This document is scheduled to be published in the

Federal Register on 11/10/2014 and available online at

http://federalregister.gov/a/2014-26146, and on FDsys.gov

DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Centers for Medicare & Medicaid Services 

42 CFR Parts 411, 412, 416, 419, 422, 423, and 424 

[CMS-1613-FC] 

RIN 0938-AS15 

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and 

Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; 

Physician-Owned Hospitals: Data Sources for Expansion Exception; Physician 

Certification of Inpatient Hospital Services; Medicare Advantage Organizations and 

Part D Sponsors: CMS-Identified Overpayments Associated with Submitted 

Payment Data 

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

ACTION: Final rule with comment period. 

SUMMARY: This final rule with comment period revises the Medicare hospital 

outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical 

center (ASC) payment system for CY 2015 to implement applicable statutory 

requirements and changes arising from our continuing experience with these systems. In 

this final rule with comment period, we describe the changes to the amounts and factors 

used to determine the payment rates for Medicare services paid under the OPPS and those 

paid under the ASC payment system. In addition, this final rule with comment period 

updates and refines the requirements for the Hospital Outpatient Quality Reporting 

(OQR) Program and the ASC Quality Reporting (ASCQR) Program. 
CMS-1613-FC 2 

 In this document, we also are making changes to the data sources permitted for 

expansion requests for physician-owned hospitals under the physician self-referral 

regulations; changes to the underlying authority for the requirement of an admission 

order for all hospital inpatient admissions and changes to require physician certification 

for hospital inpatient admissions only for long-stay cases and outlier cases; and changes 

to establish a formal process, including a three-level appeals process, to recoup 

overpayments that result from the submission of erroneous payment data by Medicare 

Advantage (MA) organizations and Part D sponsors in the limited circumstances in which 

the organization or sponsor fails to correct these data. 

DATES: Effective Date: This final rule with comment period is effective on 

January 1, 2015. 

 Comment Period: To be assured consideration, comments on the payment 

classifications assigned to HCPCS codes identified in Addenda B, AA, and BB to this 

final rule with comment period with the “NI” comment indicator, and on other areas 

specified throughout this final rule with comment period must be received at one of the 

addresses provided in the ADDRESSES section no later than 5 p.m. EST on [Insert date 

60 days after date of display for public inspection by the Office of the Federal 

Register]. 

 Application Deadline—New Class of New Technology Intraocular Lenses: 

Requests for review of applications for a new class of new technology intraocular lenses 

must be received by 5 p.m. EST on March 2, 2015, at the following address: 

ASC/NTIOL, Division of Outpatient Care, Mailstop C4-05-17, Centers for Medicare and 

Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. 
CMS-1613-FC 3 

ADDRESSES: In commenting, please refer to file code CMS-1613-FC. 

Because of staff and resource limitations, we cannot accept comments by facsimile 

(FAX) transmission. 

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

 1. Electronically. You may (and we encourage you to) submit electronic 

comments on this regulation to http://www.regulations.gov. Follow the instructions 

under the “submit a comment” tab. 

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

ONLY: 

Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Attention: CMS-1613-FC, 

 P.O. Box 8013, 

 Baltimore, MD 21244-1850. 

 Please allow sufficient time for mailed comments to be received before the close 

of the comment period. 

 3. By express or overnight mail. You may send written comments via express or 

overnight mail to the following address ONLY: 

Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Attention: CMS-1613-FC, 

 Mail Stop C4-26-05, 

 7500 Security Boulevard, 
CMS-1613-FC 4 

 Baltimore, MD 21244-1850. 

 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your 

written comments before the close of the comment period to either of the following 

addresses: 

 a. For delivery in Washington, DC— 

 Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Room 445-G, Hubert H. Humphrey Building, 

 200 Independence Avenue, S.W., 

 Washington, DC 20201. 

 (Because access to the interior of the Hubert H. Humphrey Building is not readily 

available to persons without Federal Government identification, commenters are 

encouraged to leave their comments in the CMS drop slots located in the main lobby of 

the building. A stamp-in clock is available for persons wishing to retain a proof of filing 

by stamping in and retaining an extra copy of the comments being filed.) 

 b. For delivery in Baltimore, MD— 

 Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 7500 Security Boulevard, 

 Baltimore, MD 21244-1850. 

 If you intend to deliver your comments to the Baltimore address, please call the 

telephone number (410) 786-7195 in advance to schedule your arrival with one of our 

staff members. 
CMS-1613-FC 5 

 Comments mailed to the addresses indicated as appropriate for hand or courier 

delivery may be delayed and received after the comment period. 

 For information on viewing public comments, we refer readers to the beginning of 

the “SUPPLEMENTARY INFORMATION” section. 

FOR FURTHER INFORMATION, CONTACT:

 Marjorie Baldo, (410) 786-4617, for issues related to new CPT and Level II 

HCPCS codes, revised process for soliciting comments related to new Category I and III 

CPT codes, and exceptions to the 2 times rule. 

 Elizabeth Bainger, (410) 786-0529, for issues related to the Hospital Outpatient 

Quality Reporting - Program Administration, Validation, and Reconsideration Issues. 

 Anita Bhatia, (410) 786-7236, for issues related to the Ambulatory Surgical 

Center Quality Reporting (ASCQR) Program – Program Administration and 

Reconsideration Issues. 

 Chuck Braver, (410) 786-9379, for issues related to the CMS Web posting of the 

OPPS and ASC payment files. 

 Anne Calinger, (410) 786-3396, for issues related to Medicare Advantage (MA) 

organizations and Medicare Part D sponsor overpayments. 

 Elisabeth Daniel, (410) 786-0237, for issues related to OPPS drugs, 

radiopharmaceuticals, biologicals, blood clotting factors, packaged items/services, and 

brachytherapy sources payment. 

Dexter Dickey, (410) 786-6856, or Dorothy Myrick, (410) 786-9671, for issues 

related to partial hospitalization and community mental health center (CMHC) issues. 
CMS-1613-FC 6 

 Eva Fung, (410) 786-7539, or Vinitha Meyyur, (410) 786-8819, for issues related 

to Hospital OQR Program and ASCQR measures issues and publication of Hospital OQR 

Program data issues. 

 Twi Jackson, (410) 786-1159, for issues related to device-dependent APCs, 

composite APCs (extended assessment and management, low dose brachytherapy, 

multiple imaging), hospital outpatient visits, inpatient procedures list, and no cost/full 

credit and partial credit devices. 

 Marina Kushnirova, (410) 786-2682, for issues related to OPPS status indicators 

and comment indicators. 

 John McInnes, (410) 786-0791, for issues related to new technology intraocular 

lenses (NTIOLs). 

 Esther Markowitz, (410) 786-4595, for issues related to comprehensive APCs and 

ambulatory surgical center (ASC) payments. 

 David Rice, (410) 786-6004, for issues related to APC weights, blood and blood 

products, cancer hospital payments, conversion factor, copayments, cost-to-charge ratios 

(CCRs), data claims, geometric mean calculation, off-campus provider-based issues, rural 

hospital payments, outlier payments, and wage index. 

 Daniel Schroder, (410) 786-4487, for issues related to physician certification of 

hospital inpatient services. 

 Carol Schwartz, (410) 786-0576, for issues related to the Advisory Panel on 

Hospital Outpatient Payment (HOP Panel) and OPPS pass-through devices. 
CMS-1613-FC 7 

 Teresa Walden, (410) 786-3755, or Patricia Taft, (410) 786-4561, for issues 

related to the physician self-referral law/physician-owned hospital expansion exception 

process. 

 Marjorie Baldo, (410) 786-4617, for all other issues related to hospital outpatient 

and ambulatory surgical center payments not previously identified. 

SUPPLEMENTARY INFORMATION:

 Inspection of Public Comments: All comments received before the close of the 

comment period are available for viewing by the public, including any personally 

identifiable or confidential business information that is included in a comment. We post 

all comments received before the close of the comment period on the following Web site 

as soon as possible after they have been received: http://www.regulations.gov. Follow 

the search instructions on that Web site to view public comments. 

 Comments received timely will also be available for public inspection, generally 

beginning approximately 3 weeks after publication of the rule, at the headquarters of the 

Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 

Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4:00 

p.m. EST. To schedule an appointment to view public comments, phone 

1-800-743-3951. 

Electronic Access

 This Federal Register document is also available from the Federal Register

online database through Federal Digital System (FDsys), a service of the U.S. 

Government Printing Office. This database can be accessed via the internet at 

http://www.gpo.gov/fdsys/. 
CMS-1613-FC 8 

Addenda Available Only Through the Internet on the CMS Web Site 

In the past, a majority of the Addenda referred to in our OPPS/ASC proposed and 

final rules were published in the Federal Register as part of the annual rulemakings. 

However, beginning with the CY 2012 OPPS/ASC proposed rule, all of the Addenda no 

longer appear in the Federal Register as part of the annual OPPS/ASC proposed and 

final rules to decrease administrative burden and reduce costs associated with publishing 

lengthy tables. Instead, these Addenda are published and available only on the CMS 

Web site. The Addenda relating to the OPPS are available at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The Addenda relating to the ASC payment 

system are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/index.html.

Alphabetical List of Acronyms Appearing in This Federal Register Document 

AHA American Hospital Association 

AMA American Medical Association 

AMI Acute myocardial infarction 

APC Ambulatory Payment Classification 

ASC Ambulatory surgical center 

ASCQR Ambulatory Surgical Center Quality Reporting 

ASP Average sales price 

AWP Average wholesale price 

BBA Balanced Budget Act of 1997, Pub. L. 105-33 
CMS-1613-FC 9 

BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance 

Program] Balanced Budget Refinement Act of 1999, Pub. L. 106-113 

BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 

Act of 2000, Pub. L. 106-554 

BLS Bureau of Labor Statistics 

CAH Critical access hospital 

CAHPS Consumer Assessment of Healthcare Providers and Systems 

CAP Competitive Acquisition Program 

C-APC Comprehensive Ambulatory Payment Classification 

CASPER Certification and Survey Provider Enhanced Reporting 

CAUTI Catheter-associated urinary tract infection 

CBSA Core-Based Statistical Area 

CCN CMS Certification Number 

CCR Cost-to-charge ratio 

CDC Centers for Disease Control and Prevention 

CED Coverage with Evidence Development 

CERT Comprehensive Error Rate Testing 

CFR Code of Federal Regulations 

CI Comment indicator 

CLABSI Central Line [Catheter] Associated Blood Stream Infection 

CLFS Clinical Laboratory Fee Schedule 

CMHC Community mental health center 

CMS Centers for Medicare & Medicaid Services 
CMS-1613-FC 10 

CoP Condition of participation 

CPI-U Consumer Price Index for All Urban Consumers 

CPT Current Procedural Terminology (copyrighted by the American Medical 

Association) 

CR Change request 

CRC Colorectal cancer 

CSAC Consensus Standards Approval Committee 

CT Computed tomography 

CV Coefficient of variation 

CY Calendar year 

DFO Designated Federal Official 

DIR Direct or indirect remuneration 

DME Durable medical equipment 

DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and Supplies 

DRA Deficit Reduction Act of 2005, Pub. L. 109-171 

DSH Disproportionate share hospital 

EACH Essential access community hospital 

EAM Extended assessment and management 

ECG Electrocardiogram 

ED Emergency department 

E/M Evaluation and management 

EHR Electronic health record 

ESRD End-stage renal disease 
CMS-1613-FC 11 

ESRD QIP End-Stage Renal Disease Quality Improvement Program 

FACA Federal Advisory Committee Act, Pub. L. 92-463 

FDA Food and Drug Administration 

FFS [Medicare] Fee-for-service 

FY Fiscal year 

GAO Government Accountability Office 

GI Gastrointestinal 

HAI Healthcare-associated infection 

HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems 

HCERA Health Care and Education Reconciliation Act of 2010, Pub. L. 111-152 

HCP Health care personnel 

HCPCS Healthcare Common Procedure Coding System 

HCRIS Healthcare Cost Report Information System 

HCUP Healthcare Cost and Utilization Project 

HH QRP Home Health Quality Reporting Program 

HHS Department of Health and Human Services 

HIE Health information exchange 

HEU Highly enriched uranium 

HIPAA Health Insurance Portability and Accountability Act of 1996, 

Pub. L. 104-191 

HOP Hospital Outpatient Payment [Panel] 

HOPD Hospital outpatient department 

HOP QDRP Hospital Outpatient Quality Data Reporting Program 
CMS-1613-FC 12 

HPMS Health Plan Management System 

IBD Inflammatory bowel disease 

ICC Interclass correlation coefficient 

ICD Implantable cardioverter defibrillator 

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

Modification 

ICH In-center hemodialysis 

IDTF Independent diagnostic testing facility 

IGI IHS Global Insight, Inc. 

IHS Indian Health Service 

I/OCE Integrated Outpatient Code Editor 

IOL Intraocular lens 

IORT Intraoperative radiation treatment 

IPFQR Inpatient Psychiatric Facility Quality Reporting 

IPPS [Hospital] Inpatient Prospective Payment System 

IQR [Hospital] Inpatient Quality Reporting 

IRF Inpatient rehabilitation facility 

IRF QRP Inpatient Rehabilitation Facility Quality Reporting 

IT Information technology 

LCD Local coverage determination 

LDR Low dose rate 

LTCH Long-term care hospital 

LTCHQR Long-Term Care Hospital Quality Reporting 
CMS-1613-FC 13 

MAC Medicare Administrative Contractor 

MAP Measure Application Partnership 

MedPAC Medicare Payment Advisory Commission 

MEG Magnetoencephalography 

MFP Multifactor productivity 

MGCRB Medicare Geographic Classification Review Board 

MIEA-TRHCA Medicare Improvements and Extension Act under Division B, Title I 

of the Tax Relief Health Care Act of 2006, Pub. L. 109-432 

MIPPA Medicare Improvements for Patients and Providers Act of 2008, 

Pub. L. 110-275 

MLR Medical loss ratio 

MMA Medicare Prescription Drug, Improvement, and Modernization Act of 

2003, Pub. L. 108-173 

MMEA Medicare and Medicaid Extenders Act of 2010, Pub. L. 111-309 

MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L. 110-173 

MPFS Medicare Physician Fee Schedule 

MR Medical review 

MRA Magnetic resonance angiography 

MRgFUS Magnetic Resonance Image Guided Focused Ultrasound 

MRI Magnetic resonance imaging 

MRSA Methicillin-Resistant Staphylococcus Aures 

MS-DRG Medicare severity diagnosis-related group 

MSIS Medicaid Statistical Information System
CMS-1613-FC 14 

MUC Measure under consideration 

NCCI National Correct Coding Initiative 

NDC National Drug Code 

NHSN National Healthcare Safety Network 

NOS Not otherwise specified 

NPWT Negative Pressure Wound Therapy 

NPI National provider identification 

NQF National Quality Forum 

NQS National Quality Strategy 

NTIOL New technology intraocular lens 

NUBC National Uniform Billing Committee 

OACT [CMS] Office of the Actuary 

OBRA Omnibus Budget Reconciliation Act of 1996, Pub. L. 99-509 

OIG [HHS] Office of the Inspector General 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for Health Information Technology 

OPD [Hospital] Outpatient Department 

OPO Organ Procurement Organization 

OPPS [Hospital] Outpatient Prospective Payment System 

OPSF Outpatient Provider-Specific File 

OQR [Hospital] Outpatient Quality Reporting 

OT Occupational therapy 

PBD Provider-Based Department 
CMS-1613-FC 15 

PCHQR PPS-Exempt Cancer Hospital Quality Reporting 

PCR Payment-to-cost ratio 

PDE Prescription Drug Event 

PE Practice expense 

PEPPER Program Evaluation Payment Patterns Electronic Report 

PHP Partial hospitalization program 

PHSA Public Health Service Act, Pub. L. 96-88 

PMA Premarket approval 

PN Pneumonia 

POS Place of service 

PPI Producer Price Index 

PPS Prospective payment system 

PQRI Physician Quality Reporting Initiative 

PQRS Physician Quality Reporting System 

QDC Quality data code 

QIO Quality Improvement Organization 

RAC Recovery Audit Contractor 

RADV Risk Adjustment Data Validation 

RFA Regulatory Flexibility Act 

RHQDAPU Reporting Hospital Quality Data for Annual Payment Update 

RTI Research Triangle Institute, International 

RVU Relative value unit 

SAMS Secure Access Management Services 
CMS-1613-FC 16 

SCH Sole community hospital 

SCOD Specified covered outpatient drugs 

SES Socioeconomic status 

SI Status indicator 

SIR Standardized infection ratio 

SNF Skilled nursing facility 

SRS Stereotactic radiosurgery 

SSA Social Security Administration 

SSI Surgical site infection 

TEP Technical Expert Panel 

TIP Transprostatic implant procedure 

TMS Transcranial Magnetic Stimulation [Therapy] 

TOPs Transitional Outpatient Payments 

USPSTF United States Preventive Services Task Force 

VBP Value-based purchasing 

WAC Wholesale acquisition cost 

Table of Contents 

I. Summary and Background 

 A. Executive Summary of This Document 

 1. Purpose 

 2. Summary of the Major Provisions 

 3. Summary of Costs and Benefits 

 B. Legislative and Regulatory Authority for the Hospital OPPS 
CMS-1613-FC 17 

 C. Excluded OPPS Services and Hospitals 

 D. Prior Rulemaking 

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

 1. Authority of the Panel 

 2. Establishment of the Panel 

 3. Panel Meetings and Organizational Structure 

 F. Public Comments Received on the CY 2015 OPPS/ASC Proposed Rule 

 G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule with 

Comment Period 

 II. Updates Affecting OPPS Payments 

 A. Recalibration of APC Relative Payment Weights 

 1. Database Construction 

 a. Database Source and Methodology 

 b. Use of Single and Multiple Procedure Claims 

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

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

 a. Claims Preparation 

 b. Splitting Claims and Creation of “Pseudo” Single Procedure Claims 

 (1) Splitting Claims 

 (2) Creation of “Pseudo” Single Procedure Claims 

 c. Completion of Claim Records and Geometric Mean Cost Calculations 

 (1) General Process 

 (2) Recommendations of the Panel Regarding Data Development 
CMS-1613-FC 18 

 d. Calculation of Single Procedure APC Criteria-Based Costs 

 (1) Device-Dependent APCs 

 (2) Blood and Blood Products 

 (3) Brachytherapy Source Payment 

 e. Establishment of Comprehensive APCs 

 (1) Background 

 (2) CY 2015 Policy for C-APCs 

 (3) Public Comments 

 (4) Statement of Final Policy and List of CY 2015 C-APCs 

 f. Calculation of Composite APC Criteria-Based Costs 

 (1) Extended Assessment and Management Composite APCs (APC 8009) 

 (2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001) 

 (3) Mental Health Services Composite APC (APC 0034) 

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

8008) 

 3. Changes to Packaged Items and Services 

 a. Background and Rationale for Packaging in the OPPS 

b. Revision of a Packaging Policy Established in CY 2014—Procedures 

Described by Add-On Codes 

 c. Packaging Policies for CY 2015 

 (1) Ancillary Services 

 (2) Prosthetic Supplies 

 4. Calculation of OPPS Scaled Payment Weights 
CMS-1613-FC 19 

 B. Conversion Factor Update 

 C. Wage Index Changes 

 D. Statewide Average Default CCRs 

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

Act 

 F. OPPS Payment to Certain Cancer Hospitals Described by Section 

1886(d)(1)(B)(v) of the Act 

 1. Background 

 2. Payment Adjustment for Certain Cancer Hospitals for CY 2015 

 G. Hospital Outpatient Outlier Payments 

 1. Background 

 2. Outlier Calculation 

 3. Final Outlier Calculation 

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

Medicare Payment 

 I. Beneficiary Copayments 

 1. Background 

 2. OPPS Copayment Policy 

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

III. OPPS Ambulatory Payment Classification (APC) Group Policies 

 A. OPPS Treatment of New CPT and Level II HCPCS Codes 
CMS-1613-FC 20 

 1. Treatment of New CY 2014 Level II HCPCS and CPT Codes Effective 

April 1, 2014 and July 1, 2014 for Which We Solicited Public Comments in the CY 2015 

OPPS/ASC Proposed Rule 

 2. Process for New Level II HCPCS Codes That Will Be Effective 

October 1, 2014 and New CPT and Level II HCPCS Codes That Will Be Effective 

January 1, 2015 for Which We Are Soliciting Public Comments in this CY 2015 

OPPS/ASC Final Rule with Comment Period 

 3. Process for Soliciting Public Comments for New and Revised CPT Codes 

Released by the AMA 

 a. Current Process for Accepting Comments on New and Revised CPT Codes for 

a Year 

 b. Modification of Process for New and Revised CPT Codes That Are Effective 

January 1 

 B. OPPS Changes--Variations within APCs 

 1. Background 

 2. Application of the 2 Times Rule 

 3. Exceptions to the 2 Times Rule 

 C. OPPS APC-Specific Policies 

 1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 0213) 

 2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 0142, 0361, 0419, 

and 0422) 

 3. Genitourinary Services 

 a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 0202) 
CMS-1613-FC 21 

 b. Cystourethroscopy, Transprostatic Implant Procedures, and Other 

Genitourinary Procedures (APCs 0160, 0161, 0162, 0163, and 1564 

 c. Level IV Anal/Rectal Procedures (APC 0150) 

 d. Percutaneous Renal Cryoablation (APC 0423) 

 4. Nervous System Services 

 a. Chemodenervation (APC 0206) 

 b. Epidural Lysis (APCs 0203 and 0207) 

 c. Transcranial Magnetic Stimulation Therapy (TMS) (APC 0218) 

 5. Ocular Services: Ophthalmic Procedures and Services 

6. Imaging 

 a. Echocardiography (APCs 0269, 0270, and 0697) 

 b. Optical Coherence Tomography Procedures of the Breast 

 c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, 0414) 

7. Radiology Oncology 

a. Proton Beam Therapy and Magnetoencephalography (MEG) Services (APCs 

0065, 0412, 0446, 0664, and 0667) 

b. Stereotactic Radiosurgery Services (SRS) and Magnetic Resonance Image 

Guided Focused Ultrasound (MRgFUS) (APC 0066) 

 8. Respiratory Services: Level II Endoscopy Lower Airway (APC 0415) 

 9. Other Services 

 a. Epidermal Autograft (APC 0327) 

 b. Image-Guided Breast Biopsy Procedures and Image-Guided Abscess Drainage 

Procedures (APCs 0005 and 0007) 

 c. Negative Pressure Wound Therapy (NPWT) (APCs 0012 and 0015) 
CMS-1613-FC 22 

 d. Platelet Rich Plasma (PRP) (APC 0327) 

IV. OPPS Payment for Devices 

 A. Pass-Through Payments for Devices 

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

 a. Background 

 b. CY 2015 Policy 

 2. Provisions for Reducing Transitional Pass-Through Payments to Offset Costs 

Packaged into APC Groups 

 a. Background 

 b. CY 2015 Policy 

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

Devices 

 1. Background 

 2. Policy for CY 2015 

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

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

Biologicals, and Radiopharmaceuticals 

 1. Background 

 2. Drugs and Biologicals with Expiring Pass-Through Status in CY 2014 

 3. Drugs, Biologicals, and Radiopharmaceuticals with New or Continuing 

Pass-Through Status in CY 2015 

 4. Provisions for Reducing Transitional Pass-Through Payments for 

Policy-Packaged Drugs and Biologicals to Offset Costs Packaged into APC Groups 
CMS-1613-FC 23 

 a. Background 

 b. Payment Offset Policy for Diagnostic Radiopharmaceuticals 

 c. Payment Offset Policy for Contrast Agents 

 d. Payment Offset Policy for Drugs, Biologicals, and Radiopharmaceuticals That 

Function as Supplies When Used in a Diagnostic Test or Procedure and Drugs and 

Biologicals That Function as Supplies When Used in a Surgical Procedure 

 B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without 

Pass-Through Status 

 1. Background 

 2. Criteria for Packaging Payment for Drugs, Biologicals, and 

Radiopharmaceuticals 

 a. Background 

 b. Cost Threshold for Packaging of Payment for HCPCS Codes That Describe 

Certain Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals (“ThresholdPackaged Drugs”) 

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

 d. Pass-Through Evaluation Process for Skin Substitutes 

 e. Packaging Determination for HCPCS Codes That Describe the Same Drug or 

Biological But Different Dosages 

 3. Payment for Drugs and Biologicals without Pass-Through Status That Are Not 

Packaged 

 a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other 

Separately Payable and Packaged Drugs and Biologicals 
CMS-1613-FC 24 

 b. CY 2015 Payment Policy 

 4. Payment Policy for Therapeutic Radiopharmaceuticals 

 5. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly 

Enriched Uranium Sources 

 6. Payment for Blood Clotting Factors 

 7. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals 

with HCPCS Codes but without OPPS Hospital Claims Data 

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

Radiopharmaceuticals, and Devices 

 A. Background 

 B. Estimate of Pass-Through Spending 

VII. OPPS Payment for Hospital Outpatient Visits 

 A. Payment for Hospital Outpatient Clinic and Emergency Department Visits 

 B. Payment for Critical Care Services 

VIII. Payment for Partial Hospitalization Services 

 A. Background 

 B. PHP APC Update for CY 2015 

 C. Separate Threshold for Outlier Payments to CMHCs 

IX. Procedures That Will Be Paid Only as Inpatient Procedures 

 A. Background 

 B. Changes to the Inpatient List 

X. Nonrecurring Policy Changes: Collecting Data on Services Furnished in Off-Campus 

Provider-Based Departments of Hospitals 
CMS-1613-FC 25 

XI. CY 2015 OPPS Payment Status and Comment Indicators 

 A. CY 2015 OPPS Payment Status Indicator Definitions 

 B. CY 2015 Comment Indicator Definitions 

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

 A. Background 

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

Payment System 

 2. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC 

Covered Surgical Procedures and Covered Ancillary Services 

 B. Treatment of New Codes 

 1. Process for Recognizing New Category I and Category III CPT Codes and 

Level II HCPCS Codes 

 2. Treatment of New Level II HCPCS Codes and Category III CPT Codes 

Implemented in April 2014 and July 2014 for Which We Solicited Public Comments in 

the CY 2015 OPPS/ASC Proposed Rule 

 3. Process for New Level II HCPCS Codes and Category I and Category III CPT 

Codes for Which We Are Soliciting Public Comments in this CY 2015 OPPS/ASC Final 

Rule with Comment Period 

 C. Update to the Lists of ASC Covered Surgical Procedures and Covered 

Ancillary Services 

 1. Covered Surgical Procedures 

 a. Additions to the List of ASC Covered Surgical Procedures 

 b. Covered Surgical Procedures Designated as Office-Based 
CMS-1613-FC 26 

 (1) Background 

 (2) Changes for CY 2015 to Covered Surgical Procedures Designated as 

Office-Based 

 c. ASC Covered Surgical Procedures Designated as Device-Intensive 

 (1) Background 

 (2) Changes to List of Covered ASC Surgical Procedures Designated as 

Device-Intensive for CY 2015 

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

Devices 

 e. ASC Treatment of Surgical Procedures Removed from the OPPS Inpatient List 

for CY 2015 

 2. Covered Ancillary Services 

 D. ASC Payment for Covered Surgical Procedures and Covered Ancillary 

Services 

 1. ASC Payment for Covered Surgical Procedures 

 a. Background 

 b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2015 

 c. Waiver of Coinsurance and Deductible for Certain Preventive Services 

 d. Payment for Cardiac Resynchronization Therapy Services 

 e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy Composite 

 2. Payment for Covered Ancillary Services 

 a. Background 

 b. Payment for Covered Ancillary Services for CY 2015 
CMS-1613-FC 27 

 E. New Technology Intraocular Lenses (NTIOLs) 

 1. NTIOL Application Cycle 

 2. Requests to Establish New NTIOL Classes for CY 2015 

 3. Payment Adjustment 

 4. Announcement of CY 2015 Deadline for Submitting Requests for CMS 

Review of Applications for a New Class of NTIOLs 

 F. ASC Payment and Comment Indicators 

 1. Background 

 2. ASC Payment and Comment Indicators 

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

 1. Background 

 2. Calculation of the ASC Payment Rates 

 a. Updating the ASC Relative Payment Weights for CY 2015 and Future Years 

 b. Transition Period to New OMB Delineations for ASC Wage Index 

 c. Updating the ASC Conversion Factor 

 3. Display of CY 2015 ASC Payment Rates 

XIII. Hospital Outpatient Quality Reporting Program Updates 

 A. Background 

 1. Overview 

 2. Statutory History of the Hospital OQR Program 

 3. Measure Updates and Data Publication 

 a. Maintenance of Technical Specifications for Quality Measures 

 b. Public Display of Quality Measures 
CMS-1613-FC 28 

 B. Process for Retention of Hospital OQR Program Measures Adopted in 

Previous Payment Determinations 

 C. Removal of Quality Measures from the Hospital OQR Program Measure Set 

 1. Considerations in Removing Quality Measures from the Hospital OQR 

Program 

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

 3. Removal of Measures from the Hospital OQR Program for the CY 2017 

Payment Determination and Subsequent Years 

 D. Quality Measures Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

 1. Data Submission Requirements for OP-27: Influenza Vaccination Coverage 

Among Healthcare Personnel (NQF #0431) Reported via NHSN for the CY 2017 

Payment Determination and Subsequent Years 

 a. Clarification of Submission Deadline and Data Submitted 

 b. Clarification on Reporting by CMS Certification Number (CCN) 

 2. Delayed Data Collection for OP-29 and OP-30 

 3. OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery 

 a. Correction of Response to Public Comments 

 b. Delayed Data Collection for OP-31 and Exclusion from the CY 2016 Payment 

Determination Measure Set 

 c. Voluntary Collection of Data for OP-31 for the CY 2017 Payment 

Determination and Subsequent Years 
CMS-1613-FC 29 

 E. New Quality Measure for the CY 2018 Payment Determination and 

Subsequent Years 

 F. Possible Hospital OQR Program Measures and Topics for Future 

Consideration 

 1. Electronic Clinical Quality Measures 

 2. Partial Hospitalization Program Measures 

 3. Behavioral Health Measures 

 4. National Quality Strategy and CMS Quality Strategy Measure Domains 

 G. Payment Reduction for Hospitals That Fail to Meet the Hospital Outpatient 

Quality Reporting (OQR) Program Requirements for the CY 2015 Payment Update 

 1. Background 

 2. Reporting Ratio Application and Associated Adjustment Policy for CY 2015 

 H. Requirements for Reporting Hospital OQR Program Data for the CY 2017 

Payment Determination and Subsequent Years 

 1. Administrative Requirements for the CY 2017 Payment Determination and 

Subsequent Years 

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

 a. General Procedural Requirements 

 b. Requirements for Chart-Abstracted Measures Where Data Are Submitted 

Directly to CMS for the CY 2017 Payment Determination and Subsequent Years 

 c. Claims-Based Measure Data Requirements for the CY 2017 and CY 2018 

Payment Determination and Subsequent Years 
CMS-1613-FC 30 

 d. Data Submission Requirements for Measure Data Submitted via the CMS 

Web-Based Tool for the CY 2017 Payment Determination and Subsequent Years 

 e. Population and Sampling Data Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

 f. Review and Corrections Period for Chart-Abstracted Measures 

 3. Hospital OQR Program Validation Requirements for Chart-Abstracted 

Measure Data Submitted Directly to CMS for the CY 2017 Payment Determination and 

Subsequent Years 

 a. Background 

 b. Selection of Hospitals for Data Validation of Chart-Abstracted Measures for 

the CY 2017 Payment Determination and Subsequent Years 

 c. Targeting Criteria for Data Validation Selection for the CY 2017 Payment 

Determination and Subsequent Years 

 d. Methodology for Encounter Selection for the CY 2017 Payment Determination 

and Subsequent Years 

 e. Medical Record Documentation Requests for Validation and Validation Score 

Calculation for the CY 2017 Payment Determination and Subsequent Years 

 I. Hospital OQR Program Reconsideration and Appeals Procedures for the 

CY 2017 Payment Determination and Subsequent Years 

 J. Extension or Exception Process for the CY 2017 Payment Determination and 

Subsequent Years 

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

Program 
CMS-1613-FC 31 

 A. Background 

 1. Overview 

 2. Statutory History of the Ambulatory Surgical Center Quality Reporting 

(ASCQR) Program 

 3. Regulatory History of the ASCQR Program 

 B. ASCQR Program Quality Measures 

 1. Considerations in the Selection of ASCQR Program Quality Measures 

 2. Policy for Removal of Quality Measures from the ASCQR Program 

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

 4. ASCQR Program Quality Measures Adopted in Previous Rulemaking 

 5. New ASCQR Program Quality Measure for the CY 2018 Payment 

Determination and Subsequent Years 

 6. ASCQR Program Measures for Future Consideration 

 7. Maintenance of Technical Specifications for Quality Measures 

 8. Public Reporting of ASCQR Program Data 

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

Requirements 

 1. Statutory Background 

 2. Reduction to the ASC Payment Rates for ASCs That Fail to Meet the ASCQR 

Program Requirements for a Payment Determination Year 

 D. Administrative Requirements 

 1. Requirements Regarding QualityNet Account and Security Administrator 

 2. Requirements Regarding Participation Status 
CMS-1613-FC 32 

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

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

 2. Minimum Threshold, Minimum Case Volume, and Data Completeness for 

Claims-Based Measures Using QDCs 

 3. Requirements for Data Submitted Via a CMS Online Data Submission Tool 

 a. Data Collection for ASC-6 and ASC-7 

 b. Delayed Data Collection for ASC-9 and ASC-10 

 c. Delayed Data Collection and Exclusion for ASC-11 for the CY 2016 Payment 

Determination and Voluntary Data Collection for ASC-11 for the CY 2017 Payment 

Determination and Subsequent Years 

 4. Claims-Based Measure Data Requirements for the New Measure for the 

CY 2018 Payment Determination and Subsequent Years 

 5. Data Submission Requirements for ASC-8 (Influenza Vaccination Coverage 

Among Healthcare Personnel) Reported via the National Healthcare Safety Network 

(NHSN) for the CY 2016 Payment Determination and Subsequent Years 

 a. Previously Adopted Requirements for the CY 2016 Payment Determination 

 b. Data Collection Timeframes for the CY 2017 Payment Determination and 

Subsequent Years and Submission Deadlines for the CY 2016 Payment Determination 

and Subsequent Years 

 6. ASCQR Program Validation of Claims-Based and CMS Web-Based Measures 

 7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017 

Payment Determination and Subsequent Years 
CMS-1613-FC 33 

 8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

 XV. Changes to the Rural Provider and Hospital Ownership Exceptions to the 

Physician Self-Referral Law: Expansion Exception Process 

 A. Background 

 1. Statutory Basis 

 2. Affordable Care Act Amendments to the Rural Provider and Hospital 

Ownership Exceptions to the Physician Self-Referral Law 

 B. Limitations Identified by Stakeholders Regarding the Required Use of HCRIS 

Data 

 C. Changes to the Physician-Owned Hospital Expansion Exception Process 

 1. Supplemental Data Sources 

 a. Internal Data Sources 

 b. External Data Sources 

 c. Completeness of Supplemental Data Sources 

 d. Other Issues Related to Supplemental Data Sources 

 e. Summary of Final Provisions Regarding Supplemental Data Sources 

 2. Fiscal Year Standard 

 a. Summary of Public Comments and Our Response Regarding the Fiscal Year 

Standard 

 b. Summary of Final Provisions Regarding the Fiscal Year Standard 

 3. Community Input and Timing of a Complete Request 
CMS-1613-FC 34 

 a. Summary of Public Comments and Our Responses Regarding Community 

Input and Timing of a Complete Request 

 b. Final Provisions Regarding Community Input and Timing of a Complete 

Request 

 D. Additional Considerations 

 E. Summary of the Final Provisions Regarding the Expansion Exception Process 

under the Rural Provider and Hospital Ownership Exceptions to the Physician 

Self-Referral Law 

 XVI. Revision of the Requirements for Physician Certification of Hospital 

Inpatient Services Other Than Psychiatric Inpatient Services 

 XVII. CMS-Identified Overpayments Associated with Payment Data Submitted 

by Medicare Advantage (MA) Organizations and Medicare Part D Sponsors (§§ 422.330 

and 423.352) 

 A. Background 

 1. Medicare Part C Payment Background 

 1. Medicare Part D Payment Background 

 B. Provisions of the Proposed Rule and Final Policies 

 1. Definitions of “Payment Data” and “Applicable Reconciliation Date” 

 2. Request for Corrections of Payment Data 

 3. Payment Offset 

 a. Offset Amount 

 b. Payment Offset Notification 

 4. Appeals Process for MA Organizations and Part D Sponsors 
CMS-1613-FC 35 

 a. Reconsideration 

 b. Informal Hearing 

 c. Review by Administrator 

 5. Matters Subject to Appeal and Burden of Proof 

 6. Effective Date of Appeals Process Provisions 

 XVIII. Files Available to the Public Via the Internet 

 XIX. Collection of Information Requirements 

 A. Legislative Requirements for Solicitation of Comments 

 B. Requirements in Regulation Text: Changes to the Rural Provider and Hospital 

Ownership Exceptions to the Physician Self-Referral Law: Expansion Exception Process 

(§ 411.362) 

 C. Associated Information Collections Not Specified in Regulatory Text 

 1. Hospital OQR Program 

 a. Revisions to the CY 2016 Payment Determination Estimates 

 b. Hospital OQR Program Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

 c. Review and Corrections Period Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

 d. Hospital OQR Program Validation Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

 e. Extraordinary Circumstances Extensions or Exemptions Process 

 f. Reconsideration and Appeals 

 2. ASCQR Program Requirements 
CMS-1613-FC 36 

 a. Background 

 b. Revisions to the CY 2016 Payment Determination Estimates 

 c. Claims-Based Measures for the CY 2014 Payment Determination and 

Subsequent Years 

 d. Web-Based Measures for the CY 2017 Payment Determination and 

Subsequent Years 

 e. Extraordinary Circumstances Extension or Exemptions Process 

 f. Reconsiderations and Appeals 

XX. Waiver of Proposed Rulemaking and Response to Comments 

 A. Waiver of Proposed Rulemaking 

 B. Response to Comments 

XXI. Economic Analyses 

 A. Regulatory Impact Analysis 

 1. Introduction 

 2. Statement of Need 

 3. Overall Impacts for the OPPS and ASC Payment Provisions 

 4. Detailed Economic Analyses 

 a. Estimated Effects of OPPS Changes in this Final Rule with Comment Period 

 (1) Limitations of Our Analysis 

 (2) Estimated Effects of OPPS Changes on Hospitals 

 (3) Estimated Effects of OPPS Changes on CMHCs 

 (4) Estimated Effect of OPPS Changes on Beneficiaries 

 (5) Estimated Effects of OPPS Changes on Other Providers 
CMS-1613-FC 37 

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

 (7) Alternative OPPS Policies Considered 

 b. Estimated Effects of CY 2015 ASC Payment System Policies 

 (1) Limitations of Our Analysis 

 (2) Estimated Effects of CY 2015ASC Payment System Policies on ASCs 

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

 (4) Alternative ASC Payment Policies Considered 

 c. Accounting Statements and Tables 

 d. Effects of Requirements for the Hospital OQR Program 

 e. Effects of CY 2014 Policies for the ASCQR Program 

 f. Effects of Changes to the Rural Provider and Hospital Ownership Exceptions 

to the Physician Self-Referral Law 

 g. Effects of Policies Related to CMS-Identified Overpayments Associated with 

Payment Data Submitted by Medicare Advantage (MA) Organizations and Medicare Part 

D Sponsors 

 B. Regulatory Flexibility Act (RFA) Analysis 

 C. Unfunded Mandates Reform Act Analysis 

 D. Conclusion 

XXII. Federalism Analysis 

 
CMS-1613-FC 38 

I. Summary and Background 

A. Executive Summary of This Document 

1. Purpose 

 In this final rule with comment period, we are updating the payment policies and 

payment rates for services furnished to Medicare beneficiaries in hospital outpatient 

departments and Ambulatory Surgical Centers (ASCs) beginning January 1, 2015. 

Section 1833(t) of the Social Security Act (the Act) requires us to annually review and 

update the relative payment weights and the conversion factor for services payable under 

the Outpatient Prospective Payment System (OPPS). Under section 1833(i) of the Act, 

we annually review and update the ASC payment rates. We describe these and various 

other statutory authorities in the relevant sections of this final rule with comment period. 

In addition, this final rule with comment period updates and refines the requirements for 

the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality 

Reporting (ASCQR) Program. 

 In this document, we also are making changes to the data sources permitted for 

expansion requests for physician-owned hospitals under the physician self-referral 

regulations; changes to the underlying authority for the requirement of an admission 

order for all hospital inpatient admissions and changes to require physician certification 

for hospital inpatient admissions only for long-stay cases and outlier cases; and changes 

to establish a formal process, including a three-level appeals process, to recoup 

overpayments that result from the submission of erroneous payment data by Medicare 

Advantage (MA) organizations and Part D sponsors in the limited circumstances in which 

the organization or sponsor fails to correct these data. 
CMS-1613-FC 39 

2. Summary of the Major Provisions 

● OPPS Update: For CY 2015, we are increasing the payment rates under the 

OPPS by an Outpatient Department (OPD) fee schedule increase factor of 2.2 percent. 

This increase is based on the final hospital inpatient market basket percentage increase of 

2.9 percent for inpatient services paid under the hospital inpatient prospective payment 

system (IPPS), minus the multifactor productivity (MFP) adjustment of 0.5 percentage 

point, and minus a 0.2 percentage point adjustment required by the Affordable Care Act. 

Under this final rule with comment period, we estimate that total payments for CY 2015, 

including beneficiary cost-sharing, to the approximate 4,000 facilities paid under the 

OPPS (including general acute care hospitals, children’s hospitals, cancer hospitals, and 

community mental health centers (CMHCs)), will be approximately $56.1 billion, an 

increase of approximately $5.1 billion compared to CY 2014 payments, or $900 million 

excluding our estimated changes in enrollment, utilization, and case-mix. 

 We are continuing to implement the statutory 2.0 percentage point reduction in 

payments for hospitals failing to meet the hospital outpatient quality reporting 

requirements, by applying a reporting factor of 0.980 to the OPPS payments and 

copayments for all applicable services. 

● Rural Adjustment: We are continuing the adjustment of 7.1 percent to the 

OPPS payments to certain rural sole community hospitals (SCHs), including essential 

access community hospitals (EACHs). This adjustment will apply to all services paid 

under the OPPS, excluding separately payable drugs and biologicals, devices paid under 

the pass-through payment policy, and items paid at charges reduced to cost. 
CMS-1613-FC 40 

● Cancer Hospital Payment Adjustment: For CY 2015, we are continuing to 

provide additional payments to cancer hospitals so that the cancer hospital’s 

payment-to-cost ratio (PCR) after the additional payments is equal to the weighted 

average PCR for the other OPPS hospitals using the most recently submitted or settled 

cost report data. Based on those data, a target PCR of 0.89 will be used to determine the 

CY 2015 cancer hospital payment adjustment to be paid at cost report settlement. That 

is, the payment adjustments will be the additional payments needed to result in a PCR 

equal to 0.89 for each cancer hospital. 

● Payment of Drugs, Biologicals, and Radiopharmaceuticals: For CY 2015, 

payment for the acquisition and pharmacy overhead costs of separately payable drugs and 

biologicals that do not have pass-through status are set at the statutory default of average 

sales price (ASP) plus 6 percent. 

● Packaging Policies: We are conditionally packaging certain ancillary services 

when they are integral, ancillary, supportive, dependent, or adjunctive to a primary 

service. The initial set of services packaged under this ancillary service policy are the 

services assigned to APCs having an APC geometric mean cost (prior to application of 

status indicator Q1) of less than or equal to $100. This $100 geometric mean cost limit 

for the APC is part of the methodology of establishing an initial set of conditionally 

packaged ancillary service APCs, and is not meant to represent a threshold above which a 

given ancillary service will not be packaged, but as a basis for selecting an initial set of 

APCs that will likely be updated and expanded in future years. 

● Implementation of Comprehensive APCs: For CY 2015, we are implementing, 

with several modifications, the policy for comprehensive APCs (C-APCs) that was 
CMS-1613-FC 41 

finalized in the CY 2014 OPPS/ASC final rule with comment period effective 

January 1, 2015. We are continuing to define the services assigned to C-APCs as 

primary services, and to define a C-APC as a classification for the provision of a primary 

service and all adjunctive services and supplies provided to support the delivery of the 

primary service. We continue to consider the entire hospital stay, defined as all services 

reported on the hospital claim reporting the primary service, to be one comprehensive 

service for the provision of a primary service into which all other services appearing on 

the claim would be packaged. This results in a single Medicare payment and a single 

beneficiary copayment under the OPPS for the comprehensive service based on all 

included charges on the claim. 

 We are establishing a total of 25 C-APCs for CY 2015, including all of the 

formerly device-dependent APCs remaining after some restructuring and consolidation of 

these APCs (except for APCs 0427, 0622, and 0652) and two C-APCs for other 

procedures that are either largely device-dependent or represent single session services 

with multiple components (single-session cranial stereotactic radiosurgery and intraocular 

telescope implantation). We are modifying the complexity adjustment criteria finalized 

last year by lowering volume and cost threshold criteria for complexity adjustments. 

Finally, we are packaging all add-on codes furnished as part of a comprehensive service, 

which is consistent with our general add-on code packaging policy. However, the add-on 

codes assigned to the CY 2014 device-dependent APCs will be being evaluated with a 

primary service for a potential complexity adjustment. 

● Ambulatory Surgical Center Payment Update: For CY 2015, we are increasing 

payment rates under the ASC payment system by 1.4 percent. This increase is based on a 
CMS-1613-FC 42 

projected CPI–U update of 1.9 percent minus a multifactor productivity adjustment 

required by the Affordable Care Act that is projected to be 0.5 percentage point. Based 

on this update, we estimate that total payments to ASCs (including beneficiary 

cost-sharing and estimated changes in enrollment, utilization, and case-mix), for CY 2015 

will be approximately $4.147 billion, an increase of approximately $236 million 

compared to estimated CY 2014 Medicare payments. 

● Hospital Outpatient Quality Reporting (OQR) Program: For the Hospital 

OQR Program, we are adding one claims-based quality measure for the CY 2018 

payment determination and subsequent years instead of the CY 2017 payment 

determination and subsequent years as proposed. However, prior to publicly reporting 

this measure, we plan to conduct a dry run (a preliminary analysis) for hospitals to review 

their performance and provide feedback using the most recently available data. There 

will be no payment impact during this dry-run period, and the results of the dry run will 

not be publicly reported. We are refining the criteria for determining “topped-out” 

measures, and we are removing the OP-6 and OP-7 measures due to “topped-out” status. 

In addition, we are updating several previously adopted measures. We are clarifying data 

submission requirements for OP-27 and are noting a delayed data collection for OP-29 

and OP-30. We are excluding one previously adopted measure (OP-31) from the 

measure set for the CY 2016 payment determination and changing this measure from 

required to voluntary for the CY 2017 payment determination and subsequent years. We 

will not subject hospitals to payment reductions with respect to the OP-31 measure for 

the CY 2016 payment determination or during the period of voluntary reporting. In 

addition, we are formalizing a review and corrections period for chart-abstracted 
CMS-1613-FC 43 

measures. We also are updating validation procedures and changes to regulation text to 

correct typographical errors. We are changing the eligibility criteria for validation; a 

hospital will only be eligible for random selection for validation if it submits at least 12 

cases to the Hospital OQR Program Clinical Data Warehouse during the quarter with the 

most recently available data. Hospitals also will have the option to submit validation data 

using electronic methods and must identify the medical record staff responsible for 

submission of records to the designated CMS contractor. Finally, we are clarifying how 

we refer to the extraordinary circumstances extensions or exemptions process. 

● Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the 

ASCQR Program, we are adopting one new quality measure (ASC-12) for the CY 2018 

payment determination and subsequent years. This measure will be computed using paid 

Medicare fee-for-service (FFS) claims data and will not impose any additional burden on 

ASCs. We also are excluding one measure (ASC-11) previously adopted for the 

CY 2016 payment determination and providing that this measure may be voluntarily 

rather than mandatorily reported for the CY 2017 payment determination and subsequent 

years. We will not subject ASCs to payment reductions with respect to this measure for 

the CY 2016 payment determination or during the period of voluntary reporting. In 

addition, we are establishing a measure removal process and criteria, defining data 

collection timeframes and submission deadlines, and clarifying how we refer to the 

extraordinary circumstances extensions or exemptions process. 

3. Summary of Costs and Benefits 
CMS-1613-FC 44 

 In sections XXI. and XXII. of this final rule with comment period, we set forth a 

detailed analysis of the regulatory and federalism impacts that the changes will have on 

affected entities and beneficiaries. Key estimated impacts are described below. 

a. Impacts of the OPPS Update 

(1) Impacts of All OPPS Changes 

 Table 49 in section XXI. of this final rule with comment period displays the 

distributional impact of all the OPPS changes on various groups of hospitals and CMHCs 

for CY 2015 compared to all estimated OPPS payments in CY 2014. We estimate that 

the policies in this final rule with comment period will result in a 2.3 percent overall 

increase in OPPS payments to providers. We estimate that total OPPS payments for 

CY 2015, including beneficiary cost-sharing, to the approximate 4,000 facilities paid 

under the OPPS (including general acute care hospitals, children’s hospitals, cancer 

hospitals, and CMHCs) will be approximately $56.1 billion, an increase of approximately 

$5.1 billion compared to CY 2014 payments, or $900 million, excluding our estimated 

changes in enrollment, utilization, and case-mix.

 We estimated the isolated impact of our OPPS policies on CMHCs because 

CMHCs are only paid for partial hospitalization services under the OPPS. Continuing the 

provider-specific structure that we adopted beginning in CY 2011 and basing payment 

fully on the type of provider furnishing the service, we estimate a 1.3 percent increase in 

CY 2015 payments to CMHCs relative to their CY 2014 payments. 

(2) Impacts of the Updated Wage Indexes 

 We estimate that our update of the wage indexes and application of the frontier 

State wage index, including changes resulting from the adoption of the new OMB labor 
CMS-1613-FC 45 

market area delineations and the transitional 1-year, 50/50 blended wage index, will 

mitigate any negative changes due to the new CBSA delineations. 

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

 There are no significant impacts of our CY 2015 payment policies for hospitals 

that are eligible for the rural adjustment or for the cancer hospital payment adjustment. 

We are not making any change in policies for determining the rural and cancer hospital 

payment adjustments, and the adjustment amounts do not significantly impact the budget 

neutrality adjustments for these policies. 

(4) Impacts of the OPD Fee Schedule Increase Factor 

 We estimate that, for most hospitals, the application of the OPD fee schedule 

increase factor of 2.2 percent to the conversion factor for CY 2015 will mitigate the small 

negative impacts of the budget neutrality adjustments. As a result of the OPD fee 

schedule increase factor and other budget neutrality adjustments, we estimate that urban 

and rural hospitals will experience increases of approximately 2.3 percent for urban 

hospitals and 1.9 percent for rural hospitals. Classifying hospitals by teaching status or 

type of ownership suggests that these hospitals will receive similar increases. 

b. Impacts of the ASC Payment Update 

 For impact purposes, the surgical procedures on the ASC list of covered 

procedures are aggregated into surgical specialty groups using CPT and HCPCS code 

range definitions. The percentage change in estimated total payments by specialty groups 

under the CY 2015 payment rates compared to estimated CY 2014 payment rates ranges 

between -4.0 percent for ancillary items and services and 14 percent for hematologic and 

lymphatic system procedures. 
CMS-1613-FC 46 

c. Impacts of the Hospital OQR Program 

 We do not expect our CY 2015 policies to significantly affect the number of 

hospitals that do not receive a full annual payment update. 

d. Impacts of the ASCQR Program 

 We do not expect our CY 2015 proposed policies to significantly affect the 

number of ASCs that do not receive a full annual payment update. 

B. Legislative and Regulatory Authority for the Hospital OPPS 

 When Title XVIII of the Social Security Act was enacted, Medicare payment for 

hospital outpatient services was based on hospital-specific costs. In an effort to ensure 

that Medicare and its beneficiaries pay appropriately for services and to encourage more 

efficient delivery of care, the Congress mandated replacement of the reasonable 

cost-based payment methodology with a prospective payment system (PPS). The 

Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 1833(t) to the Act 

authorizing implementation of a PPS for hospital outpatient services. The OPPS was first 

implemented for services furnished on or after August 1, 2000. Implementing regulations 

for the OPPS are located at 42 CFR Parts 410 and 419. 

 The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 

(BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. The following 

Acts made additional changes to the OPPS: the Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 

(Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted 

on February 8, 2006; the Medicare Improvements and Extension Act under Division B of 
CMS-1613-FC 47 

Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 

109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension 

Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare 

Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), 

enacted on July 15, 2008; the Patient Protection and Affordable Care Act 

(Pub. L. 111-148), enacted on March 23, 2010, as amended by the Health Care and 

Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010 

(These two public laws are collectively known as the Affordable Care Act); the Medicare 

and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll 

Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on 

December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 

(MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; and the American Taxpayer 

Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013. 

 Under the OPPS, we pay for hospital Part B services on a rate-per-service basis 

that varies according to the APC group to which the service is assigned. We use the 

Healthcare Common Procedure Coding System (HCPCS) (which includes certain Current 

Procedural Terminology (CPT) codes) to identify and group the services within each 

APC. The OPPS includes payment for most hospital outpatient services, except those 

identified in section I.C. of this final rule with comment period. Section 1833(t)(1)(B) of 

the Act provides for payment under the OPPS for hospital outpatient services designated 

by the Secretary (which includes partial hospitalization services furnished by CMHCs), 

and certain inpatient hospital services that are paid under Part B. 
CMS-1613-FC 48 

 The OPPS rate is an unadjusted national payment amount that includes the 

Medicare payment and the beneficiary copayment. This rate is divided into a 

labor-related amount and a nonlabor-related amount. The labor-related amount is 

adjusted for area wage differences using the hospital inpatient wage index value for the 

locality in which the hospital or CMHC is located. 

 All services and items within an APC group are comparable clinically and with 

respect to resource use (section 1833(t)(2)(B) of the Act). In accordance with 

section 1833(t)(2) of the Act, subject to certain exceptions, items and services within an 

APC group cannot be considered comparable with respect to the use of resources if the 

highest median cost (or mean cost, if elected by the Secretary) for an item or service in 

the APC group is more than 2 times greater than the lowest median cost (or mean cost, if 

elected by the Secretary) for an item or service within the same APC group (referred to as 

the “2 times rule”). In implementing this provision, we generally use the cost of the item 

or service assigned to an APC group. 

 For new technology items and services, special payments under the OPPS may be 

made in one of two ways. Section 1833(t)(6) of the Act provides for temporary 

additional payments, which we refer to as “transitional pass-through payments,” for at 

least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy 

devices used for the treatment of cancer, and categories of other medical devices. For 

new technology services that are not eligible for transitional pass-through payments, and 

for which we lack sufficient clinical information and cost data to appropriately assign 

them to a clinical APC group, we have established special APC groups based on costs, 

which we refer to as New Technology APCs. These New Technology APCs are 
CMS-1613-FC 49 

designated by cost bands which allow us to provide appropriate and consistent payment 

for designated new procedures that are not yet reflected in our claims data. Similar to 

pass-through payments, an assignment to a New Technology APC is temporary; that is, 

we retain a service within a New Technology APC until we acquire sufficient data to 

assign it to a clinically appropriate APC group. 

C. Excluded OPPS Services and Hospitals 

 Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the 

hospital outpatient services that are paid under the OPPS. While most hospital outpatient 

services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes 

payment for ambulance, physical and occupational therapy, and speech-language 

pathology services, for which payment is made under a fee schedule. It also excludes 

screening mammography, diagnostic mammography, and effective January 1, 2011, an 

annual wellness visit providing personalized prevention plan services. The Secretary 

exercises the authority granted under the statute to also exclude from the OPPS certain 

services that are paid under fee schedules or other payment systems. Such excluded 

services include, for example, the professional services of physicians and nonphysician 

practitioners paid under the Medicare Physician Fee Schedule (MPFS); certain laboratory 

services paid under the Clinical Laboratory Fee Schedule (CLFS); services for 

beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD 

prospective payment system; and services and procedures that require an inpatient stay 

that are paid under the hospital IPPS. We set forth the services that are excluded from 

payment under the OPPS in regulations at 42 CFR 419.22. 
CMS-1613-FC 50 

 Under § 419.20(b) of the regulations, we specify the types of hospitals that are 

excluded from payment under the OPPS. These excluded hospitals include: critical 

access hospitals (CAHs); hospitals located outside of the 50 States, the District of 

Columbia, and Puerto Rico; and Indian Health Service (IHS) hospitals. 

D. Prior Rulemaking 

 On April 7, 2000, we published in the Federal Register a final rule with 

comment period (65 FR 18434) to implement a prospective payment system for hospital 

outpatient services. The hospital OPPS was first implemented for services furnished on 

or after August 1, 2000. Section 1833(t)(9) of the Act requires the Secretary to review 

certain components of the OPPS, not less often than annually, and to revise the groups, 

relative payment weights, and other adjustments that take into account changes in 

medical practices, changes in technologies, and the addition of new services, new cost 

data, and other relevant information and factors. 

 Since initially implementing the OPPS, we have published final rules in the 

Federal Register annually to implement statutory requirements and changes arising from 

our continuing experience with this system. These rules can be viewed on the CMS Web 

site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

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

1. Authority of the Panel 

 Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 

Pub. L. 106-113, and redesignated by section 202(a)(2) of Pub. L. 106-113, requires that 

we consult with an external advisory panel of experts to annually review the clinical 
CMS-1613-FC 51 

integrity of the payment groups and their weights under the OPPS. In CY 2000, based on 

section 1833(t)(9)(A) of the Act and section 222 of the Public Health Service (PHS) Act, 

the Secretary established the Advisory Panel on Ambulatory Payment Classification 

Groups (APC Panel) to fulfill this requirement. In CY 2011, based on section 222 of the 

PHS Act which gives discretionary authority to the Secretary to convene advisory 

councils and committees, the Secretary expanded the panel’s scope to include the 

supervision of hospital outpatient therapeutic services in addition to the APC groups and 

weights. To reflect this new role of the panel, the Secretary changed the panel’s name to 

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

Panel is not restricted to using data compiled by CMS, and in conducting its review it 

may use data collected or developed by organizations outside the Department. 

2. Establishment of the Panel 

 On November 21, 2000, the Secretary signed the initial charter establishing the 

HOP Panel, at that time named the APC Panel. This expert panel, which may be 

composed of up to 19 appropriate representatives of providers (currently employed fulltime, not as consultants, in their respective areas of expertise), reviews clinical data and 

advises CMS about the clinical integrity of the APC groups and their payment weights. 

Since CY 2012, the Panel also is charged with advising the Secretary on the appropriate 

level of supervision for individual hospital outpatient therapeutic services. The Panel is 

technical in nature, and it is governed by the provisions of the Federal Advisory 

Committee Act (FACA). The current charter specifies, among other requirements, that: 

the Panel continues to be technical in nature; is governed by the provisions of the FACA; 

may convene up to three meetings per year; has a Designated Federal Official (DFO); and 
CMS-1613-FC 52 

is chaired by a Federal Official designated by the Secretary. The current charter was 

amended on November 15, 2011, and the Panel was renamed to reflect expanding the 

Panel’s authority to include supervision of hospital outpatient therapeutic services and 

therefore to add CAHs to its membership. 

 The current Panel membership and other information pertaining to the Panel, 

including its charter, Federal Register notices, membership, meeting dates, agenda 

topics, and meeting reports, can be viewed on the CMS Web site at: 

http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGrou

ps.asp#TopOfPage. 

3. Panel Meetings and Organizational Structure 

 The Panel has held multiple meetings, with the last meeting taking place on 

August 25, 2014. Prior to each meeting, we publish a notice in the Federal Register to 

announce the meeting and, when necessary, to solicit nominations for Panel membership 

and to announce new members. 

 The Panel has established an operational structure that, in part, currently includes 

the use of three subcommittees to facilitate its required review process. The three current 

subcommittees are the Data Subcommittee, the Visits and Observation Subcommittee, 

and the Subcommittee for APC Groups and Status Indicator (SI) Assignments. 

 The Data Subcommittee is responsible for studying the data issues confronting the 

Panel and for recommending options for resolving them. The Visits and Observation 

Subcommittee reviews and makes recommendations to the Panel on all technical issues 

pertaining to observation services and hospital outpatient visits paid under the OPPS (for 

example, APC configurations and APC relative payment weights). The Subcommittee 
CMS-1613-FC 53 

for APC Groups and SI Assignments advises the Panel on the following issues: the 

appropriate SIs to be assigned to HCPCS codes, including but not limited to whether a 

HCPCS code or a category of codes should be packaged or separately paid; and the 

appropriate APC placement of HCPCS codes regarding services for which separate 

payment is made. 

 Each of these subcommittees was established by a majority vote from the full 

Panel during a scheduled Panel meeting, and the Panel recommended at the August 2014 

meeting that the subcommittees continue. We accepted this recommendation. 

 Discussions of the other recommendations made by the Panel at the August 2014 

Panel meeting are included in the sections of this final rule with comment period that are 

specific to each recommendation. For discussions of earlier Panel meetings and 

recommendations, we refer readers to previously published OPPS/ASC proposed and 

final rules, the CMS Web site mentioned earlier in this section, and the FACA database 

at: http://fido.gov/facadatabase/public.asp. 

F. Public Comments Received on the CY 2015 OPPS/ASC Proposed Rule 

 We received approximately 719 timely pieces of correspondence on the CY 2015 

OPPS/ASC proposed rule that appeared in the Federal Register on July 14, 2014 

(79 FR 40915). We note that we received some public comments that are outside the 

scope of the CY 2015 OPPS/ASC proposed rule. Out-of-scope public comments are not 

addressed in this CY 2015 OPPS/ASC final rule with comment period. Summaries of 

those public comments that are within the scope of the proposed rule and our responses 

are set forth in the various sections of this final rule with comment period under the 

appropriate headings. 
CMS-1613-FC 54 

G. Public Comments Received on the CY 2014 OPPS/ASC Final Rule with Comment 

Period 

 We received approximately 490 timely pieces of correspondence on the CY 2014 

OPPS/ASC final rule with comment period that appeared in the Federal Register on 

December 10, 2013 (78 FR 74826), some of which contained comments on the interim 

APC assignments and/or status indicators of new or replacement HCPCS codes 

(identified with comment indicator “NI” in Addenda B, AA, and BB to that final rule). 

Summaries of the public comments on new or replacement codes are set forth in this 

CY 2015 OPPS/ASC final rule with comment period under the appropriate subject-matter 

headings. 

II. Updates Affecting OPPS Payments 

A. Recalibration of APC Relative Payment Weights 

1. Database Construction 

a. Database Source and Methodology 

 Section 1833(t)(9)(A) of the Act requires that the Secretary review not less often 

than annually and revise the relative payment weights for APCs. In the April 7, 2000 

OPPS final rule with comment period (65 FR 18482), we explained in detail how we 

calculated the relative payment weights that were implemented on August 1, 2000 for 

each APC group. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40925), for the CY 2015 OPPS, 

we proposed to recalibrate the APC relative payment weights for services furnished on or 

after January 1, 2015, and before January 1, 2016 (CY 2015), using the same basic 

methodology that we described in the CY 2014 OPPS/ASC final rule with comment 
CMS-1613-FC 55 

period. That is, we proposed to recalibrate the relative payment weights for each APC 

based on claims and cost report data for hospital outpatient department (HOPD) services, 

using the most recent available data to construct a database for calculating APC group 

weights. Therefore, for the purpose of recalibrating the proposed APC relative payment 

weights for CY 2015, we used approximately 149 million final action claims (claims for 

which all disputes and adjustments have been resolved and payment has been made) for 

hospital outpatient department services furnished on or after January 1, 2013, and before 

January 1, 2014. For this final rule with comment period, for the purpose of recalibrating 

the final APC relative payment weights for CY 2015, we used approximately 161 million 

final action claims (claims for which all disputes and adjustments have been resolved and 

payment has been made) for HOPD services furnished on or after January 1, 2013, and 

before January 1, 2014. For exact counts of claims used, we refer readers to the claims 

accounting narrative under supporting documentation for the CY 2015 OPPS/ASC 

proposed rule and this final rule with comment period on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

 Of the approximately 161 million final action claims for services provided in 

hospital outpatient settings used to calculate the CY 2015 OPPS payment rates for this 

final rule with comment period, approximately 123 million claims were the type of bill 

potentially appropriate for use in setting rates for OPPS services (but did not necessarily 

contain services payable under the OPPS). Of the approximately 123 million claims, 

approximately 5 million claims were not for services paid under the OPPS or were 

excluded as not appropriate for use (for example, erroneous cost-to-charge ratios (CCRs) 
CMS-1613-FC 56 

or no HCPCS codes reported on the claim). From the remaining approximately 118 

million claims, we created approximately 101 million single records, of which 

approximately 50 million were “pseudo” single or “single session” claims (created from 

approximately 22 million multiple procedure claims using the process we discuss later in 

this section). Approximately 1 million claims were trimmed out on cost or units in 

excess of +/- 3 standard deviations from the geometric mean, yielding approximately 

101 million single bills for ratesetting. As described in section II.A.2. of this final rule 

with comment period, our data development process is designed with the goal of using 

appropriate cost information in setting the APC relative payment weights. The bypass 

process is described in section II.A.1.b. of this final rule with comment period. This 

section discusses how we develop “pseudo” single procedure claims (as defined below), 

with the intention of using more appropriate data from the available claims. In some 

cases, the bypass process allows us to use some portion of the submitted claim for cost 

estimation purposes, while the remaining information on the claim continues to be 

unusable. Consistent with the goal of using appropriate information in our data 

development process, we only use claims (or portions of each claim) that are appropriate 

for ratesetting purposes. 

 The final APC relative weights and payments for CY 2015 in Addenda A and B 

to this final rule with comment period (which are available via the Internet on the CMS 

Web site) were calculated using claims from CY 2013 that were processed through 

June 30, 2014. While prior to CY 2013 we historically based the payments on median 

hospital costs for services in the APC groups, beginning with the CY 2013 OPPS, we 

established the cost-based relative payment weights for the OPPS using geometric mean 
CMS-1613-FC 57 

costs, as discussed in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68259 through 68271). For the CY 2015 OPPS, we proposed and are using this 

same methodology, basing payments on geometric mean costs. Under this methodology, 

we select claims for services paid under the OPPS and match these claims to the most 

recent cost report filed by the individual hospitals represented in our claims data. We 

continue to believe that it is appropriate to use the most current full calendar year claims 

data and the most recently submitted cost reports to calculate the relative costs 

underpinning the APC relative payment weights and the CY 2015 payment rates. 

b. Use of Single and Multiple Procedure Claims 

 For CY 2015, in general, and as we proposed, we are continuing to use single 

procedure claims to set the costs on which the APC relative payment weights are based. 

We generally use single procedure claims to set the estimated costs for APCs because we 

believe that the OPPS relative weights on which payment rates are based should be 

derived from the costs of furnishing one unit of one procedure and because, in many 

circumstances, we are unable to ensure that packaged costs can be appropriately allocated 

across multiple procedures performed on the same date of service. 

 It is generally desirable to use the data from as many claims as possible to 

recalibrate the APC relative payment weights, including those claims for multiple 

procedures. As we have for several years, we are continuing to use date of service 

stratification and a list of codes to be bypassed to convert multiple procedure claims to 

“pseudo” single procedure claims. Through bypassing specified codes that we believe do 

not have significant packaged costs, we are able to use more data from multiple 

procedure claims. In many cases, this enables us to create multiple “pseudo” single 
CMS-1613-FC 58 

procedure claims from claims that were submitted as multiple procedure claims spanning 

multiple dates of service, or claims that contained numerous separately paid procedures 

reported on the same date on one claim. We refer to these newly created single 

procedure claims as “pseudo” single procedure claims. The history of our use of a bypass 

list to generate “pseudo” single procedure claims is well documented, most recently in 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 74849 through 74851). 

In addition, for CY 2008 (72 FR 66614 through 66664), we increased packaging and 

created the first composite APCs, and continued those policies through CY 2014. 

Increased packaging and creation of composite APCs also increased the number of bills 

that we were able to use for ratesetting by enabling us to use claims that contained 

multiple major procedures that previously would not have been usable. Further, for 

CY 2009, we expanded the composite APC model to one additional clinical area, 

multiple imaging services (73 FR 68559 through 68569), which also increased the 

number of bills we were able to use in developing the OPPS relative weights on which 

payments are based. We have continued the composite APCs for multiple imaging 

services through CY 2014, and as we proposed, we are continuing this policy for 

CY 2015. We refer readers to section II.A.2.f. of the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74910 through 74925) for a discussion of the use of claims in 

modeling the costs for composite APCs and to section II.A.3. of the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 74925 through 74948) for a discussion of our 

packaging policies for CY 2014. In addition, as we proposed, we are establishing 

additional packaging policies for the CY 2015 OPPS, as discussed in section II.A.3. of 

this final rule with comment period. 
CMS-1613-FC 59 

 As we proposed, we are continuing to apply these processes to enable us to use as 

much claims data as possible for ratesetting for the CY 2015 OPPS. This methodology 

enabled us to create, for this final rule with comment period, approximately 50 million 

“pseudo” single procedure claims, including multiple imaging composite “single session” 

bills (we refer readers to section II.A.2.f.(4) of this final rule with comment period for 

further discussion), to add to the approximately 51 million “natural” single procedure 

claims. 

 For CY 2015, we proposed to bypass 227 HCPCS codes that were identified in 

Addendum N to the CY 2015 OPPS/ASC proposed rule (which is available via the 

Internet on the CMS Web site). Since the inception of the bypass list, which is the list of 

codes to be bypassed to convert multiple procedure claims to “pseudo” single procedure 

claims, we have calculated the percent of “natural” single bills that contained packaging 

for each HCPCS code and the amount of packaging on each “natural” single bill for each 

code. Each year, we generally retain the codes on the previous year’s bypass list and use 

the updated year’s data (for CY 2015, data available for the March 10, 2014 meeting of 

the Advisory Panel on Hospital Outpatient Payment (the Panel) from CY 2013 claims 

processed through September 30, 2013, and CY 2012 claims data processed through 

June 30, 2013, used to model the payment rates for CY 2014) to determine whether it 

would be appropriate to add additional codes to the previous year’s bypass list. For 

CY 2015, we proposed to continue to bypass all of the HCPCS codes on the CY 2014 

OPPS bypass list, with the exception of HCPCS codes that we proposed to delete for 

CY 2015, which were listed in Table 1 of the proposed rule (79 FR 40927 through 

40929). We also proposed to remove HCPCS codes that are not separately paid under the 
CMS-1613-FC 60 

OPPS because the purpose of the bypass list is to obtain more data for those codes 

relevant to ratesetting. Some of the codes we proposed to remove from the CY 2015 

bypass list are affected by the CY 2015 final packaging policy, discussed in 

section II.A.3. of this final rule with comment period. In addition, we proposed to add to 

the bypass list for CY 2015 HCPCS codes not on the CY 2014 bypass list that, using 

either the CY 2014 final rule with comment period data (CY 2012 claims) or the 

March 10, 2014 Panel data (first 9 months of CY 2013 claims), met the empirical criteria 

for the bypass list that are summarized below. Finally, to remain consistent with the 

CY 2015 proposal to continue to develop OPPS relative payment weights based on 

geometric mean costs, we also proposed that the packaged cost criterion continue to be 

based on the geometric mean cost. The entire list proposed for CY 2015 (including the 

codes that remain on the bypass list from prior years) was open to public comment in the 

CY 2015 OPPS/ASC proposed rule. Because we must make some assumptions about 

packaging in the multiple procedure claims in order to assess a HCPCS code for addition 

to the bypass list, we assumed that the representation of packaging on “natural” single 

procedure claims for any given code is comparable to packaging for that code in the 

multiple procedure claims. The criteria for the bypass list are: 

● There are 100 or more “natural” single procedure claims for the code. This 

number of single procedure claims ensures that observed outcomes are sufficiently 

representative of packaging that might occur in the multiple claims. 

● Five percent or fewer of the “natural” single procedure claims for the code 

have packaged costs on that single procedure claim for the code. This criterion results in 

limiting the amount of packaging being redistributed to the separately payable procedures 
CMS-1613-FC 61 

remaining on the claim after the bypass code is removed and ensures that the costs 

associated with the bypass code represent the cost of the bypassed service. 

● The geometric mean cost of packaging observed in the “natural” single 

procedure claims is equal to or less than $55. This criterion also limits the amount of 

error in redistributed costs. During the assessment of claims against the bypass criteria, 

we do not know the dollar value of the packaged cost that should be appropriately 

attributed to the other procedures on the claim. Therefore, ensuring that redistributed 

costs associated with a bypass code are small in amount and volume protects the validity 

of cost estimates for low cost services billed with the bypassed service. 

 We note that, as we did for CY 2014, we proposed to continue to establish the 

CY 2015 OPPS relative payment weights based on geometric mean costs. To remain 

consistent in the metric used for identifying cost patterns, we proposed to use the 

geometric mean cost of packaging to identify potential codes to add to the bypass list. 

 In response to public comments on the CY 2010 OPPS/ASC proposed rule 

requesting that the packaged cost threshold be updated, we considered whether it would 

be appropriate to update the $50 packaged cost threshold for inflation when examining 

potential bypass list additions. As discussed in the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60328), the real value of this packaged cost threshold criterion 

has declined due to inflation, making the packaged cost threshold more restrictive over 

time when considering additions to the bypass list. Therefore, adjusting the threshold by 

the market basket increase would prevent continuing decline in the threshold’s real value. 

Based on the same rationale described for the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74838), we proposed for CY 2015 to continue to update the 
CMS-1613-FC 62 

packaged cost threshold by the market basket increase. By applying the final CY 2014 

market basket increase of 1.7 percent to the prior nonrounded dollar threshold of $54.73 

(78 FR 74838), we determined that the threshold remains for CY 2015 at $55 ($55.66 

rounded to $55, the nearest $5 increment). Therefore, we proposed to set the geometric 

mean packaged cost threshold on the CY 2013 claims at $55 for a code to be considered 

for addition to the CY 2015 OPPS bypass list. 

● The code is not a code for an unlisted service. Unlisted codes do not describe a 

specific service, and thus their costs would not be appropriate for bypass list purposes. 

 In addition, we proposed to continue to include on the bypass list HCPCS codes 

that CMS medical advisors believe have minimal associated packaging based on their 

clinical assessment of the complete CY 2015 OPPS proposal. Some of these codes were 

identified by CMS medical advisors and some were identified in prior years by 

commenters with specialized knowledge of the packaging associated with specific 

services. We also proposed to continue to include certain HCPCS codes on the bypass 

list in order to purposefully direct the assignment of packaged costs to a companion code 

where services always appear together and where there would otherwise be few single 

procedure claims available for ratesetting. For example, we have previously discussed 

our reasoning for adding HCPCS code G0390 (Trauma response team associated with 

hospital critical care service) to the bypass list (73 FR 68513). 

 As a result of the multiple imaging composite APCs that we established in 

CY 2009, the program logic for creating “pseudo” single procedure claims from bypassed 

codes that are also members of multiple imaging composite APCs changed. When 

creating the set of “pseudo” single procedure claims, claims that contain “overlap bypass 
CMS-1613-FC 63 

codes” (those HCPCS codes that are both on the bypass list and are members of the 

multiple imaging composite APCs) were identified first. These HCPCS codes were then 

processed to create multiple imaging composite “single session” bills, that is, claims 

containing HCPCS codes from only one imaging family, thus suppressing the initial use 

of these codes as bypass codes. However, these “overlap bypass codes” were retained on 

the bypass list because, at the end of the “pseudo” single processing logic, we reassessed 

the claims without suppression of the “overlap bypass codes” under our longstanding 

“pseudo” single process to determine whether we could convert additional claims to 

“pseudo” single procedure claims. (We refer readers to section II.A.2.b. of this final rule 

with comment period for further discussion of the treatment of “overlap bypass codes.”) 

This process also created multiple imaging composite “single session” bills that could be 

used for calculating composite APC costs. “Overlap bypass codes” that are members of 

the multiple imaging composite APCs are identified by asterisks (*) in Addendum N to 

this final rule with comment period (which is available via the Internet on the CMS Web 

site). 

 Comment: One commenter supported the CY 2015 proposal to remove certain 

codes from the bypass list, in particular for the anatomic pathology procedures, and 

suggested that the bypass list undervalues codes and artificially lowers their estimated 

costs, as evidenced by the estimated increase in payment for some of those services in the 

CY 2015 OPPS/ASC proposed rule. 

 Response: We appreciate the commenter’s support. The bypass list process is 

used to extract more data from claims that would otherwise be unusable. We use a 

variety of information in identifying codes that could be potentially added to the bypass 
CMS-1613-FC 64 

list each year, including codes selected based on the empirical criteria, CMS medical 

advisor recommendations, and commenter requests. In doing so, we attempt to ensure 

that the amount of packaged cost being redistributed as a result of the process is limited. 

 After consideration of the public comments we received, we are adopting as final 

the proposed “pseudo” single claims process. As discussed earlier in this section, there 

are interactions between the application of a bypass list and various other OPPS payment 

policies. As a result of modifications to the packaging policies described in section III. of 

this final rule with comment period, we are adding codes that we had originally proposed 

to remove from the CY 2015 bypass list back on the CY 2015 final OPPS bypass list. 

 Addendum N to this final rule with comment period (which is available via the 

Internet on the CMS Web site) includes the list of bypass codes for CY 2015. The list of 

bypass codes contains codes that were reported on claims for services in CY 2013 and, 

therefore, includes codes that were in effect in CY 2013 and used for billing but were 

deleted for CY 2014. We retained these deleted bypass codes on the CY 2015 bypass list 

because these codes existed in CY 2013 and were covered OPD services in that period, 

and CY 2013 claims data are used to calculate CY 2015 payment rates. Keeping these 

deleted bypass codes on the bypass list potentially allows us to create more “pseudo” 

single procedure claims for ratesetting purposes. “Overlap bypass codes” that were 

members of the multiple imaging composite APCs are identified by asterisks (*) in the 

third column of Addendum N to this final rule with comment period. HCPCS codes that 

we are adding for CY 2015 are identified by asterisks (*) in the fourth column of 

Addendum N. 
CMS-1613-FC 65 

 Table 1 of the proposed rule contained the list of codes that we proposed to 

remove from the CY 2015 bypass list (79 FR 40927 through 40929). Table 1 below 

contains the list of codes that we are removing from the final CY 2015 bypass list 

because these codes were either deleted from the HCPCS before CY 2013 (and therefore 

were not covered OPD services in CY 2013) or were not separately payable codes under 

the CY 2015 OPPS because these codes are not used for ratesetting through the bypass 

process. The list of codes for removal from the bypass list includes those that will be 

affected by the CY 2015 OPPS packaging policy described in section II.A.3. of this final 

rule with comment period. 

 
CMS-1613-FC 66 

TABLE 1.—HCPCS CODES REMOVED FROM THE CY 2015 BYPASS LIST 

HCPCS 

Code HCPCS Short Descriptor 

11056 Trim skin lesions 2 to 4 

11300 Shave skin lesion 0.5 cm/< 

11301 Shave skin lesion 0.6-1.0 cm 

11719 Trim nail(s) any number 

11720 Debride nail 1-5 

11721 Debride nail 6 or more 

17000 Destruct premalg lesion 

17110 Destruct b9 lesion 1-14 

29240 Strapping of shoulder 

29260 Strapping of elbow or wrist 

29280 Strapping of hand or finger 

29520 Strapping of hip 

29530 Strapping of knee 

51741 Electro-uroflowmetry first 

51798 Us urine capacity measure 

53601 Dilate urethra stricture 

53661 Dilation of urethra 

54240 Penis study 

67820 Revise eyelashes 

69210 Remove impacted ear wax uni 

69220 Clean out mastoid cavity 

70030 X-ray eye for foreign body 

70100 X-ray exam of jaw <4views 

70110 X-ray exam of jaw 4/> views 

70120 X-ray exam of mastoids 

70130 X-ray exam of mastoids 

70140 X-ray exam of facial bones 

70150 X-ray exam of facial bones 

70160 X-ray exam of nasal bones 

70200 X-ray exam of eye sockets 

70210 X-ray exam of sinuses 

70220 X-ray exam of sinuses 

70240 X-ray exam pituitary saddle 

70250 X-ray exam of skull 

70260 X-ray exam of skull 

70320 Full mouth x-ray of teeth 

70328 X-ray exam of jaw joint 

70330 X-ray exam of jaw joints 
CMS-1613-FC 67 

HCPCS 

Code HCPCS Short Descriptor 

70355 Panoramic x-ray of jaws 

70360 X-ray exam of neck 

71021 Chest x-ray frnt lat lordotc 

71022 Chest x-ray frnt lat oblique 

71023 Chest x-ray and fluoroscopy 

71030 Chest x-ray 4/> views 

71035 Chest x-ray special views 

71100 X-ray exam ribs uni 2 views 

71101 X-ray exam unilat ribs/chest 

71110 X-ray exam ribs bil 3 views 

71111 X-ray exam ribs/chest4/> vws 

71120 X-ray exam breastbone 2/>vws 

71130 X-ray strenoclavic jt 3/>vws 

72020 X-ray exam of spine 1 view 

72040 X-ray exam neck spine 2-3 vw 

72050 X-ray exam neck spine 4/5vws 

72052 X-ray exam neck spine 6/>vws 

72069 X-ray exam trunk spine stand 

72070 X-ray exam thorac spine 2vws 

72072 X-ray exam thorac spine 3vws 

72074 X-ray exam thorac spine4/>vw 

72080 X-ray exam trunk spine 2 vws 

72090 X-ray exam scloiosis erect 

72100 X-ray exam l-s spine 2/3 vws 

72110 X-ray exam l-2 spine 4/>vws 

72114 X-ray exam l-s spine bending 

72120 X-ray bend only l-s spine 

72170 X-ray exam of pelvis 

72190 X-ray exam of pelvis 

72202 X-ray exam si joints 3/> vws 

72220 X-ray exam sacrum tailbone 

73000 X-ray exam of collar bone 

73010 X-ray exam of shoulder blade 

73020 X-ray exam of shoulder 

73030 X-ray exam of shoulder 

73050 X-ray exam of shoulders 

73060 X-ray exam of humerus 

73070 X-ray exam of elbow 

73080 X-ray exam of elbow 
CMS-1613-FC 68 

HCPCS 

Code HCPCS Short Descriptor 

73090 X-ray exam of forearm 

73100 X-ray exam of wrist 

73110 X-ray exam of wrist 

73120 X-ray exam of hand 

73130 X-ray exam of hand 

73140 X-ray exam of finger(s) 

73510 X-ray exam of hip 

73520 X-ray exam of hips 

73540 X-ray exam of pelvis & hips 

73550 X-ray exam of thigh 

73560 X-ray exam of knee 1 or 2 

73562 X-ray exam of knee 3 

73564 X-ray exam knee 4 or more 

73565 X-ray exam of knees 

73590 X-ray exam of lower leg 

73600 X-ray exam of ankle 

73610 X-ray exam of ankle 

73620 X-ray exam of foot 

73630 X-ray exam of foot 

73650 X-ray exam of heel 

73660 X-ray exam of toe(s) 

74000 X-ray exam of abdomen 

74010 X-ray exam of abdomen 

74020 X-ray exam of abdomen 

74022 X-ray exam series abdomen 

76100 X-ray exam of body section 

76510 Ophth us b & quant a 

76514 Echo exam of eye thickness 

76516 Echo exam of eye 

76519 Echo exam of eye 

76645 Us exam breast(s) 

76816 Ob us follow-up per fetus 

76882 Us xtr non-vasc lmtd 

76970 Ultrasound exam follow-up 

76977 Us bone density measure 

77072 X-rays for bone age 

77073 X-rays bone length studies 

77074 X-rays bone survey limited 

77076 X-rays bone survey infant 
CMS-1613-FC 69 

HCPCS 

Code HCPCS Short Descriptor 

77077 Joint survey single view 

77078 Ct bone density axial 

77079 Ct bone density peripheral 

77080 Dxa bone density axial 

77081 Dxa bone density/peripheral 

77082 Dxa bone density vert fx 

77083 Radiographic absorptiometry 

80500 Lab pathology consultation 

80502 Lab pathology consultation 

85097 Bone marrow interpretation 

86510 Histoplasmosis skin test 

86850 Rbc antibody screen 

86870 Rbc antibody identification 

86880 Coombs test direct 

86885 Coombs test indirect qual 

86886 Coombs test indirect titer 

86900 Blood typing abo 

86901 Blood typing rh (d) 

86904 Blood typing patient serum 

86905 Blood typing rbc antigens 

86906 Blood typing rh phenotype 

86930 Frozen blood prep 

86970 Rbc pretx incubatj w/chemicl 

86977 Rbc serum pretx incubj/inhib 

88104 Cytopath fl nongyn smears 

88106 Cytopath fl nongyn filter 

88107 Cytopath fl nongyn sm/fltr 

88108 Cytopath concentrate tech 

88112 Cytopath cell enhance tech 

88120 Cytp urne 3-5 probes ea spec 

88160 Cytopath smear other source 

88161 Cytopath smear other source 

88162 Cytopath smear other source 

88172 Cytp dx eval fna 1st ea site 

88173 Cytopath eval fna report 

88182 Cell marker study 

88184 Flowcytometry/ tc 1 marker 

88189 Flowcytometry/read 16 & > 

88300 Surgical path gross 
CMS-1613-FC 70 

HCPCS 

Code HCPCS Short Descriptor 

88302 Tissue exam by pathologist 

88304 Tissue exam by pathologist 

88305 Tissue exam by pathologist 

88307 Tissue exam by pathologist 

88312 Special stains group 1 

88313 Special stains group 2 

88321 Microslide consultation 

88323 Microslide consultation 

88325 Comprehensive review of data 

88329 Path consult introp 

88331 Path consult intraop 1 bloc 

88342 Immunohisto antibody slide 

88346 Immunofluorescent study 

88347 Immunofluorescent study 

88348 Electron microscopy 

88358 Analysis tumor 

88360 Tumor immunohistochem/manual 

88361 Tumor immunohistochem/comput 

88365 Insitu hybridization (fish) 

88368 Insitu hybridization manual 

88385 Eval molecul probes 51-250 

88386 Eval molecul probes 251-500 

89049 Chct for mal hyperthermia 

89220 Sputum specimen collection 

89230 Collect sweat for test 

89240 Pathology lab procedure 

92020 Special eye evaluation 

92025 Corneal topography 

92060 Special eye evaluation 

92081 Visual field examination(s) 

92082 Visual field examination(s) 

92083 Visual field examination(s) 

92133 Cmptr ophth img optic nerve 

92134 Cptr ophth dx img post segmt 

92136 Ophthalmic biometry 

92225 Special eye exam initial 

92226 Special eye exam subsequent 

92230 Eye exam with photos 

92250 Eye exam with photos 
CMS-1613-FC 71 

HCPCS 

Code HCPCS Short Descriptor 

92285 Eye photography 

92286 Internal eye photography 

92520 Laryngeal function studies 

92541 Spontaneous nystagmus test 

92542 Positional nystagmus test 

92550 Tympanometry & reflex thresh 

92552 Pure tone audiometry air 

92553 Audiometry air & bone 

92555 Speech threshold audiometry 

92556 Speech audiometry complete 

92557 Comprehensive hearing test 

92567 Tympanometry 

92570 Acoustic immitance testing 

92582 Conditioning play audiometry 

92603 Cochlear implt f/up exam 7/> 

92604 Reprogram cochlear implt 7/> 

92626 Eval aud rehab status 

93005 Electrocardiogram tracing 

93017 Cardiovascular stress test 

93225 Ecg monit/reprt up to 48 hrs 

93226 Ecg monit/reprt up to 48 hrs 

93270 Remote 30 day ecg rev/report 

93278 Ecg/signal-averaged 

93279 Pm device progr eval sngl 

93280 Pm device progr eval dual 

93281 Pm device progr eval multi 

93282 Icd device progr eval 1 sngl 

93283 Icd device progr eval dual 

93284 Icd device progr eval mult 

93285 Ilr device eval progr 

93288 Pm device eval in person 

93289 Icd device interrogate 

93290 Icm device eval 

93291 Ilr device interrogate 

93292 Wcd device interrogate 

93293 Pm phone r-strip device eval 

93296 Pm/icd remote tech serv 

93299 Icm/ilr remote tech serv 

93701 Bioimpedance cv analysis 
CMS-1613-FC 72 

HCPCS 

Code HCPCS Short Descriptor 

93786 Ambulatory bp recording 

93788 Ambulatory bp analysis 

93875 Extracranial study 

94015 Patient recorded spirometry 

94690 Exhaled air analysis 

95803 Actigraphy testing 

95869 Muscle test thor paraspinal 

95900 Motor nerve conduction test 

95921 Autonomic nrv parasym inervj 

95970 Analyze neurostim no prog 

96900 Ultraviolet light therapy 

96910 Photochemotherapy with uv-b 

96912 Photochemotherapy with uv-a 

96920 Laser tx skin < 250 sq cm 

96921 Laser tx skin 250-500 sq cm 

98925 Osteopath manj 1-2 regions 

98926 Osteopath manj 3-4 regions 

98927 Osteopath manj 5-6 regions 

98928 Osteopath manj 7-8 regions 

98929 Osteopath manj 9-10 regions 

98940 Chiropract manj 1-2 regions 

98941 Chiropract manj 3-4 regions 

98942 Chiropractic manj 5 regions 

G0127 Trim nail(s) 

G0130 Single energy x-ray study 

G0166 Extrnl counterpulse, per tx 

G0239 Oth resp proc, group 

G0389 Ultrasound exam aaa screen 

G0404 Ekg tracing for initial prev 

G0424 Pulmonary rehab w exer 

Q0091 Obtaining screen pap smear 

 
CMS-1613-FC 73 

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

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40929), we proposed to 

continue to use the hospital-specific overall ancillary and departmental cost-to-charge 

ratios (CCRs) to convert charges to estimated costs through application of a revenue 

code-to-cost center crosswalk. To calculate the APC costs on which the proposed 

CY 2015 APC payment rates were based, we calculated hospital-specific overall ancillary 

CCRs and hospital-specific departmental CCRs for each hospital for which we had 

CY 2013 claims data by comparing these claims data to the most recently available 

hospital cost reports, which, in most cases, were from CY 2012. For the CY 2015 OPPS 

proposed rates, we used the set of claims processed during CY 2013. We applied the 

hospital-specific CCR to the hospital’s charges at the most detailed level possible, based 

on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to 

estimate costs from charges for each revenue code. That crosswalk is available for 

review and continuous comment on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

 To ensure the completeness of the revenue code-to-cost center crosswalk, we 

reviewed changes to the list of revenue codes for CY 2013 (the year of claims data we 

used to calculate the proposed CY 2015 OPPS payment rates) and found that the National 

Uniform Billing Committee (NUBC) did not add any new revenue codes to the NUBC 

2013 Data Specifications Manual. 

 In accordance with our longstanding policy, we calculated CCRs for the standard 

and nonstandard cost centers accepted by the electronic cost report database. In general, 
CMS-1613-FC 74 

the most detailed level at which we calculated CCRs was the hospital-specific 

departmental level. For a discussion of the hospital-specific overall ancillary CCR 

calculation, we refer readers to the CY 2007 OPPS/ASC final rule with comment period 

(71 FR 67983 through 67985). The calculation of blood costs is a longstanding exception 

(since the CY 2005 OPPS) to this general methodology for calculation of CCRs used for 

converting charges to costs on each claim. This exception is discussed in detail in the 

CY 2007 OPPS/ASC final rule with comment period and discussed further in section 

II.A.2.d.(2) of this final rule with comment period. 

 For the CCR calculation process, we used the same general approach that we used 

in developing the final APC rates for CY 2007 and thereafter, using the revised CCR 

calculation that excluded the costs of paramedical education programs and weighted the 

outpatient charges by the volume of outpatient services furnished by the hospital. We 

refer readers to the CY 2007 OPPS/ASC final rule with comment period for more 

information (71 FR 67983 through 67985). We first limited the population of cost 

reports to only those hospitals that filed outpatient claims in CY 2013 before determining 

whether the CCRs for such hospitals were valid. 

 We then calculated the CCRs for each cost center and the overall ancillary CCR 

for each hospital for which we had claims data. We did this using hospital-specific data 

from the Hospital Cost Report Information System (HCRIS). We used the most recent 

available cost report data, which, in most cases, were from cost reports with cost 

reporting periods beginning in CY 2012. For the proposed rule, we used the most 

recently submitted cost reports to calculate the CCRs to be used to calculate costs for the 

proposed CY 2015 OPPS payment rates. If the most recently available cost report was 
CMS-1613-FC 75 

submitted but not settled, we looked at the last settled cost report to determine the ratio of 

submitted to settled cost using the overall ancillary CCR, and we then adjusted the most 

recent available submitted, but not settled, cost report using that ratio. We then 

calculated both an overall ancillary CCR and cost center-specific CCRs for each hospital. 

We used the overall ancillary CCR referenced above for all purposes that require use of 

an overall ancillary CCR. We proposed to continue this longstanding methodology for 

the calculation of costs for CY 2015. 

 Since the implementation of the OPPS, some commenters have raised concerns 

about potential bias in the OPPS cost-based weights due to “charge compression,” which 

is the practice of applying a lower charge markup to higher cost services and a higher 

charge markup to lower cost services. As a result, the cost-based weights may reflect 

some aggregation bias, undervaluing high-cost items and overvaluing low-cost items 

when an estimate of average markup, embodied in a single CCR, is applied to items of 

widely varying costs in the same cost center. This issue was evaluated in a report by the 

Research Triangle Institute, International (RTI). The RTI final report can be found on 

RTI’s Web site at: http://www.rti.org/reports/cms/HHSM-500-2005-

0029I/PDF/Refining_Cost_to_Charge_ratios_200807_Final.pdf. For a complete 

discussion of the RTI recommendations, public comments, and our responses, we refer 

readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519 through 

68527). 

 We addressed the RTI finding that there was aggregation bias in both the IPPS 

and the OPPS cost estimation of expensive and inexpensive medical supplies in the 

FY 2009 IPPS final rule (73 FR 48458 through 45467). Specifically, we created one cost 
CMS-1613-FC 76 

center for “Medical Supplies Charged to Patients” and one cost center for “Implantable 

Devices Charged to Patients,” essentially splitting the then current cost center for 

“Medical Supplies Charged to Patients” into one cost center for low-cost medical 

supplies and another cost center for high-cost implantable devices in order to mitigate 

some of the effects of charge compression. In determining the items that should be 

reported in these respective cost centers, we adopted commenters’ recommendations that 

hospitals should use revenue codes established by the AHA’s NUBC to determine the 

items that should be reported in the “Medical Supplies Charged to Patients” and the 

“Implantable Devices Charged to Patients” cost centers. For a complete discussion of the 

rationale for the creation of the new cost center for “Implantable Devices Charged to 

Patients,” a summary of public comments received, and our responses to those public 

comments, we refer readers to the FY 2009 IPPS final rule. 

 The cost center for “Implantable Devices Charged to Patients” has been available 

for use for cost reporting periods beginning on or after May 1, 2009. In the CY 2013 

OPPS/ASC final rule with comment period, we determined that a significant volume of 

hospitals were utilizing the “Implantable Devices Charged to Patients” cost center. 

Because a sufficient amount of data from which to generate a meaningful analysis was 

available, we established in the CY 2013 OPPS/ASC final rule with comment period a 

policy to create a distinct CCR using the “Implantable Devices Charged to Patients” cost 

center (77 FR 68225). We retained this policy for the CY 2014 OPPS and, as we 

proposed, we are continuing this practice for the CY 2015 OPPS. 

 In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080), we 

finalized our proposal to create new standard cost centers for “Computed Tomography 
CMS-1613-FC 77 

(CT),” “Magnetic Resonance Imaging (MRI),” and “Cardiac Catheterization,” and to 

require that hospitals report the costs and charges for these services under these new cost 

centers on the revised Medicare cost report Form CMS 2552-10. As we discussed in the 

FY 2009 IPPS and CY 2009 OPPS/ASC proposed and final rules, RTI also found that the 

costs and charges of CT scans, MRIs, and cardiac catheterization differ significantly from 

the costs and charges of other services included in the standard associated cost center. 

RTI concluded that both the IPPS and the OPPS relative payment weights would better 

estimate the costs of those services if CMS were to add standard costs centers for CT 

scans, MRIs, and cardiac catheterization in order for hospitals to report separately the 

costs and charges for those services and in order for CMS to calculate unique CCRs to 

estimate the cost from charges on claims data. We refer readers to the FY 2011 

IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more detailed discussion 

on the reasons for the creation of standard cost centers for CT scans, MRIs, and cardiac 

catheterization. The new standard cost centers for CT scans, MRIs, and cardiac 

catheterization were effective for cost report periods beginning on or after May 1, 2010, 

on the revised cost report Form CMS-2552-10. 

 Using the HCRIS update for the CY 2015 final rule cycle, which we used to 

estimate costs in the CY 2015 OPPS ratesetting process, as discussed in the CY 2015 

OPPS/ASC proposed rule (79 FR 40930), we were able to calculate a valid implantable 

device CCR for 2,895 hospitals, a valid MRI CCR for 1,934 hospitals, a valid CT scan 

CCR for 2,035 hospitals, and a valid Cardiac Catheterization CCR for 1,397 hospitals. 

 In our CY 2014 OPPS/ASC proposed rule discussion (78 FR 43549), we noted 

that, for CY 2014, the estimated changes in geometric mean estimated APC cost of using 
CMS-1613-FC 78 

data from the new standard cost centers for CT scans and MRIs appeared consistent with 

RTI’s analysis of cost report and claims data in the July 2008 final report (pages 5 and 6). 

RTI concluded that “in hospitals that aggregate data for CT scanning, MRI, or nuclear 

medicine services with the standard line for Diagnostic Radiology, costs for these 

services all appear substantially overstated, while the costs for plain films, ultrasound and 

other imaging procedures are correspondingly understated.” We also noted that there 

were limited additional impacts in the implantable device-related APCs from adopting 

the new cost report Form CMS 2552-10 because we had used data from the standard cost 

center for implantable medical devices beginning in CY 2013 OPPS ratesetting, as 

discussed above. 

 As we indicated in prior rulemaking (77 FR 68223 through 68225), once we 

determined that cost report data for the new standard cost centers were sufficiently 

available, we would analyze that data and, if appropriate, we would propose to use the 

distinct CCRs for new standard cost centers described above in the calculation of the 

OPPS relative payment weights. As stated in the CY 2014 OPPS/ASC proposed rule 

(78 FR 43550), we have conducted our analysis and concluded that we should develop 

distinct CCRs for each of the new cost centers and use them in ratesetting. Therefore, we 

began in the CY 2014 OPPS, and proposed to continue for the CY 2015 OPPS, to 

calculate the OPPS relative payment weights using distinct CCRs for cardiac 

catheterization, CT scan, MRI, and implantable medical devices. Section XXI. of this 

final rule with comment period includes the impacts of calculating the CY 2015 OPPS 

relative payment weights using these new standard cost centers. 
CMS-1613-FC 79 

 Comment: A few commenters encouraged CMS to ensure data quality and 

continue to test, refine, and improve its CCR analysis for CT scans and MRI. 

 Response: We will continue to monitor the CCRs for these services. 

 After consideration of the public comments we received, we are finalizing our 

proposal to calculate the OPPS relative payment weights using distinct CCRs for cardiac 

catheterization, CT scan, MRI, and implantable medical devices for CY 2015 without 

modification. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74847), we 

finalized a policy to remove claims from providers that use a cost allocation method of 

“square feet” to calculate CCRs used to estimate costs associated with the CT and MRI 

APCs. This change allows hospitals additional time to use one of the more accurate cost 

allocation methods, and thereby improve the accuracy of the CCRs on which the OPPS 

relative payment weights are developed. In Table 2 below, we display CCR values for 

providers based on various cost allocation methods. 

TABLE 2.—CCR STATISTICAL VALUES BASED ON USE OF DIFFERENT 

COST ALLOCATION METHODS 

 

Cost Allocation Method 

CT MRI 

Median 

CCR 

Mean 

CCR 

Median 

CCR 

Mean 

CCR 

All Providers 0.0464 0.0608 0.0901 0.1151

Square Feet Only 0.0370 0.0502 0.0787 0.1013

Direct Assign 0.0640 0.0740 0.1063 0.1294

Dollar Value 0.0555 0.0718 0.1046 0.1298

Direct Assign and Dollar Value 0.0554 0.0715 0.1047 0.1297

 As part of this transitional policy to estimate the CT and MRI APC relative 

payment weights using only cost data from providers that do not use “square feet” as the 
CMS-1613-FC 80 

cost allocation statistic, we adopted a policy in the CY 2014 OPPS/ASC final rule with 

comment period that we will sunset this policy in 4 years once the updated cost report 

data become available for ratesetting purposes. We stated that we believe 4 years is 

sufficient time for hospitals that have not done so to transition to a more accurate cost 

allocation method and for the related data to be available for ratesetting purposes. 

Therefore, in CY 2018, we will estimate the CT and MRI APC relative payment weights 

using cost data from all providers, regardless of the cost allocation statistic employed. In 

Table 3 below, we display the impact of excluding claims based on the “square feet” cost 

allocation method from estimates of CT and MRI costs in CY 2015. 

 
CMS-1613-FC 81 

TABLE 3.—PERCENTAGE CHANGE IN ESTIMATED COST FOR CT AND 

MRI APCs WHEN EXCLUDING CLAIMS FROM PROVIDERS USING 

“SQUARE FEET” AS THE COST ALLOCATION METHOD 

CY 

2015 

APC 

CY 2015 APC Descriptor Percent 

Change 

0283 Computed Tomography with Contrast 9.6%

0284 

Magnetic Resonance Imaging and Magnetic Resonance 

Angiography with Contrast 4.0%

0331 Combined Abdomen and Pelvis CT without Contrast 12.1%

0332 Computed Tomography without Contrast 14.5%

0333 Computed Tomography without Contrast followed by Contrast 12.3%

0334 Combined Abdomen and Pelvis CT with Contrast 10.1%

0336 

Magnetic Resonance Imaging and Magnetic Resonance 

Angiography without Contrast 7.5%

0337 

Magnetic Resonance Imaging and Magnetic Resonance 

Angiography without Contrast f 6.4%

0383 Cardiac Computed Tomographic Imaging 3.6%

0662 CT Angiography 10.3%

8005 CT and CTA without Contrast Composite 12.8%

8006 CT and CTA with Contrast Composite 9.4%

8007 MRI and MRA without Contrast Composite 6.7%

8008 MRI and MRA with Contrast Composite 6.9%

 Comment: A few commenters supported CMS’ proposal to continue removing 

claims from providers that use the “square feet” cost allocation method from the cost 

model. One commenter suggested that CMS continue removing claims from providers 

that use this method in CY 2018 and beyond. 

 Response: We thank the commenters for their support and are finalizing this 

policy as proposed. We will continue to only include cost data from providers that do not 

use “square feet” as the cost allocation statistic in relative payment weights through 

CY 2017. For CY 2018 and beyond, we will estimate the CT and MRI APC relative 
CMS-1613-FC 82 

payment weights using cost data from all providers, regardless of the cost allocation 

statistic employed. 

 In summary, as we proposed, we are continuing to use data from the “Implantable 

Devices Charged to Patients” and “Cardiac Catheterization” cost centers to create distinct 

CCRs for use in calculating the OPPS relative payment weights for the CY 2015 OPPS. 

For the “Magnetic Resonance Imaging (MRI)” and “Computed Tomography (CT) Scan” 

APCs identified in Table 3 of this final rule with comment period, we are continuing our 

policy of removing claims from cost modeling for those providers using “square feet” as 

the cost allocation statistic for CY 2015. 

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

 In this section of this final rule with comment period, we discuss the use of claims 

to calculate the OPPS payment rates for CY 2015. The Hospital OPPS page on the CMS 

Web site on which this final rule with comment period is posted 

(http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html) provides an accounting of claims used in 

the development of the final payment rates. That accounting provides additional detail 

regarding the number of claims derived at each stage of the process. In addition, below 

in this section we discuss the file of claims that comprises the data set that is available for 

purchase under a CMS data use agreement. The CMS Web site, 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html, includes information about purchasing the 

“OPPS Limited Data Set,” which now includes the additional variables previously 

available only in the OPPS Identifiable Data Set, including ICD-9-CM diagnosis codes 
CMS-1613-FC 83 

and revenue code payment amounts. This file is derived from the CY 2013 claims that 

were used to calculate the final payment rates for the CY 2015 OPPS. 

 In the history of the OPPS, we have traditionally established the scaled relative 

weights on which payments are based using APC median costs, which is a process 

described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). 

However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final 

rule with comment period (77 FR 68259 through 68271), we finalized the use of 

geometric mean costs to calculate the relative weights on which the CY 2013 OPPS 

payment rates were based. While this policy changed the cost metric on which the 

relative payments are based, the data process in general remained the same, under the 

methodologies that we used to obtain appropriate claims data and accurate cost 

information in determining estimated service cost. For CY 2015, as we proposed, we are 

continuing to use geometric mean costs to calculate the relative weights on which the 

CY 2015 OPPS payment rates are based. 

 We used the methodology described in sections II.A.2.a. through II.A.2.f. of this 

final rule with comment period to calculate the costs we used to establish the relative 

weights used in calculating the OPPS payment rates for CY 2015 shown in Addenda A 

and B to this final rule with comment period (which are available via the Internet on the 

CMS Web site). We refer readers to section II.A.4. of this final rule with comment 

period for a discussion of the conversion of APC costs to scaled payment weights. 

a. Claims Preparation 

 For this final rule with comment period, we used the CY 2013 hospital outpatient 

claims processed through June 30, 2014, to calculate the geometric mean costs of APCs 
CMS-1613-FC 84 

that underpin the relative payment weights for CY 2015. To begin the calculation of the 

relative payment weights for CY 2015, we pulled all claims for outpatient services 

furnished in CY 2013 from the national claims history file. This is not the population of 

claims paid under the OPPS, but all outpatient claims (including, for example, critical 

access hospital (CAH) claims and hospital claims for clinical laboratory tests for persons 

who are neither inpatients nor outpatients of the hospital). 

 We then excluded claims with condition codes 04, 20, 21, and 77 because these 

are claims that providers submitted to Medicare knowing that no payment would be 

made. For example, providers submit claims with a condition code 21 to elicit an official 

denial notice from Medicare and document that a service is not covered. We then 

excluded claims for services furnished in Maryland, Guam, the U.S. Virgin Islands, 

American Samoa, and the Northern Mariana Islands because hospitals in those 

geographic areas are not paid under the OPPS, and, therefore, we do not use claims for 

services furnished in these areas in ratesetting. 

 We divided the remaining claims into the three groups shown below. 

Groups 2 and 3 comprise the 123 million claims that contain hospital bill types paid 

under the OPPS. 

 1. Claims that were not bill types 12X (Hospital Inpatient (Medicare Part B 

only)), 13X (Hospital Outpatient), 14X (Hospital--Laboratory Services Provided to 

Nonpatients), or 76X (Clinic--Community Mental Health Center). Other bill types are 

not paid under the OPPS; therefore, these claims were not used to set OPPS payment. 
CMS-1613-FC 85 

 2. Claims that were bill types 12X, 13X or 14X. Claims with bill types 12X and 

13X are hospital outpatient claims. Claims with bill type 14X are laboratory specimen 

claims. 

 3. Claims that were bill type 76X (CMHC). 

 To convert charges on the claims to estimated cost, we multiplied the charges on 

each claim by the appropriate hospital-specific CCR associated with the revenue code for 

the charge as discussed in section II.A.1.c. of this final rule with comment period. We 

then flagged and excluded CAH claims (which are not paid under the OPPS) and claims 

from hospitals with invalid CCRs. The latter included claims from hospitals without a 

CCR; those from hospitals paid an all-inclusive rate; those from hospitals with obviously 

erroneous CCRs (greater than 90 or less than 0.0001); and those from hospitals with 

overall ancillary CCRs that were identified as outliers (that exceeded +/- 3 standard 

deviations from the geometric mean after removing error CCRs). In addition, we 

trimmed the CCRs at the cost center (that is, departmental) level by removing the CCRs 

for each cost center as outliers if they exceeded +/- 3 standard deviations from the 

geometric mean. We used a four-tiered hierarchy of cost center CCRs, which is the 

revenue code-to-cost center crosswalk, to match a cost center to every possible revenue 

code appearing in the outpatient claims that is relevant to OPPS services, with the top tier 

being the most common cost center and the last tier being the default CCR. If a 

hospital’s cost center CCR was deleted by trimming, we set the CCR for that cost center 

to “missing” so that another cost center CCR in the revenue center hierarchy could apply. 

If no other cost center CCR could apply to the revenue code on the claim, we used the 

hospital’s overall ancillary CCR for the revenue code in question as the default CCR. For 
CMS-1613-FC 86 

example, if a visit was reported under the clinic revenue code but the hospital did not 

have a clinic cost center, we mapped the hospital-specific overall ancillary CCR to the 

clinic revenue code. The revenue code-to-cost center crosswalk is available for 

inspection on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HospitalOutpatientPPS/index.html. Revenue codes that we do not use 

in establishing relative costs or to model impacts are identified with an “N” in the 

revenue code-to-cost center crosswalk. 

 We applied the CCRs as described above to claims with bill type 12X, 13X, or 

14X, excluding all claims from CAHs and hospitals in Maryland, Guam, the U.S. Virgin 

Islands, American Samoa, and the Northern Mariana Islands and claims from all hospitals 

for which CCRs were flagged as invalid. 

 We identified claims with condition code 41 as partial hospitalization services of 

hospitals and moved them to another file. We note that the separate file containing 

partial hospitalization claims is included in the files that are available for purchase as 

discussed above. 

 We then excluded claims without a HCPCS code. We moved to another file 

claims that contained only influenza and pneumococcal pneumonia (PPV) vaccines. 

Influenza and PPV vaccines are paid at reasonable cost; therefore, these claims are not 

used to set OPPS rates. 

 We next copied line-item costs for drugs, blood, and brachytherapy sources to a 

separate file (the lines stay on the claim, but are copied onto another file). No claims 

were deleted when we copied these lines onto another file. These line-items are used to 

calculate a per unit arithmetic and geometric mean and median cost and a per day 
CMS-1613-FC 87 

arithmetic and geometric mean and median cost for drugs and nonimplantable 

biologicals, therapeutic radiopharmaceutical agents, and brachytherapy sources, as well 

as other information used to set payment rates, such as a unit-to-day ratio for drugs. 

 Prior to CY 2013, our payment policy for nonpass-through separately paid drugs 

and biologicals was based on a redistribution methodology that accounted for pharmacy 

overhead by allocating cost from packaged drugs to separately paid drugs. This 

methodology typically would have required us to reduce the cost associated with 

packaged coded and uncoded drugs in order to allocate that cost. However, for CY 2013, 

we paid for separately payable drugs and biologicals under the OPPS at ASP+6 percent, 

based upon the statutory default described in section 1833(t)(14)(A)(iii)(II) of the Act. 

Under that policy, we did not redistribute the pharmacy overhead costs from packaged 

drugs to separately paid drugs. For the CY 2014 OPPS, we continued the CY 2013 

payment policy for separately payable drugs and biologicals, and we are continuing this 

payment policy for CY 2015. We refer readers to section V.B.3. of this final rule with 

comment period for a complete discussion of our CY 2015 final payment policy for 

separately paid drugs and biologicals. 

 We then removed line-items that were not paid during claim processing, 

presumably for a line-item rejection or denial. The number of edits for valid OPPS 

payment in the Integrated Outpatient Code Editor (I/OCE) and elsewhere has grown 

significantly in the past few years, especially with the implementation of the full 

spectrum of National Correct Coding Initiative (NCCI) edits. To ensure that we are using 

valid claims that represent the cost of payable services to set payment rates, we removed 

line-items with an OPPS status indicator that were not paid during claims processing in 
CMS-1613-FC 88 

the claim year, but have a status indicator of “S,” “T,” and “V” in the prospective year’s 

payment system. This logic preserves charges for services that would not have been paid 

in the claim year but for which some estimate of cost is needed for the prospective year, 

such as services newly removed from the inpatient list for CY 2014 that were assigned 

status indicator “C” in the claim year. It also preserves charges for packaged services so 

that the costs can be included in the cost of the services with which they are reported, 

even if the CPT codes for the packaged services were not paid because the service is part 

of another service that was reported on the same claim or the code otherwise violates 

claims processing edits. 

 For CY 2015, as we proposed, we are continuing the policy we implemented for 

CY 2013 and CY 2014 to exclude line-item data for pass-through drugs and biologicals 

(status indicator “G” for CY 2013) and nonpass-through drugs and biologicals (status 

indicator “K” for CY 2013) where the charges reported on the claim for the line were 

either denied or rejected during claims processing. Removing lines that were eligible for 

payment but were not paid ensures that we are using appropriate data. The trim avoids 

using cost data on lines that we believe were defective or invalid because those rejected 

or denied lines did not meet the Medicare requirements for payment. For example, edits 

may reject a line for a separately paid drug because the number of units billed exceeded 

the number of units that would be reasonable and, therefore, is likely a billing error (for 

example, a line reporting 55 units of a drug for which 5 units is known to be a fatal dose). 

As with our trimming in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74849) of line-items with a status indicator of “S,” “T,” “V,” or “X,” we believe 

that unpaid line-items represent services that are invalidly reported and, therefore, should 
CMS-1613-FC 89 

not be used for ratesetting. We believe that removing lines with valid status indicators 

that were edited and not paid during claims processing increases the accuracy of the data 

used for ratesetting purposes. 

 For the CY 2015 OPPS, as part of our continued packaging of clinical diagnostic 

laboratory tests, we also are applying the line item trim to these services if they did not 

receive payment in the claims year. Removing these lines ensures that, in establishing 

the CY 2015 OPPS relative payment weights, we appropriately allocate the costs 

associated with packaging these services. 

b. Splitting Claims and Creation of “Pseudo” Single Procedure Claims 

(1) Splitting Claims 

 For the CY 2015 OPPS, we then split the remaining claims into five groups: 

single majors; multiple majors; single minors; multiple minors; and other claims. 

(Specific definitions of these groups are presented below.) We note that, under the 

proposed CY 2015 OPPS packaging policy (79 FR 40933), we proposed to delete status 

indicator “X” and revise the title and description of status indicator “Q1” to reflect that 

deletion, as discussed in sections II.A.3. and XI. of this final rule with comment period. 

We note that we also proposed to create status indicator “J1” to reflect the comprehensive 

APCs (C-APCs) discussed in section II.A.2.e. of this final rule with comment period. For 

CY 2015, we proposed to define major procedures as any HCPCS code having a status 

indicator of “J1,” “S,” “T,” or “V,” define minor procedures as any code having a status 

indicator of “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N,” and classify “other” procedures 

as any code having a status indicator other than one that we have classified as major or 

minor. For CY 2015, we proposed to continue to assign status indicator “R” to blood and 
CMS-1613-FC 90 

blood products; status indicator “U” to brachytherapy sources; status indicator “Q1” to all 

“STV-packaged codes;” status indicator “Q2” to all “T-packaged codes;” and status 

indicator “Q3” to all codes that may be paid through a composite APC based on 

composite-specific criteria or paid separately through single code APCs when the criteria 

are not met. 

 As discussed in the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68709), we established status indicators “Q1,” “Q2,” and “Q3” to facilitate 

identification of the different categories of codes. As we proposed, we are treating these 

codes in the same manner for data purposes for CY 2015 as we have treated them since 

CY 2008. Specifically, we are continuing to evaluate whether the criteria for separate 

payment of codes with status indicator “Q1” or “Q2” are met in determining whether they 

are treated as major or minor codes. Codes with status indicator “Q1” or “Q2” are 

carried through the data either with status indicator “N” as packaged or, if they meet the 

criteria for separate payment, they are given the status indicator of the APC to which they 

are assigned and are considered as “pseudo” single procedure claims for major codes. 

Codes assigned status indicator “Q3” are paid under individual APCs unless they occur in 

the combinations that qualify for payment as composite APCs and, therefore, they carry 

the status indicator of the individual APC to which they are assigned through the data 

process and are treated as major codes during both the split and “pseudo” single creation 

process. The calculation of the geometric mean costs for composite APCs from multiple 

procedure major claims is discussed in section II.A.2.f. of this final rule with comment 

period. 

 Specifically, we divided the remaining claims into the following five groups: 
CMS-1613-FC 91 

 1. Single Procedure Major Claims: Claims with a single separately payable 

procedure (that is, status indicator “S,” “T,” or “V” which includes codes with status 

indicator “Q3”); claims with status indicator “J1,” which receive special processing for 

C-APCs, as discussed in section II.A.2.e. of this final rule with comment period; claims 

with one unit of a status indicator “Q1” code (“STV-packaged”) where there was no code 

with status indicator “S,” “T,” or “V” on the same claim on the same date; or claims with 

one unit of a status indicator “Q2” code (“T-packaged”) where there was no code with a 

status indicator “T” on the same claim on the same date. 

 2. Multiple Procedure Major Claims: Claims with more than one separately 

payable procedure (that is, status indicator “S,” “T,” or “V” which includes codes with 

status indicator “Q3”), or multiple units of one payable procedure. These claims include 

those codes with a status indicator “Q2” code (“T-packaged”) where there was no 

procedure with a status indicator “T” on the same claim on the same date of service but 

where there was another separately paid procedure on the same claim with the same date 

of service (that is, another code with status indicator “S” or “V”). We also include in this 

set claims that contained one unit of one code when the bilateral modifier was appended 

to the code and the code was conditionally or independently bilateral. In these cases, the 

claims represented more than one unit of the service described by the code, 

notwithstanding that only one unit was billed. 

 3. Single Procedure Minor Claims: Claims with a single HCPCS code that was 

assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N” and not status 

indicator “Q1” (“STV-packaged”) or status indicator “Q2” (“T-packaged”) code. 
CMS-1613-FC 92 

 4. Multiple Procedure Minor Claims: Claims with multiple HCPCS codes that 

are assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N;” claims that 

contain more than one code with status indicator “Q1” (“STV-packaged”) or more than 

one unit of a code with status indicator “Q1” but no codes with status indicator “S,” “T,” 

or “V” on the same date of service; or claims that contain more than one code with status 

indicator “Q2” (T-packaged), or “Q2” and “Q1,” or more than one unit of a code with 

status indicator “Q2” but no code with status indicator “T” on the same date of service. 

 5. Non-OPPS Claims: Claims that contain no services payable under the OPPS 

(that is, all status indicators other than those listed for major or minor status). These 

claims were excluded from the files used for the OPPS. Non-OPPS claims have codes 

paid under other fee schedules, for example, durable medical equipment, and do not 

contain a code for a separately payable or packaged OPPS service. Non-OPPS claims 

include claims for therapy services paid sometimes under the OPPS but billed, in these 

non-OPPS cases, with revenue codes indicating that the therapy services would be paid 

under the Medicare Physician Fee Schedule (MPFS). 

 The claims listed in numbers 1, 2, 3, and 4 above are included in the data file that 

can be purchased as described above. Claims that contain codes to which we have 

assigned status indicators “Q1” (“STV-packaged”) and “Q2” (“T-packaged”) appear in 

the data for the single major file, the multiple major file, and the multiple minor file used 

for ratesetting. Claims that contain codes to which we have assigned status indicator 

“Q3” (composite APC members) appear in both the data of the single and multiple major 

files used in this final rule with comment period, depending on the specific composite 

calculation. 
CMS-1613-FC 93 

(2) Creation of “Pseudo” Single Procedure Claims 

 To develop “pseudo” single procedure claims for this final rule with comment 

period, we examined both the multiple procedure major claims and the multiple 

procedure minor claims. We first examined the multiple major procedure claims for 

dates of service to determine if we could break them into “pseudo” single procedure 

claims using the dates of service for all lines on the claim. If we could create claims with 

single major procedures by using dates of service, we created a single procedure claim 

record for each separately payable procedure on a different date of service (that is, a 

“pseudo” single procedure claim). 

 As proposed, we also use the bypass codes listed in Addendum N to this final rule 

with comment period (which is available via the Internet on our Web site) and discussed 

in section II.A.1.b. of this final rule with comment period to remove separately payable 

procedures which we determined contained limited or no packaged costs or that were 

otherwise suitable for inclusion on the bypass list from a multiple procedure bill. As 

discussed above, we ignore the “overlap bypass codes,” that is, those HCPCS codes that 

are both on the bypass list and are members of the multiple imaging composite APCs, in 

this initial assessment for “pseudo” single procedure claims. The final CY 2015 “overlap 

bypass codes” are listed in Addendum N to this final rule with comment period (which is 

available via the Internet on the CMS Web site). When one of the two separately payable 

procedures on a multiple procedure claim was on the bypass list, we split the claim into 

two “pseudo” single procedure claim records. The single procedure claim record that 

contained the bypass code did not retain packaged services. The single procedure claim 

record that contained the other separately payable procedure (but no bypass code) 
CMS-1613-FC 94 

retained the packaged revenue code charges and the packaged HCPCS code charges. We 

also removed lines that contained multiple units of codes on the bypass list and treated 

them as “pseudo” single procedure claims by dividing the cost for the multiple units by 

the number of units on the line. If one unit of a single, separately payable procedure code 

remained on the claim after removal of the multiple units of the bypass code, we created 

a “pseudo” single procedure claim from that residual claim record, which retained the 

costs of packaged revenue codes and packaged HCPCS codes. This enabled us to use 

claims that would otherwise be multiple procedure claims and could not be used. 

 We then assessed the claims to determine if the criteria for the multiple imaging 

composite APCs, discussed in section II.A.2.f.(5) of this final rule with comment period, 

were met. If the criteria for the imaging composite APCs were met, we created a “single 

session” claim for the applicable imaging composite service and determined whether we 

could use the claim in ratesetting. For HCPCS codes that are both conditionally 

packaged and are members of a multiple imaging composite APC, we first assessed 

whether the code would be packaged and, if so, the code ceased to be available for further 

assessment as part of the composite APC. Because the packaged code would not be a 

separately payable procedure, we considered it to be unavailable for use in setting the 

composite APC costs on which the CY 2015 OPPS relative payment weights are based. 

Having identified “single session” claims for the imaging composite APCs, we reassessed 

the claim to determine if, after removal of all lines for bypass codes, including the 

“overlap bypass codes,” a single unit of a single separately payable code remained on the 

claim. If so, we attributed the packaged costs on the claim to the single unit of the single 

remaining separately payable code other than the bypass code to create a “pseudo” single 
CMS-1613-FC 95 

procedure claim. We also identified line-items of overlap bypass codes as a “pseudo” 

single procedure claim. This allowed us to use more claims data for ratesetting purposes. 

 As we proposed, we also examined the multiple procedure minor claims to 

determine whether we could create “pseudo” single procedure claims. Specifically, 

where the claim contained multiple codes with status indicator “Q1” (“STV-packaged”) 

on the same date of service or contained multiple units of a single code with status 

indicator “Q1,” we selected the status indicator “Q1” HCPCS code that had the highest 

CY 2014 relative payment weight, and set the units to one on that HCPCS code to reflect 

our policy of paying only one unit of a code with a status indicator of “Q1.” We then 

packaged all costs for the following into a single cost for the “Q1” HCPCS code that had 

the highest CY 2014 relative payment weight to create a “pseudo” single procedure claim 

for that code: additional units of the status indicator “Q1” HCPCS code with the highest 

CY 2014 relative payment weight; other codes with status indicator “Q1;” and all other 

packaged HCPCS codes and packaged revenue code costs. We changed the status 

indicator for the selected code from the data status indicator of “N” to the status indicator 

of the APC to which the selected procedure was assigned for further data processing and 

considered this claim as a major procedure claim. We used this claim in the calculation 

of the APC geometric mean cost for the status indicator “Q1” HCPCS code. 

 Similarly, if a multiple procedure minor claim contained multiple codes with 

status indicator “Q2” (“T-packaged”) or multiple units of a single code with status 

indicator “Q2,” we selected the status indicator “Q2” HCPCS code that had the highest 

CY 2014 relative payment weight and set the units to one on that HCPCS code to reflect 

our policy of paying only one unit of a code with a status indicator of “Q2.” We then 
CMS-1613-FC 96 

packaged all costs for the following into a single cost for the “Q2” HCPCS code that had 

the highest CY 2014 relative payment weight to create a “pseudo” single procedure claim 

for that code: additional units of the status indicator “Q2” HCPCS code with the highest 

CY 2014 relative payment weight; other codes with status indicator “Q2”; and other 

packaged HCPCS codes and packaged revenue code costs. We changed the status 

indicator for the selected code from a data status indicator of “N” to the status indicator 

of the APC to which the selected code was assigned, and we considered this claim as a 

major procedure claim. 

 If a multiple procedure minor claim contained multiple codes with status indicator 

“Q2” (“T-packaged”) and status indicator “Q1” (“STV-packaged”), we selected the 

T-packaged status indicator “Q2” HCPCS code that had the highest relative payment 

weight for CY 2014 and set the units to one on that HCPCS code to reflect our policy of 

paying only one unit of a code with a status indicator of “Q2.” We then packaged all 

costs for the following into a single cost for the selected (“T-packaged”) HCPCS code to 

create a “pseudo” single procedure claim for that code: additional units of the status 

indicator “Q2” HCPCS code with the highest CY 2014 relative payment weight; other 

codes with status indicator “Q2;” codes with status indicator “Q1” (“STV-packaged”); 

and other packaged HCPCS codes and packaged revenue code costs. We selected status 

indicator “Q2” HCPCS codes instead of “Q1” HCPCS codes because “Q2” HCPCS 

codes have higher CY 2014 relative payment weights. If a status indicator “Q1” HCPCS 

code had a higher CY 2014 relative payment weight, it became the primary code for the 

simulated single bill process. We changed the status indicator for the selected status 

indicator “Q2” (“T-packaged”) code from a data status indicator of “N” to the status 
CMS-1613-FC 97 

indicator of the APC to which the selected code was assigned and we considered this 

claim as a major procedure claim. 

 We then applied our process for creating “pseudo” single procedure claims to the 

conditionally packaged codes that do not meet the criteria for packaging, which enabled 

us to create single procedure claims from them, if they met the criteria for single 

procedure claims. Conditionally packaged codes are identified using status indicators 

“Q1” and “Q2,” and are described in section XI.A. of this final rule with comment 

period. 

 Lastly, we excluded those claims that we were not able to convert to single 

procedure claims even after applying all of the techniques for creation of “pseudo” single 

procedure claims to multiple procedure major claims and to multiple procedure minor 

claims. As has been our practice in recent years, we also excluded claims that contained 

codes that were viewed as independently or conditionally bilateral and that contained the 

bilateral modifier (Modifier 50 (Bilateral procedure)) because the line-item cost for the 

code represented the cost of two units of the procedure, notwithstanding that hospitals 

billed the code with a unit of one. 

 We proposed to continue to apply the methodology described above for the 

purpose of creating “pseudo” single procedure claims for the CY 2015 OPPS. 

 We did not receive any public comments on this proposal. Therefore, we are 

finalizing our proposal to continue to apply the methodology described above for the 

purpose of creating ‘‘pseudo’’ single procedure claims for the CY 2015 OPPS. 

c. Completion of Claim Records and Geometric Mean Cost Calculations 

(1) General Process 
CMS-1613-FC 98 

 We then packaged the costs of packaged HCPCS codes (codes with status 

indicator “N” listed in Addendum B to this final rule with comment period (which is 

available via the Internet on the CMS Web site) and the costs of those lines for codes 

with status indicator “Q1” or “Q2” when they are not separately paid), and the costs of 

the services reported under packaged revenue codes in Table 4 below that appeared on 

the claim without a HCPCS code into the cost of the single major procedure remaining on 

the claim. For a more complete discussion of our final CY 2015 OPPS packaging policy, 

we refer readers to section II.A.3. of this final rule with comment period. 

 As noted in the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation that 

CMS should review the final list of packaged revenue codes for consistency with OPPS 

policy and ensure that future versions of the I/OCE edit accordingly. As we have in the 

past, and as we proposed, we are continuing to compare the final list of packaged revenue 

codes that we adopt for CY 2015 to the revenue codes that the I/OCE will package for 

CY 2015 to ensure consistency. 

 In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68531), we 

replaced the NUBC standard abbreviations for the revenue codes listed in Table 2 of the 

CY 2009 OPPS/ASC proposed rule with the most current NUBC descriptions of the 

revenue code categories and subcategories to better articulate the meanings of the 

revenue codes without changing the list of revenue codes. In the CY 2010 OPPS/ASC 

final rule with comment period (74 FR 60362 through 60363), we finalized changes to 

the packaged revenue code list based on our examination of the updated NUBC codes 

and public comment on the CY 2010 proposed list of packaged revenue codes. 
CMS-1613-FC 99 

 For CY 2015, as we did for CY 2014, we reviewed the changes to revenue codes 

that were effective during CY 2013 for purposes of determining the charges reported with 

revenue codes but without HCPCS codes that we proposed to package for CY 2015. We 

believe that the charges reported under the revenue codes listed in Table 4 of the 

proposed rule continue to reflect ancillary and supportive services for which hospitals 

report charges without HCPCS codes. Therefore, for CY 2015, we proposed to continue 

to package the costs that we derive from the charges reported without HCPCS codes 

under the revenue codes displayed in Table 4 of the proposed rule for purposes of 

calculating the geometric mean costs on which the final CY 2015 OPPS/ASC payment 

rates are based. 

 Comment: One commenter recommended that CMS include, in the list of 

packaged revenue codes, revenue codes 0331 (Radiology- Therapeutic and/or 

Chemotherapy Administration; Chemotherapy Admin - Injected), 0332 (RadiologyTherapeutic and/or Chemotherapy Administration; Chemotherapy Admin - Oral), 0335 

(Radiology- Therapeutic and/or Chemotherapy Administration; Chemotherapy Admin - 

IV), 0360 (Operating Room Services; General Classification), 0361 (Operating Room 

Services; Minor Surgery), 0362 (Operating Room Services; Organ Transplant- Other than 

Kidney), 0369 (Operating Room Services; Other OR Services), 0410 (Respiratory 

Services; General Classification), 0412 (Respiratory Services; Inhalation Services), 0413 

(Respiratory Services; Hyperbaric Oxygen Therapy), 0419 (Respiratory Services; Other 

Respiratory Services), 0722 (Labor Room/Delivery; Delivery Room), 0724 (Labor 

Room/Delivery; Birthing Center), 0729 (Labor Room/Delivery; Other Labor 

Room/Delivery), 0760 (Specialty Services; General Classification), 0761 (Specialty 
CMS-1613-FC 100 

Services; Treatment Room), 0762 (Specialty Services; Observation), 0769 (Specialty 

Services; Other Specialty Services), 0770 (Preventive Care Services; General 

Classification). The commenter stated that charge data on claim lines with these revenue 

codes is currently included in OPPS modeling, and including them when they appear 

without a HCPCS would more accurately capture the costs from these lines. 

 Response: On the OPPS revenue code-to-cost center modeling crosswalk that we 

make available online, we indicate which revenue codes we believe are appropriately 

used for OPPS ratesetting purposes. As the commenter noted, coded lines billed using 

these specific revenue codes are already currently included for ratesetting purposes. 

While we note that including the packaged costs associated with uncoded lines billed 

with these revenue codes has a minimal impact on the relative payment weights, we 

believe that including them when establishing the OPPS relative payment weights would 

better estimate the full range of costs for services to which these lines are packaged. 

Including the uncoded lines and capturing the costs billed using these revenue codes 

would generally be appropriate in establishing the OPPS relative payment weights and 

our ratesetting methodology. Therefore, we have updated Table 4 which appeared in the 

proposed rule (79 FR 40935 through 40936) (also Table 4 in this final rule with comment 

period) to reflect the addition of these packaged revenue codes and incorporated these 

changes into our cost modeling logic. We will also ensure that this list corresponds with 

that used for I/OCE purposes. 

 After consideration of the public comments we received, we are finalizing the 

proposed packaged revenue codes for CY 2015, which are identified in Table 4 below, 

with modification to include the revenue codes described earlier in this section.
CMS-1613-FC 101 

TABLE 4.—CY 2015 PACKAGED REVENUE CODES 

Revenue 

Code Description 

250 Pharmacy; General Classification 

251 Pharmacy; Generic Drugs 

252 Pharmacy; Non-Generic Drugs 

254 Pharmacy; Drugs Incident to Other Diagnostic Services 

255 Pharmacy; Drugs Incident to Radiology 

257 Pharmacy; Non-Prescription 

258 Pharmacy; IV Solutions 

259 Pharmacy; Other Pharmacy 

260 IV Therapy; General Classification 

261 IV Therapy; Infusion Pump 

262 IV Therapy; IV Therapy/Pharmacy Svcs 

263 IV Therapy; IV Therapy/Drug/Supply Delivery 

264 IV Therapy; IV Therapy/Supplies 

269 IV Therapy; Other IV Therapy 

270 Medical/Surgical Supplies and Devices; General Classification 

271 Medical/Surgical Supplies and Devices; Non-sterile Supply 

272 Medical/Surgical Supplies and Devices; Sterile Supply 

275 Medical/Surgical Supplies and Devices; Pacemaker 

276 Medical/Surgical Supplies and Devices; Intraocular Lens 

278 Medical/Surgical Supplies and Devices; Other Implants 

279 Medical/Surgical Supplies and Devices; Other Supplies/Devices 

280 Oncology; General Classification 

289 Oncology; Other Oncology 

331 Radiology- Therapeutic and/or Chemotherapy Administration; Chemotherapy 

Admin – Injected 

332 Radiology- Therapeutic and/or Chemotherapy Administration; Chemotherapy 

Admin – Oral 

335 Radiology- Therapeutic and/or Chemotherapy Administration; Chemotherapy 

Admin – IV 

343 Nuclear Medicine; Diagnostic Radiopharmaceuticals 

344 Nuclear Medicine; Therapeutic Radiopharmaceuticals 

360 Operating Room Services; General Classification 

361 Operating Room Services; Minor Surgery 

362 Operating Room Services; Organ Transplant- Other than Kidney 

369 Operating Room Services; Other OR Services 

370 Anesthesia; General Classification 

371 Anesthesia; Anesthesia Incident to Radiology 

372 Anesthesia; Anesthesia Incident to Other DX Services 

379 Anesthesia; Other Anesthesia 

390 Administration, Processing and Storage for Blood and Blood Components; 

General Classification 
CMS-1613-FC 102 

Revenue 

Code Description 

392 Administration, Processing and Storage for Blood and Blood Components; 

Processing and Storage 

399 Administration, Processing and Storage for Blood and Blood Components; 

Other Blood Handling 

410 Respiratory Services; General Classification 

412 Respiratory Services; Inhalation Services 

413 Respiratory Services; Hyperbaric Oxygen Therapy 

419 Respiratory Services; Other Respiratory Services 

621 Medical Surgical Supplies – Extension of 027X; Supplies Incident to 

Radiology 

622 Medical Surgical Supplies – Extension of 027X; Supplies Incident to Other 

DX Services 

623 Medical Supplies – Extension of 027X, Surgical Dressings 

624 Medical Surgical Supplies – Extension of 027X; FDA Investigational 

Devices 

630 Pharmacy – Extension of 025X; Reserved 

631 Pharmacy – Extension of 025X; Single Source Drug 

632 Pharmacy – Extension of 025X; Multiple Source Drug 

633 Pharmacy – Extension of 025X; Restrictive Prescription 

681 Trauma Response; Level I Trauma 

682 Trauma Response; Level II Trauma 

683 Trauma Response; Level III Trauma 

684 Trauma Response; Level IV Trauma 

689 Trauma Response; Other 

700 Cast Room; General Classification 

710 Recovery Room; General Classification 

720 Labor Room/Delivery; General Classification 

721 Labor Room/Delivery; Labor 

722 Labor Room/Delivery; Delivery Room 

724 Labor Room/Delivery; Birthing Center 

729 Labor Room/Delivery; Other Labor Room/Delivery 

732 EKG/ECG (Electrocardiogram); Telemetry 

760 Specialty Services; General Classification 

761 Specialty Services; Treatment Room 

762 Specialty services; Observation Hours 

769 Specialty Services; Other Specialty Services 

770 Preventive Care Services; General Classification 

801 Inpatient Renal Dialysis; Inpatient Hemodialysis 

802 Inpatient Renal Dialysis; Inpatient Peritoneal Dialysis (Non-CAPD) 

803 Inpatient Renal Dialysis; Inpatient Continuous Ambulatory Peritoneal 

Dialysis (CAPD) 

804 Inpatient Renal Dialysis; Inpatient Continuous Cycling Peritoneal Dialysis 

(CCPD) 
CMS-1613-FC 103 

Revenue 

Code Description 

809 Inpatient Renal Dialysis; Other Inpatient Dialysis 

810 Acquisition of Body Components; General Classification 

819 Acquisition of Body Components; Other Donor 

821 Hemodialysis-Outpatient or Home; Hemodialysis Composite or Other Rate 

824 Hemodialysis-Outpatient or Home; Maintenance – 100% 

825 Hemodialysis-Outpatient or Home; Support Services 

829 Hemodialysis-Outpatient or Home; Other OP Hemodialysis 

942 Other Therapeutic Services (also see 095X, an extension of 094x); 

Education/Training 

943 Other Therapeutic Services (also see 095X, an extension of 094X), Cardiac 

Rehabilitation 

948 Other Therapeutic Services (also see 095X, an extension of 094X), 

Pulmonary Rehabilitation 

 In accordance with our longstanding policy, we proposed to continue to exclude: 

(1) claims that had zero costs after summing all costs on the claim; and (2) claims 

containing packaging flag number 3. Effective for services furnished after July 1, 2014, 

the I/OCE assigned packaging flag number 3 to claims on which hospitals submitted 

token charges less than $1.01 for a service with status indicator “S” or “T” (a major 

separately payable service under the OPPS) for which the Medicare Administrative 

Contractor (MAC) was required to allocate the sum of charges for services with a status 

indicator equaling “S” or “T” based on the relative payment weight of the APC to which 

each code was assigned. We do not believe that these charges, which were token charges 

as submitted by the hospital, are valid reflections of hospital resources. Therefore, we 

deleted these claims. We also deleted claims for which the charges equaled the revenue 

center payment (that is, the Medicare payment) on the assumption that, where the charge 

equaled the payment, to apply a CCR to the charge would not yield a valid estimate of 

relative provider cost. We proposed to continue these processes for the CY 2015 OPPS. 
CMS-1613-FC 104 

 For the remaining claims, we proposed to then standardize 60 percent of the costs 

of the claim (which we have previously determined to be the labor-related portion) for 

geographic differences in labor input costs. We made this adjustment by determining the 

wage index that applied to the hospital that furnished the service and dividing the cost for 

the separately paid HCPCS code furnished by the hospital by that wage index. The 

claims accounting that we provide for the proposed rule and final rule with comment 

period contains the formula we use to standardize the total cost for the effects of the wage 

index. As has been our policy since the inception of the OPPS, we proposed to use the 

pre-reclassified wage indices for standardization because we believe that they better 

reflect the true costs of items and services in the area in which the hospital is located than 

the post-reclassification wage indices and, therefore, would result in the most accurate 

unadjusted geometric mean costs. We proposed to use these pre-reclassified wage 

indices for standardization using the new OMB labor market area delineations described 

in section II.C. of this final rule with comment period. 

 In accordance with our longstanding practice, we also proposed to exclude single 

and “pseudo” single procedure claims for which the total cost on the claim was outside 

3 standard deviations from the geometric mean of units for each HCPCS code on the 

bypass list (because, as discussed above, we used claims that contain multiple units of the 

bypass codes). 

 After removing claims for hospitals with error CCRs, claims without HCPCS 

codes, claims for immunizations not covered under the OPPS, and claims for services not 

paid under the OPPS, approximately 118 million claims were left. Using these 

approximately 118 million claims, we created approximately 100 million single and 
CMS-1613-FC 105 

“pseudo” single procedure claims, of which we used approximately 51 million single 

bills (after trimming out approximately 1 million claims as discussed in section II.A.1.a. 

of this final rule with comment period) in the CY 2015 geometric mean cost development 

and ratesetting. 

 As discussed above, the OPPS has historically developed the relative weights on 

which APC payments are based using APC median costs. For the CY 2013 OPPS and 

the CY 2014 OPPS, we calculated the APC relative payment weights using geometric 

mean costs, and we are continuing this practice for CY 2015. Therefore, the following 

discussion of the 2 times rule violation and the development of the relative payment 

weight refers to geometric means. For more detail about the CY 2015 OPPS/ASC policy 

to calculate relative payment weights based on geometric means, we refer readers to 

section II.A.2.f. of this final rule with comment period. 

 We proposed to use these claims to calculate the CY 2015 geometric mean costs 

for each separately payable HCPCS code and each APC. The comparison of HCPCS 

code-specific and APC geometric mean costs determines the applicability of the 2 times 

rule. Section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items 

and services within an APC group shall not be treated as comparable with respect to the 

use of resources if the highest median cost (or mean cost, if elected by the Secretary) for 

an item or service within the group is more than 2 times greater than the lowest median 

cost (or mean cost, if so elected) for an item or service within the same group (the 2 times 

rule). While we have historically applied the 2 times rule based on median costs, in the 

CY 2013 OPPS/ASC final rule with comment period (77 FR 68270), as part of the 

CY 2013 policy to develop the OPPS relative payment weights based on geometric mean 
CMS-1613-FC 106 

costs, we also applied the 2 times rule based on geometric mean costs. For the CY 2015 

OPPS, we are continuing to develop the APC relative payment weights based on 

geometric mean costs. 

 We note that, for purposes of identifying significant HCPCS codes for 

examination in the 2 times rule, we consider codes that have more than 1,000 single 

major claims or codes that have both greater than 99 single major claims and contribute 

at least 2 percent of the single major claims used to establish the APC geometric mean 

cost to be significant. This longstanding definition of when a HCPCS code is significant 

for purposes of the 2 times rule was selected because we believe that a subset of 1,000 

claims is negligible within the set of approximately 100 million single procedure or 

single session claims we use for establishing geometric mean costs. Similarly, a HCPCS 

code for which there are fewer than 99 single bills and which comprises less than 

2 percent of the single major claims within an APC will have a negligible impact on the 

APC geometric mean. We note that this method of identifying significant HCPCS codes 

within an APC for purposes of the 2 times rule was used in prior years under the 

median-based cost methodology. Under our CY 2015 policy to continue to base the 

relative payment weights on geometric mean costs, we believe that this same 

consideration for identifying significant HCPCS codes should apply because the 

principles are consistent with their use in the median-based cost methodology. Unlisted 

codes are not used in establishing the percent of claims contributing to the APC, nor are 

their costs used in the calculation of the APC geometric mean. Finally, we reviewed the 

geometric mean costs for the services for which we pay separately under this final rule 

with comment period, and we reassigned HCPCS codes to different APCs where it was 
CMS-1613-FC 107 

necessary to ensure clinical and resource homogeneity within the APCs. The APC 

geometric means were recalculated after we reassigned the affected HCPCS codes. Both 

the HCPCS code-specific geometric means and the APC geometric means were weighted 

to account for the inclusion of multiple units of the bypass codes in the creation of 

“pseudo” single procedure claims. 

 We did not receive any public comments on our proposed CY 2015 methodology 

for calculating the geometric mean costs upon which the CY 2015 OPPS payment rates 

are based, and therefore are finalizing our methodology as proposed. 

 As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this final rule with 

comment period, in some cases, APC geometric mean costs are calculated using 

variations of the process outlined above. Specifically, section II.A.2.d. of this final rule 

with comment period addresses the calculation of single APC criteria-based geometric 

mean costs. Section II.A.2.f. of this final rule with comment period discusses the 

calculation of composite APC criteria-based geometric mean costs. Section VIII.B. of 

this final rule with comment period addresses the methodology for calculating the 

geometric mean costs for partial hospitalization services. 

(2) Recommendations of the Panel Regarding Data Development 

 At the August 2014 meeting of the Panel, we discussed changes in APC 

geometric mean cost between the CY 2015 Proposed OPPS and the CY 2014 Final 

OPPS, the CY 2015 proposed comprehensive APC policy, and a study examining the 

packaged codes most commonly appearing with clinic visit codes. 
CMS-1613-FC 108 

 At the August 2014 Panel meeting, the Panel made a number of recommendations 

related to the data process. The Panel’s data-related recommendations and our responses 

follow. 

 Recommendation: The Panel recommends that the work of the Data 

Subcommittee continue. 

 CMS Response: We are accepting this recommendation. 

 Recommendation: The Panel recommends that Jim Nelson serve as the Chair of 

the Data Subcommittee. 

 CMS Response: We are accepting this recommendation. 

 Recommendation: The Panel recommends that CMS provide the Panel with a list 

of APCs for which costs fluctuate by more than 20 percent relative to the APCs in the 

most recent prior rulemaking cycle. 

 CMS Response: We are accepting this recommendation and will provide this 

information regarding fluctuating APC costs at the next HOP Panel meeting. 

d. Calculation of Single Procedure APC Criteria-Based Costs 

(1) Device-Dependent APCs 

 Historically, device-dependent APCs are populated by HCPCS codes that usually, 

but not always, require that a device be implanted or used to perform the procedure. The 

standard methodology for calculating device-dependent APC costs utilizes claims data 

that generally reflect the full cost of the required device by using only the subset of single 

procedure claims that pass the procedure-to-device and device-to-procedure edits; do not 

contain token charges (less than $1.01) for devices; and, until January 1, 2014, did not 

contain the “FB” modifier signifying that the device was furnished without cost to the 
CMS-1613-FC 109 

provider, or where a full credit was received; and do not contain the “FC” modifier 

signifying that the hospital received partial credit for the device. For a full history of how 

we have calculated payment rates for device-dependent APCs in previous years and a 

detailed discussion of how we developed the standard device-dependent APC ratesetting 

methodology, we refer readers to the CY 2008 OPPS/ASC final rule with comment 

period (72 FR 66739 through 66742). Overviews of the procedure-to-device edits and 

device-to-procedure edits used in ratesetting for device-dependent APCs are available in 

the CY 2005 OPPS final rule with comment period (69 FR 65761 through 65763) and the 

CY 2007 OPPS/ASC final rule with comment period (71 FR 68070 through 68071). 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74857 through 

74859), we finalized a policy to define 29 device-dependent APCs as single complete 

services and to assign them to comprehensive APCs (C-APCs) that provide all-inclusive 

payments for those services, but we delayed implementation of this policy until CY 2015 

(78 FR 74862). This policy is a further step toward improving the prospective nature of 

our payments for these services where the cost of the device is relatively high compared 

to the other costs that contribute to the cost of the service. Table 5 of the CY 2014 

OPPS/ASC final rule with comment period provided a list of the 39 APCs recognized as 

device-dependent APCs and identified the 29 device-dependent APCs that would have 

been converted to C-APCs. In addition, in the CY 2014 OPPS/ASC final rule with 

comment period, we finalized a policy for the treatment of the remaining 10 

device-dependent APCs that applied our standard APC ratesetting methodology to 

calculate the CY 2014 payment rates for these APCs, but implementation of the entire 

policy was delayed until CY 2015. 
CMS-1613-FC 110 

 In the CY 2014 OPPS/ASC proposed rule (78 FR 43556 through 43557) and in 

the CY 2015 OPPS/ASC proposed rule (79 FR 40937 through 40938), for CY 2015, we 

proposed to no longer implement procedure-to-device edits and device-to-procedure edits 

for any APC. Under this proposed policy, which was discussed but not finalized in the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 74857 through 74858), 

hospitals are still expected to adhere to the guidelines of correct coding and append the 

correct device code to the claim, when applicable. However, claims would no longer be 

returned to providers when specific procedure and device code pairings do not appear on 

a claim. As we stated in both the CY 2014 OPPS/ASC proposed rule (78 FR 43556 

through 43557) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74857 through 74858), we believe that this is appropriate because of hospitals’ 

multiyear experience in coding and reporting charges for medical device implantation 

procedures. We also believe that the C-APCs will reliably reflect the cost of the devices 

as the C-APCs will include all costs on the claim (except for the few categories of items 

and services that are excluded from the comprehensive APC policy). Therefore, we do 

not believe that the burden imposed upon hospitals to adhere to the procedure-to-device 

edits and device-to-procedure edits and the burden imposed upon the Medicare program 

to maintain those edits continue to be necessary. As with all other items and services 

recognized under the OPPS, we expect hospitals to code and report their costs 

appropriately, regardless of whether there are claims processing edits in place. 

 The CY 2015 comprehensive APC policy that we proposed in the CY 2015 

OPPS/ASC proposed rule consolidates and restructures the 39 current device-dependent 

APCs into 26 (of the total 28) proposed C-APCs, which were listed in Table 5 of the 
CMS-1613-FC 111 

proposed rule. The final CY 2015 comprehensive APC policy is discussed in section 

II.A.2.e. of this final rule with comment period. As a result of the final CY 2015 

comprehensive APC policy, only 3 of the current 39 device-dependent APCs will remain 

in the CY 2015 OPPS because all other device-dependent APCs are being converted to 

C-APCs. All of the remaining device-dependent APCs were either deleted due to the 

consolidation and restructuring of these APCs or they were converted to C-APCs. In 

conjunction with the conversion of almost all of the 39 device-dependent APCs into 

C-APCs, and as discussed in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74857 through 74858), in the CY 2015 OPPS/ASC proposed rule, we proposed to 

no longer use procedure-to-device edits and device-to-procedure edits for any APC 

because we continue to believe that the elimination of device-to-procedure edits and 

procedure-to-device edits is appropriate considering the experience that hospitals now 

have in coding and reporting these claims fully and, for the more costly devices, the CAPCs will reliably reflect the cost of the device if it is included anywhere on the claim. 

 While we believe that device-to-procedure edits and procedure-to-device edits are 

no longer necessary, we are sensitive to the concerns raised by stakeholders in the past 

about the costs of devices being reported and captured. In light of these concerns, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 40937 through 40938), we proposed to create 

claims processing edits that require any of the device codes used in the previous 

device-to-procedure edits for device-dependent APCs to be present on the claim 

whenever a procedure code assigned to any of the former device-dependent APCs (most 

of which are being converted to C-APCs) is reported on the claim to ensure that device 

costs are captured by hospitals. We stated that we expect that hospitals would use an 
CMS-1613-FC 112 

appropriate device code consistent with correct coding in order to ensure that device costs 

are always reported on the claim, so that costs are appropriately captured in claims that 

CMS uses for ratesetting. 

 Comment: The majority of commenters requested that CMS maintain 

device-to-procedure and procedure-to-device edits in order to ensure continued complete 

and accurate cost reporting by hospitals. One commenter recommended that CMS adopt 

its proposal to require any appropriate device code used in the previous 

device-to-procedure edits to be present on the claim, if CMS discontinues the current 

edits and educates hospitals on the continued need to report the actual device used in the 

procedure for accurate ratesetting. One commenter was cautiously optimistic that CMS’ 

proposal requiring any appropriate device code used in the previous device-to-procedure 

edits to be present on the claim for most comprehensive APCs could promote complete 

reporting in a potentially less prescriptive way for hospitals. Another commenter 

believed CMS’ proposed policy change would result in “ridiculous” combinations of 

device and procedure codes for some services and thus would result in invalid mean costs 

for the procedures. Other commenters recommended that CMS modify its proposed 

policy to incorporate edit logic that will allow exceptions for comprehensive APCs that 

do not require device codes to be reported with every assigned procedural code. One 

commenter recommended that the claims edits be implemented initially on a 1-year 

trial/interim basis. Other commenters suggested that CMS eliminate the device claims 

processing edits altogether. 

 Response: We continue to believe that the elimination of device-to-procedure 

edits and procedure-to-device edits is appropriate due to the experience hospitals now 
CMS-1613-FC 113 

have in coding and reporting these claims fully. More specifically, for the more costly 

devices, we believe the C-APCs will reliably reflect the cost of the device if charges for 

the device are included anywhere on the claim. We remind commenters that, under our 

proposed policy, hospitals would still be expected to adhere to the guidelines of correct 

coding and append the correct device code to the claim when applicable. We also remind 

commenters that, as with all other items and services recognized under the OPPS, we 

expect hospitals to code and report their costs appropriately, regardless of whether there 

are claims processing edits in place. We do not believe that our proposed policy will 

result in ridiculous combinations of device and procedure codes for some services, as this 

would require deliberate miscoding by hospitals, which we do not believe would result 

from this change to the device code reporting requirements. We continue to expect that 

hospitals would use an appropriate device code consistent with correct coding in order to 

ensure that device costs are always reported on the claim, so that costs are appropriately 

captured in claims that CMS uses for ratesetting. While we believe that 

device-to-procedure edits and procedure-to-device edits are no longer necessary at this 

time, we are sensitive to commenters’ concerns that all relevant costs for the APCs 

currently recognized as device-dependent APCs are appropriately included in the claims 

that CMS will use for ratesetting. In light of those concerns, we believe creating a claims 

processing edit requiring a device code to be present on the claim whenever a procedure 

code from the APCs currently recognized as a device-dependent APCs will help to ensure 

continued complete and accurate cost reporting by hospitals. Device edits will not apply 

to procedures assigned to C-APCs that either do not use implantable medical devices or 

procedures that do not have device-to-procedure or procedure-to-device edits assigned to 
CMS-1613-FC 114 

them currently for CY 2014. This will ensure that the proposed device edit policy 

(requiring only that any device code be reported on a claim containing a procedure 

assigned to one of the formerly device-dependent APCs) will only apply to those 

procedures that currently have device-to-procedure or procedure-to-device edits currently 

assigned to them. 

 After consideration of the public comments we received, we are finalizing our 

proposal to no longer implement specific procedure-to-device and device-to-procedure 

edits for any APC. We also are finalizing our proposal to create claims processing edits 

that require any of the device codes used in the previous device-to-procedure edits to be 

present on the claim whenever a procedure code assigned to any of the current 

device-dependent APCs (that remain after the consolidation and restructuring of these 

APCs) listed in Table 5 below is reported on the claim to ensure that device costs are 

captured by hospitals. CMS will monitor the claims data to ensure that hospitals continue 

reporting appropriate device codes on the claims for the formerly device-dependent 

APCs. We note that while we proposed to make all 26 of the APCs listed in Table 5 

C-APCs for CY 2015, in section II.A.2.e. of this final rule with comment period, we are 

not finalizing our proposal to recognize APCs 0427, 0622, and 0652 as C-APCs. While 

APCs 0427, 0622, and 0652 will not be recognized as comprehensive APCs for CY 2015, 

our finalized device edit policy will apply to these 3 APCs, as these 3 APCs are formerly 

device-dependent APCs. The term “device-dependent APC” will no longer be employed 

beginning in CY 2015. We will refer to APCs with a device offset of more than 40 

percent as “device-intensive” APCs. Device-intensive APCs will be subject to the no 

cost/full credit and partial credit device policy. For a discussion of device-intensive 
CMS-1613-FC 115 

APCs and the no cost/full credit and partial credit device policy, we refer readers to 

section IV.B. of this final rule with comment period. For a discussion of ASC procedures 

designated as device intensive, we refer readers to section XII.C.1.c. of this final rule 

with comment period. 

TABLE 5.—APCs THAT WILL REQUIRE A DEVICE CODE TO BE 

REPORTED ON A CLAIM WHEN A PROCEDURE ASSIGNED TO ONE OF 

THESE APCs IS REPORTED 

APC APC Title 

0039 Level III Neurostimulator 

0061 Level II Neurostimulator 

0083 Level I Endovascular 

0084 Level I EP 

0085 Level II EP 

0086 Level III EP 

0089 Level III Pacemaker 

0090 Level II Pacemaker 

0107 Level I ICD 

0108 Level II ICD 

0202 Level V Female Reproductive 

0227 Implantation of Drug Infusion 

0229 Level II Endovascular 

0259 Level VII ENT Procedures 

0293 Level IV Intraocular 

0318 Level IV Neurostimulator 

0319 Level III Endovascular 

0384 GI Procedures with Stents 

0385 Level I Urogenital 

0386 Level II Urogenital 

0425 Level V Musculoskeletal 

0427 Level II Tube/Catheter 

0622 Level II Vascular Access 

0648 Level IV Breast Surgery 

0652 Insertion of IP/Pl. Cath. 

0655 Level IV Pacemaker 
CMS-1613-FC 116 

(2) Blood and Blood Products 

Since the implementation of the OPPS in August 2000, we have made separate 

payments for blood and blood products through APCs rather than packaging payment for 

them into payments for the procedures with which they are administered. Hospital 

payments for the costs of blood and blood products, as well as for the costs of collecting, 

processing, and storing blood and blood products, are made through the OPPS payments 

for specific blood product APCs. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40938), for CY 2015, we 

proposed to continue to establish payment rates for blood and blood products using our 

blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most 

recently available hospital cost reports to convert hospital charges for blood and blood 

products to costs. This methodology has been our standard ratesetting methodology for 

blood and blood products since CY 2005. It was developed in response to data analysis 

indicating that there was a significant difference in CCRs for those hospitals with and 

without blood-specific cost centers, and past public comments indicating that the former 

OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a 

blood-specific cost center often resulted in an underestimation of the true hospital costs 

for blood and blood products. Specifically, in order to address the differences in CCRs 

and to better reflect hospitals’ costs, we proposed to continue to simulate blood CCRs for 

each hospital that does not report a blood cost center by calculating the ratio of the 

blood-specific CCRs to hospitals’ overall CCRs for those hospitals that do report costs 

and charges for blood cost centers. We proposed to apply this mean ratio to the overall 

CCRs of hospitals not reporting costs and charges for blood cost centers on their cost 
CMS-1613-FC 117 

reports in order to simulate blood-specific CCRs for those hospitals. We proposed to 

calculate the costs upon which the proposed CY 2015 payment rates for blood and blood 

products are based using the actual blood-specific CCR for hospitals that reported costs 

and charges for a blood cost center and a hospital-specific simulated blood-specific CCR 

for hospitals that did not report costs and charges for a blood cost center. 

 Comment: Commenters supported the proposal to continue to separately pay for 

blood and blood products using a blood-specific CCR methodology. 

 Response: We appreciate the commenters’ support. 

 After consideration of the public comments we received, we are finalizing our 

proposal to continue to establish payment rates for blood and blood products using our 

blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most 

recently available hospital cost reports to convert hospital charges for blood and blood 

products to costs. 

We continue to believe that the hospital-specific simulated blood-specific CCR 

methodology better responds to the absence of a blood-specific CCR for a hospital than 

alternative methodologies, such as defaulting to the overall hospital CCR or applying an 

average blood-specific CCR across hospitals. Because this methodology takes into 

account the unique charging and cost accounting structure of each hospital, we believe 

that it yields more accurate estimated costs for these products. We continue to believe 

that this methodology in CY 2015 will result in costs for blood and blood products that 

appropriately reflect the relative estimated costs of these products for hospitals without 

blood cost centers and, therefore, for these blood products in general. 
CMS-1613-FC 118 

 We note that, as discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final 

rule with comment period and this final rule with comment period, we established 

comprehensive APCs that will provide all-inclusive payments for certain 

device-dependent procedures. Under this policy, we include the costs of blood and blood 

products when calculating the overall costs of these comprehensive APCs. We proposed 

to continue to apply the blood-specific CCR methodology described in this section when 

calculating the costs of the blood and blood products that appear on claims with services 

assigned to the comprehensive APCs (79 FR 40939). Because the costs of blood and 

blood products will be reflected in the overall costs of the comprehensive APCs (and, as a 

result, in the final payment rates of the comprehensive APCs), we proposed to not make 

separate payments for blood and blood products when they appear on the same claims as 

services assigned to the comprehensive APCs (79 FR 40939). 

We did not receive any public comments on this proposal and are finalizing the 

policy as proposed. We refer readers to Addendum B to this final rule with comment 

period (which is available via the Internet on the CMS Web site) for the final CY 2015 

payment rates for blood and blood products (which are identified with status indicator 

“R”). For a more detailed discussion of the blood-specific CCR methodology, we refer 

readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full 

history of OPPS payment for blood and blood products, we refer readers to the CY 2008 

OPPS/ASC final rule with comment period (72 FR 66807 through 66810). 

(3) Brachytherapy Sources 

 Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of 

covered OPD services that classify devices of brachytherapy consisting of a seed or seeds 
CMS-1613-FC 119 

(or radioactive source) (“brachytherapy sources”) separately from other services or 

groups of services. The statute provides certain criteria for the additional groups. For the 

history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final 

rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 

through 68241). As we have stated in prior OPPS updates, we believe that adopting the 

general OPPS prospective payment methodology for brachytherapy sources is 

appropriate for a number of reasons (77 FR 68240). The general OPPS payment 

methodology uses costs based on claims data to set the relative payment weights for 

hospital outpatient services. This payment methodology results in more consistent, 

predictable, and equitable payment amounts per source across hospitals by averaging the 

extremely high and low values, in contrast to payment based on hospitals’ charges 

adjusted to costs. We believe that the OPPS prospective payment methodology, as 

opposed to payment based on hospitals’ charges adjusted to cost, also would provide 

hospitals with incentives for efficiency in the provision of brachytherapy services to 

Medicare beneficiaries. Moreover, this approach is consistent with our payment 

methodology for the vast majority of items and services paid under the OPPS. We refer 

readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66779 through 

66787), the CY 2009 OPPS/ASC final rule with comment period (73 FR 68668 through 

68670, the CY 2010 OPPS/ASC final rule with comment period (74 FR 60533 through 

60537), the CY 2011 OPPS/ASC final rule with comment period (75 FR 71978 through 

71981), the CY 2012 OPPS/ASC final rule with comment period (76 FR 74160 through 

74163), the CY 2013 OPPS/ASC final rule with comment period (77 FR 68240 through 
CMS-1613-FC 120 

68242), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 74860) for 

further discussion of the history of OPPS payment for brachytherapy sources. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40939 through 40940), for 

CY 2015, we proposed to use the costs derived from CY 2013 claims data to set the 

proposed CY 2015 payment rates for brachytherapy sources, as we proposed to use to set 

the proposed payment rates for most other items and services that would be paid under 

the CY 2015 OPPS. We based the proposed payment rates for brachytherapy sources on 

the geometric mean unit costs for each source, consistent with the methodology proposed 

for other items and services paid under the OPPS, as discussed in section II.A.2. of the 

proposed rule. We also proposed to continue the other payment policies for 

brachytherapy sources that we finalized and first implemented in the CY 2010 

OPPS/ASC final rule with comment period (74 FR 60537). We proposed to pay for the 

stranded and non-stranded not otherwise specified (NOS) codes, HCPCS codes C2698 

and C2699, at a rate equal to the lowest stranded or non-stranded prospective payment 

rate for such sources, respectively, on a per source basis (as opposed to, for example, a 

per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66785). We also proposed to continue the policy we 

first implemented in the CY 2010 OPPS/ASC final rule with comment period 

(74 FR 60537) regarding payment for new brachytherapy sources for which we have no 

claims data, based on the same reasons we discussed in the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66786; which was delayed until January 1, 2010 by 

section 142 of Pub. L. 110-275). That policy is intended to enable us to assign new 

HCPCS codes for new brachytherapy sources to their own APCs, with prospective 
CMS-1613-FC 121 

payment rates set based on our consideration of external data and other relevant 

information regarding the expected costs of the sources to hospitals. 

 The proposed CY 2015 payment rates for brachytherapy sources were included in 

Addendum B to the proposed rule (which is available via the Internet on the CMS Web 

site) and were identified with status indicator “U.” 

 We invited public comment on this proposed policy and also requested 

recommendations for new HCPCS codes to describe new brachytherapy sources 

consisting of a radioactive isotope, including a detailed rationale to support recommended 

new sources. In the CY 2015 OPPS/ASC proposed rule, we provided an appropriate 

address for receipt of these recommendations; the address is repeated at the end of this 

section. We indicated that we will continue to add new brachytherapy source codes and 

descriptors to our systems for payment on a quarterly basis. 

 Comment: Commenters expressed a number of concerns regarding CMS’ 

outpatient hospital claims data used to set prospective payment rates for brachytherapy 

sources. Commenters stated that high dose rate (HDR) brachytherapy devices decay over 

a 90-day period and are used to treat multiple patients during this time period. According 

to the commenters, the true cost of brachytherapy sources depends on the number of 

patients treated by a hospital within a 90-day period, as well as the number of treatments 

required and the intensity of the treatments. For this reason, the commenters believed 

that it is difficult to establish fair and adequate prospective payment rates for 

brachytherapy sources. Commenters also noted that the brachytherapy source payment 

data continue to show huge variation in per unit cost across hospitals. In addition, the 

commenters believed that CMS’ claims data contain rank order anomalies, causing the 
CMS-1613-FC 122 

usual cost relationship between the high activity palladium-103 source (HCPCS code 

C2635, Brachytherapy source, non-stranded, high activity, palladium-103, greater than 

2.2 mci (NIST) per source) and the low activity palladium-103 sources (HCPCS codes 

C2640, Brachytherapy source, stranded, palladium-103, per source and C2641, 

Brachytherapy source, non-stranded, palladium-103, per source) to be reversed. The 

commenters noted that the proposed geometric mean costs of the brachytherapy source 

HCPCS codes are approximately $26, $69, and $72, respectively. The commenters stated 

that stranded palladium-103 sources (HCPCS code C2640) always cost more than 

non-stranded palladium-103 sources (HCPCS code C2641), which is not reflected in the 

proposed rule claims data. 

 Response: As stated above, we believe that geometric mean costs based on 

hospital claims data for brachytherapy sources have produced reasonably consistent 

per-source cost estimates over the past several years, comparable to the patterns we have 

observed for many other OPPS services whose payments are set based upon relative 

payment weights from claims data. We believe that our per-source payment 

methodology specific to each source’s radioisotope, radioactive intensity, and stranded or 

non-stranded configuration, supplemented by payment based on the number of sources 

used in a specific clinical case, adequately accounts for the major expected sources of 

variability across treatments. (We refer readers to the CY 208 OPPS final rule with 

comment period (72 FR 66782); the CY 2010 OPPS/ASC final rule with comment period 

(74 FR 60534); the CY 2011 OPPS/ASC final rule with comment period (75 FR 71979); 

the CY 2012 OPPS/ASC final rule with comment period (76 FR 74161); the CY 2013 

OPPS/ASC final rule with comment period (77 FR 68241); and the CY 2014 OPPS/ASC 
CMS-1613-FC 123 

final rule with comment period (78 FR 74861)). We believe that the CY 2013 

brachytherapy source claims data used for CY 2015 ratesetting produce adequate 

payment for these services. Also, as we have explained previously, a prospective 

payment system relies upon the concept of averaging, where the payment may be more or 

less than the estimated cost of providing a service for a particular patient. With the 

exception of outlier cases, the payment for services is adequate to ensure access to 

appropriate care. In the case of brachytherapy sources for which the law requires 

separate payment groups, without packaging, the costs of these individual items could be 

expected to show greater variation than some other APCs under the OPPS because higher 

variability in costs for some component items and services is not balanced with lower 

variability in costs for others, and because relative payment weights are typically 

estimated using a smaller set of claims. Nevertheless, we believe that prospective 

payment for brachytherapy sources based on geometric mean costs of the services 

reported on claims calculated according to the standard OPPS methodology is appropriate 

and provides hospitals with the greatest incentives for efficiency in furnishing 

brachytherapy treatment. 

 Under the budget neutral provision for the OPPS, it is the relativity of costs, not 

the absolute costs, that is important, and we believe that brachytherapy sources are 

appropriately paid according to the standard OPPS payment approach. Furthermore, 

some sources may have geometric mean costs and payment rates based on 50 or fewer 

providers because it is not uncommon for OPPS prospective payment rates to be based on 

claims from a relatively small number of hospitals that furnished the service in the year 

of claims data available for the OPPS update year. Fifty hospitals may report hundreds of 
CMS-1613-FC 124 

brachytherapy source services on claims for many cases and comprise the universe of 

providers using particular low volume sources, for which we are required to pay 

separately by statute. Further, our methodology for estimating geometric mean costs for 

brachytherapy sources utilizes all line-item charges for those sources, which allows us to 

use all hospital reported charge and estimated cost information to set payment rates for 

these items. Therefore, no brachytherapy source claims are excluded from the estimate 

of geometric means costs. We have no reason to believe that prospective payment rates 

based on claims data from those providers furnishing a particular source do not 

appropriately reflect the cost of that source to hospitals. As for most other OPPS 

services, we note that the geometric mean costs for brachytherapy sources are based upon 

the costs of those providers sources in CY 2013. Hospitals individually determine their 

charge for an item or service, and one of Medicare’s primary requirements for setting a 

charge is that it be reasonably and consistently related to the cost of the item or service 

for that facility. (We refer readers to the Medicare Provider Reimbursement Manual, Part 

I, Section 2203, which is available on the CMS Web site at: 

http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-ManualsItems/CMS021929.html?DLPage=1&DLSort=0&DLSortDir=ascending.) We then estimate a 

cost from that charge using the hospital’s most recent Medicare hospital cost report data 

in our standard OPPS ratesetting process. 

 We acknowledge that HDR brachytherapy sources such as HDR iridium-192 have 

a fixed active life and must be replaced every 90 days. As a result, a hospital’s per 

treatment cost for the source would be dependent on the number of treatments furnished 

per source. The source’s cost must be amortized over the life of the source. Therefore, 

when establishing charges for HDR iridium-192, we expect hospitals to project the 
CMS-1613-FC 125 

number of treatments that would be provided over the life of the source and establish 

charges for the source accordingly (72 FR 66783; 74 FR 60535; 75 FR 71980; 

76 FR 74162; 77 FR 68242; and 78 FR 74861). For most payable services under the 

OPPS, our practice is to establish prospective payment rates based on the geometric mean 

costs determined from hospitals’ claims data to provide incentives for efficient and cost 

effective delivery of these services. 

 In the case of high-activity and low-activity iodine-125 sources, our CY 2013 

claims data show that the hospitals’ relative costs for the high-activity source are greater 

than the costs of the low-activity sources. As we have stated in the past, we do not have 

any information about the expected cost differential between high-activity and 

low-activity sources of various isotopes other than what is available in our claims and 

hospital cost report data (75 FR 71979; 76 FR 74162; 77 FR 68242; and 78 FR 74861). 

In the case of the relationship between high-activity and low-activity palladium-103, our 

claims data consistently have shown higher average costs for low-activity palladium-103. 

For the high-activity palladium-103 sources (HCPCS code C2635), 8 hospitals reported 

this service in CY 2013, compared to 104 and 159 hospitals that reported services for the 

low-activity palladium-103 sources described by HCPCS codes C2640 and C2641, 

respectively. It is clear that fewer hospitals furnished the high-activity palladium-103 

source than the low-activity palladium-103 sources, and we expect that the hospital cost 

distribution for those hospitals could be different than the cost distribution of the large 

numbers of hospitals reporting the low-activity palladium-103 sources, as previously 

stated (74 FR 60535; 75 FR 71979; 76 FR 74162; 77 FR 68242; and 78 FR 74861). 

These varied cost distributions clearly contribute to the observed relationship in 
CMS-1613-FC 126 

geometric mean cost between the different types of sources. However, we see no reason 

why our standard ratesetting methodology for brachytherapy sources that relies on all 

claims data from all hospitals furnishing brachytherapy sources would not yield valid 

geometric mean costs for those hospitals furnishing the different brachytherapy sources 

upon which CY 2015 prospective payments are based. 

 Comment: One commenter, a developer of a linear non-stranded palladium-103 

source described by HCPCS code C2636 (Brachytherapy linear source, nonstranded, 

palladium-103, per 1 mm), believed that CY 2013 claims data for services furnished prior 

to November 2013 used to determine the CY 2015 payment rates are invalid because the 

claims data do not reflect the costs of its linear non-stranded palladium-103 source, which 

became commercially available in November 2013. Further, the commenter stated that 

there were no other linear non-stranded palladium-103 sources commercially available 

prior to November 2013. Therefore, the commenter requested that payment for HCPCS 

code C2636 remain at the current CY 2014 payment rate until claims data for HCPCS 

code C2636 become available in CY 2016. 

 Response: We understand the commenter’s claim that its linear non-stranded 

palladium-103 source described by HCPCS code C2636 became commercially available 

in November 2013. However, we disagree with the commenter’s assertion that there 

were no other commercially available linear non-stranded palladium-103 sources 

described by HCPCS code C2636 prior to November 2013. We also disagree with the 

commenter that the CY 2013 claims data used to determine the CY 2015 payment rate for 

HCPCS code C2636 are invalid. As discussed in the CY 2005 OPPS final rule 

(69 FR 65840), we established HCPCS code C2636 to uniquely identify linear 
CMS-1613-FC 127 

non-stranded Palladium-103 brachytherapy sources. Since the HCPCS code became 

effective January 1, 2005, we have used historical claims data to set the prospective 

payment rates. To determine the CY 2015 OPPS payment rate for HCPCS code C2636, 

we used CY 2013 claims data, which include brachytherapy sources costs for linear 

non-stranded palladium-103 sources. Despite the date of commercial availability for the 

commenter’s linear non-stranded palladium-103 brachytherapy source, we do have 

CY 2013 claims data for HCPCS code C2636. Therefore, in accordance with our 

above-mentioned methodology and consistent with our policy used to set the prospective 

payment rates for brachytherapy sources, we are finalizing our proposed payment rate for 

HCPCS code C2636 based on CY 2013 claims data. 

 Comment: One commenter expressed concern regarding CMS’ CY 2014 

payment rate for a new brachytherapy source described by HCPCS code C2644 

(Brachytherapy source, cesium-131 chloride solution, per millicurrie), which became 

effective July 1, 2014. In the July 2014 OPPS Change Request (CR) 8776, dated 

May 23, 2014, CMS established a payment rate for HCPCS code C2644 of $18.97. The 

commenter, who also petitioned for the initial establishment of HCPCS code C2644 to 

describe the new brachytherapy source, requested clarification on how the payment rate 

was established by CMS, given that the cost of the new brachytherapy source is $25 per 

millicurie and claims data are not yet available. 

 Response: As discussed in the CY 2008 OPPS/ASC final rule with comment 

period (72 FR 66786), we assign new HCPCS codes that describe new brachytherapy 

sources to their own APCs, with prospective payment rates set based on consideration of 

external data and other relevant information regarding the expected costs of the sources 
CMS-1613-FC 128 

to hospitals. The commenter provided CMS with clinical information on the 

brachytherapy source cesium-131 chloride solution within its petition for the 

establishment of the new HCPCS code, and noted the source’s clinical similarities with 

the liquid iodine-125 solution source, which is described by HCPCS code A9527 (Iodine 

I-125 sodium iodide). The commenter stated that both iodine I-125 sodium iodide and 

cesium-131 chloride solution “have similar energies, are capable of delivering the same 

radiation dose to the planned treatment volume, are supplied in liquid form, and are 

compatible with the GliaSite RTS Catheter”. Based on clinical information provided by 

the commenter and a clinical review by CMS’ medical advisors, we believe that the 

brachytherapy sources described by HCPCS code C2644 and HCPCS code A9527 are 

clinical substitutes. Therefore, we set a payment rate for HCPCS code C2644 that is 

equal to the payment rate for HCPCS code A9527 when it became effective in CY 2014, 

and proposed to apply the same methodology for CY 2015. We are finalizing our 

proposal for CY 2015 to set the payment rate for HCPCS code C2644 as the equivalent of 

the payment rate for HCPCS code A9527. (We refer readers to Addendum B of this final 

rule with comment period for the CY 2015 OPPS payment rate. Addendum B is 

available via the Internet on the CMS Web site.) 

 After consideration of the public comments we received, we are finalizing our 

proposal to continue to set the payment rates for brachytherapy sources using our 

established prospective payment methodology, which is based on geometric mean costs. 

The CY 2015 final payment rates for brachytherapy sources are found in Addendum B to 

this final rule with comment period (which is available via the Internet on the CMS Web 

site). 
CMS-1613-FC 129 

 As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40940), we continue 

to invite hospitals and other parties to submit recommendations to CMS for new HCPCS 

codes that describe new brachytherapy sources consisting of a radioactive isotope, 

including a detailed rationale to support recommended new sources. Such 

recommendations should be directed to the Division of Outpatient Care, Mail Stop 

C4-03-27, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, 

Baltimore, MD 21244. 

 
CMS-1613-FC 130 

e. Comprehensive APCs 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 

74910), we finalized a comprehensive payment policy that packages payment for 

adjunctive and secondary items, services, and procedures into the most costly primary 

procedure (primarily medical device implantation procedures) under the OPPS at the 

claim level, effective January 1, 2015. We defined a comprehensive APC (C-APC) as a 

classification for the provision of a primary service and all adjunctive services provided 

to support the delivery of the primary service. We established comprehensive APCs as a 

category broadly for OPPS payment and established 29 C-APCs to prospectively pay for 

167 of the most costly device-dependent services assigned to these 29 APCs beginning in 

CY 2015 (78 FR 74910). Under this policy, we designated each service described by a 

HCPCS code assigned to a C-APC as the primary service and, with few exceptions 

described below, consider all other services reported on a hospital outpatient claim in 

combination with the primary service to be related to the delivery of the primary service 

(78 FR 74869). In addition, under this policy, we calculate a single payment for the 

entire hospital stay, defined by a single claim, regardless of the date of service span over 

which the primary service and all related services are delivered. This comprehensive 

APC packaging policy packages payment for all items and services typically packaged 

under the OPPS, but also packages payment for other items and services that are not 

typically packaged under the OPPS (78 FR 74909). 

 Because of the overall complexity of this new policy and our introduction of 

complexity adjustments in the CY 2014 OPPS/ASC final rule with comment period, we 

modeled the policy as if we were implementing it for CY 2014, but delayed the effective 
CMS-1613-FC 131 

date until January 1, 2015, to allow additional time for further analysis, opportunity for 

public comment, and systems preparation. In the CY 2015 OPPS/ASC proposed rule 

(79 FR 40941 through 40953), we discussed our review of the policies finalized in the 

CY 2014 OPPS/ASC final rule with comment period for C-APCs, and summarized and 

responded to public comments received in response to the CY 2014 OPPS/ASC final rule 

with comment period relating to the comprehensive APC payment policy. We then 

outlined our proposed policy for CY 2015, which included several clarifications and 

proposed modifications in response to public comments received. In this section, we use 

the terms “service” and “procedure” interchangeably. 

(1) Background 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 

74910), we finalized a policy, with a delayed implementation date of CY 2015, that 

designated certain covered OPD services as primary services (identified by a new OPPS 

status indicator of “J1”) assigned to C-APCs. When such a primary service is reported on 

a hospital outpatient claim, taking into consideration the few exceptions that are 

discussed below, we treat all other items and services reported on the claim as integral, 

ancillary, supportive, dependent, and adjunctive to the primary service (hereinafter 

collectively referred to as “adjunctive services”) and representing components of a 

comprehensive service (78 FR 74865). This results in a single prospective payment for 

the primary, comprehensive service based on the cost of all reported services at the claim 

level. We only exclude charges for services that are statutorily excluded from the OPPS, 

such as certain mammography and ambulance services that are never covered OPD 

services in accordance with section 1833(t)(1)(B)(iv) of the Act; charges for 
CMS-1613-FC 132 

brachytherapy seeds, which must receive separate payment under section 1833(t)(2)(H) 

of the Act; charges for pass-through drugs and devices, which also require separate 

payment under section 1833(t)(6) of the Act; and charges for self-administered drugs 

(SADs) that are not otherwise packaged as supplies because they are not covered under 

Medicare Part B under section 1861(s)(2)(B) of the Act (78 FR 74865). 

 The ratesetting process set forth in the CY 2014 OPPS/ASC final rule with 

comment period for the comprehensive APC payment policy is summarized as follows 

(78 FR 74887): 

 APC assignment of primary (“J1”) services. HCPCS codes assigned to status 

indicator “J1” are assigned to C-APCs based on our usual APC assignment methodology 

of evaluating the geometric mean cost of the primary service claims to establish resource 

similarity and the clinical characteristics of each procedure to establish clinical similarity 

within each APC. Claims reporting multiple procedures described by HCPCS codes 

assigned to status indicator “J1” are identified and the procedures are then assigned to a 

C-APC based on the primary HCPCS code that has the highest APC geometric mean 

cost. This ensures that multiple procedures described by HCPCS codes assigned to status 

indicator “J1” reported on claims are always paid through and assigned to the C-APC that 

would generate the highest APC payment. If multiple procedures described by HCPCS 

codes assigned to status indicator “J1” that are reported on the same claim have the same 

APC geometric mean estimated cost, as would be the case when two different procedures 

described by HCPCS codes assigned to status indicator “J1” are assigned to the same 

APC, identification of the primary service is then based on the procedure described by 

the HCPCS code assigned to status indicator “J1” with the highest HCPCS-level 
CMS-1613-FC 133 

geometric mean cost. When there is no claims data available upon which to establish a 

HCPCS-level comprehensive geometric mean cost, we use the geometric mean cost for 

the APC to which the HCPCS code is assigned. 

 Complexity adjustments and determination of final C-APC groupings. We then 

considered reassigning complex subsets of claims for each primary service described 

by a HCPCS code assigned to status indicator “J1.” All claims reporting more than one 

procedure described by HCPCS codes assigned to status indicator “J1” are evaluated for 

the existence of commonly occurring pairs of procedure codes reported on claims that 

exhibit a materially greater comprehensive geometric mean cost relative to the geometric 

mean cost of the claims reporting that primary service. This indicates that the subset of 

procedures identified by the secondary HCPCS code has increased resource requirements 

relative to less complex subsets of that primary procedure (78 FR 74887). The CY 2014 

complexity adjustment criteria are as follows: 

● The comprehensive geometric mean cost of the claims reporting the 

combination of procedures is more than two times the comprehensive geometric mean 

cost of the single major claims reporting only the primary service; 

● There are more than 100 claims in the data year reporting the specific code 

combination; 

● The number of claims reporting the specific code combination exceed 5 

percent of the volume of all claims reporting the designated primary service; and 

● There would be no violation of the “2 times” rule within the receiving C-APC 

(78 FR 74886). 
CMS-1613-FC 134 

 If a pair of procedure codes reported on claims is identified that meets these 

requirements, that is, commonly occurring and exhibiting materially greater resource 

requirements, the pair of procedure codes is further evaluated to confirm clinical validity 

as a complex subset of the primary procedure and the pair of procedure codes is then 

identified as complex, and primary service claims with that combination of procedure 

codes are subsequently reassigned as appropriate. If a pair of procedure codes does not 

meet the requirement for a materially greater resource requirement or does not occur 

commonly, the pair of procedure codes is not considered to be complex, and primary 

service claims with that combination of procedure codes are not reassigned. All pairs of 

procedures described by HCPCS codes assigned to status indicator “J1” for each primary 

service are similarly evaluated. Once all pairs of procedures described by HCPCS codes 

assigned to status indicator “J1” have been evaluated, all claims identified for 

reassignment for each primary service are combined and the group is assigned to a higher 

level C-APC within a clinical family of C-APCs, that is, an APC with greater estimated 

resource requirements than the initially assigned C-APC and with appropriate clinical 

homogeneity. We assessed resource variation for reassigned claims within the receiving 

APC using the geometric mean cost for all reassigned claims for the primary service 

relative to other services assigned to that APC using the 2 times rule criteria 

(78 FR 74887). 

 For new HCPCS codes and codes without data, we use the best information 

available to us to identify combinations of procedure codes that represent a more 

complex form of the primary service and warrant reassignment to a higher level APC. In 
CMS-1613-FC 135 

the proposed rule, we stated that we would reevaluate our APC assignments and 

identification and APC placement of complex claims once claims data become available. 

(2) CY 2015 Policy for C-APCs 

(a) Methodology 

 Basic C-APC Methodology. After consideration of the public comments we 

received on the CY 2014 OPPS/ASC final rule with comment period, in the CY 2015 

OPPS/ASC proposed rule (79 FR 40941 through 40953), we described our proposed 

payment methodology for C-APCs for CY 2015. For CY 2015, we proposed to establish 

a policy that services assigned to C-APCs would be designated as the primary services 

for C-APCs, using new status indicator “J1” as listed in Addendum J and Addendum B to 

the CY 2015 OPPS/ASC proposed rule (which are available via the Internet on the CMS 

Web site). We stated that the basic steps for calculating the C-APC payments remain the 

same as those finalized in the CY 2014 OPPS/ASC final rule with comment period, 

except for the complexity adjustment criteria described briefly above (78 FR 74885 

through 74888). For CY 2015, we proposed to restructure and consolidate some of the 

current device-dependent APCs to improve both the resource and clinical homogeneity of 

these APCs. In addition, instead of assigning any add-on codes to status indicator “J1” as 

finalized in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74873 

through 74883), we proposed to package all add-on codes, consistent with our CY 2014 

OPPS policy to package add-on codes (78 FR 74942), but to allow certain add-on codes 

to qualify a primary J1 procedure code-add-on code combination for a complexity 

adjustment. For CY 2015, similar to other procedures described by add-on codes under 

the OPPS and according to 42 CFR 419.2(b)(18), procedures described by add-on codes 
CMS-1613-FC 136 

furnished in conjunction with primary comprehensive services would be packaged 

instead of being assigned to an APC with a separately payable status indicator in 

accordance with the CY 2014 OPPS policy for add-on codes assigned to 

device-dependent APCs. However, the add-on codes currently assigned to 

device-dependent APCs (that are converted to C-APCs) may qualify as a secondary code 

in a complexity adjustment code pair. 

 Further, we proposed to convert all current device-dependent APCs remaining 

after the proposed restructuring and consolidation of some of these APCs to C-APCs. 

We also proposed to create two new C-APCs: C-APC 0067 for single-session cranial 

stereotactic radiosurgery services (SRS) and C-APC 0351 for intraocular telescope 

implantation. In addition, we proposed to reassign CPT codes 77424 and 77425 that 

describe intraoperative radiation therapy (IORT) to C-APC 0648 (Level IV Breast and 

Skin Surgery). We discuss in detail below our proposed new complexity adjustment 

criteria and our proposal to package all add-on codes, but to allow complexity 

adjustments for qualifying code combinations of primary codes and add-on codes 

currently assigned to device-intensive C-APCs. 

 As stated in the CY 2014 OPPS/ASC final rule with comment period, we define 

the comprehensive APC payment policy as including all covered OPD services on a 

hospital outpatient claim reporting a primary service that is assigned to status indicator 

“J1,” excluding services that cannot be covered OPD services or that cannot by statute be 

paid under the OPPS. Services packaged for payment under the comprehensive APC 

payment packaging policy, that is, services that are typically integral, ancillary, 

supportive, dependent, or adjunctive to the primary service, provided during the delivery 
CMS-1613-FC 137 

of the comprehensive service, include diagnostic procedures, laboratory tests and 

other diagnostic tests and treatments that assist in the delivery of the primary 

procedure; visits and evaluations performed in association with the procedure; 

uncoded services and supplies used during the service; durable medical equipment 

as well as prosthetic and orthotic items and supplies when provided as part of the 

outpatient service; and any other components reported by HCPCS codes that are 

provided during the comprehensive service, except excluded services that are 

described below (78 FR 74865). In addition, payment for outpatient department 

services that are similar to therapy services and delivered either by therapists or 

nontherapists is packaged as part of the comprehensive service. These services that 

are provided during the perioperative period are adjunctive services and not therapy 

services as described in section 1834(k) of the Act, regardless of whether the services are 

delivered by therapists or other nontherapist health care workers. We have previously 

noted that therapy services are those provided by therapists under a plan of care in 

accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid 

under section 1834(k) of the Act subject to annual therapy caps, as applicable 

(78 FR 74867). However, certain other services similar to therapy services are 

considered and paid as outpatient services. Payment for these nontherapy outpatient 

department services that are reported with therapy codes and provided with a 

comprehensive service is packaged with the comprehensive service. We note that these 

services, even though they are reported with therapy codes, are outpatient department 

services and not therapy services. Therefore, the requirement for functional reporting 

under the regulations at 42 CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply. 
CMS-1613-FC 138 

 Items packaged for payment provided in conjunction with the primary service 

also include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except 

those drugs with pass-through payment status and those drugs that are usually selfadministered (SADs), unless they function as packaged supplies (78 FR 74868 through 

74869 and 74909). We refer readers to the Medicare Benefit Policy Manual, Chapter 15, 

Covered Medical and Other Health Services, Section 50.2.M, for a description of our 

policy on self-administered drugs treated as hospital outpatient supplies, including lists of 

SADs that function as supplies and those that do not function as supplies. 

 Services excluded from the comprehensive APC payment policy are as follows: 

SADs that are not considered supplies, because they are not covered under Medicare Part 

B under section 1861(s)(2)(B) of the Act; services excluded from the OPPS according to 

section 1833(t)(1)(B) of the Act including recurring therapy services, which we 

considered unrelated to the comprehensive service (defined as therapy services reported 

on a separate facility claim for recurring services), ambulance services, diagnostic and 

screening mammography, the annual wellness visit providing personalized prevention 

plan services, and pass-through drugs and devices that are paid according to section 

1833(t)(6) of the Act. 

 We also exclude preventive services defined in 42 CFR 410.2, “(1) [t]he specific 

services listed in section 1861(ww)(2) of the Act, with the explicit exclusion of 

electrocardiograms; (2) [t]he Initial Preventive Physical Examination (IPPE) (as specified 

by section 1861(ww)(1) of the Act); and (3) Annual Wellness Visit (AWV), providing 

Personalized Prevention Plan Services (PPPS) (as specified by section 1861(hhh)(1) of 

the Act).” These preventive services are listed by their HCPCS codes in Addendum J to 
CMS-1613-FC 139 

this final rule with comment period and include: annual wellness visits providing 

personalized prevention plan services; initial preventive physical examinations; 

pneumococcal, influenza, and hepatitis B vaccines and administrations; mammography 

screenings; pap smear screenings and pelvic examination screenings; prostate cancer 

screening tests; colorectal cancer screening tests; diabetes outpatient self-management 

training services; bone mass measurements; glaucoma screenings; medical nutrition 

therapy services; cardiovascular screening blood tests; diabetes screening tests; 

ultrasound screenings for abdominal aortic aneurysm; and additional preventive services 

as defined in section 1861(ddd)(1) of the Act. We defined and discussed these services in 

detail for hospital billing purposes in the CY 2011 OPPS/ASC final rule with comment 

period pursuant to coverage and payment provisions in the Affordable Care Act 

(75 FR 72013 through 72020). 

 This policy is consistent with our policy to exclude preventive services from the 

ancillary services packaging policy, will encourage the provision of preventive services, 

and provide maximum flexibility to beneficiaries across different sites of service in 

receiving preventive services. In addition, the statute does not permit assessment of 

beneficiary cost-sharing for most preventive services, and some receive cost-based 

payment (75 FR 72013 through 72020 and 78 FR 74962). While any beneficiary 

cost-sharing attributable to preventive services, if they were packaged, would be very 

small in relation to the comprehensive service overall, we believe that we should exclude 

these services from the OPPS beneficiary copayment calculations, as discussed in section 

II.I. of this final rule with comment period. We note that payment for one preventive 

service (HCPCS code G0102 (Prostate cancer screening; digital rectal examination)) will 
CMS-1613-FC 140 

continue to be packaged under the OPPS in CY 2015, both broadly and in the context of 

comprehensive services. Currently, payment for the procedure described by this HCPCS 

code is packaged because it is included in evaluation and management services. We note 

that beneficiary cost-sharing is not waived for the service described by HCPCS code 

G0102. 

 Consistent with the policy finalized in the CY 2014 OPPS/ASC final rule with 

comment period, we exclude brachytherapy services and pass-through drugs, biologicals 

and devices that are separately payable by statute (78 FR 74868 and 74909). In addition, 

we exclude services assigned to OPPS status indicator “F” that are not paid under the 

OPPS and are instead paid on a reasonable cost basis (certain CRNA services, Hepatitis 

B vaccines, and corneal tissue acquisition, which is not part of a comprehensive service 

for CY 2015). In Table 6 below, we list the services that are excluded from the 

comprehensive APC payment policy. 

TABLE 6.—COMPREHENSIVE APC PAYMENT POLICY EXCLUSIONS FOR 

CY 2015 

Ambulance services 

Brachytherapy 

Diagnostic and mammography screenings 

Physical therapy, speech-language pathology and occupational therapy services - 

Therapy services reported on a separate facility claim for recurring services 

Pass-through drugs, biologicals and devices 

Preventive services defined in 42 CFR 410.2: 

• Annual wellness visits providing personalized prevention plan services 

• Initial preventive physical examinations 

• Pneumococcal, influenza, and hepatitis B vaccines and administrations 

• Mammography Screenings 

• Pap smear screenings and pelvic examination screenings 

• Prostate cancer screening tests 

• Colorectal cancer screening tests 

• Diabetes outpatient self-management training services 
CMS-1613-FC 141 

• Bone mass measurements 

• Glaucoma screenings 

• Medical nutrition therapy services 

• Cardiovascular screening blood tests 

• Diabetes screening tests 

• Ultrasound screenings for abdominal aortic aneurysm 

• Additional preventive services (as defined in section 1861(ddd)(1) of the Act) 

Self-administered drugs - Drugs that are usually self-administered and do not function 

as supplies in the provision of the comprehensive service 

Services assigned to OPPS status indicator “F” (Certain CRNA services, Hepatitis B 

vaccines and corneal tissue acquisition) 

Services assigned to OPPS status indicator “L” (Influenza and pneumococcal 

pneumonia vaccines) 

Certain Part B inpatient services – Ancillary Part B inpatient services payable under 

Part B when the primary “J1” service for the claim is not a payable Part B inpatient 

service (for example, exhausted Medicare Part A benefits, beneficiaries with Part B 

only) 

 We proposed to continue to define each hospital outpatient claim reporting a 

single unit of a single primary service assigned to status indicator “J1” as a single “J1” 

unit procedure claim (78 FR 74871). We proposed to sum all line item charges for 

services included in the C-APC payment, convert the charges to costs, and calculate the 

“comprehensive” geometric mean cost of one unit of each service assigned to status 

indicator “J1.” (We note that we use the term “comprehensive” to describe the geometric 

mean cost of a claim reporting “J1” service(s) or the geometric mean cost of a C-APC, 

inclusive of all of the items and services in the C-APC payment bundle). Charges for 

services that would otherwise have been separately payable are added to the charges for 

the primary service. This process differs from our traditional cost accounting 

methodology only in that all such services on the claim are packaged (except certain 

services as described above). We proposed to apply our standard data trims, excluding 

claims with extremely high primary units or extreme costs. 
CMS-1613-FC 142 

 The comprehensive geometric mean costs are used to establish resource similarity 

and, along with clinical similarity, dictate the assignment of the primary services to the 

C-APCs. We proposed to establish a ranking of each primary service (single unit only) 

assigned to status indicator “J1” according to their comprehensive geometric mean costs. 

For the minority of claims reporting more than one primary service assigned to status 

indicator “J1” or units thereof (approximately 20 percent of CY 2013 claims), we 

proposed to continue to identify one “J1” service as the primary service for the claim 

based on our cost-based ranking of primary services. We then assign these multiple “J1” 

procedure claims to the C-APC to which the service designated as the primary service is 

assigned. If the reported “J1” services reported on a claim map to different C-APCs, we 

designate the “J1” service assigned to the C-APC with the highest comprehensive 

geometric mean cost as the primary service for that claim. If the reported multiple “J1” 

services on a claim map to the same C-APC, we designate the most costly service (at the 

HCPCS code level) as the primary service for that claim. This process results in initial 

assignments of claims for the primary services assigned to status indicator “J1” to the 

most appropriate C-APCs based on both single and multiple procedure claims reporting 

these services and clinical and resource homogeneity. 

Complexity Adjustments. We proposed to use complexity adjustments to provide 

increased payment for certain comprehensive services. We proposed to apply a 

complexity adjustment by promoting qualifying “J1” service code combinations or code 

combinations of “J1” services and certain add-on codes (as described further below) from 

the originating C-APC (the C-APC to which the designated primary service is first 

assigned) to a higher paying C-APC in the same clinical family of C-APCs, if 
CMS-1613-FC 143 

reassignment is clinically appropriate and the reassignment would not create a violation 

of the 2 times rule in the receiving APC (the higher paying C-APC in the same clinical 

family of C-APCs). We proposed to implement this type of complexity adjustment when 

the code combination represents a complex, costly form or version of the primary service 

according to the following criteria: 

● Frequency of 25 or more claims reporting the code combination (frequency 

threshold); and 

● Violation of the 2 times rule (cost threshold). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40947 through 40948, we 

explained in detail in response to a comment to the CY 2014 OPPS/ASC final rule with 

comment period the differences between the finalized CY 2014 complexity adjustment 

criteria and the CY 2015 proposed complexity adjustment criteria and our rationale for 

the proposed changes. 

 After designating a single primary service for a claim, we proposed to evaluate 

that service in combination with each of the other procedure codes reported on the claim 

assigned to status indicator “J1” (or certain add-on codes) to determine if they meet the 

complexity adjustment criteria. For new HCPCS codes, we proposed to determine initial 

C-APC assignments and complexity adjustments using the best data available, 

cross-walking the new HCPCS codes to predecessor codes wherever possible. 

 Once we have determined that a particular code combination of “J1” services (or 

combinations of “J1” services reported in conjunction with certain add-on codes) 

represents a complex version of the primary service because it is sufficiently costly, 

frequent, and a subset of the primary comprehensive service overall according to the 
CMS-1613-FC 144 

criteria described above, we proposed to promote the complex version of the primary 

service as described by the code combination to the next higher cost C-APC within the 

clinical family, unless the APC reassignment is not clinically appropriate, the 

reassignment would create a violation of the 2 times rule in the receiving APC, or the 

primary service is already assigned to the highest cost APC within the C-APC clinical 

family or assigned to the only C-APC in a clinical family (79 FR 40944). We did not 

propose to create new APCs with a geometric mean cost that is higher than the highest 

cost (or only) C-APC in a clinical family just to accommodate potential complexity 

adjustments. Therefore, the highest payment for any code combination for services 

assigned to a C-APC would be the highest paying C-APC in the clinical family. 

 As discussed below, we proposed that add-on codes reported in conjunction with 

a “J1” service would receive complexity adjustments when a qualifying add-on code is 

reported in conjunction with the primary service assigned to status indicator “J1” and 

satisfies the criteria described above for a complexity adjustment. Any combinations of 

HCPCS codes that fail to meet the proposed complexity adjustment criteria (frequency 

and cost thresholds) would not be identified as complex subsets of the primary procedure 

and would not be reassigned to a higher paying C-APC within the same clinical family of 

C-APCs. We provided a proposed list of qualifying code combinations (including add-on 

codes) in Addendum J to the proposed rule (which is available via the Internet on the 

CMS Web site). 

We proposed to package payment for all add-on codes into the payment for the 

C-APC. However, we indicated that add-on codes that are assigned to the current devicedependent APCs listed in Table 5 of the proposed rule (79 FR 40938) would be evaluated 
CMS-1613-FC 145 

for a possible complexity adjustment when they are reported in conjunction with a 

designated primary service assigned to status indicator “J1.” We proposed to only 

evaluate the add-on codes that are assigned to the current device-dependent APCs listed 

in Table 5 of the proposed rule for potential complexity adjustments because we believe 

that, in certain cases, these procedure codes may represent services with additional 

medical device costs that result in significantly more complex and costly procedures. To 

determine which combinations of primary service codes reported in conjunction with the 

add-on code may qualify for a complexity adjustment for CY 2015, we proposed to apply 

the proposed frequency and cost criteria discussed above, testing claims reporting one 

unit of a single primary service assigned to status indicator “J1” and any number of units 

of a single add-on code. If the frequency and cost criteria for a complexity adjustment 

were met, and reassignment to the next higher cost APC in the clinical family is 

appropriate, we proposed to make a complexity adjustment for the code combination; that 

is, we proposed to reassign the primary service code reported in conjunction with the 

add-on code combination to a higher cost C-APC within the same clinical family of CAPCs. If any add-on code combination reported in conjunction with the primary service 

code did not qualify for a complexity adjustment, payment for these services would be 

packaged. We listed the complexity adjustments proposed for add-on code combinations 

for CY 2015, along with all of the other proposed complexity adjustments, in Addendum 

J to the proposed rule (which is available via the Internet on the CMS Web site). One 

primary service code and add-on code combination (CPT code 37225 and 37233) that 

satisfied the frequency and cost criteria was not proposed for a complexity adjustment 

because we believe that these claims are miscoded. Of the 35 qualifying claims reporting 
CMS-1613-FC 146 

this code combination, only 3 claims contained the appropriate base code (CPT code 

37228) for CPT add-on code 37233. 

 We provided in Addendum J to the proposed rule a breakdown of cost statistics 

for each code combination that would qualify for a complexity adjustment (including 

primary code and add-on code combinations). Addendum J to the proposed rule also 

contained summary cost statistics for each of the code combinations proposed to be 

reassigned under a given primary code. The combined statistics for all proposed 

reassigned complex code combinations are represented by an alphanumeric code with the 

last 4 digits of the designated primary service followed by “A” (indicating “adjustment”). 

For example, the geometric mean cost listed in Addendum J for the code combination 

described by CPT code 33208A assigned to C-APC 0655 included all code combinations 

that were proposed to be reassigned to C-APC 0655 when CPT code 33208 is the primary 

code. Providing the information contained in Addendum J in the proposed rule allowed 

stakeholders the opportunity to better assess the impact associated with the proposed 

reassignment of each of the code combinations eligible for a complexity adjustment. 

(b) Additional C-APCs 

 Several commenters to the CY 2014 OPPS/ASC proposed rule questioned why 

CMS only converted a subset of the device-dependent APCs to C-APCs (78 FR 74864). 

We responded that while we were initially adopting a subset of the most costly devicedependent services, we may extend comprehensive payments to other procedures in 

future years as part of a broader packaging initiative (78 FR 74864). Upon further review 

for CY 2015, we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40944 through 

40945) that we believe that the entire set of the currently device-dependent APCs (after 
CMS-1613-FC 147 

the proposed reorganization and consolidation of the current device-dependent APCs) are 

appropriate candidates for C-APC payment because the device-dependent APCs not 

included in last year’s comprehensive APC payment proposal are similar to the original 

29 device-dependent APCs that were proposed as C-APCs in CY 2014. Similar to the 

original 29 device-dependent APCs for CY 2014 that were converted to C-APCs, the 

additional device-dependent APCs that were proposed for conversion to C-APCs contain 

comprehensive services primarily intended for the implantation of costly medical 

devices. Therefore, in the CY 2015 OPPS/ASC proposed rule, we proposed to apply the 

comprehensive APC payment policy to the remaining device-dependent APCs for 

CY 2015. 

 In addition, since the publication of the CY 2014 OPPS/ASC final rule with 

comment period, stakeholders brought several services to our attention as appropriate 

candidates for C-APC payment. Stakeholders recommended that we create C-APCs for 

these procedures and technologies or assign them to a previously proposed C-APC. We 

agreed with the stakeholders. Similar to the other services designated as comprehensive 

in CY 2014, these procedures are comprehensive single-session services with high-cost 

implantable devices or high-cost equipment. For CY 2015, we proposed to convert the 

following existing APCs into C-APCs: APC 0067 (Single Session Cranial Stereotactic 

Radiosurgery) and APC 0351 (Level V Intraocular Surgery)). C-APC 0351 only contains 

one procedure–CPT code 0308T (Insertion of ocular telescope prosthesis including 

removal of crystalline lens). We also proposed to assign the CPT codes for IORT (CPT 

codes 77424 and 77425) to C-APC 0648 (Level IV Breast and Skin Surgery) because 

IORT is a single session comprehensive service that includes breast surgery combined 
CMS-1613-FC 148 

with a special type of radiation therapy that is delivered inside the surgical cavity but is 

not technically brachytherapy. The HCPCS codes that we proposed to assign to these 

C-APCs in CY 2015 would be assigned to status indicator “J1.” 

 
CMS-1613-FC 149 

(c) Reconfiguration and Restructuring of the C-APCs 

 Based on further examination of the structure of the C-APCs illustrated in the 

CY 2014 OPPS/ASC final rule with comment period and an evaluation of their 

comprehensive geometric mean costs (using the updated CY 2013 claims data), in the 

CY 2015 OPPS/ASC proposed rule (79 FR 40945), we proposed to reorganize, combine, 

and restructure some of the C-APCs. The purpose of this APC restructuring is to 

improve resource and clinical homogeneity among the services assigned to certain 

C-APCs and to eliminate APCs for clinically similar services, but with overlapping 

geometric mean costs. The services we proposed to assign to each of the C-APCs for 

CY 2015, along with the relevant cost statistics, were provided in Addendum J to the 

proposed rule. Addendum J is available at the CMS Web site at: 

http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. Table 7 of the proposed rule (79 FR 40952) 

listed the additional 28 APCs proposed under the CY 2015 comprehensive APC policy. 

 In summary, our proposal to reorganize, combine, and restructure some of the 

C-APCs included the following proposed changes: 

● Endovascular clinical family (renamed Vascular Procedures, VASCX). We 

proposed to combine C-APCs 0082, 0083, 0104, 0229, 0319, and 0656 illustrated for 

CY 2014 to form three proposed levels of comprehensive endovascular procedure APCs: 

C-APC 0083 (Level I Endovascular Procedures); C-APC 0229 (Level II Endovascular 

Procedures); and C-APC 0319 (Level IV Endovascular Procedures). 

● Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related 

Devices (AICDP). We proposed to combine C-APCs 0089, 0090, 0106, 0654, 0655, and 
CMS-1613-FC 150 

0680 as illustrated for CY 2014 to form three proposed levels of C-APCs within a 

broader series of APCs for pacemaker implantation and similar procedures as follows: 

APC 0105 (Level I Pacemaker and Similar Procedures), a non-comprehensive APC; 

C-APC 0090 (Level II Pacemaker and Similar Procedures); C-APC 0089 (Level III 

Pacemaker and Similar Procedures); and C-APC 0655 (Level IV Pacemaker and Similar 

Procedures). 

● We proposed to delete the clinical family for Event Monitoring, which only 

had one C-APC (C-APC 0680 (Insertion of Patient Activated Event)) with a single CPT 

code 33282 as illustrated for CY 2014. We also proposed to reassign CPT code 33282 to 

C-APC 0090, which contains clinically similar procedures. 

● In the urogenital family, we proposed two levels instead of three levels for 

urogenital procedures, and to reassign several codes from APC 0195 to C-APC 0202 

(Level V Female Reproductive Procedures). 

● We proposed to rename the arthroplasty family of APCs to “Orthopedic 

Surgery.” We also proposed to reassign several codes from APC 0052 to C-APC 0425, 

which we proposed to rename “Level V Musculoskeletal Procedures Except Hand and 

Foot.” 

● We proposed three levels of electrophysiologic procedures, using the current 

inactive APC “0086” instead of APC 0444, to have consecutive APC grouping numbers 

for this clinical family and to rename APC 0086 “Level III Electrophysiologic 

Procedures.” In addition, we proposed to replace composite APC 8000 with proposed 

C-APC 0086 as illustrated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74870). 
CMS-1613-FC 151 

 We also proposed three new clinical families: Gastrointestinal Procedures 

(GIXXX) for gastrointestinal stents, Tube/Catheter Changes (CATHX) for insertion of 

various catheters, and Radiation Oncology (RADTX), which would include C-APC 0067 

for single session cranial SRS. 

(3) Public Comments 

 Comment: Commenters were generally supportive of the proposed changes to the 

comprehensive APC payment policy for CY 2015 when compared to the CY 2014 final 

policy, and urged CMS to monitor implementation for payment adequacy and access to 

quality care. Some commenters requested that CMS delay implementation until at least 

July 1, 2015, to allow time to fully test systems changes. Some commenters requested 

that CMS delay implementation for a year or more until CMS addresses assorted 

concerns or so that hospitals can continue to analyze the policy and budget for the 

financial impact. 

 Response: We appreciate the commenters’ support. We plan to monitor the 

implementation of this C-APC payment policy and will consider future revisions as 

necessary. We will not further delay implementation of this policy. We have already 

delayed implementation of the C-APC payment policy for a year, which we believe 

provided ample time for hospitals to evaluate the policy. 

 Comment: We received feedback from commenters regarding the data resources 

that CMS provided to support the proposed rule. Some commenters commended CMS 

for the technical support and assistance provided that enabled the commenters to replicate 

CMS’ methodology and match CMS’ results. Other commenters expressed concern that 

the data resources were insufficient, inconsistent, and unclear. Some commenters also 
CMS-1613-FC 152 

requested that CMS enhance transparency, expand the data resources available to the 

public, and engage stakeholders in future comprehensive APC payment policy 

development. Some commenters asked that CMS provide cost data on all of the code 

combinations that were evaluated for the complexity adjustments, including the code 

combinations that qualified for a complexity adjustment. One commenter stated that 

discrepancies in some of the number entries between Addendum J and Addendum B 

violate the Administrative Procedures Act (APA) because these discrepancies “make it 

impossible to understand what CMS is proposing.” 

 Response: We appreciate the commenters’ support for the proposed expansion of 

available data resources related to the comprehensive APC payment policy methodology. 

In response to the commenters who expressed concern regarding the insufficiency of the 

data files provided, we understand that the OPPS is technically complex. However, we 

believe that the data made available to the public as part of the proposed rule were 

appropriate, clear, and sufficient. We acknowledge the commenters’ concerns regarding 

the transparency of related data and the desire for additional resources. Therefore, for 

this final rule with comment period, we are providing additional data in Addendum J, 

such as cost statistics related to code combinations that are not eligible for complexity 

adjustments. Regarding any indications of discrepancies in some of the number entries 

between Addendum J and Addendum B, as the commenter suggested, we understand and 

acknowledge that minor discrepancies may sometimes occur with complex payment rules 

that include various files with many different types of data. However, we do not believe 

any such discrepancies would limit commenters’ ability to understand the proposed 

policies or to evaluate the impacts or effects of the proposed policy changes. The 
CMS-1613-FC 153 

comprehensive APC payment policy has been open for public comment during three 

consecutive OPPS rulemaking cycles: the CY 2014 OPPS/ASC proposed rule; the 

CY 2014 OPPS/ASC final rule with comment period; and the CY 2015 OPPS/ASC 

proposed rule. Therefore, we do not believe that we provided insufficient notice of the 

policies that are a part of the comprehensive APC payment policy. 

 Comment: Commenters expressed concern regarding the misalignment between 

hospitals’ billing practices and systems and the proposal to package all services (except 

for the few exceptions noted above) on a claim into the payment for the comprehensive 

service. The commenters observed that a significant number of comprehensive service 

claims spanned more than 5 days, with some claims spanning close to 30 days. The 

commenters recommended that CMS limit the payment bundle to services provided 

within 1 or 2 days of the primary service, or defining the bundle based on episodes of 

care. Commenters also requested that CMS clarify the guidance provided and educate 

providers on how to report comprehensive services that fall within the span of a recurring 

service claim. Some commenters expressed concern that policies which reduce or 

eliminate series billing for recurring services may create an operational burden for 

hospitals; increase claims processing activity for Medicare contractors; and increase the 

amount of paperwork sent to a beneficiary. 

 Response: Our intent is to capture all of the services associated with the primary 

service assigned to a C-APC, except those services that would still be separately paid 

under the OPPS, even when provided in conjunction with a comprehensive service. The 

219 procedures assigned to the C-APCs are a small fraction of the total services provided 

in HOPDs. We believe that it would not be an undue hardship for some hospitals to alter 
CMS-1613-FC 154 

their processes such that they file separate claims for services that are unrelated both 

clinically and in regard to time to the comprehensive service. With regard to recurring 

services, we have previously issued manual guidance in the Internet Only Manual, Pub. 

100-4, Chapter 1, Section 50.2.2, that provides that only recurring services should be 

billed monthly. We also have specified that, in the event that a recurring service occurs 

on the same day as an acute service that falls within the span of the recurring service 

claim, hospitals should bill separately for recurring services on a monthly claim 

(repetitive billing) and submit a separate claim for the acute service. We also do not 

expect that these claims for comprehensive services in the outpatient setting would 

extend beyond a few days because the 219 procedures assigned to the 25 C-APCs are 

almost entirely surgical procedures. If a physician determined that furnishing one of 

these services would be medically necessary for the treatment of a Medicare beneficiary 

and expected the beneficiary to require hospital care for more than 2 midnights, inpatient 

admission would be appropriate. 

 Comment: Commenters generally supported the proposed packaging of all addon codes reported in conjunction with comprehensive service claims with the allowance 

of complexity adjustments for add-on codes currently assigned to device-dependent 

APCs in CY 2014. One commenter requested that CMS assign add-on CPT code 57267 

(Insertion of mesh or other prosthesis for repair of pelvic floor defect, each site (anterior, 

posterior compartment), vaginal approach (List separately in addition to code for primary 

procedure) to C-APC 0202 because this code has high device costs. 

 Response: We appreciate the commenters’ support. According to 

42 CFR 419.2(b)(18), add-on codes are packaged under the OPPS. Because 
CMS-1613-FC 155 

implementation of the finalized comprehensive APC payment policy was delayed until 

CY 2015, for CY 2014 we maintained the structure and code assignments for the 

device-dependent APCs, which continued separate payment for add-on codes assigned to 

device-dependent APCs for CY 2014. We refer readers to Table 7 of the CY 2014 

OPPS/ASC final rule with comment period (78 FR 74859). The add-on code complexity 

adjustment policy is limited only to certain add-on codes that were previously assigned to 

device-dependent APCs and that, along with a primary comprehensive service, meet the 

complexity adjustment criteria. We refer readers to Table 9 of the CY 2015 OPPS/ASC 

proposed rule (79 FR 40959) for a listing of these add-on codes. Our intent is not to 

make a higher payment in every case that an add-on procedure results in higher costs. 

Therefore, we are finalizing the CY 2015 proposal to package all add-on codes reported 

on a claim in conjunction with a comprehensive service, and also to allow a limited 

number of add-on codes to be evaluated for a complexity adjustment when billed with a 

primary comprehensive service. We are not extending the complexity adjustment policy 

beyond those add-on codes that were assigned to device-dependent APCs. The list of 

add-on codes that we evaluated for a complexity adjustment is included later in this 

section in Table 8. 

 Comment: Some commenters requested that CMS divide the restructured CAPCs into more discrete groupings to increase clinical coherence and resource cost 

homogeneity. Some commenters believed that improved clinical coherence among the 

procedures within the C-APCs would increase the stability of C-APC payments from 

year-to-year and decrease opportunities for “gaming” the system. Some commenters also 

expressed concern with the high variation in geometric mean costs for services assigned 
CMS-1613-FC 156 

to the C-APCs that do not create a violation of the 2 times rule, but would result in 

inadequate payment for the highest cost procedures assigned to the C-APC. 

 Response: We disagree with the commenters. We believe that the categorization 

of the restructured C-APCs better represents clinical and resource homogeneity when 

compared to the CY 2014 structure of the C-APCs. We also note that the OPPS is a 

prospective payment system that relies on groupings of procedures resulting in a 

weighted-average cost payment based on all of the procedures in the group. Too much 

discretization of APC groupings would move the OPPS more toward a fee schedule, 

which would have individual payments for each HCPCS code and presents an 

undesirable outcome for the OPPS. In addition, we encourage all members of the 

stakeholder public to report all suspected incidents of fraud and abuse to the Office of 

Inspector General or the CMS Center for Program Integrity. As required by statute, we 

will review and evaluate, on an annual basis, any year-to-year changes in APC and 

HCPCS geometric mean costs. 

 Comment: A few commenters disagreed with CMS’ proposal to expand the 

C-APCs to include all of the current device-dependent APCs. The commenters noted that 

a significant percentage of claims for some of the lower paying C-APCs (specifically, 

C-APCs 0084 (Level I Electrophysiologic Procedures), 0427 (Level II Tube or Catheter 

Changes or Repositioning), 0622 (Level II Vascular Access Procedures), and 0652 

(Insertion of Intraperitoneal and Pleural Catheters) report services assigned to 

noncomprehensive APCs that are significantly more costly than the primary service that 

is motivating the C-APC payment. Commenters believed that procedures assigned to 

these APCs are not infrequently performed as secondary procedures to other more costly 
CMS-1613-FC 157 

procedures that are assigned to noncomprehensive APCs. Commenters recommended 

various approaches for addressing this concern: (1) applying complexity adjustments to 

these claims; (2) excluding high-cost procedures from the comprehensive APC packaging 

policy; (3) paying for the higher-cost service and applying a multiple procedure reduction 

to the C-APC; or (4) eliminating the lower paying C-APCs from the comprehensive APC 

payment policy methodology. 

 Response: Our analysis shows a significant number of claims in APCs 0427 and 

0622 that contain noncomprehensive services that are more costly than the procedures 

assigned to the proposed C-APC. In addition, similar to APCs 0427 and 0622, APC 0652 

contains a total of three catheter-insertion procedures. These procedures are not similar 

to the other major procedures assigned to C-APCs, but are sometimes supportive of other 

procedures. For example, APC 0652 includes the procedure that describes the placement 

of a pleural catheter that can be used for drug delivery, but is not a definitive therapeutic 

procedure similar to most of the other procedures assigned to that C-APC. Also, APCs 

0427, 0622, and 0652 are not device-intensive APCs, meaning that the device offsets are 

not greater than 40 percent. Therefore, we are accepting the commenters’ 

recommendation. We are not converting APCs 0427, 0622, and 0652 into C-APCs for 

CY 2015. In addition, because we are not converting APC 0427 into a C-APC, we will 

not evaluate add-on CPT code 49435 for complexity adjustments because the APC that 

contains the base codes for CPT code 49435 are assigned to APC 0427. However, we are 

finalizing the proposal to convert APC 0084 into a C-APC. We did not find that a 

significant number of higher cost noncomprehensive procedures are performed in 

conjunction with the procedures assigned to APC 0084. Unlike many of the catheter 
CMS-1613-FC 158 

insertion procedures assigned to APCs 0427, 0622, and 0652, the electrophysiology 

procedures assigned to APC 0084 are not supportive of other services, but are the 

definitive therapeutic procedures intended to treat a patient’s cardiac condition. 

 Comment: Commenters urged CMS to develop adjustments to C-APC payments 

based on patient acuity or diagnosis to account for clinical complexity and patient 

characteristics, which could help mitigate the negative payment impact of expanding the 

comprehensive APC payment policy on hospitals that treat more clinically complex 

patients, such as academic medical centers, cancer hospitals, and trauma centers. 

 Response: As we stated in the CY 2015 OPPS/ASC proposed rule 

(79 FR 40951), section 1833(t)(2) of the Act provides a procedure-based payment 

methodology for the OPPS, which is unlike the IPPS that makes payments based on both 

diagnoses and procedures. Currently OPPS payments are not based on patient severity or 

diagnosis like payments under the IPPS. Therefore, we are unable to make payment 

adjustments based on diagnoses. 

 Comment: Commenters expressed concern that not implementing C-APCs in the 

ASC setting distorts the payment relationship between ASCs and HOPDs and could 

result in incentives to direct patients from one setting to another. Commenters 

recommended that CMS reprogram the ASC payment system software, as soon as 

possible, to allow the system to perform the complex logic needed to implement and 

provide adequate payment for the C-APCs for ASCs. 

 Response: The commenters are correct that the comprehensive APC payment 

policy methodology is not being adopted under the ASC payment system. However, we 

do not believe that this policy decision will result in site-of-service shifts, but we will 
CMS-1613-FC 159 

continue to monitor procedure volumes in both settings. Although OPPS payments for 

individual surgical procedures assigned to C-APCs are higher than ASC payments for the 

same procedures, under the standard noncomprehensive service payment methodology 

that applies in the ASC for all APCs and in the OPPS for noncomprehensive services, 

there remains separate payment for covered procedures and covered ancillary services 

that are not packaged under a general packaging policy. This continuation of separate 

payment for covered procedures and covered ancillary services performed in the ASC 

(which is not available in the OPPS for procedures performed in addition to the primary 

procedures assigned to C-APCs) should help mitigate any incentive to perform 

procedures assigned to C-APCs in the HOPD. However, given the significant difference 

between ASC and OPPS payment rates, we do not believe that separate payment (at the 

multiple procedure reduction reduced rate) for additional procedures performed in the 

ASC setting along with a procedure that is assigned to a C-APC will draw cases away 

from the HOPD because, in most cases, the overall HOPD will be higher than the ASC 

payment for the same set of procedures. We will consider the commenters’ suggestion 

that we develop new payment software for the ASC payment system should an 

opportunity to do so arise in the future. 

 Comment: Commenters requested that CMS provide separate payment for certain 

services reported on a comprehensive claim. Some commenters requested that CMS 

exclude the following additional services from the packaging provision under the 

comprehensive APC payment policy: 

● Dialysis and emergency dialysis services. 

● Blood products. 
CMS-1613-FC 160 

● Expensive diagnostic tests, such as angiography. 

● High-cost drugs and devices that account for a high percentage of the 

geometric mean cost of a C-APC. 

● Outpatient services paid under a payment schedule, such as laboratory services. 

 The commenters believed that the C-APC payment would not adequately cover 

the cost of these services. One commenter believed that packaging payment for an 

otherwise separately payable drug when provided in conjunction with a comprehensive 

service may cause hospitals, in consultation with physicians, to choose a less-expensive 

alternative drug. 

 Response: We responded to similar comments that disagreed with CMS’ 

proposal to package payment for various items and services into the C-APC payment in 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 74865 through 74910). 

As previously stated, we disagree with the commenters. We believe that the central 

attribute of the comprehensive APC payment policy is the packaging of all adjunctive 

services, with the exception of those services described above that, according to the 

statute, cannot be packaged or the list of preventive services that generally would not be 

provided at the time of a major procedure assigned to a C-APC. We note that (as stated 

above in section II.A.3.a. of this final rule with comment period) where there are a 

variety of devices, drugs, items, and supplies that could be used to furnish a service, some 

of which are more expensive than others, packaging encourages hospitals to use the most 

cost-efficient item that meets the patient’s needs, rather than routinely using a more 

expensive item, which often results if separate payment is provided for the items. 

Furthermore, packaging also encourages hospitals to effectively negotiate with 
CMS-1613-FC 161 

manufacturers and suppliers to reduce the purchase price of items and services (including 

drugs) or to explore alternative group purchasing arrangements, thereby encouraging the 

most economical health care delivery. 

 Comment: Commenters asserted that the reliance on code combinations based on 

cost ranking of codes would lead to instability in the complexity adjustments from year to 

year, and overlook a large number of comprehensive claims with three or more “J1” 

services, which is common for the clinical complexity of procedures assigned to the 

endovascular revascularization family of APCs. Commenters suggested alternative 

methodologies for determining eligibility, such as applying a complexity adjustment to 

any claim that has three or more “J1” services or applying the cost and frequency criteria 

to all combinations of “J1” services. 

 Response: We disagree with the commenters that assigning complexity 

adjustments based on cost ranking of primary and secondary codes is either insufficient 

or would result in instability of the complexity adjustments in future years. We proposed 

complexity adjustments for certain code pairs to provide a higher payment in the next 

higher APC within a clinical family for high cost procedure pairs consisting of a primary 

comprehensive procedure and a secondary comprehensive procedure that represent 

sufficiently frequent and sufficiently costly comprehensive procedure pairs such that they 

are separated from and provided a higher payment than all of the cases that are accounted 

for in APC assignment of the primary service. We do not believe that providing a 

complexity adjustment to any claim that has three or more “J1” services or to all claims 

reporting pairs of “J1” services that meet the cost and frequency criteria would 

adequately serve the stated purpose of the policy. The intent of the complexity 
CMS-1613-FC 162 

adjustment policy is to identify a limited number of costly procedure pairs for a higher 

payment at the next higher paying C-APC within the clinical family, not to unpackage 

and separately pay for all of the high cost cases that are associated with the primary “J1” 

procedure. Although such a policy as the commenters requested could be beneficial to 

the procedures assigned to the endovascular C-APC family because of the high number 

of codes that can be billed per case, we do not believe that this approach would serve the 

other clinical families that do not rely on component coding to the same extent as 

endovascular procedures. Therefore, we are finalizing our proposal to base the 

complexity adjustments on code pairs that include the two most costly “J1” services 

reported on the C- APC service claim. 

 Comment: Commenters believed that the cost threshold is too restrictive and 

would cause financial hardship for hospitals and jeopardize beneficiary access to care. 

Commenters suggested that CMS adjust the cost threshold to 1.5, 1.75, or within 2 

percent of the 2 times rule limit. 

 Response: In response to comments to the CY 2014 OPPS/ASC final rule with 

comment period, we significantly lowered the cost criterion for a complexity adjustment 

from two times the cost of the primary procedure to two times the cost of the lowest cost 

procedure in the APC to which the primary procedure is assigned. This change made it 

significantly easier for code combinations to qualify for a complexity adjustment based 

on higher cost. We do not believe that further lowering of the cost criterion would be 

consistent with the objective of the comprehensive APC payment policy. We believe that 

lowering the cost criterion would result in effectively unpackaging too many cases from 

the primary C-APC assignment and, therefore, defeat the purpose of the policy, which is 
CMS-1613-FC 163 

to create a comprehensive prospective payment for major, primary device-intensive 

procedures. 

 Comment: Commenters expressed concern that claims assigned to the only level 

or the highest level C-APC within a clinical family are ineligible to receive a complexity 

adjustment because there is no higher paying APC in the clinical family in which to 

assign these code combinations. Commenters requested that CMS add an additional 

C-APC level to these clinical families to provide for more granular payment levels and 

accommodate potential complexity adjustments. 

 Response: As we stated in the CY 2015 OPPS/ASC proposed rule, we would not 

create new APCs with a geometric mean cost that is higher than the highest cost C-APC 

in a clinical family just to accommodate potential complexity adjustments. Therefore, the 

highest payment for any code combination for services assigned to a C-APC would be the 

highest paying C-APC in the clinical family. We only found 7 code pairs out of the 219 

procedures that are assigned to the 25 final C-APCs that would qualify for a complexity 

adjustment if a higher paying APC were available for assignment of the code 

combination. We do not believe that this small number of code combinations from the 

highest paying APCs in the final 12 clinical families of C-APCs that satisfy the 

complexity adjustment criteria necessitates creating additional APCs, especially if these 

APCs would be populated with only a few multiple procedure claims. In addition, in 

accordance with section 1833(t)(2)(B) of the Act, APCs are defined as “groups of 

covered OPD services” that are comparable clinically and with respect to the use of 

resources. If we created an additional new higher level APC within each C-APC clinical 

family that did not contain any primary comprehensive services and instead only 
CMS-1613-FC 164 

contained a very small volume of complexity-adjusted code pairs, we do not believe that 

such APCs would constitute appropriate “groups of covered OPD services.” 

 Comment: One commenter urged CMS to finalize the proposal to assign CPT 

code 0308T to APC 0351 and to convert APC 0351 into a C-APC. 

 Response: We appreciate the commenter’s support. For this final rule with 

comment period, we are finalizing our proposal to assign CPT code 0308T to APC 0351 

and to convert APC 0351 into a C-APC for CY 2015. 

 Comment: Commenters generally agreed with the proposed structure of the 

Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices 

(AICDP) C-APCs. One commenter specifically supported the assignment of CPT code 

0319T to C-APC 108. 

 Response: We appreciate the commenters’ support. 

 Comment: Several commenters supported CMS’ proposed assignment of CPT 

codes 77424 and 77425 to C-APC 0648. Another commenter believed that the services 

assigned to C-APC 0648 are not similar clinically or similar in resource costs, and 

suggested that CMS divide this C-APC into two levels. 

 Response: We appreciate the commenters’ support for our proposal regarding 

C-APC 0648. However, we disagree with the commenter that the services assigned to 

C-APC 0648 are not similar clinically or in regard to resource costs. All of the seven 

services proposed to be assigned to C-APC 0648 involve the breast. The current clinical 

application of intraoperative radiation therapy (IORT CPT codes 77424 and 77425) is for 

breast cancer following lumpectomy. In regard to resource costs of the services assigned 

to C-APC 0648, the range from the lowest cost significant procedure to the highest cost 
CMS-1613-FC 165 

significant procedure is between approximately $5,584 and $9,325, which is well within 

the 2 times rule limit. In addition, C-APC 0648 is a small APC with only 7 services and 

a total of approximately 5,000 claims based on CY2013 claims data. To further divide 

this C-APC would be less consistent with a prospective payment system than its proposed 

structure. Therefore, we are finalizing our proposal to assign CPT codes 77424 and 

77425 to C-APC 0648. 

 Comment: One commenter requested that CMS exclude C-APC 0259 from the 

comprehensive APC payment policy. The commenter believed that the change in the 

procedure-to-device claim edits policy would result in more incorrectly coded claims for 

the procedure described by CPT code 69930 (Cochlear device implantation, with or 

without mastoidectomy), which is the only service assigned to C-APC 0259. 

 Response: We do not believe that C-APC 0259 should be excluded from the 

comprehensive APC payment policy. The discussion of the device edits policy is in 

section II.A.2.d.1. of this final rule with comment period. We believe that hospitals will 

continue to report the cost of the cochlear implant when one of these devices is implanted 

into a Medicare beneficiary because the cost of this device is 84 percent of the total cost 

of the procedure. After consideration of this comment, we see no reason to exempt 

C-APC 0259 from the comprehensive APC payment policy. We are finalizing our 

proposal to convert APC 0259 into a C-APC for CY 2015. 

 Comment: Several commenters agreed with CMS’ proposed structure of the 

cardiac electrophysiology C-APCs: C-APC 0084 (Level I Electrophysiologic 

Procedures); C-APC 0085; and C-APC 0086 (Level III Electrophysiologic Procedures). 

One commenter requested that CMS reassign CPT code 93603 (Right ventricular 
CMS-1613-FC 166 

recording) from C-APC 0084 to C-APC 0085 because the commenter believed that the 

procedure described by CPT code 93603 is more similar to the procedures assigned to 

C-APC 0085 than the other procedures assigned to C-APC 0084. 

 Response: We appreciate the commenters’ support. However, we disagree with 

the commenter that CPT code 93603 should be reassigned from C-APC 0084 to C-APC 

0085. CPT code 93603 is a very low-volume procedure, with a total of 12 claims for 

CY 2013. The geometric mean cost for CPT code 93603 (based on these 12 claims) is 

$1,807. The geometric mean cost of the lowest cost significant service in C-APC 0085 is 

$4,064 (CPT code 93619). Therefore, we believe that CPT code 93603 lacks resource 

similarity to the procedures assigned to C-APC 0085. We are finalizing the structure of 

the cardiac electrophysiology C-APCs, as proposed for CY 2015. 

 Comment: Several commenters agreed with CMS’ proposed structure of the 

neurostimulator APCs. Two commenters believed that the difference in cost between 

CPT code 61885 (Insertion or replacement of cranial neurostimulator pulse generator or 

receiver, direct or inductive coupling; with connection to a single electrode array) and 

CPT code 61886 (Insertion or replacement of cranial neurostimulator pulse generator or 

receiver, direct or inductive coupling; with connection to 2 or more electrode arrays) is 

too low and that the device costs may not be adequately captured based on the accuracy 

of the claims data. Another commenter recommended that CMS restructure the 

neurostimulator APCs to improve clinical coherence by limiting C-APC 0318 to only 

certain full-system procedures, assigning all lead placement procedures to C-APC 0061, 

and assigning the remaining neurostimulator procedures to C-APC 0039. 
CMS-1613-FC 167 

 Response: We appreciate the commenters’ support. Regarding the commenters’ 

concern about the geometric mean cost of CPT codes 61885 and 61886, the geometric 

mean cost of CPT code 61886 (dual channel procedure) is higher than CPT code 61885 

(single channel procedure), which is to be expected. It is important to remember that the 

C-APC payment policy packages all procedures performed with the primary procedure, 

so the cost for the primary service in a C-APC may be higher than the cost associated 

with single claims for the same service. We note that APC groupings are based on two 

factors, clinical similarity and resource similarity. The OPPS requires that we group 

services into APCs for payment purposes based on these two factors. Clinical similarity 

in the APC grouping context is by definition, and by necessity, is much broader than the 

comparisons that distinguish individual CPT codes. All of the procedures assigned to 

C-APCs 0061, 0039, and 0318 include the various neurostimulator-related procedures. 

The neurostimulator family of C-APCs groups these procedures based on the geometric 

mean cost and clinical similarity of the primary service. In some cases, an APC includes 

implantation of a complete system of one type of neurostimulator and the implantation of 

either a generator alone or a complete system of other types. This is a function of the 

CPT coding system and the prospective nature of the comprehensive APC payment 

policy. Overall, we believe that the proposed structure of the neurostimulator family of 

C-APCs strikes the proper balance of both factors for APC construction and resource and 

clinical similarity. We are finalizing the proposed structure of the neurostimulator 

C-APCs, as proposed, and without modification. 

 Comment: One commenter requested that CMS divide C-APC 0425 into two 

APCs because the range of procedure costs in this APC is too significant. Another 
CMS-1613-FC 168 

commenter requested that CMS reassign the following CPT codes from APC 0208 to 

C-APC 0425 based on more appropriate resource homogeneity to the other procedures 

assigned to C-APC 0425: CPT codes 22551, 22554, 22612, and 22856. 

 Response: We disagree with the commenters’ recommendation to divide C-APC 

0425 into two C-APCs. The cost range for significant procedures within C-APC 0425 

(using the proposed rule code assignments) is between approximately $9,087 (for CPT 

code 69714) and $15,740 (for CPT code 24363), which is well within the 2 times rule 

limit. We agree with the commenters that CPT codes 22551 (with a geometric mean cost 

of $10,052), 22554 (with a geometric mean cost of $8,129), 22612 (with a geometric 

mean cost of $8,451), and 22856 (with a geometric mean cost of $12,958) should be 

reassigned from APC 0208 (with a geometric mean cost of $4,267) to C-APC 0425 (with 

a geometric mean cost of $10,606). We believe that assigning these four CPT codes to 

C-APC 0425 supports more appropriate resource and clinical similarity when compared 

to the current assignment to APC 0208. Otherwise, we are finalizing the proposed 

structure for C-APC 0425. With these additions to C-APC 0425, the cost range for 

significant procedures within C-APC 0425 (using the final rule code assignments) is 

between approximately $8,451 (for CPT code 22612) and $15,740 (for CPT code 24363). 

 Comment: One commenter believed that the proposed C-APCs that include drug 

pumps would provide inadequate payment for its developing therapy because the therapy 

uses an advanced technology drug pump and a very costly drug. The commenter 

requested that CMS either provide complexity adjustments for high-cost drugs or 

unpackage the payment for certain high-cost drugs. 
CMS-1613-FC 169 

 Response: As we stated in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74908 through 74909), we do not believe that drugs being supplied to the 

patient to fill the reservoir of a pump at the time of pump implantation should be 

excluded from the comprehensive APC payment policy because drugs supplied to fill the 

pump during implantation of the pump are adjunctive to the procedure. The costs of 

costly adjunctive services are included proportionally into the cost estimation for the 

primary services through our ability to use almost all claims for a service and adoption of 

the geometric mean cost upon which to establish relative payment weights. In addition, 

we do not believe that we should make complexity adjustments for higher cost drugs. 

Complexity adjustments are for more complex procedure variations that differ 

significantly from the primary “J1” procedure. Complexity adjustments are not intended 

as a way to provide separate payment for adjunctive drugs and supplies under the guise of 

a complexity adjustment. Therefore, we are not adopting this commenter’s suggested 

changes to the comprehensive APC payment policy. We will continue to monitor the 

development of this technology and consider future revisions to this policy as needed. 

 Comment: Commenters opinions varied regarding CMS’ proposal to include 

C-APCs 0202 (Level V Gynecologic Procedures), 0385 (Level I Urogenital Procedures), 

and 0386 (Level II Urogenital Procedures) in the urogenital procedures clinical family of 

C-APCs and to allow complexity adjustments from C-APC 0202 to C-APC 0385 and 

complexity adjustments from C-APC 0385 to C-APC 0386. Some commenters agreed 

with CMS’ proposed structure of the urogenital procedures family of C-APCs, while 

other commenters opposed the proposal to reassign complexity adjustment code 

combinations from C-APC 0202 to C-APC 0385. The commenters believed that the 
CMS-1613-FC 170 

procedures assigned to C-APC 0202, which are related to female urogenital anatomy, are 

not sufficiently clinically similar to the primary procedures assigned to C-APC 0385, 

which relate to the male urogenital anatomy. 

 Response: We appreciate the commenters’ support for the proposed structure of 

the urogenital procedures C-APC clinical family and the proposed approach for 

complexity adjustments. However, we disagree with the commenters that complexity 

adjustments should not be made from C-APC 0202 to C-APC 0385 because of 

insufficient clinical similarity between the complex procedures with a primary code 

assigned to C-APC 0202 that have been reassigned according to the complexity 

adjustment policy to C-APC 0385 and the primary procedures assigned to C-APC 0385. 

Although we acknowledge that there are differences in the male and female human 

urogenital anatomy, we believe that many of these procedures involve relatively complex 

repairs of the urogenital region involving implantable medical devices and, therefore, it is 

appropriate to assign complexity adjusted code combinations from C-APC 0202 to the 

next higher paying APC in the urogenital procedures clinical family, which is 

C-APC 0385. 

 Comment: Some commenters supported the proposed structure of the C-APCs in 

the endovascular clinical family. Other commenters noted that payments for some 

endovascular procedure code combinations would be negatively impacted by the 

proposed structure for C-APCs 0083 (Level I Endovascular Procedures), 0229 Level II 

Endovascular Procedures), and 0319 (Level III Endovascular Procedures). The 

commenters recommended reviewing and revising these C-APCs and creating more 

levels beyond the proposed three levels of endovascular C-APCs. 
CMS-1613-FC 171 

 Response: We appreciate the commenters’ support for the proposed structure of 

the endovascular C-APC clinical family. We do not believe that additional levels of 

endovascular C-APCs are necessary at this time. We believe that the restructured 

endovascular C-APCs better reflect resource homogeneity than the CY 2014 final 

structure of these C-APCs because the new structure has clearer delineations between the 

cost ranges of the procedures assigned to the three levels. In addition, in response to 

comments to the CY 2014 OPPS/ASC final rule with comment period (79 FR 40951), we 

proposed less stricter complexity adjustment criteria, which resulted in more code 

combinations qualifying for higher payment than would have qualified under the 

CY 2014 OPPS final rule complexity adjustment criteria. We also proposed evaluating 

certain add-on codes that are currently assigned to device-dependent APCs for 

complexity adjustments, and the overwhelming majority of these add-on codes are 

endovascular add-on codes. We believe that these two changes to the CY 2014 

comprehensive APC payment policy sufficiently mitigate much of any negative payment 

impact for endovascular procedures in this transition from the current payment 

methodology to the comprehensive APC payment methodology. As we do annually, we 

will reevaluate the need for adjustments to the endovascular family of C-APCs. 

 Comment: In the CY 2015 OPPS/ASC proposed rule (79 FR 40950 through 

40951) in response to a comment to the CY 2014 OPPS/ASC final rule with comment 

period, we proposed to continue to pay for stem cell transplant procedures as we have 

done for many years through APCs 0111 (Blood Product Exchange) and 0112 (Apheresis 

and Stem Cell Procedures). We stated that we would not create a C-APC for stem cell 
CMS-1613-FC 172 

transplant procedures. Some commenters supported this approach. Other commenters 

requested that CMS create a C-APC for these procedures. 

 Response: Based on the rationale discussed in the CY 2015 OPPS/ASC proposed 

rule (79 FR 40950 through 40951), we will continue to pay for stem cell transplant 

procedures through APCs 0111 and 0112 in CY 2015. 

(4) Statement of Final Policy and List of CY 2015 C-APCs 

 As we discussed earlier, in the CY 2015 OPPS/ASC proposed rule (79 FR 40941 

through 40953), we proposed to continue to define a comprehensive service as a 

classification for the provision of a primary service and all adjunctive services and 

supplies reported on the hospital Medicare Part B claim, with few exceptions, resulting in 

a single beneficiary copayment per claim. The comprehensive APC payment bundle 

policy includes all hospital services reported on the claim that are covered under 

Medicare Part B, except for the excluded services or services requiring separate payment 

by statute as noted above. We proposed to continue to define a clinical family of 

C-APCs as a set of clinically related C-APCs that represent different resource levels of 

clinically comparable services. 

 After consideration of the public comments we received, we are finalizing our 

proposals, with some minor modifications, for establishment of C-APCs. In this final 

rule with comment period, we are establishing a total of 25 C-APCs within 12 clinical 

families for CY 2015, as described below in Table 7. 

 We are establishing a comprehensive APC payment methodology that adheres to 

the same basic principles as those finalized in the CY 2014 OPPS/ASC final rule with 

comment period, with the following changes for CY 2015: 
CMS-1613-FC 173 

● We are reorganizing and consolidating several of the current device-dependent 

APCs and the CY 2014 C-APCs. 

● We are expanding the comprehensive APC payment policy to include all 

device-dependent APCs, except for APCs 0427, 0622, and 0652. 

● We are creating two other new C-APCs (C-APC 0067 and C-APC 0351). 

● We are establishing new complexity adjustment criteria: 

▪ Frequency of 25 or more claims reporting the HCPCS code combination (the 

frequency threshold); and 

▪ Violation of the “2 times” rule (the cost threshold). 

● We are establishing a policy to package all add-on codes, although we evaluate 

claims reporting a single primary service code reported in combination with an applicable 

add-on code (we refer readers to Table 8 below for the list of applicable add-on codes) 

for complexity adjustments. 

 Addendum J to this final rule with comment period (which is available via the 

Internet on the CMS Web site) contains all of the data related to the comprehensive APC 

payment policy, including the list of complexity adjustments. 

TABLE 7.—CY 2015 C-APCs 

Clinical 

Family* C-APC APC Title 

CY 2015 

Payment 

AICDP 0090 Level II Pacemaker/Similar Procedures $6,542.78 

AICDP 0089 Level III Pacemaker/Similar Procedures $9,489.74 

AICDP 0655 Level IV Pacemaker/Similar Procedures $16,400.98 

AICDP 0107 Level I ICD and Similar Procedures $22,907.64 

AICDP 0108 Level II ICD and Similar Procedures $30,806.39 

BREAS 0648 Level IV Breast and Skin Surgery $7,461.40 

ENTXX 0259 Level VII ENT Procedures $29,706.85 

EPHYS 0084 Level I Electrophysiologic Procedures $872.92 

EPHYS 0085 Level II Electrophysiologic Procedures $4,633.33 

EPHYS 0086 Level III Electrophysiologic Procedures $14,356.62 
CMS-1613-FC 174 

Clinical 

Family* C-APC APC Title 

CY 2015 

Payment 

EYEXX 0293 Level IV Intraocular Procedures $8,446.54 

EYEXX 0351 Level V Intraocular Procedures $23,075.30 

GIXXX 0384 GI Procedures with Stents $3,173.83 

NSTIM 0061 Level II Neurostim./Related Procedures $5,288.58 

NSTIM 0039 Level III Neurostim./Related Procedures $17,099.35 

NSTIM 0318 Level IV Neurostim./Related Procedures $26,152.16 

ORTHO 0425 Level V Musculoskeletal Procedures $10,220.00 

PUMPS 0227 Implantation of Drug Infusion Device $15,566.34 

RADTX 0067 Single Session Cranial SRS $9,765.40 

UROGN 0202 Level V Gynecologic Procedures $3,977.63 

UROGN 0385 Level I Urogenital Procedures $6,822.35 

UROGN 0386 Level II Urogenital Procedures $13,967.97 

VASCX 0083 Level I Endovascular Procedures $4,537.45 

VASCX 0229 Level II Endovascular Procedures $9,624.10 

VASCX 0319 Level III Endovascular Procedures $14,840.64 

*Clinical Family Descriptor Key: 

AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices 

BREAS = Breast Surgery 

ENTXX = ENT Procedures 

EPHYS = Cardiac Electrophysiology 

EYEXX = Ophthalmic Surgery 

GIXXX = Gastrointestinal Procedures 

NSTIM = Neurostimulators 

ORTHO = Orthopedic Surgery 

PUMPS = Implantable Drug Delivery Systems 

RADTX = Radiation Oncology 

UROGN = Urogenital Procedures 

VASCX = Vascular Procedures 

TABLE 8.—CY 2015 PACKAGED CPT ADD-ON CODES THAT ARE 

EVALUATED FOR A COMPLEXITY ADJUSTMENT 

CY 2015 

CPT/HCPCS 

Add-On 

Code CY 2015 Short Descriptor 

19297 Place breast cath for rad 

33225 L ventric pacing lead add-on 

37222 Iliac revasc add-on 

37223 Iliac revasc w/stent add-on 

37232 Tib/per revasc add-on 

37233 Tibper revasc w/ather add-on 

37234 Revsc opn/prq tib/pero stent 

37235 Tib/per revasc stnt & ather 

37237 Open/perq place stent ea add 

37239 Open/perq place stent ea add 
CMS-1613-FC 175 

CY 2015 

CPT/HCPCS 

Add-On 

Code CY 2015 Short Descriptor 

92921 Prq cardiac angio addl art 

92925 Prq card angio/athrect addl 

92929 Prq card stent w/angio addl 

92934 Prq card stent/ath/angio 

92938 Prq revasc byp graft addl 

92944 Prq card revasc chronic addl 

92998 Pul art balloon repr precut 

C9601 Perc drug-el cor stent bran 

C9603 Perc d-e cor stent ather br 

C9605 Perc d-e cor revasc t cabg b 

C9608 Perc d-e cor revasc chro add 

f. Calculation of Composite APC Criteria-Based Costs 

 As discussed in the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals 

to provide necessary, high quality care as efficiently as possible. For CY 2008, we 

developed composite APCs to provide a single payment for groups of services that are 

typically performed together during a single clinical encounter and that result in the 

provision of a complete service. Combining payment for multiple, independent services 

into a single OPPS payment in this way enables hospitals to manage their resources with 

maximum flexibility by monitoring and adjusting the volume and efficiency of services 

themselves. An additional advantage to the composite APC model is that we can use data 

from correctly coded multiple procedure claims to calculate payment rates for the 

specified combinations of services, rather than relying upon single procedure claims 

which may be low in volume and/or incorrectly coded. Under the OPPS, we currently 

have composite policies for extended assessment and management services, low dose rate 

(LDR) prostate brachytherapy, cardiac electrophysiologic evaluation and ablation 
CMS-1613-FC 176 

services, mental health services, multiple imaging services, and cardiac resynchronization 

therapy services. We refer readers to the CY 2008 OPPS/ASC final rule with comment 

period for a full discussion of the development of the composite APC methodology 

(72 FR 66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 74163) for more recent background. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), for CY 2015, we 

proposed to continue our composite APC payment policies for LDR prostate 

brachytherapy services, mental health services, and multiple imaging services, as 

discussed below. In addition, we noted that we finalized a policy in the CY 2014 

OPPS/ASC final rule with comment period to modify our longstanding policy to provide 

payment to hospitals in certain circumstances when extended assessment and 

management of a patient occur (78 FR 74910 through 74912). For CY 2014, we created 

one new composite APC, entitled “Extended Assessment and Management (EAM) 

Composite” (APC 8009), to provide payment for all qualifying extended assessment and 

management encounters rather than recognize two levels of EAM composite APCs 

(78 FR 74910 through 74912). Under this policy, we allow any visits, a Level 4 or 5 

Type A ED visit or a Level 5 Type B ED visit furnished by a hospital in conjunction with 

observation services of substantial duration to qualify for payment through EAM 

composite APC 8009. In the CY 2015 OPPS/ASC proposed rule (79 FR 40953 to 

40954), we proposed to pay for qualifying extended assessment and management services 

through composite APC 8009. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40953), we also proposed to 

discontinue our composite APC payment policies for cardiac electrophysiologic 
CMS-1613-FC 177 

evaluation and ablation services (APC 8000), and to pay for these services through 

comprehensive APC 0086 (Level III Electrophysiologic Procedures), as presented in a 

proposal included under section II.A.2.e. of the CY 2015 OPPS/ASC proposed rule. As 

such, in the CY 2015 OPPS/ASC proposed rule, we proposed to delete APC 8000 for 

CY 2015 (79 FR 40953). 

 We note that we finalized a policy to discontinue and supersede the cardiac 

resynchronization therapy composite APC with comprehensive APC 0108 (Level II 

Implantation of Cardioverter-Defibrillators (ICDs)), as discussed in section II.A.2.e. of 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 74902). For CY 2014, 

APC 0108 is classified as a composite APC, as discussed in the CY 2014 OPPS/ASC 

final rule with comment period, because comprehensive APCs were not made effective 

until CY 2015 (78 FR 74925). For CY 2015, with the implementation of our new 

comprehensive APC policy, in the CY 2015 OPPS/ASC proposed rule, we proposed to 

effectuate the policy finalized in the CY 2014 OPPS/ASC final rule with comment 

period, and pay for cardiac resynchronization therapy services through comprehensive 

APC 0108 (proposed to be renamed “Level II ICD and Similar Procedures”), which is 

discussed in section II.A.2.e. of the CY 2015 proposed rule (79 FR 40953). 

(1) Extended Assessment and Management Composite APC (APC 8009) 

 Beginning in CY 2008, we included composite APC 8002 (Level I Extended 

Assessment and Management (EAM) Composite) and composite APC 8003 (Level II 

Extended Assessment and Management (EAM) Composite) in the OPPS to provide 

payment to hospitals in certain circumstances when extended assessment and 

management of a patient occur (an extended visit). In most of these circumstances, 
CMS-1613-FC 178 

observation services are furnished in conjunction with evaluation and management 

services as an integral part of a patient’s extended encounter of care. From CY 2008 

through CY 2013, in the circumstances when 8 or more hours of observation care was 

provided in conjunction with a high level visit, critical care, or direct referral for 

observation, was an integral part of a patient’s extended encounter of care, and was not 

furnished on the same day as surgery or post-operatively, a single OPPS payment was 

made for the observation and evaluation and management services through one of the two 

composite APCs, as appropriate. We refer readers to the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74163 through 74165) for a full discussion of this 

longstanding policy for CY 2013 and prior years. In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74910), we created one new composite APC, APC 8009 

(Extended Assessment and Management (EAM) Composite), to provide payment for all 

qualifying extended assessment and management encounters rather than recognizing two 

levels of EAM composite services. Under the CY 2014 finalized policy, we no longer 

recognize composite APC 8002 or APC 8003. Beginning in CY 2014, we allowed 

services identified by the new single clinic visit HCPCS code G0463, a Level 4 or 5 Type 

A ED visit (CPT code 99284 or 99285), a Level 5 Type B ED visit (HCPCS code 

G0384), or critical care (CPT code 99291) provided by a hospital in conjunction with 

observation services of substantial duration (8 or more hours) (provided the observation 

was not furnished on the same day as surgery or post-operatively) (78 FR 74910 through 

74912) to qualify for payment through EAM composite APC 8009. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40953 through 40954), for 

CY 2015, we proposed to continue our CY 2014 finalized policy to provide payment for 
CMS-1613-FC 179 

all qualifying extended assessment and management encounters through composite APC 

8009. As we did for CY 2014, in the CY 2015 OPPS/ASC proposed rule, for CY 2015, 

we proposed to allow a clinic visit and certain high level ED visits furnished by a hospital 

in conjunction with observation services of substantial duration (8 or more hours) to 

qualify for payment through the EAM composite APC 8009 (provided the observation is 

not furnished on the same day as surgery or post-operatively). Specifically, we proposed 

to continue to allow a clinic visit, a Level 4 or Level 5 Type A ED visit, or a Level 5 

Type B ED visit furnished by a hospital or a direct referral for observation (identified by 

HCPCS code G0379) performed in conjunction with observation services of substantial 

duration to qualify for payment through composite APC 8009 (provided the observation 

is not furnished on the same day as surgery or post-operatively). We note that, for 

CY 2015, we also proposed to continue our current policy where one service code 

describes all clinic visits. We refer readers to the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74910 through 74912) for a full discussion of the creation of 

composite APC 8009. 

 As we noted in the CY 2014 OPPS/ASC final rule with comment period, the 

historical cost data used annually to calculate the geometric mean costs and payment rate 

for composite APC 8009 would not reflect the single clinic visit code that was new for 

CY 2014 (HCPCS code G0463) until our CY 2016 rulemaking cycle. We stated in the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 74910 through 74912) that 

when hospital claims data for the CY 2014 clinic and ED visit codes become available, 

we would calculate the geometric mean cost for EAM composite APC 8009 using 
CMS-1613-FC 180 

CY 2014 single and “pseudo” single procedure claims that meet each of the following 

criteria: 

● The claims do not contain a HCPCS code to which we have assigned status 

indicator “T” that is reported with a date of service 1 day earlier than the date of service 

associated with HCPCS code G0378. (By selecting these claims from single and 

“pseudo” single claims, we ensure that they would not contain a code for a service with 

status indicator “T” on the same date of service.) 

● The claims contain 8 or more units of services described by HCPCS code 

G0378 (Observation services, per hour.) 

● The claims contain one of the following codes: HCPCS code G0379 (Direct 

referral of patient for hospital observation care) on the same date of service as HCPCS 

code G0378; CPT code 99291 (Critical care, evaluation and management of the critically 

ill or critically injured patient; first 30–74 minutes); or HCPCS code G0463 (Hospital 

outpatient clinic visit for assessment and management of a patient) provided on the same 

date of service or 1 day before the date of service for HCPCS code G0378. 

 Because we have no available cost data for HCPCS code G0463, for CY 2015, we 

proposed to calculate the geometric mean cost for procedures assigned to APC 8009 

using CY 2013 single and “pseudo” single procedure claims that met each of the 

following criteria: 

● The claim did not contain a HCPCS code to which we have assigned status 

indicator “T” that is reported with a date of service 1 day earlier than the date of service 

associated with HCPCS code G0378. (By selecting these claims from single and 
CMS-1613-FC 181 

“pseudo” single claims, we assured that they would not contain a code for a service with 

status indicator “T” on the same date of service.) 

● The claim contained 8 or more units of services described by HCPCS code 

G0378 (Observation services, per hour.) 

● The claim contained one of the following codes: HCPCS code G0379 (Direct 

referral of patient for hospital observation care) on the same date of service as HCPCS 

code G0378; or CPT code 99201 (Office or other outpatient visit for the evaluation and 

management of a new patient (Level 1)); CPT code 99202 (Office or other outpatient 

visit for the evaluation and management of a new patient (Level 2)); CPT code 99203 

(Office or other outpatient visit for the evaluation and management of a new patient 

(Level 3)); CPT code 99204 (Office or other outpatient visit for the evaluation and 

management of a new patient (Level 4)); CPT code 99205 (Office or other outpatient 

visit for the evaluation and management of a new patient (Level 5)); CPT code 99211 

(Office or other outpatient visit for the evaluation and management of an established 

patient (Level 1)); CPT code 99212 (Office or other outpatient visit for the evaluation and 

management of an established patient (Level 2)); CPT code 99213 (Office or other 

outpatient visit for the evaluation and management of an established patient (Level 3)); 

CPT code 99214 (Office or other outpatient visit for the evaluation and management of 

an established patient (Level 4)); CPT code 99215 (Office or other outpatient visit for the 

evaluation and management of an established patient (Level 5)); CPT code 99284 

(Emergency department visit for the evaluation and management of a patient (Level 4)); 

CPT code 99285 (Emergency department visit for the evaluation and management of a 

patient (Level 5)); HCPCS code G0384 (Type B emergency department visit (Level 5)); 
CMS-1613-FC 182 

or CPT code 99291 (Critical care, evaluation and management of the critically ill or 

critically injured patient; first 30-74 minutes) provided on the same date of service or 

1 day before the date of service for HCPCS code G0378. 

 The proposed CY 2015 geometric mean cost resulting from this methodology for 

EAM composite APC 8009 was approximately $1,287. 

 Comment: One commenter urged CMS to consider options to minimize the 

financial burden for the beneficiary associated with self-administered drugs while the 

beneficiary is receiving observation services. The commenter also supported efforts to 

count outpatient observation toward the Medicare skilled nursing facility (SNF) 3-day 

stay requirement. Another commenter expressed concern that paying for all qualifying 

EAM encounters through a single composite APC is likely to penalize certain outpatient 

facilities, such as those that are attached to safety-net or teaching hospitals, which treat 

more complex patients and populations. The commenter urged CMS to monitor and 

accept provider feedback concerning the impact of this coding change to ensure that it 

does not create financial pressure or incentives to admit borderline cases, deny treatment, 

or otherwise negatively affect clinical decision making. 

 Response: The comments related to beneficiary liability associated with 

self-administered drugs and counting outpatient observation toward the SNF 3-day 

qualifying stay are outside the scope of the proposed regulations. We do not believe that 

paying for all qualifying EAM encounters through a single composite APC is likely to 

penalize certain outpatient facilities that treat more complex patients and populations. 

We believe that this proposal accurately accounts for the cost of providing an extended 

assessment and management service and that this proposal does not have any substantial 
CMS-1613-FC 183 

impact on any particular type of facility or patient type. We also do not believe that 

paying for all qualifying EAM encounters through a single composite APC creates any 

financial pressure or incentives to admit borderline cases, deny treatment, or otherwise 

negatively affect clinical decision making. We continue to expect hospitals to provide 

the appropriate medical care to all beneficiaries. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to continue our CY 2014 finalized policy to provide 

payment for all qualifying extended assessment and management encounters through 

composite APC 8009 for CY 2015. We also are finalizing our proposal, without 

modification, to continue to allow a clinic visit and certain high level ED visits furnished 

by a hospital in conjunction with observation services of substantial duration (8 or more 

hours) to qualify for payment through EAM composite APC 8009 (provided the 

observation is not furnished on the same day as surgery or post-operatively). The final 

CY 2015 geometric mean cost resulting from this methodology for EAM composite APC 

8009 is approximately $1,281. 

(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001) 

 LDR prostate brachytherapy is a treatment for prostate cancer in which hollow 

needles or catheters are inserted into the prostate, followed by permanent implantation of 

radioactive sources into the prostate through the needles/catheters. At least two CPT 

codes are used to report the composite treatment service because there are separate codes 

that describe placement of the needles/catheters and the application of the brachytherapy 

sources: CPT code 55875 (Transperineal placement of needles or catheters into prostate 

for interstitial radioelement application, with or without cystoscopy) and CPT code 77778 
CMS-1613-FC 184 

(Interstitial radiation source application; complex), which are generally present together 

on claims for the same date of service in the same operative session. In order to base 

payment on claims for the most common clinical scenario, and to further our goal of 

providing payment under the OPPS for a larger bundle of component services provided in 

a single hospital encounter, beginning in CY 2008, we began providing a single payment 

for LDR prostate brachytherapy when the composite service, reported as CPT codes 

55875 and 77778, is furnished in a single hospital encounter. We base the payment for 

composite APC 8001 (LDR Prostate Brachytherapy Composite) on the geometric mean 

cost derived from claims for the same date of service that contain both CPT codes 55875 

and 77778 and that do not contain other separately paid codes that are not on the bypass 

list. We refer readers to the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66652 through 66655) for a full history of OPPS payment for LDR prostate 

brachytherapy services and a detailed description of how we developed the LDR prostate 

brachytherapy composite APC. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015, we 

proposed to continue to pay for LDR prostate brachytherapy services using the composite 

APC payment methodology proposed and implemented for CY 2008 through CY 2014. 

That is, we proposed to use CY 2013 claims reporting charges for both CPT codes 55875 

and 77778 on the same date of service with no other separately paid procedure codes 

(other than those on the bypass list) to calculate the proposed payment rate for composite 

APC 8001. Consistent with our CY 2008 through CY 2014 practice, in the CY 2015 

OPPS/ASC proposed rule (79 FR 40955), we proposed not to use the claims that meet 

these criteria in the calculation of the geometric mean costs of procedures or services 
CMS-1613-FC 185 

assigned to APC 0163 (Level IV Cystourethroscopy and Other Genitourinary Procedures) 

and APC 0651 (Complex Interstitial Radiation Source Application), the APCs to which 

CPT codes 55875 and 77778 are assigned, respectively. We proposed to continue to 

calculate the geometric mean costs of procedures or services assigned to APCs 0163 and 

0651 using single and “pseudo” single procedure claims. We continue to believe that this 

composite APC contributes to our goal of creating hospital incentives for efficiency and 

cost containment, while providing hospitals with the most flexibility to manage their 

resources. We also continue to believe that data from claims reporting both services 

required for LDR prostate brachytherapy provide the most accurate geometric mean cost 

upon which to base the proposed composite APC payment rate. 

 Using a partial year of CY 2013 claims data available for the CY 2015 

OPPS/ASC proposed rule, we were able to use 379 claims that contained both CPT codes 

55875 and 77778 to calculate the proposed geometric mean cost of approximately $3,669 

for these procedures upon which the proposed CY 2015 payment rate for composite 

APC 8001 is based. 

 Comment: Several commenters expressed concern that the proposed payment 

rate for APC 8001 is based only on 379 claims that reported both CPT codes 55875 and 

77778 on the same date of service, a significant decrease from the CY 2014 final rule 

claims data used for ratesetting when 591 claims were available. Commenters also noted 

that the proposed payment rate of $3,504.02 yields an 8.9 percent decrease in payment 

compared to the CY 2014 payment rate of $3,844.64. One commenter opined that the 

decrease in payment for these services is partially due to the number of brachytherapy 

procedures provided in the hospital outpatient setting. A few commenters urged CMS to 
CMS-1613-FC 186 

closely monitor the number of claims used to set the payment rate for this APC and to 

consider other ratesetting methodologies if the number of claims continues to decrease. 

Several commenters expressed that the low volume of claims reporting outpatient 

brachytherapy services also affected other APCs, notably APC 0312 (Radioelement 

Applications) and APC 0651 (Complex Interstitial Radiation Source Application), and 

cited additional decreases in the volume of claims used for ratesetting for these APCs. 

 Response: The CY 2015 final rule claims data show that 406 claims were 

available and used to set the payment rate for APC 8001, with a geometric mean cost of 

approximately $3,745, compared to the proposed rule claims data that showed 379 claims 

available and used for ratesetting, with a geometric mean cost of approximately $3,669. 

In response to comments regarding the decrease in the number of claims available for 

CY 2015 ratesetting and the geometric mean cost relative to the number of claims 

available for CY 2014 ratesetting and the geometric mean cost, we note that there is 

typically some fluctuation in costs from year to year. We acknowledge that the number 

of claims available and used for ratesetting for APC 8001 has decreased over recent 

years. However, the percentage of single frequency claims compared to total claims that 

we were able to use for ratesetting in this final rule with comment period is comparable to 

prior years. In addition, evaluation of the claims data for the 4 years prior to CY 2014 

indicated that the mean or median costs used for ratesetting for APC 8001 were lower in 

those years than CY 2014 or CY 2015 cost levels. For APC 0651, based on final rule 

claims data, there are 62 single frequency claims out of a total of 3,785 claims, with a 

geometric mean cost of approximately $988. For APC 0312, based on final rule claims 

data, there are 26 single frequency claims out of a total of 378 claims, with a geometric 
CMS-1613-FC 187 

mean cost of approximately $411. We agree with the commenters’ assertion that it 

appears that there are an increasing number of radiation oncological technologies that are 

competing with prostate brachytherapy, which may be contributing to a decreased 

number of claims available for ratesetting for these APCs. As we stated in the CY 2014 

OPPS/ASC final rule with comment period, we will continue to evaluate additional 

refinements and improvements to our ratesetting methodologies in order to maximize the 

use of claims data (78 FR 74913). In addition, we will continue to explore means by 

which we can use a larger volume of claims to establish the payment rate for APC 0312 

and APC 0651. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to continue use of composite APC 8001 for CY 2015 and 

to set the payment rate for this APC using our established methodology. The final 

geometric mean cost for composite APC 8001 for CY 2015 is approximately $3,745. 

(3) Mental Health Services Composite APC (APC 0034) 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40955), for CY 2015, we 

proposed to continue our longstanding policy of limiting the aggregate payment for 

specified less resource-intensive mental health services furnished on the same date to the 

payment for a day of partial hospitalization services provided by a hospital, which we 

consider to be the most resource-intensive of all outpatient mental health services. We 

refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18452 

through 18455) for the initial discussion of this longstanding policy and the CY 2012 

OPPS/ASC final rule with comment period (76 FR 74168) for more recent background. 
CMS-1613-FC 188 

 Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 40955), we 

proposed that when the aggregate payment for specified mental health services provided 

by one hospital to a single beneficiary on one date of service based on the payment rates 

associated with the APCs for the individual services exceeds the maximum per diem 

payment rate for partial hospitalization services provided by a hospital, those specified 

mental health services would be assigned to APC 0034 (Mental Health Services 

Composite). We also proposed to continue to set the payment rate for APC 0034 at the 

same payment rate that we proposed to establish for APC 0176 (Level II Partial 

Hospitalization (4 or more services) for hospital-based PHPs), which is the maximum 

partial hospitalization per diem payment rate for a hospital, and that the hospital continue 

to be paid one unit of APC 0034 (79 FR 40955). Under this policy, the I/OCE would 

continue to determine whether to pay for these specified mental health services 

individually, or to make a single payment at the same payment rate established for APC 

0176 for all of the specified mental health services furnished by the hospital on that 

single date of service. We continue to believe that the costs associated with 

administering a partial hospitalization program at a hospital represent the most 

resource-intensive of all outpatient mental health services. Therefore, we do not believe 

that we should pay more for mental health services under the OPPS than the highest 

partial hospitalization per diem payment rate for hospitals. 

 We did not receive any public comments on this proposal. Therefore, we are 

finalizing our CY 2015 proposal, without modification, to continue our longstanding 

policy of limiting the aggregate payment for specified less resource-intensive mental 

health services furnished on the same date to a single beneficiary by a hospital to the 
CMS-1613-FC 189 

payment rate for APC 0176, which is the maximum partial hospitalization per diem 

payment for a hospital for CY 2015. 

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

 Effective January 1, 2009, we provide a single payment each time a hospital bills 

more than one imaging procedure within an imaging family on the same date of service, 

in order to reflect and promote the efficiencies hospitals can achieve when performing 

multiple imaging procedures during a single session (73 FR 41448 through 41450). We 

utilize three imaging families based on imaging modality for purposes of this 

methodology: (1) ultrasound; (2) computed tomography (CT) and computed 

tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and 

magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple 

imaging composite policy and their respective families are listed in Table 12 of the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 74920 through 74924). 

 While there are three imaging families, there are five multiple imaging composite 

APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we 

differentiate payment for OPPS imaging services provided with and without contrast. 

While the ultrasound procedures included in the policy do not involve contrast, both 

CT/CTA and MRI/MRA scans can be provided either with or without contrast. The five 

multiple imaging composite APCs established in CY 2009 are: 

● APC 8004 (Ultrasound Composite); 

● APC 8005 (CT and CTA without Contrast Composite); 
CMS-1613-FC 190 

● APC 8006 (CT and CTA with Contrast Composite); 

● APC 8007 (MRI and MRA without Contrast Composite); and 

● APC 8008 (MRI and MRA with Contrast Composite). 

 We define the single imaging session for the “with contrast” composite APCs as 

having at least one or more imaging procedures from the same family performed with 

contrast on the same date of service. For example, if the hospital performs an MRI 

without contrast during the same session as at least one other MRI with contrast, the 

hospital will receive payment for APC 8008, the “with contrast” composite APC. 

 We make a single payment for those imaging procedures that qualify for 

composite APC payment, as well as any packaged services furnished on the same date of 

service. The standard (noncomposite) APC assignments continue to apply for single 

imaging procedures and multiple imaging procedures performed across families. For a 

full discussion of the development of the multiple imaging composite APC methodology, 

we refer readers to the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68559 through 68569). 

 In the CY 2015 OPPS/ASC proposed rule, for CY 2015, we proposed to continue 

to pay for all multiple imaging procedures within an imaging family performed on the 

same date of service using the multiple imaging composite APC payment methodology 

(79 FR 40956). We continue to believe that this policy will reflect and promote the 

efficiencies hospitals can achieve when performing multiple imaging procedures during a 

single session. 

 The proposed CY 2015 payment rates for the five multiple imaging composite 

APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 8008) were based on 
CMS-1613-FC 191 

geometric mean costs calculated from a partial year of CY 2013 claims available for the 

proposed rule that qualified for composite payment under the current policy (that is, those 

claims with more than one procedure within the same family on a single date of service). 

To calculate the proposed geometric mean costs, we used the same methodology that we 

used to calculate the final CY 2013 and CY 2014 geometric mean costs for these 

composite APCs, as described in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74918). The imaging HCPCS codes referred to as “overlap bypass codes” 

that we removed from the bypass list for purposes of calculating the proposed multiple 

imaging composite APC geometric mean costs, pursuant to our established methodology 

as stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918), are 

identified by asterisks in Addendum N to the CY 2015 OPPS/ASC proposed rule (which 

is available via the Internet on the CMS Web site) and are discussed in more detail in 

section II.A.1.b. of that proposed rule. 

 For the CY 2015 OPPS/ASC proposed rule, we were able to identify 

approximately 636,000 “single session” claims out of an estimated 1.6 million potential 

composite APC cases from our ratesetting claims data, approximately 40 percent of all 

eligible claims, to calculate the proposed CY 2015 geometric mean costs for the multiple 

imaging composite APCs. 

 Table 8 of the proposed rule (79 FR 40956 through 40958) listed the proposed 

HCPCS codes that would be subject to the multiple imaging composite APC policy and 

their respective families and approximate composite APC geometric mean costs for 

CY 2015. 
CMS-1613-FC 192 

 Comment: A few commenters expressed concern that the multiple imaging 

composite APCs may undercompensate providers for imaging procedures. These 

commenters recommended that CMS provide an analysis of the effects of reductions in 

imaging payments due to the composite APC policy on utilization. The commenters 

recommended that CMS provide separate payment for each imaging procedure in light of 

reductions to payment for imaging procedures. 

 Response: We continue to believe that our multiple imaging composite policies 

reflect and promote the efficiencies hospitals can achieve when performing multiple 

imaging procedures during a single session, and some of those efficiencies result in lower 

payments due to cost savings from furnishing multiple imaging services on the same date. 

We will continue to monitor the multiple imaging composite APC ratesetting 

methodology and the cost of providing imaging services. If appropriate, we may report 

any information to the HOP Panel, or discuss and propose changes to the multiple 

imaging composite APCs in rulemaking in the future. 

 After consideration of the public comments received, we are finalizing our 

proposal to continue the use of multiple imaging composites without modification. We 

were able to identify approximately 661,000 million “single session” claims out of an 

estimated 1.68 million potential composite cases from our CY 2013 ratesetting claims 

data, approximately 39 percent of all eligible claims, to calculate the final CY 2015 

geometric mean costs for the multiple imaging composite APCs. 

 Table 9 below lists the HCPCS codes that will be subject to the multiple imaging 

composite APC policy and their respective families and approximate composite APC 

geometric mean costs for CY 2015. 
CMS-1613-FC 193 

TABLE 9.—OPPS IMAGING FAMILIES AND MULTIPLE IMAGING 

PROCEDURE COMPOSITE APCs 

Family 1 – Ultrasound 

CY 2015 APC 8004 (Ultrasound Composite) CY 2015 Approximate 

APC Geometric Mean Cost = $296 

76604 Us exam, chest 

76700 Us exam, abdom, complete 

76705 Echo exam of abdomen 

76770 Us exam abdo back wall, comp 

76775 Us exam abdo back wall, lim 

76776 Us exam k transpl w/Doppler 

76831 Echo exam, uterus 

76856 Us exam, pelvic, complete 

76870 Us exam, scrotum 

76857 Us exam, pelvic, limited 

Family 2 - CT and CTA with and without Contrast 

CY 2015 APC 8005 (CT and CTA without 

Contrast Composite)* 

CY 2015 Approximate 

APC Geometric Mean Cost = $325 

70450 Ct head/brain w/o dye 

70480 Ct orbit/ear/fossa w/o dye 

70486 Ct maxillofacial w/o dye 

70490 Ct soft tissue neck w/o dye 

71250 Ct thorax w/o dye 

72125 Ct neck spine w/o dye 

72128 Ct chest spine w/o dye 

72131 Ct lumbar spine w/o dye 

72192 Ct pelvis w/o dye 

73200 Ct upper extremity w/o dye 

73700 Ct lower extremity w/o dye 

74150 Ct abdomen w/o dye 

74261 Ct colonography, w/o dye 

74176 Ct angio abd & pelvis 

CY 2015 APC 8006 (CT and CTA with 

Contrast Composite) 

CY 2015 Approximate 

APC Geometric Mean Cost = $548 

70487 Ct maxillofacial w/dye 

70460 Ct head/brain w/dye 

70470 Ct head/brain w/o & w/dye 
CMS-1613-FC 194 

70481 Ct orbit/ear/fossa w/dye 

70482 Ct orbit/ear/fossa w/o & w/dye 

70488 Ct maxillofacial w/o & w/dye 

70491 Ct soft tissue neck w/dye 

70492 Ct sft tsue nck w/o & w/dye 

70496 Ct angiography, head 

70498 Ct angiography, neck 

71260 Ct thorax w/dye 

71270 Ct thorax w/o & w/dye 

71275 Ct angiography, chest 

72126 Ct neck spine w/dye 

72127 Ct neck spine w/o & w/dye 

72129 Ct chest spine w/dye 

72130 Ct chest spine w/o & w/dye 

72132 Ct lumbar spine w/dye 

72133 Ct lumbar spine w/o & w/dye 

72191 Ct angiograph pelv w/o & w/dye 

72193 Ct pelvis w/dye 

72194 Ct pelvis w/o & w/dye 

73201 Ct upper extremity w/dye 

73202 Ct uppr extremity w/o & w/dye 

73206 Ct angio upr extrm w/o & w/dye 

73701 Ct lower extremity w/dye 

73702 Ct lwr extremity w/o & w/dye 

73706 Ct angio lwr extr w/o & w/dye 

74160 Ct abdomen w/dye 

74170 Ct abdomen w/o & w/dye 

74175 Ct angio abdom w/o & w/dye 

74262 Ct colonography, w/dye 

75635 Ct angio abdominal arteries 

74177 Ct angio abd & pelv w/contrast 

74178 Ct angio abd & pelv 1+ regns 

* If a “without contrast” CT or CTA procedure is performed during the same session as a 

“with contrast” CT or CTA procedure, the I/OCE would assign APC 8006 rather than 

APC 8005. 

Family 3 - MRI and MRA with and without Contrast 

CY 2015 APC 8007 (MRI and MRA without 

Contrast Composite)* 

CY 2015 Approximate 

APC Geometric Mean Cost = $631 
CMS-1613-FC 195 

70336 Magnetic image, jaw joint 

70540 Mri orbit/face/neck w/o dye 

70544 Mr angiography head w/o dye 

70547 Mr angiography neck w/o dye 

70551 Mri brain w/o dye 

70554 Fmri brain by tech 

71550 Mri chest w/o dye 

72141 Mri neck spine w/o dye 

72146 Mri chest spine w/o dye 

72148 Mri lumbar spine w/o dye 

72195 Mri pelvis w/o dye 

73218 Mri upper extremity w/o dye 

73221 Mri joint upr extrem w/o dye 

73718 Mri lower extremity w/o dye 

73721 Mri jnt of lwr extre w/o dye 

74181 Mri abdomen w/o dye 

75557 Cardiac mri for morph 

75559 Cardiac mri w/stress img 

C8901 MRA w/o cont, abd 

C8904 MRI w/o cont, breast, uni 

C8907 MRI w/o cont, breast, bi 

C8910 MRA w/o cont, chest 

C8913 MRA w/o cont, lwr ext 

C8919 MRA w/o cont, pelvis 

C8932 MRA, w/o dye, spinal canal 

C8935 MRA, w/o dye, upper extr 

CY 2015 APC 8008 (MRI and MRA with 

Contrast Composite) 

CY 2015 Approximate 

APC Geometric Mean Cost = $945 

70549 Mr angiograph neck w/o & w/dye 

70542 Mri orbit/face/neck w/dye 

70543 Mri orbt/fac/nck w/o & w/dye 

70545 Mr angiography head w/dye 

70546 Mr angiograph head w/o & w/dye 

70547 Mr angiography neck w/o dye 

70548 Mr angiography neck w/dye 

70552 Mri brain w/dye 

70553 Mri brain w/o & w/dye 

71551 Mri chest w/dye 

71552 Mri chest w/o & w/dye 
CMS-1613-FC 196 

72142 Mri neck spine w/dye 

72147 Mri chest spine w/dye 

72149 Mri lumbar spine w/dye 

72156 Mri neck spine w/o & w/dye 

72157 Mri chest spine w/o & w/dye 

72158 Mri lumbar spine w/o & w/dye 

72196 Mri pelvis w/dye 

72197 Mri pelvis w/o & w/dye 

73219 Mri upper extremity w/dye 

73220 Mri uppr extremity w/o & w/dye 

73222 Mri joint upr extrem w/dye 

73223 Mri joint upr extr w/o & w/dye 

73719 Mri lower extremity w/dye 

73720 Mri lwr extremity w/o & w/dye 

73722 Mri joint of lwr extr w/dye 

73723 Mri joint lwr extr w/o & w/dye 

74182 Mri abdomen w/dye 

74183 Mri abdomen w/o & w/dye 

75561 Cardiac mri for morph w/dye 

75563 Card mri w/stress img & dye 

C8900 MRA w/cont, abd 

C8902 MRA w/o fol w/cont, abd 

C8903 MRI w/cont, breast, uni 

C8905 MRI w/o fol w/cont, brst, un 

C8906 MRI w/cont, breast, bi 

C8908 MRI w/o fol w/cont, breast, 

C8909 MRA w/cont, chest 

C8911 MRA w/o fol w/cont, chest 

C8912 MRA w/cont, lwr ext 

C8914 MRA w/o fol w/cont, lwr ext 

C8918 MRA w/cont, pelvis 

C8920 MRA w/o fol w/cont, pelvis 

C8931 MRA, w/dye, spinal canal 

C8933 MRA, w/o&w/dye, spinal canal 

C8934 MRA, w/dye, upper extremity 

C8936 MRA, w/o&w/dye, upper extr 

* If a “without contrast” MRI or MRA procedure is performed during the same session as a 

“with contrast” MRI or MRA procedure, the I/OCE would assign APC 8008 rather than 

APC 8007. 
CMS-1613-FC 197 

3. Changes to Packaged Items and Services 

a. Background and Rationale for Packaging in the OPPS 

 Like other prospective payment systems, the OPPS relies on the concept of 

averaging to establish a payment rate for services. The payment may be more or less 

than the estimated cost of providing a specific service or bundle of specific services for a 

particular patient. The OPPS packages payment for multiple interrelated items and 

services into a single payment to create incentives for hospitals to furnish services most 

efficiently and to manage their resources with maximum flexibility. Our packaging 

policies support our strategic goal of using larger payment bundles in the OPPS to 

maximize hospitals’ incentives to provide care in the most efficient manner. For 

example, where there are a variety of devices, drugs, items, and supplies that could be 

used to furnish a service, some of which are more expensive than others, packaging 

encourages hospitals to use the most cost-efficient item that meets the patient’s needs, 

rather than to routinely use a more expensive item, which often results if separate 

payment is provided for the items. 

 Packaging also encourages hospitals to effectively negotiate with manufacturers 

and suppliers to reduce the purchase price of items and services or to explore alternative 

group purchasing arrangements, thereby encouraging the most economical health care 

delivery. Similarly, packaging encourages hospitals to establish protocols that ensure 

that necessary services are furnished, while scrutinizing the services ordered by 

practitioners to maximize the efficient use of hospital resources. Packaging payments 

into larger payment bundles promotes the predictability and accuracy of payment for 
CMS-1613-FC 198 

services over time. Finally, packaging may reduce the importance of refining 

service-specific payment because packaged payments include costs associated with 

higher cost cases requiring many ancillary items and services and lower cost cases 

requiring fewer ancillary items and services. Because packaging encourages efficiency 

and is an essential component of a prospective payment system, packaging payment for 

items and services that are typically integral, ancillary, supportive, dependent, or 

adjunctive to a primary service has been a fundamental part of the OPPS since its 

implementation in August 2000. Over the last 15 years, as we have refined our 

understanding of the OPPS as a prospective payment system, we have packaged 

numerous services that we originally paid as primary services. As we continue to 

develop larger payment groups that more broadly reflect services provided in an 

encounter or episode of care, we have expanded the OPPS packaging policies. Most, but 

not necessarily all, items and services currently packaged in the OPPS are listed in 

42 CFR 419.2(b), including the five packaging policies that were added in CY 2014 

(78 FR 74925). Our overarching goal is to make OPPS payments for all services paid 

under the OPPS more consistent with those of a prospective payment system and less like 

those of a per service fee schedule, which pays separately for each coded item. As a part 

of this effort, we have continued to examine the payment for items and services provided 

in the OPPS to determine which OPPS services can be packaged to achieve the objective 

of advancing the OPPS as a prospective payment system. 

 We have examined the items and services currently provided under the OPPS, 

reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and 

services for which we believe payment would be appropriately packaged into payment of 
CMS-1613-FC 199 

the primary service they support. Specifically, we examined the HCPCS code definitions 

(including CPT code descriptors) to determine whether there were categories of codes for 

which packaging would be appropriate according to existing OPPS packaging policies or 

a logical expansion of those existing OPPS packaging policies. In general, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 40958 through 40961), we proposed to 

package the costs of selected HCPCS codes into payment for services reported with other 

HCPCS codes where we believe that one code reported an item or service that was 

integral, ancillary, supportive, dependent, or adjunctive to the provision of care that was 

reported by another HCPCS code. Below we discuss categories and classes of items and 

services that we proposed to package beginning in CY 2015. For an extensive discussion 

of the history and background of the OPPS packaging policy, we refer readers to the 

CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66580), and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74925). 

b. Revisions of a Packaging Policy Established in CY 2014--Procedures Described by 

Add-On Codes 

 In the CY 2014 OPPS/ASC final rule with comment period, we packaged add-on 

codes in the OPPS, with the exception of add-on codes describing drug administration 

services (78 FR 74943; 42 CFR 419.2(b)(18)). With regard to the packaging of add-on 

procedures that use expensive medical devices, we stated in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 74943) that the most expensive medical devices 

used in procedures to insert or implant devices in the hospital outpatient setting are 

included in procedures that are assigned to comprehensive APCs. Comprehensive APCs 
CMS-1613-FC 200 

are discussed in section II.A.2.e. of this final rule with comment period. In the CY 2014 

OPPS/ASC final rule with comment period (78 FR 74864), we discussed the 

comprehensive APC policy, which we adopted, with modification, but delayed the 

implementation of, until CY 2015. We stated that, for CY 2014, we would continue to 

pay separately for only those add-on codes (except for drug administration add-on codes) 

that were assigned to device-dependent APCs in CY 2014, but that, after CY 2014, these 

device-dependent add-on codes would be paid under the comprehensive APC policy. 

According to the proposed changes to the comprehensive APC policy described in 

section II.A.2.e. of this final rule with comment period, we proposed to package all of the 

procedures described by add-on codes that are currently assigned to device-dependent 

APCs, which will be replaced by comprehensive APCs. The device-dependent add-on 

codes that are separately paid in CY 2014 that we proposed to package in CY 2015 were 

listed in Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 40959). 

 Comment: A few commenters disagreed with the proposal to package payment 

for the add-on codes listed in Table 9 of the proposed rule for the following reasons: 

● Some commenters requested that CMS delay packaging the device-dependent 

add-on codes remaining for CY 2015 while additional data analysis is performed and 

refinements are adopted to ensure accurate payment for the full range of add-on 

procedures, including those not assigned to comprehensive APCs. 

● A few commenters suggested that add-on codes are separate and distinct 

clinical procedures having unique, independent values determined by the American 

Medical Association (AMA) and, therefore, should not be treated as ancillary services. 
CMS-1613-FC 201 

● Some commenters requested that CMS establish exceptions to its proposal to 

package add-on codes for specific add-on procedures with high cost supply items that 

commenters believed would be underpaid under the policy and impede patient access to 

care. 

 Response: We disagree with the commenters that oppose packaging these 

remaining add-on codes. We received similar public comments during the CY 2014 

rulemaking cycle and responded to those comments in the CY 2014 OPPS/ASC final rule 

with comment period. Generally, we disagree because add-on codes describe services 

that are integral, ancillary, supportive, dependent, or adjunctive to the primary service. In 

other words, add-on codes do not represent a stand-alone procedure and are inclusive to 

other procedures performed at the same time. For a full discussion of our response to 

these public comments, we refer readers to the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74942 through 74943). 

 We also disagree with commenters’ assertion that add-on code services are 

separate and distinct clinical procedures and should not be treated as ancillary services. 

We received a similar public comment last year where commenters suggested that 

procedures described by add-on codes are not integral, ancillary, supportive, dependent, 

or adjunctive to the primary service. As we noted previously (78 FR 74942 through 

74943), the fundamental nature of an add-on code procedure is that it typically describes 

some form of a related extension of or addition to the primary procedure or service 

described by the primary procedure. The definition of an add-on code is that it is an 

extension of a primary, base service. CPT defines add-on codes as codes that describe 

“procedures [that] are commonly carried out in addition to the primary procedure 
CMS-1613-FC 202 

performed” (2014 CPT Codebook Professional Edition, page xiv). Further, CPT states 

that “add-on codes describe additional intra-service work associated with the primary 

procedure (emphasis added) (2014 CPT Codebook Professional Edition, page xiv). We 

also disagree with commenters that some add-on codes are not related to the primary 

procedure but represent a separate procedure that should be paid separately from the 

primary procedure. If such procedures were in fact separate procedures, they would not 

be described by an add-on code. Thus, we believe that add-on code procedures are not 

always separate and distinct clinical procedures, but rather are related extensions, 

supportive, integral, or adjunctive of the primary procedure and, therefore, it is 

appropriate to package the cost of the add-on codes into the payment calculation for the 

primary procedure. Finally, in response to commenters who requested that CMS 

establish exceptions to its proposal for add-on code with high cost supply items, we are 

allowing certain add-on codes to be evaluated for a complexity adjustment when billed 

with a comprehensive APC primary procedure. We refer readers to section II.A.2.e. of 

this final rule with comment period for further discussion of that policy. We see no 

reason to grant exceptions to the add-on code packaging policy to specifically account for 

add-on procedures with high cost supply items, as any associated costs are accounted for 

in the payment for the primary procedure. The only reason we did not package the 

add-on codes listed in Table 9 of the proposed rule was that implementation of the 

comprehensive APC policy was delayed for 1 year (78 FR 74943). Because the 

comprehensive APC policy will be implemented in CY 2015, we are packaging these 

remaining add-on codes. 
CMS-1613-FC 203 

 After consideration of the public comments we received, we are finalizing our 

proposal to package all of the procedures described by add-on codes that are currently 

assigned to device-dependent APCs, which will be replaced by comprehensive APCs, as 

listed in Table 9 of the CY 2015 OPPS/ASC proposed rule (79 FR 40959) and included 

in Table 10 below. The current device-dependent add-on codes that are separately paid 

in CY 2014 that will be packaged in CY 2015 are included in Table 8 under section 

II.A.2.e. of this final rule with comment period, which addresses the comprehensive APC 

policy. 

 
CMS-1613-FC 204 

TABLE 10.—ADD-ON CODES ASSIGNED TO DEVICE-DEPENDENT APCS 

FOR CY 2014 THAT ARE PACKAGED IN CY 2015 

CY 2015 Add-on 

Code Short Descriptor 

19297 Place breast cath for rad 

33225 L ventric pacing lead add-on 

37222 Iliac revasc add-on 

37223 Iliac revasc w/stent add-on 

37232 Tib/per revasc add-on 

37233 Tibper revasc w/ather add-on 

37234 Revsc opn/prq tib/pero stent 

37235 Tib/per revasc stnt & ather 

37237 Open/perq place stent ea add 

37239 Open/perq place stent ea add 

49435 Insert subq exten to ip cath 

92921 Prq cardiac angio addl art 

92925 Prq card angio/athrect addl 

92929 Prq card stent w/angio addl 

92934 Prq card stent/ath/angio 

92938 Prq revasc byp graft addl 

92944 Prq card revasc chronic addl 

92998 Pul art balloon repr precut 

C9601 Perc drug-el cor stent bran 

C9603 Perc d-e cor stent ather br 

C9605 Perc d-e cor revasc t cabg b 

C9608 Perc d-e cor revasc chro add 

c. Packaging Policies for CY 2015 

(1) Ancillary Services 

 Under the OPPS, we currently pay separately for certain ancillary services. Some 

of these ancillary services are currently assigned to status indicator “X,” which is defined 

as “ancillary services,” but some other ancillary services are currently assigned to status 

indicators other than “X.” This is because the current use of status indicator “X” in the 

OPPS is incomplete and imprecise. Some procedures and services that are ancillary, for 

example, a chest X-ray, are assigned to an APC with services assigned status indicator 
CMS-1613-FC 205 

“S.” As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 

40961), we reviewed all of the covered services provided in the HOPD and identified 

those that are commonly performed when provided with other HOPD services, and also 

provided as ancillary to a primary service in the HOPD. These ancillary services that we 

identified are primarily minor diagnostic tests and procedures that are often performed 

with a primary service, although there are instances where hospitals provide such services 

alone and without another primary service during the same encounter. 

 As discussed in section II.A.3.a. of this final rule with comment period, our intent 

is that the OPPS be more of a prospective payment system with expanded packaging of 

items and services that are typically integral, ancillary, supportive, dependent, or 

adjunctive to a primary service. Given that the longstanding OPPS policy is to package 

items and services that are integral, ancillary, supportive, dependent, or adjunctive to a 

primary service, we stated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74945) that we believe that ancillary services should be packaged when they are 

performed with another service, but should continue to be separately paid when 

performed alone. We indicated that this packaging approach is most consistent with a 

prospective payment system and the regulation at 42 CFR 419.2(b) that packages many 

ancillary services into primary services while preserving separate payment for those 

instances in which one of these ancillary services is provided alone (not with any other 

service paid under the OPPS) to a hospital outpatient. We did not finalize the ancillary 

packaging policy for CY 2014 because we believed that further evaluation was necessary 

(78 FR 74946). 
CMS-1613-FC 206 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40959 through 40961), we 

proposed to conditionally package certain ancillary services for CY 2015. Specifically, 

we proposed to limit the initial set of APCs that contain conditionally packaged services 

to those ancillary service APCs with a proposed geometric mean cost of less than or 

equal to $100 (prior to application of the conditional packaging status indicator). We 

limited this initial set of packaged ancillary service APCs to those with a proposed 

geometric mean cost of less than or equal to $100 in response to public comments on the 

CY 2014 ancillary service packaging proposal in which commenters expressed concern 

that certain low volume but relatively costly ancillary services would have been packaged 

into high volume but relatively inexpensive primary services (for example, a visit) 

(74 FR 74945). We noted that the proposed $100 geometric mean cost limit for selecting 

this initial group of conditionally packaged ancillary service APCs is less than the 

geometric mean cost of APC 0634, which contains the single clinic visit HCPCS code 

G0463, which is a single payment rate for clinic visits beginning in CY 2014, and had a 

CY 2015 OPPS/ASC proposed rule geometric mean cost of approximately $103. This 

proposed $100 geometric mean cost limit is part of the methodology of selecting the 

initial set of conditionally packaged ancillary service APCs under this proposed 

packaging policy. It is not meant to represent a threshold above which ancillary services 

will not be packaged, but as a basis for selecting this initial set of APCs, which will likely 

be updated and expanded in future years. In future years, we may package ancillary 

services assigned to APCs with geometric mean costs higher than $100. In addition, 

geometric mean costs can change over time. An increase in the geometric mean cost of 

any of the proposed APCs to above $100 in future years would not change the 
CMS-1613-FC 207 

conditionally packaged status of services assigned to the APCs selected in CY 2015 in a 

future year. We would continue to consider these APCs to be conditionally packaged. 

However, we would review the conditionally packaged status of ancillary services 

annually. 

 We proposed to exclude certain services from this packaging policy even though 

they are assigned to APCs with a geometric mean cost of less than or equal to $100. 

Preventive services will continue to be paid separately, and include the following services 

listed in Table 11 below that would otherwise be packaged under this policy. 

 
CMS-1613-FC 208 

TABLE 11.—PREVENTIVE SERVICES EXEMPTED FROM THE ANCILLARY 

SERVICE PACKAGING POLICY 

HCPCS 

Code Short Descriptor APC 

76977 Us bone density measure 0340 

77078 Ct bone density axial 0260 

77080 Dxa bone density axial 0261 

77081 Dxa bone density/peripheral 0260 

G0117 Glaucoma scrn hgh risk direc 0260 

G0118 Glaucoma scrn hgh risk direc 0230 

G0130 Single energy x-ray study 0230 

G0389 Ultrasound exam aaa screen 0265 

G0404 Ekg tracing for initial prev 0450 

Q0091 Obtaining screen pap smear 0450 

 In addition, we did not propose to package certain psychiatry and 

counseling-related services as we see similarities to a visit and, at the time of issuance of 

the CY 2015 OPPS/ASC proposed rule, did not consider them to be ancillary services. 

We also did not propose to package certain low cost drug administration services as we 

are examining various alternative payment policies for drug administration services, 

including the associated drug administration add-on codes. 

 Finally, we proposed to delete status indicator “X” (Ancillary Services) because 

the majority of the services assigned to status indicator “X” were proposed to be assigned 

to status indicator “Q1” (STV-Packaged Codes). For the services that are currently 

assigned status indicator “X” that were not proposed to be conditionally packaged under 

this policy, we proposed to assign those services status indicator “S” (Procedure or 

Service, Not Discounted When Multiple), indicating separate payment and that the 

services are not subject to the multiple procedure reduction. The APCs that we proposed 

for conditional packaging as ancillary services in CY 2015 were listed in Table 11 of the 

CY 2015 OPPS/ASC proposed rule (79 FR 40960 through 40961). 
CMS-1613-FC 209 

 The HCPCS codes that we proposed to conditionally package as ancillary services 

for CY 2015 were displayed in Addendum B to the CY 2015 OPPS/ASC proposed rule 

(which is available via the Internet on the CMS Web site). The supporting documents for 

the proposed rule are available at the CMS Web site at: 

http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

 We also proposed to revise the regulations at 42 CFR 419.2(b)(7) to replace the 

phrase “Incidental services such as venipuncture” with “Ancillary services” to more 

accurately reflect the proposed packaging policy discussed above. 

 Comment: A number of commenters, which included hospital associations, 

health systems, and individual hospitals, supported conditionally packaging ancillary 

services with a geometric mean cost of $100 prior to application of the “Q1” status 

indicator. 

 Response: We appreciate the commenters’ support. 

 Comment: A few commenters expressed concern that conditionally packaging 

ancillary services would disproportionately affect teaching hospitals because of the types 

of patients these hospitals serve and the types of services that they typically provide. One 

commenter submitted results from its data analysis that estimated major teaching 

hospitals will lose approximately -0.4 percent on average as a result of this packaging 

proposal, compared to nonteaching hospitals, which would gain approximately 0.2 

percent. The commenter’s concern was that the negative impact is a direct result of 

academic medical centers’ caring for unique and complex patient populations, for 

example, trauma patients who are seen in teaching hospital emergency departments. The 
CMS-1613-FC 210 

commenter’s analysis suggested that a large proportion of certain APCs listed on Table 

11 of the proposed rule (APCs 0012, 0099, 0260, 0261, 0340, and 0420) are packaged 

into emergency department visits and related services. 

 Response: Conditional packaging of ancillary services results in packaging of 

these services when provided with other primary services and separate payment for the 

services when they are performed alone. It is possible that, as the commenter asserted, 

the case-mix at teaching hospitals results in greater packaging of ancillary services than 

at nonteaching hospitals. This may be due to teaching hospitals being more likely to 

provide services in addition to the ancillary service, which would result in packaging of 

the ancillary service into the other primary service or services provided to the patient. 

Even if the commenter’s observation is reflective of a difference between teaching and 

nonteaching hospitals, we do not believe that such an observation is a sufficient reason to 

not package ancillary services in the OPPS. Packaging is a fundamental element of a 

prospective payment system. As stated above, in the OPPS, we packaged items and 

services that are typically integral, ancillary, supportive, dependent, or adjunctive to a 

primary service. We believe that the ancillary services proposed for conditional 

packaging are ancillary when provided with other primary services and, therefore, are 

appropriately conditionally packaged in the OPPS. As for the impact of the CY 2015 

OPPS policies on teaching hospitals, we refer the commenter to the impact table 

(Table 49) in section XXI. of this final rule with comment period, which shows that 

teaching hospitals will receive an overall 2.3 percent payment update compared to a 2.0 

percent payment update for nonteaching hospitals. Therefore, overall teaching hospitals 

stand to benefit more than nonteaching hospitals from the policies adopted in this final 
CMS-1613-FC 211 

rule with comment period, despite any relative negative impacts from the ancillary 

packaging policy. 

 Comment: Several commenters requested clarification of the methodology used 

to identify APCs with a geometric mean cost less than or equal to $100 prior to 

application of the “Q1” status indicator, given that the geometric mean cost of some of 

the APCs listed in Table 11 of the proposed rule exceeds $100. Also, commenters 

requested that the $100 threshold be held constant for future years or updated annually 

based on inflation akin to the drug threshold methodology. 

 Response: As we stated in the CY 2015 OPPS/ASC proposed rule 

(79 FR 40960), the ancillary services APCs proposed for conditional packaging were 

those with a geometric mean cost of less than or equal to $100 prior to application of the 

“Q1” status indicator to the APC. In other words, it was ancillary service APCs with a 

geometric mean cost of $100 or less with all of the services assigned to the APC that had 

either status indicator “X” or “S.” Once status indicator “Q1” was assigned, some of the 

geometric mean costs of some of the APCs increased to above $100 due to conditional 

packaging according to the “Q1” status indicator logic. We remind the commenters that 

the APCs listed in Table 11 of the proposed rule (79 FR 40960 through 40961) displayed 

the APC geometric mean costs after application of the “Q1” status indicator, which 

resulted in some of the APC geometric mean costs that were below $100 prior to 

application of the “Q1” status indicator to exceed $100 after application of the “Q1” 

status indicator. We also clarify that the $100 geometric mean cost initial selection 

criteria for this packaging policy is not a threshold above which ancillary services will 

not be conditionally packaged. As we stated in the CY 2015 OPPS/ASC proposed rule, 
CMS-1613-FC 212 

“[the $100 limit] is not meant to represent a threshold above which ancillary services will 

not be packaged, but as a basis for selecting this initial set of APCs, which will likely be 

updated and expanded in future years” (79 FR 40960). As we stated in the proposed rule, 

in future years, we may package additional ancillary services in APCs with a geometric 

mean cost (prior to the application of the conditional packaging status indicator) that 

exceeds $100. 

 Comment: One commenter expressed concern regarding the composition of APC 

0077 (Level I Pulmonary Treatment), which was proposed to be conditionally packaged. 

The commenter believed that HCPCS code G0424 (Pulmonary rehabilitation, including 

exercise (includes monitoring), one hour, per session, up to two sessions per day) is not 

clinically similar to HCPCS code G0237 (Therapeutic procedures to increase strength or 

endurance of respiratory muscles, face to face, one on one, each 15 minutes (includes 

monitoring) and HCPCS code G0238 (Therapeutic procedures to improve respiratory 

function, other than described by G0237, one on one, face to face, per 15 minutes 

(includes monitoring), which also are assigned to APC 0077. In addition, the commenter 

stated that the assignment of HCPCS code G0424 to APC 0077 would create a 2 times 

rule violation. The commenter recommended that CMS reassign HCPCS code G0424 to 

APC 0078 (Level II Pulmonary Treatment). 

 Response: We disagree with the commenter’s assertion that the assignment of 

HCPCS code G0424 to APC 0077 would create a 2 times rule violation. Section 

1833(t)(9) of the Act requires that we annually review all the items and services within an 

APC group and revise the APC structures accordingly. Included in this review is the 

identification of any 2 times rule violations as provided under section 1833(t)(2) of the 
CMS-1613-FC 213 

Act and, to the extent possible, rectification of these violations. We review our claims 

data and determine whether we need to make changes to the current APC assignment for 

the following year. For HCPCS codes G0238 and G0424, we evaluated their APC 

assignment for the CY 2015 update and determined that APC 0340 (Level II Minor 

Procedures) is the more appropriate assignment for these services based on resource 

similarity to the other services assigned to APC 0340. In addition, with the reassignment 

of HCPCS codes G0424 and G0238 to APC 0340, only four HCPCS codes (31270, 

94668, 94669, and G0237) remained in APC 0077, one (HCPCS code 94669) of which 

did not have any claims volume in CY 2013. The commenter suggested that we reassign 

HCPCS code G0424 to APC 0078. APC 0078 has a mean cost of approximately $90, 

which is under the $100 initial selection criteria for conditionally packaged ancillary 

services. With the reduced size of APC 0077 and the mean cost of APC 0078 being less 

than $100, we are reassigning the procedure codes remaining in APC 0078 to APC 0077 

and revising the title of APC 0077 to read “Pulmonary Treatment.” The new combined 

APC 0077 is assigned status indicator “Q1” under the conditional packaging policy. We 

note that the mean cost of this revised APC 0077 (after application of the “Q1” status 

indicator) is approximately $154. 

 Comment: One commenter requested that CMS continue separate payment, by 

assigning status indicator “S,” for CPT codes 92557 (comprehensive hearing test), 92601 

through 92604 (cochlear implant programming), and 92640 (auditory brainstem implant 

programming) which are assigned to APC 0364, an APC that is proposed for conditional 

packaging. The commenter stated that these CPT codes are primary audiology services 

and are not dependent or incident to other services in the hospital. 
CMS-1613-FC 214 

 Response: We do not believe that it is necessary to change the status indicator to 

“S” as we disagree that these CPT codes represent primary audiology services. 

Conditional packaging provides separate payment when the otherwise packaged services 

are provided alone without other primary services. Therefore, these services will 

continue to be separately paid when performed without other primary services. 

 Comment: Some commenters expressed concern that packaging payment for 

ancillary services could have a negative impact on patient access because hospitals will 

not have an incentive to perform ancillary services at the time of other therapeutic or 

evaluation/management services, even when providing such services at the same 

encounter would be efficient and offer patients the most appropriate and complete care. 

Commenters cautioned that expanded packaging policies will impede the accuracy and 

stability of future ratesetting under the OPPS. 

 Response: We appreciate stakeholders’ concerns and predictions about the effect 

that this conditional packaging policy may have on patient access to ancillary services. 

We will continue to monitor service utilization trends in the HOPD. We disagree with 

commenters that packaging services impedes the accuracy and stability of future OPPS 

ratesetting. As a reminder, hospitals include HCPCS codes and charges for packaged 

services on their claims, and the costs associated with those packaged services are 

included in the costs of the separately payable procedure on the claim. We also continue 

to emphasize that hospitals should report all HCPCS codes for all services, including 

those for packaged services, according to correct coding principles. 

 Comment: One commenter disagreed with the proposed assignment of status 

indicator “Q1” to CPT code 95012 (Expired nitric oxide gas determination). The 
CMS-1613-FC 215 

commenter requested that CMS assign status indicator “S” to CPT code 95012 because 

the code describes an independent, primary procedure that is not ancillary to any other 

procedure. The commenter also requested that CMS reassign CPT code 95012 to APC 

0078 (Level II Pulmonary Treatment) because of its clinical homogeneity to other 

services assigned to that APC. 

 Response: We disagree with the commenter. We believe the procedure or service 

described by CPT code 95012 to be an ancillary diagnostic test and, therefore, 

appropriate for conditional packaging under the ancillary services policy. We believe 

that existing assignment to APC 0340 (Level II Minor Procedures) is appropriate in that 

CPT code 95012 is a minor test and that its mean cost of approximately $41 is similar to 

the mean cost of APC 0340 of approximately $53. Therefore, we are finalizing our 

proposal to maintain assignment of CPT code 95012 to APC 0340 with a “Q1” status 

indicator for CY 2015. 

 Comment: A few commenters requested that CMS make an exception to the 

ancillary packaging policy for pathology services, specifically those services assigned to 

APC 0342 (Level I Pathology) and APC 0433 (Level II Pathology). These commenters 

were concerned about inadequate payment for pathology services. 

 Response: We disagree with commenters’ concern regarding inadequate payment 

for pathology services and do not believe that an exception to this packaging policy for 

the pathology services assigned to APCs 0342 and 0433 is appropriate at this time. We 

remind the commenters that this policy only affects the facility payment for the technical 

aspect of the services and does not affect the physician fee schedule payment to the 

pathologist for the physician work in performing pathology services. We believe that 
CMS-1613-FC 216 

pathology services are some of the best examples of ancillary services as they typically 

follow a surgical or other specimen-generating procedure for the purposes of diagnosis. 

We also remind the commenters that in the event a patient receives a pathology test in 

isolation from other primary HOPD services, the test would be separately paid because 

the ancillary services packaging policy is a conditional packaging policy. Therefore, we 

are not creating an exception to this ancillary packaging policy for pathology services. 

 After consideration of the public comments we received, we are finalizing our 

ancillary services packaging policy as proposed, including deletion of status indicator 

“X.” We also are adopting as final our proposed revision of the regulations at 

42 CFR 419.2(b)(7) to replace the phrase “Incidental services such as venipuncture” with 

“Ancillary services” to more accurately reflect the final packaging policy for CY 2015. 

 The APCs that we are conditionally packaging as ancillary services in CY 2015 

are listed in Table 12 below. 

TABLE 12.--APCs FOR CONDITIONALLY PACKAGED ANCILLARY 

SERVICES FOR CY 2015 

APC 

CY 2015 OPPS 

Geometric 

Mean Cost 

(with 

application of 

Q1 status 

indicator) 

Final 

CY 2015 

OPPS SI 

Group Title 

0012 $102.18 Q1 Level I Debridement & Destruction 

0060 $20.57 Q1 Manipulation Therapy 

0077 $170.77 Q1 Level I Pulmonary Treatment 

0099 $81.40 Q1 Electrocardiograms/Cardiography 

0215 $98.52 Q1 Level I Nerve and Muscle Services 

0230 $54.01 Q1 Level I Eye Tests & Treatments 

0260 $61.59 Q1 

Level I Plain Film Including Bone Density 

Measurement 

0261 $98.56 Q1 

Level II Plain Film Including Bone 

Density Measurement 
CMS-1613-FC 217 

APC 

CY 2015 OPPS 

Geometric 

Mean Cost 

(with 

application of 

Q1 status 

indicator) 

Final 

CY 2015 

OPPS SI 

Group Title 

0265 

$95.12 

Q1 

Level I Diagnostic and Screening 

Ultrasound 

0340 $54.33 Q1 Level II Minor Procedures 

0342 $56.31 Q1 Level I Pathology 

0345 $78.91 Q1 

Level I Transfusion Laboratory 

Procedures 

0364 $44.94 Q1 Level I Audiometry 

0365 $122.36 Q1 Level II Audiometry 

0367 $167.31 Q1 Level I Pulmonary Tests 

0420 $136.66 Q1 Level III Minor Procedures 

0433 $190.55 Q1 Level II Pathology 

0450 $30.33 Q1 Level I Minor Procedures 

0624 $81.76 Q1 

Phlebotomy and Minor Vascular Access 

Device Procedures 

0690 $36.47 Q1 Level I Electronic Analysis of Devices 

0698 $104.61 Q1 Level II Eye Tests & Treatments 

 The HCPCS codes that we are conditionally package as ancillary services for 

CY 2015 are displayed in Addendum B to this CY 2015 OPPS/ASC final rule with 

comment period (which is available via the Internet on the CMS Web site). The 

supporting documents for this final rule with comment period are available at the CMS 

Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

(2) Prosthetic Supplies 

 We have a longstanding policy of providing payment under the OPPS for 

implantable DME, implantable prosthetics, and medical and surgical supplies, as 

provided at sections 1833(t)(1)(B)(i) and (t)(1)(B)(iii) of the Act and 42 CFR 419.2(b)(4), 

(b)(10), and (b)(11). In the CY 2014 OPPS/ASC final rule with comment period, we 
CMS-1613-FC 218 

clarified that medical and surgical supplies under § 419.2(b)(4) include (but are not 

limited to) all supplies on the DMEPOS Fee Schedule except prosthetic supplies 

(78 FR 74947). Under 42 CFR 419.22(j), prosthetic supplies are currently excluded from 

payment under the OPPS and are paid under the DMEPOS Fee Schedule, even when 

provided in the HOPD. However, as we discussed in the CY 2015 OPPS/ASC proposed 

rule (79 FR 40961), under section 1833(t)(1)(B)(i) of the Act, the Secretary has the 

authority to designate prosthetic supplies provided in the hospital outpatient setting as 

covered OPD services payable under the OPPS. 

 As we stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40961) and as 

mentioned above, implantable prosthetic devices are packaged in the OPPS under 

42 CFR 419.2(b)(11). It is common for implantable prosthetic devices to be provided as 

a part of a device system. Such device systems include the implantable part or parts of 

the overall device system and also certain nonimplantable prosthetic supplies that are 

integral to the overall function of the medical device, part of which is implanted and part 

of which is external to the patient. These prosthetic supplies are integral to the 

implantable prosthetic because typically shortly after the surgical procedure to implant 

the implantable prosthetic device in the hospital, the surgeon and/or his or her colleagues 

will have to attach, fit, and program certain prosthetic supplies that are not surgically 

implanted into the patient but are a part of a system and that are essential to the overall 

function of an implanted device. Because these supplies are integral to the overall 

function of the implanted prosthetic, and because, as mentioned above, we package in the 

OPPS items and services that are typically integral, ancillary, supportive, dependent, or 

adjunctive to a primary service, we believe that it is most consistent with a prospective 
CMS-1613-FC 219 

payment system to package the payment of prosthetic supplies (along with the 

implantable prosthetic device) into the surgical procedure that implants the prosthetic 

device, as all of the components are typically necessary for the performance of the system 

and the hospital typically purchases the system as a single unit. Patients requiring 

replacement supplies at a time later than the initial surgical procedure and outside of the 

hospital would obtain them as they typically do from a DMEPOS supplier with payment 

for such supplies made under the DMEPOS Fee Schedule. 

 In addition to prosthetic supplies that are components of device systems, part of 

which are implanted, many other prosthetic supplies on the DMEPOS Fee Schedule are 

typical medical and surgical supplies and of the type that are packaged in the OPPS under 

§ 419.2(b)(4). Consistent with our change from status indicator “A” to “N” for all 

nonprosthetic DMEPOS supplies in the CY 2014 OPPS final rule with comment period 

(78 FR 74947), in the CY 2015 OPPS/ASC proposed rule (79 FR 40961), we proposed to 

package and change the status indicator from “A” to “N” for all DMEPOS prosthetic 

supplies. With this proposed change, all medical and surgical supplies would be 

packaged in the OPPS. 

 Therefore, we proposed to delete “prosthetic supplies” from the regulations at 

§ 419.22(j) because we proposed that prosthetic supplies be packaged covered OPD 

services in the OPPS for CY 2015. Prosthetic supplies provided in the HOPD would be 

included in “medical and surgical supplies” (as are all other supplies currently provided 

in the HOPD) under § 419.2(b)(4). The HCPCS codes for prosthetic supplies that we 

proposed to package for CY 2015 were displayed in Addendum B to the CY 2015 

OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site). The 
CMS-1613-FC 220 

supporting documents for the proposed rule, including but not limited to Addendum B, 

are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/index.html. 

 Comment: Many commenters agreed with CMS’ proposal to conditionally 

package prosthetic supplies furnished in the HOPD. 

 Response: We appreciate the commenters’ support. 

 Comment: A few commenters requested to be informed of the fund transfer 

amount from the DMEPOS Fee Schedule to the OPPS as a result of this proposed policy. 

 Response: Our CY 2013 claims analysis shows that packaging payment for 

prosthetic supplies under the OPPS would redistribute approximately $1 million. 

 Comment: Some commenters recommended that CMS implement an exception 

to the “unbundling” rule that currently exists for the inpatient prospective payment 

systems (IPPS). (We refer readers to the Medicare Claims Processing Manual, Pub. 

100-04, Chapter 20 – Durable Medical Equipment, Prosthetics, Orthotic Devices, and 

Supplies, Section 110- General Billing Requirements – for DME, Prosthetics, Orthotic 

Devices, and Supplies.) The commenters believed that such an exception would allow 

DME suppliers to bill Medicare directly for prosthetic supplies furnished to patients 

during an outpatient visit when the supplies are intended primarily for home use. 

 Response: We do not believe that an additional exception to the “unbundling” 

rule is necessary for the provision of prosthetic supplies in the HOPD. We remind 

commenters that DME, prosthetics, and orthotics can be billed by hospitals for 

outpatients and are paid according to the DMEPOS Fee Schedule. Only prosthetic 

supplies are packaged in the OPPS. Unlike inpatient stays, hospital outpatient stays are 
CMS-1613-FC 221 

typically brief and the need for replacement supplies during a hospital outpatient stay 

should be minimal. If a hospital wants to provide a patient with some basic supplies for 

immediate home use (for example, tape, a syringe, or gauze), such supplies are packaged 

into the payment for whatever service the patient received at the hospital. DME suppliers 

can furnish additional or replacement prosthetic supplies to the patient’s home and 

receive payment under the DMEPOS Fee Schedule. 

 After consideration of the public comments we received, we are adopting as final 

our proposed deletion of “prosthetic supplies” from the regulations at § 419.22(j) because 

prosthetic supplies are packaged covered OPD services in the OPPS for CY 2015. 

Prosthetic supplies provided in the HOPD will be included in the packaged category of 

“medical and surgical supplies” (as are all other supplies currently provided in the 

HOPD) under § 419.2(b)(4). The HCPCS codes for prosthetic supplies that we are 

packaging for CY 2015 are displayed in Addendum B to this CY 2015 OPPS/ASC final 

rule with comment period (which is available via Internet on the CMS Web site). The 

supporting documents for this final rule with comment period, including but not limited 

to Addendum B, are available at the CMS Web site at: 

http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

4. Calculation of OPPS Scaled Payment Weights 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40961 through 40962), for 

CY 2015, we proposed to calculate the relative payment weights for each APC shown in 

Addenda A and B to the proposed rule (which are available via the Internet on the CMS 

Web site) using the APC costs discussed in sections II.A.1. and II.A.2. of the proposed 
CMS-1613-FC 222 

rule. Prior to CY 2007, we standardized all the relative payment weights to APC 0601 

(Mid-Level Clinic Visit) because mid-level clinic visits were among the most frequently 

performed services in the hospital outpatient setting. We assigned APC 0601 a relative 

payment weight of 1.00 and divided the median cost for each APC by the median cost for 

APC 0601 to derive the relative payment weight for each APC. 

 Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all of the 

relative payment weights to APC 0606 (Level 3 Clinic Visits) because we deleted 

APC 0601 as part of the reconfiguration of the clinic visit APCs. We selected APC 0606 

as the base because it was the mid-level clinic visit APC (that is, Level 3 of five levels). 

For the CY 2013 OPPS (77 FR 68283), we established a policy of using geometric 

mean-based APC costs rather than median-based APC costs to calculate relative payment 

weights. For CY 2015, we proposed to continue this policy. 

 For the CY 2014 OPPS, we standardized all of the relative payment weights to 

clinic visit APC 0634 as discussed in section VII. of the CY 2015 OPPS/ASC proposed 

rule (79 FR 41008). For CY 2015, we proposed to continue this policy to maintain 

consistency in calculating unscaled weights that represent the cost of some of the most 

frequently provided services. We proposed to assign APC 0634 a relative payment 

weight of 1.00 and to divide the geometric mean cost of each APC by the proposed 

geometric mean cost for APC 0634 to derive the proposed unscaled relative payment 

weight for each APC. The choice of the APC on which to base the proposed relative 

payment weights does not affect payments made under the OPPS because we scale the 

weights for budget neutrality. 
CMS-1613-FC 223 

 Section 1833(t)(9)(B) of the Act requires that APC reclassification and 

recalibration changes, wage index changes, and other adjustments be made in a budget 

neutral manner. Budget neutrality ensures that the estimated aggregate weight under the 

OPPS for CY 2015 is neither greater than nor less than the estimated aggregate weight 

that would have been made without the changes. To comply with this requirement 

concerning the APC changes, we proposed to compare the estimated aggregate weight 

using the CY 2014 scaled relative payment weights to the estimated aggregate weight 

using the proposed CY 2015 unscaled relative payment weights. 

 We did not receive any public comments on our proposed policy for the CY 2015 

unscaled relative payment weights. Therefore, we are finalizing our proposed policy to 

maintain consistency in calculating unscaled weights that represent the cost of some of 

the most frequently provided services by assigning APC 0634 a relative payment weight 

of 1.00 and dividing the geometric mean cost of each APC by the geometric mean cost 

for APC 0634 to derive the unscaled relative payment weight for each APC for CY 2015. 

 For CY 2014, we multiplied the CY 2014 scaled APC relative payment weight 

applicable to a service paid under the OPPS by the volume of that service from CY 2013 

claims to calculate the total relative payment weight for each service. We then added 

together the total relative payment weight for each of these services in order to calculate 

an estimated aggregate weight for the year. For CY 2015, we proposed to apply the same 

process using the CY 2015 unscaled relative payment weights rather than scaled relative 

payment weights. We proposed to calculate the weight scaler by dividing the CY 2014 

estimated aggregate weight by the CY 2015 estimated aggregate weight (79 FR 40962). 

The service-mix is the same in the current and prospective years because we use the same 
CMS-1613-FC 224 

set of claims for service volume in calculating the aggregate weight for each year. We 

note that the CY 2014 OPPS scaled relative weights incorporate the estimated payment 

weight from packaged laboratory tests previously paid at CLFS rates. 

 For a detailed discussion of the weight scaler calculation, we refer readers to the 

OPPS claims accounting document available on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. Click on the CY 2015 OPPS final rule link, 

then open the claims accounting document link at the bottom of the page. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40962), we proposed to include 

estimated payments to CMHCs in our comparison of the estimated unscaled relative 

payment weights in CY 2015 to the estimated total relative payment weights in CY 2014 

using CY 2013 claims data, holding all other components of the payment system constant 

to isolate changes in total weight. Based on this comparison, we proposed to adjust the 

proposed CY 2015 unscaled relative payment weights for purposes of budget neutrality. 

The proposed CY 2015 unscaled relative payment weights were adjusted by multiplying 

them by a weight scaler of 1.3220 to ensure that the proposed CY 2015 relative payment 

weights are budget neutral. 

 Section 1833(t)(14) of the Act provides the payment rates for certain SCODs. 

Section 1833(t)(14)(H) of the Act states that “Additional expenditures resulting from this 

paragraph shall not be taken into account in establishing the conversion factor, weighting, 

and other adjustment factors for 2004 and 2005 under paragraph (9), but shall be taken 

into account for subsequent years.” Therefore, the cost of those SCODs (as discussed in 
CMS-1613-FC 225 

section V.B.3. of this final rule with comment period) is included in the budget neutrality 

calculations for the CY 2015 OPPS. 

 Comment: One commenter expressed concern that CMS did not provide detailed 

data on the weight scaling process. The commenter noted that it could not find the claims 

accounting document to which the proposed rule referenced. 

 Response: The direct link to the proposed rule claims accounting document is 

located on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HospitalOutpatientPPS/Downloads/CMS-1613-P-claims-accountingnarrative.pdf.

 After consideration of the public comments we received, we are finalizing our 

proposed methodology for calculating the OPPS scaled relative payment weights without 

modification, including updating of the budget neutrality scaler for this final rule with 

comment period. Under this methodology, the final unscaled relative payment weights 

were adjusted by a weight scaler of 1.2977 for this final rule with comment period. The 

CY 2015 unscaled relative payment weights listed in Addenda A and B to this final rule 

with comment period (which are available via the Internet on the CMS Web site) 

incorporate the recalibration adjustments discussed in sections II.A.1. and II.A.2. of this 

final rule with comment period. 

B. Conversion Factor Update 

 Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to update the 

conversion factor used to determine the payment rates under the OPPS on an annual basis 

by applying the OPD fee schedule increase factor. For purposes of section 

1833(t)(3)(C)(iv) of the Act, subject to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, 
CMS-1613-FC 226 

the OPD fee schedule increase factor is equal to the hospital inpatient market basket 

percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of 

the Act. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49994), consistent with 

current law, based on IHS Global Insight, Inc.’s second quarter 2014 forecast of the 

FY 2015 market basket increase, the FY 2015 IPPS market basket update is 2.9 percent. 

However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the Act, as added by section 

3401(i) of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-148) and 

as amended by section 10319(g) of that law and further amended by section 1105(e) of 

the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), provide 

adjustments to the OPD fee schedule increase factor for CY 2015. 

 Specifically, section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and 

subsequent years, the OPD fee schedule increase factor under subparagraph (C)(iv) be 

reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the 

Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 

equal to the 10-year moving average of changes in annual economy-wide, private 

nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 

10-year period ending with the applicable fiscal year, year, cost reporting period, or other 

annual period) (the “MFP adjustment”). In the FY 2012 IPPS/LTCH PPS final rule 

(76 FR 51689 through 51692), we finalized our methodology for calculating and 

applying the MFP adjustment. In the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 49994), we discussed the calculation of the MFP adjustment for FY 2015, which 

is 0.5 percentage point. 
CMS-1613-FC 227 

 As we proposed, based on more recent data that became subsequently available 

after the publication of the CY 2015 OPPS/ASC proposed rule (for example, a more 

recent estimate of the market basket increase and the MFP adjustment), we are using such 

updated data, if appropriate, to determine the CY 2015 market basket update and the 

MFP adjustment, components in calculating the OPD fee schedule increase factor under 

sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY 2015 OPPS/ASC final 

rule with comment period. 

 In addition, section 1833(t)(3)(F)(ii) of the Act requires that, for each of years 

2010 through 2019, the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) 

of the Act be reduced by the adjustment described in section 1833(t)(3)(G) of the Act. 

For CY 2015, section 1833(t)(3)(G)(iv) of the Act provides a 0.2 percentage point 

reduction to the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the 

Act. Therefore, in accordance with sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the 

Act, as we proposed, we are applying a 0.2 percentage point reduction to the OPD fee 

schedule increase factor for CY 2015. 

 We note that section 1833(t)(3)(F) of the Act provides that application of this 

subparagraph may result in the OPD fee schedule increase factor under section 

1833(t)(3)(C)(iv) of the Act being less than 0.0 percent for a year, and may result in 

OPPS payment rates being less than rates for the preceding year. As described in further 

detail below, we are finalizing an OPD fee schedule increase factor of 2.2 percent for the 

CY 2015 OPPS (which is 2.9 percent, the estimate of the hospital inpatient market basket 

percentage increase, less the 0.5 percentage point MFP adjustment, and less the 0.2 

percentage point additional adjustment). 
CMS-1613-FC 228 

 Hospitals that fail to meet the Hospital OQR Program reporting requirements are 

subject to an additional reduction of 2.0 percentage points from the OPD fee schedule 

increase factor adjustment to the conversion factor that would be used to calculate the 

OPPS payment rates for their services, as required by section 1833(t)(17) of the Act. For 

further discussion of the Hospital OQR Program, we refer readers to section XIII. of this 

final rule with comment period. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40963), we proposed to amend 

42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the requirement in 

section 1833(t)(3)(F)(i) of the Act that, for CY 2015, we reduce the OPD fee schedule 

increase factor by the MFP adjustment as determined by CMS, and to reflect the 

requirement in section 1833(t)(3)(G)(iv) of the Act, as required by section 

1833(t)(3)(F)(ii) of the Act, that we reduce the OPD fee schedule increase factor by an 

additional 0.2 percentage point for CY 2015. 

 We did not receive any public comments on our proposed adjustments to the OPD 

fee schedule increase factor or the proposed amendment to § 419.32(b)(1)(iv)(B) by 

adding a new paragraph (6) to reflect the requirement in section 1833(t)(3)(F)(i) of the 

Act. Therefore, for the reasons discussed above, we are adjusting the OPD fee schedule 

increase factor for CY 2015 as proposed. We also are finalizing the amendment to 

§ 419.32(b)(1)(iv)(B) as proposed. 

 To set the OPPS conversion factor for CY 2015, we proposed to increase the 

CY 2014 conversion factor of $72.672 by 2.1 percent. In accordance with section 

1833(t)(9)(B) of the Act, we further adjusted the conversion factor for CY 2015 to ensure 

that any revisions made to the wage index and rural adjustment were made on a budget 
CMS-1613-FC 229 

neutral basis. We proposed a calculated overall budget neutrality factor of 0.9998 for 

wage index changes by comparing total estimated payments from our simulation model 

using the FY 2015 IPPS wage indexes to those payments using the FY 2014 IPPS wage 

indexes, as adopted on a calendar year basis for the OPPS. 

 For CY 2015, we proposed to maintain current rural adjustment policy, as 

discussed in section II.E. of this final rule with comment period. Therefore, the budget 

neutrality factor for the rural adjustment would be 1.0000. 

 For CY 2015, we proposed to continue previously established policies for 

implementing the cancer hospital payment adjustment described in section 1833(t)(18) of 

the Act, as discussed in section II.F. of this final rule with comment period. We 

calculated a CY 2015 budget neutrality adjustment factor for the cancer hospital payment 

adjustment by comparing estimated total CY 2015 payments under section 1833(t) of the 

Act, including the CY 2015 cancer hospital payment adjustment, to estimated CY 2015 

total payments using the CY 2014 final cancer hospital payment adjustment as required 

under section 1833(t)(18)(B) of the Act. The CY 2015 estimated payments applying the 

CY 2015 cancer hospital payment adjustment are identical to estimated payments 

applying the CY 2014 final cancer hospital payment adjustment. Therefore, we applied a 

budget neutrality adjustment factor of 1.0000 to the conversion factor for the cancer 

hospital payment adjustment. 

 For the proposed rule, we estimated that pass-through spending for drugs, 

biologicals, and devices for CY 2015 would equal approximately $15.5 million, which 

represented 0.03 percent of total projected CY 2015 OPPS spending. Therefore, the 

proposed conversion factor would be adjusted by the difference between the 0.02 percent 
CMS-1613-FC 230 

estimate of pass-through spending for CY 2014 and the 0.03 percent estimate of 

pass-through spending for CY 2015, resulting in a proposed adjustment for CY 2015 of 

0.01 percent. Finally, estimated payments for outliers would remain at 1.0 percent of 

total OPPS payments for CY 2015. 

 For the proposed rule, we proposed that hospitals that fail to meet the reporting 

requirements of the Hospital OQR Program would continue to be subject to a further 

reduction of 2.0 percentage points to the OPD fee schedule increase factor. For hospitals 

that fail to meet the requirements of the Hospital OQR Program, we would make all other 

adjustments discussed above, but use a reduced OPD fee schedule update factor of 

0.2 percent (that is, the OPD fee schedule increase factor of 2.1 percent further reduced 

by 2.0 percentage points). This resulted in a proposed reduced conversion factor for 

CY 2015 of $72.692 for hospitals that fail to meet the Hospital OQR requirements (a 

difference of -$1.484 in the conversion factor relative to hospitals that met the 

requirements). 

 Comment: MedPAC noted that CMS is required by law to implement the 2015 

update to the conversion factor as stated in the Affordable Care Act. In its March 2014 

Report to Congress, MedPAC recommended an update of 3.25 percent and Congressional 

action to direct the Secretary to reduce or eliminate differences in payment rates between 

HOPDs and physician offices, which is different from the Affordable Care Act 

requirement. 

 Response: As discussed above, section 1833(t)(3)(C)(ii) of the Act requires the 

Secretary to update the conversion factor used to determine the payment rates under the 

OPPS on an annual basis by applying the OPD fee schedule increase factor. Section 
CMS-1613-FC 231 

1833(t)(3)(C)(iv) provides that the OPD fee schedule increase factor, subject to sections 

1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the Act, is equal to the hospital inpatient market 

basket percentage increase applicable to hospital discharges under 

section 1886(b)(3)(B)(iii) of the Act. 

 After consideration of the public comment we received, we are finalizing the 

calculation of the CY 2015 OPPS conversion factor as proposed. We are finalizing the 

proposed amendment to § 419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect 

the reductions to the OPD fee schedule increase factor that are required for CY 2015 to 

satisfy the statutory requirements of sections 1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. 

We are using a reduced conversion factor of $72.661 in the calculation of payments for 

hospitals that fail to meet the Hospital OQR Program requirements (a difference 

of -$1.483 in the conversion factor relative to hospitals that met the requirements). 

 For CY 2015, we are finalizing our proposal to continue previously established 

policies for implementing the cancer hospital payment adjustment described in section 

1833(t)(18) of the Act, as discussed in section II.F. of this final rule with comment 

period. 

 For this final rule with comment period, we estimate that pass-through spending 

for drugs, biologicals, and devices for CY 2015 will equal approximately $82.8 million, 

which represents 0.15 percent of total projected CY 2015 OPPS spending. Therefore, the 

conversion factor is also adjusted by the difference between the 0.02 percent estimate of 

pass-through spending for CY 2014 and the 0.15 percent estimate of pass-through 

spending for CY 2015, resulting in an adjustment for CY 2015 of -0.13 percent. Finally, 
CMS-1613-FC 232 

estimated payments for outliers remain at 1.0 percent of total OPPS payments for 

CY 2015. 

 As a result of these final policies, the OPD fee schedule increase factor for the 

CY 2015 OPPS is 2.2 percent (which is 2.9 percent, the estimate of the hospital inpatient 

market basket percentage increase, less the 0.5 percentage point MFP adjustment, and 

less the 0.2 percentage point additional adjustment). For CY 2015, we are using a 

conversion factor of $74.144 in the calculation of the national unadjusted payment rates 

for those items and services for which payment rates are calculated using geometric mean 

costs, that is the OPD fee schedule increase factor of 2.2 percent for CY 2015, the 

required wage index budget neutrality adjustment of approximately 0.9996, the cancer 

hospital payment adjustment of 1.0000, and the adjustment of -0.13 percent of projected 

OPPS spending for the difference in the pass-through spending result in a conversion 

factor for CY 2015 of $74.144. 

C. Wage Index Changes 

 Section 1833(t)(2)(D) of the Act requires the Secretary to “determine a wage 

adjustment factor to adjust the portion of payment and coinsurance attributable to 

labor-related costs for relative differences in labor and labor-related costs across 

geographic regions in a budget neutral manner” (codified at 42 CFR 419.43(a)). This 

portion of the OPPS payment rate is called the OPPS labor-related share. Budget 

neutrality is discussed in section II.B. of this final rule with comment period. 

 The OPPS labor-related share is 60 percent of the national OPPS payment. This 

labor-related share is based on a regression analysis that determined that, for all hospitals, 

approximately 60 percent of the costs of services paid under the OPPS were attributable 
CMS-1613-FC 233 

to wage costs. We confirmed that this labor-related share for outpatient services is 

appropriate during our regression analysis for the payment adjustment for rural hospitals 

in the CY 2006 OPPS final rule with comment period (70 FR 68553). Therefore, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to continue this policy 

for the CY 2015 OPPS. We refer readers to section II.H. of this final rule with comment 

period for a description and example of how the wage index for a particular hospital is 

used to determine payment for the hospital. 

 As discussed in section II.A.2.c. of this final rule with comment period, for 

estimating APC costs, we standardize 60 percent of estimated claims costs for geographic 

area wage variation using the same FY 2015 pre-reclassified wage index that the IPPS 

uses to standardize costs. This standardization process removes the effects of differences 

in area wage levels from the determination of a national unadjusted OPPS payment rate 

and copayment amount. 

 Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the original OPPS 

April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), the OPPS 

adopted the final fiscal year IPPS wage index as the calendar year wage index for 

adjusting the OPPS standard payment amounts for labor market differences. Therefore, 

the wage index that applies to a particular acute care short-stay hospital under the IPPS 

also applies to that hospital under the OPPS. As initially explained in the 

September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that using the IPPS 

wage index as the source of an adjustment factor for the OPPS is reasonable and logical, 

given the inseparable, subordinate status of the HOPD within the hospital overall. In 
CMS-1613-FC 234 

accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index is updated 

annually. 

 The Affordable Care Act contained several provisions affecting the wage index. 

These provisions were discussed in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74191). As discussed in that final rule with comment period, section 

10324 of the Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, which 

defines a “frontier State,” and amended section 1833(t) of the Act to add new paragraph 

(19), which requires a “frontier State” wage index floor of 1.00 in certain cases, and 

states that the frontier State floor shall not be applied in a budget neutral manner. We 

codified these requirements in § 419.43(c)(2) and (c)(3) of our regulations. In the 

CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to implement this 

provision in the same manner as we have since CY 2011. That is, frontier State hospitals 

would receive a wage index of 1.00 if the otherwise applicable wage index (including 

reclassification, rural and imputed floor, and rural floor budget neutrality) is less than 

1.00. Similar to our current policy for HOPDs that are affiliated with multicampus 

hospital systems, we proposed that the HOPD would receive a wage index based on the 

geographic location of the specific inpatient hospital with which it is associated. 

Therefore, if the associated hospital is located in a frontier State, the wage index 

adjustment applicable for the hospital also will apply for the affiliated HOPD. We refer 

readers to the following sections in the FY 2011 through FY 2015 IPPS/LTCH PPS final 

rules for discussions regarding this provision, including our methodology for identifying 

which areas meet the definition of “frontier States” as provided for in 

section 1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50160 through 50161; for 
CMS-1613-FC 235 

FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 53369 through 53370; for 

FY 2014, 78 FR 50590 through 50591; and for FY 2015, 79 FR 49971. 

 In addition to the changes required by the Affordable Care Act, we note that the 

FY 2015 IPPS wage indexes continue to reflect a number of adjustments implemented 

over the past few years, including, but not limited to, reclassification of hospitals to 

different geographic areas, the rural and imputed floor provisions, an adjustment for 

occupational mix, and an adjustment to the wage index based on commuting patterns of 

employees (the out-migration adjustment). We refer readers to the FY 2015 IPPS/LTCH 

PPS proposed rule and final rule (79 FR 28054 through 28084 and 79 FR 49950 through 

49991, respectively) for a detailed discussion of all changes to the FY 2015 IPPS wage 

indexes. In addition, we refer readers to the CY 2005 OPPS final rule with comment 

period (69 FR 65842 through 65844) and subsequent OPPS rules for a detailed discussion 

of the history of these wage index adjustments as applied under the OPPS. 

 As discussed in the FY 2015 IPPS/LTCH PPS proposed rule and final rule 

(79 FR 28054 through 28055 and 79 FR 49951 through 49957, respectively), the Office 

of Management and Budget (OMB) issued revisions to the current labor market area 

delineations on February 28, 2013, that included a number of significant changes such as 

new Core Based Statistical Areas (CBSAs), urban counties that become rural, rural 

counties that become urban, and existing CBSAs that are split apart (OMB Bulletin 

13-01). This bulletin can be found at: 

http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. As we 

stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50586), in order to allow for 

sufficient time to assess the new revisions and their ramifications, we intended to propose 
CMS-1613-FC 236 

changes to the IPPS wage index based on the newest CBSA delineations in the FY 2015 

IPPS/LTCH PPS proposed rule. Similarly, in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74951), we stated that we intended to propose changes in the 

OPPS, which uses the IPPS wage index, based on the new OMB delineations in the 

CY 2015 OPPS/ASC proposed rule, consistent with any proposals in the FY 2015 

IPPS/LTCH PPS proposed rule. We refer readers to proposed changes based on the new 

OMB delineations in the FY 2015 IPPS/LTCH proposed rule at 79 FR 28054 through 

28084 and the final changes based on the new OMB delineations in the FY 2015 

IPPS/LTCH PPS final rule at 79 FR 49950 through 49966. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40964), we proposed to use the 

FY 2015 hospital IPPS wage index for urban and rural areas as the wage index for the 

OPPS hospital to determine the wage adjustments for the OPPS payment rate and the 

copayment standardized amount for CY 2015. (We refer readers to the FY 2015 

IPPS/LTCH PPS final rule (79 FR 49850) and the final FY 2015 hospital wage index 

files posted on the CMS Web site.) We note that the final FY 2015 IPPS wage indexes 

reflect a number of changes as a result of the new OMB delineations as well as a 1-year 

extension of the imputed rural floor. We proposed that the CY 2015 OPPS wage index 

(for hospitals paid under the IPPS and OPPS) would be the final FY 2015 IPPS wage 

index. Thus, any adjustments, including the adjustments related to the new OMB 

delineations, that were finalized for the IPPS wage index would be reflected in the OPPS 

wage index. As stated earlier in this section, we continue to believe that using the IPPS 

wage index as the source of an adjustment factor for the OPPS is reasonable and logical, 

given the inseparable, subordinate status of the HOPD within the hospital overall. 
CMS-1613-FC 237 

Therefore, we did not propose to change our existing regulations, which require that we 

use the FY 2015 IPPS wage indexes for calculating OPPS payments in CY 2015. 

 Hospitals that are paid under the OPPS but not under the IPPS do not have a 

hospital wage index under the IPPS. Therefore, for non-IPPS hospitals paid under the 

OPPS, we assign the wage index that would be applicable if the hospital were paid under 

the IPPS, based on its geographic location and any applicable wage index adjustments. 

We proposed to adopt the final wage index changes from the FY 2015 IPPS/LTCH PPS 

final rule for these hospitals. The following is a brief summary of the major changes in 

the FY 2015 IPPS wage indexes and any adjustments that we proposed to apply to these 

hospitals under the OPPS for CY 2015. We refer the reader to the FY 2015 IPPS/LTCH 

PPS final rule (79 FR 49950 through 49991) for a detailed discussion of the changes to 

the wage indexes. 

 For CY 2015, we proposed to continue our policy of allowing non-IPPS hospitals 

paid under the OPPS to qualify for the out-migration adjustment if they are located in a 

section 505 out-migration county (section 505 of the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173)). We stated in 

the proposed rule that applying this adjustment is consistent with our proposed policy of 

adopting IPPS wage index policies for hospitals paid under the OPPS. We note that, 

because non-IPPS hospitals cannot reclassify, they would be eligible for the 

out-migration wage adjustment if they are located in a section 505 out-migration county. 

This is the same out-migration adjustment policy that would apply if the hospital were 

paid under the IPPS. Table 4J from the FY 2015 IPPS/LTCH PPS final rule (available 

via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-
CMS-1613-FC 238 

for-Service-Payment/AcuteInpatientPPS/index.html) identifies counties eligible for the 

out-migration adjustment and IPPS hospitals that will receive the adjustment for 

FY 2015. 

 As we have done in prior years, we are including Table 4J from the FY 2015 

IPPS/LTCH PPS final rule as Addendum L to this final rule with comment period with 

the addition of non-IPPS hospitals that would receive the section 505 out-migration 

adjustment under the CY 2015 OPPS. Addendum L is available via the Internet on the 

CMS Web site. 

 In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed to adopt the new 

OMB labor market area delineations issued by OMB in OMB Bulletin No. 13-01 on 

February 28, 2013, based on standards published on June 28, 2010 (75 FR 37246 through 

37252) and the 2010 Census data to delineate labor market areas for purposes of the IPPS 

wage index. In the FY 2015 IPPS/LTCH PPS final rule, we finalized the adoption of the 

new OMB delineations. For IPPS wage index purposes, for hospitals that are designated 

as rural under the new OMB labor market area delineations that currently are located in 

urban CBSAs, we generally assigned them the urban wage index value of the CBSA in 

which they are physically located for FY 2014 for a period of 3 fiscal years (79 FR 28060 

through 28061 and 79 FR 49957 through 49960). To be consistent, we proposed to apply 

the same policy to hospitals paid under the OPPS but not under the IPPS so that such 

hospitals will maintain the wage index of the CBSA in which they are physically located 

for FY 2014 for the next 3 calendar years. As stated in the CY 2015 OPPS/ASC 

proposed rule (79 FR 40965), this proposed policy would impact six hospitals for 

purposes of OPPS payment. 
CMS-1613-FC 239 

 We believe that adopting the new OMB labor market area delineations creates a 

more accurate wage index system, but we also recognize that implementing the new 

OMB delineations may cause some short-term instability in hospital payments. 

Therefore, similar to the policy we adopted in the FY 2005 IPPS final rule 

(69 FR 49033), in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49960 through 49962), 

we finalized a 1-year blended wage index for all hospitals that experience any decrease in 

their actual payment wage index exclusively due to the implementation of the new OMB 

delineations. Under this final IPPS policy, a post-reclassified wage index with the rural 

and imputed floors applied is computed based on the hospital’s FY 2014 CBSA (that is, 

using all of its FY 2014 constituent county/ies), and another post-reclassified wage index 

with the rural and imputed floors applied is computed based on the hospital’s new 

FY 2015 CBSA (that is, the FY 2015 constituent county/ies). We then compare these 

two wage indexes. If the FY 2015 wage index with FY 2015 CBSAs is lower than the 

FY 2015 wage index with FY 2014 CBSAs, we compute a blended wage index 

consisting of 50 percent of each of the two wage indexes added together. This blended 

wage index will be the IPPS hospital’s wage index for FY 2015. In the CY 2015 

OPPS/ASC proposed rule, for purposes of the OPPS, we proposed to apply this 

50-percent transition blend to hospitals paid under the OPPS but not under the IPPS. We 

stated that we believe a 1-year, 50/50 blended wage index would mitigate the short-term 

instability and negative payment impacts due to the implementation of the new OMB 

delineations, providing hospitals with a transition period during which they may adjust to 

their new geographic CBSA. We believe that a longer transition period would reduce the 
CMS-1613-FC 240 

accuracy of the overall labor market area wage index system, and generally would not be 

warranted for hospitals moving from one urban geographic labor market area to another. 

 In addition, for the FY 2015 IPPS, we are continuing the extension of the imputed 

floor policy (both the original methodology and alternative methodology) for another 

year, through September 30, 2015 (79 FR 49969 through 49971). For purposes of the 

CY 2015 OPPS, we also proposed to apply the imputed floor policy to hospitals paid 

under the OPPS but not under the IPPS. 

 For CMHCs, we proposed to continue to calculate the wage index by using the 

post-reclassification IPPS wage index based on the CBSA where the CMHC is located. 

As with OPPS hospitals and for the same reasons, we proposed to apply a 1-year, 50/50 

blended wage index to CMHCs that would receive a lower wage index due to the new 

CBSA delineations. In addition, as with OPPS hospitals and for the same reasons, for 

CMHCs currently located in urban CBSAs that are designated as rural under the new 

OMB labor market area delineations, we proposed to maintain the urban wage index 

value of the CBSA in which they are physically located for CY 2014 for the next 3 

calendar years. Consistent with our current policy, the wage index that applies to 

CMHCs includes both the imputed floor adjustment and the rural floor adjustment, but 

does not include the out-migration adjustment because that adjustment only applies to 

hospitals. 

 With the exception of the out-migration wage adjustment table (Addendum L to 

this final rule with comment period, which is available via the Internet on the CMS Web 

site), which includes non-IPPS hospitals paid under the OPPS, we are not reprinting the 

FY 2015 IPPS wage indexes referenced in this discussion of the wage index. We refer 
CMS-1613-FC 241 

readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will 

find a link to the final FY 2015 IPPS wage index tables. 

 Comment: One commenter suggested that the IPPS rural floor should utilize 

State-specific budget neutrality rather than national budget neutrality to prevent it from 

being susceptible to gaming by hospitals. The commenter suggested that, under the 

current policy, an urban hospital can reclassify to rural status to improve the rural wage 

index in the State, which in some cases is used as a floor for urban hospitals. 

 Response: As we stated in the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 50370), section 3141 of Pub. L. 111-148 requires that a national budget neutrality 

adjustment be applied in implementing the rural floor policy under the IPPS. Therefore, 

absent a legislative change enacted by Congress, we are unable to change the rural floor 

budget neutrality adjustment from a national adjustment to a State-specific adjustment. 

In this final rule with comment period, we are adopting the final fiscal year IPPS wage 

index as the calendar year wage index for adjusting the OPPS standard payment amounts 

for labor market differences. We refer readers to the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 50370 through 50372) for further discussion and a detailed response to a similar 

comment. 
CMS-1613-FC 242 

 After considering the public comment we received, we are finalizing our 

proposals to use the FY 2015 IPPS final wage index as the CY 2015 wage index for 

OPPS hospitals and CMHCs, as discussed above and as set forth in the CY 2015 

OPPS/ASC proposed rule (79 FR 40963 through 40965), without modification. 

D. Statewide Average Default CCRs 

 In addition to using CCRs to estimate costs from charges on claims for ratesetting, 

CMS uses overall hospital-specific CCRs calculated from the hospital’s most recent cost 

report to determine outlier payments, payments for pass-through devices, and monthly 

interim transitional corridor payments under the OPPS during the PPS year. MACs 

cannot calculate a CCR for some hospitals because there is no cost report available. For 

these hospitals, CMS uses the statewide average default CCRs to determine the payments 

mentioned above until a hospital’s MAC is able to calculate the hospital’s actual CCR 

from its most recently submitted Medicare cost report. These hospitals include, but are 

not limited to, hospitals that are new, have not accepted assignment of an existing 

hospital’s provider agreement, and have not yet submitted a cost report. CMS also uses 

the statewide average default CCRs to determine payments for hospitals that appear to 

have a biased CCR (that is, the CCR falls outside the predetermined ceiling threshold for 

a valid CCR) or for hospitals in which the most recent cost report reflects an all-inclusive 

rate status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, 

Section 10.11). In the CY 2015 OPPS/ASC proposed rule (79 FR 40966), we proposed 

to update the default ratios for CY 2015 using the most recent cost report data. We 

discuss our policy for using default CCRs, including setting the ceiling threshold for a 

valid CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 
CMS-1613-FC 243 

through 68599) in the context of our adoption of an outlier reconciliation policy for cost 

reports beginning on or after January 1, 2009. 

 For CY 2015, we proposed to continue to use our standard methodology of 

calculating the statewide average default CCRs using the same hospital overall CCRs that 

we use to adjust charges to costs on claims data for setting the CY 2015 OPPS relative 

payment weights. Table 12 published in the proposed rule (79 FR 40966 through 40968) 

listed the proposed CY 2015 default urban and rural CCRs by State and compared them 

to the CY 2014 default CCRs. These proposed CCRs represented the ratio of total costs 

to total charges for those cost centers relevant to outpatient services from each hospital’s 

most recently submitted cost report, weighted by Medicare Part B charges. We also 

proposed to adjust ratios from submitted cost reports to reflect the final settled status by 

applying the differential between settled to submitted overall CCRs for the cost centers 

relevant to outpatient services from the most recent pair of final settled and submitted 

cost reports. We then proposed to weight each hospital’s CCR by the volume of 

separately paid line-items on hospital claims corresponding to the year of the majority of 

cost reports used to calculate the overall CCRs. We refer readers to the CY 2008 

OPPS/ASC final rule with comment period (72 FR 66680 through 66682) and prior 

OPPS rules for a more detailed discussion of our established methodology for calculating 

the statewide average default CCRs, including the hospitals used in our calculations and 

our trimming criteria. 

 We did not receive any public comments on our CY 2015 proposal. Therefore, 

we are finalizing our proposal, without modification, to apply our standard methodology 

of calculating the statewide average default CCRs using the same hospital overall CCRs 
CMS-1613-FC 244 

that we used to adjust charges to costs on claims data for setting the CY 2015 OPPS 

relative payment weights. We used this methodology to calculate the statewide average 

default CCRs listed in Table 13 below. 

 For Maryland, we used an overall weighted average CCR for all hospitals in the 

Nation as a substitute for Maryland CCRs. Few hospitals in Maryland are eligible to 

receive payment under the OPPS, which limits the data available to calculate an accurate 

and representative CCR. The weighted CCR is used for Maryland because it takes into 

account each hospital’s volume, rather than treating each hospital equally. We refer 

readers to the CY 2005 OPPS final rule with comment period (69 FR 65822) for further 

discussion and the rationale for our longstanding policy of using the national average 

CCR for Maryland. In general, observed changes in the statewide average default CCRs 

between CY 2014 and CY 2015 are modest and the few significant changes are 

associated with areas that have a small number of hospitals. 

 Table 13 below lists the statewide average default CCRs for OPPS services 

furnished on or after January 1, 2015. 
CMS-1613-FC 245 

TABLE 13.– CY 2015 STATEWIDE AVERAGE CCRs 

State Urban/Rural 

CY 

2015 

Default 

CCR 

Previous 

Default CCR 

(CY 2014 

OPPS Final 

Rule) 

ALABAMA RURAL 0.235 0.229 

ALABAMA URBAN 0.186 0.188 

ALASKA RURAL 0.439 0.473 

ALASKA URBAN 0.294 0.302 

ARIZONA RURAL 0.228 0.254 

ARIZONA URBAN 0.181 0.182 

ARKANSAS RURAL 0.262 0.244 

ARKANSAS URBAN 0.239 0.220 

CALIFORNIA RURAL 0.178 0.190 

CALIFORNIA URBAN 0.196 0.206 

COLORADO RURAL 0.410 0.393 

COLORADO URBAN 0.219 0.221 

CONNECTICUT RURAL 0.339 0.343 

CONNECTICUT URBAN 0.273 0.276 

DELAWARE URBAN 0.314 0.356 

DISTRICT OF 

COLUMBIA URBAN 0.299 0.279 

FLORIDA RURAL 0.180 0.160 

FLORIDA URBAN 0.156 0.160 

GEORGIA RURAL 0.256 0.260 

GEORGIA URBAN 0.211 0.205 

HAWAII RURAL 0.337 0.345 

HAWAII URBAN 0.307 0.298 

IDAHO RURAL 0.353 0.359 

IDAHO URBAN 0.463 0.478 

ILLINOIS RURAL 0.252 0.252 

ILLINOIS URBAN 0.217 0.222 

INDIANA RURAL 0.334 0.326 

INDIANA URBAN 0.262 0.288 

IOWA RURAL 0.321 0.308 

IOWA URBAN 0.269 0.266 

KANSAS RURAL 0.300 0.313 

KANSAS URBAN 0.231 0.239 

KENTUCKY RURAL 0.231 0.221 
CMS-1613-FC 246 

State Urban/Rural 

CY 

2015 

Default 

CCR 

Previous 

Default CCR 

(CY 2014 

OPPS Final 

Rule) 

KENTUCKY URBAN 0.212 0.225 

LOUISIANA RURAL 0.272 0.257 

LOUISIANA URBAN 0.209 0.222 

MAINE RURAL 0.430 0.452 

MAINE URBAN 0.432 0.438 

MARYLAND RURAL 0.296 0.283 

MARYLAND URBAN 0.244 0.248 

MASSACHUSETTS RURAL 0.326 0.395 

MASSACHUSETTS URBAN 0.333 0.336 

MICHIGAN RURAL 0.371 0.341 

MICHIGAN URBAN 0.320 0.322 

MINNESOTA RURAL 0.485 0.462 

MINNESOTA URBAN 0.347 0.349 

MISSISSIPPI RURAL 0.247 0.233 

MISSISSIPPI URBAN 0.181 0.200 

MISSOURI RURAL 0.267 0.263 

MISSOURI URBAN 0.274 0.280 

MONTANA RURAL 0.501 0.481 

MONTANA URBAN 0.386 0.384 

NEBRASKA RURAL 0.290 0.323 

NEBRASKA URBAN 0.255 0.243 

NEVADA RURAL 0.241 0.220 

NEVADA URBAN 0.149 0.154 

NEW HAMPSHIRE RURAL 0.362 0.326 

NEW HAMPSHIRE URBAN 0.280 0.287 

NEW JERSEY URBAN 0.202 0.213 

NEW MEXICO RURAL 0.296 0.291 

NEW MEXICO URBAN 0.294 0.304 

NEW YORK RURAL 0.333 0.345 

NEW YORK URBAN 0.340 0.351 

NORTH CAROLINA RURAL 0.280 0.258 

NORTH CAROLINA URBAN 0.246 0.256 

NORTH DAKOTA RURAL 0.660 0.661 

NORTH DAKOTA URBAN 0.395 0.400 

OHIO RURAL 0.317 0.327 
CMS-1613-FC 247 

State Urban/Rural 

CY 

2015 

Default 

CCR 

Previous 

Default CCR 

(CY 2014 

OPPS Final 

Rule) 

OHIO URBAN 0.222 0.232 

OKLAHOMA RURAL 0.282 0.258 

OKLAHOMA URBAN 0.203 0.205 

OREGON RURAL 0.287 0.311 

OREGON URBAN 0.352 0.357 

PENNSYLVANIA RURAL 0.283 0.257 

PENNSYLVANIA URBAN 0.197 0.198 

PUERTO RICO URBAN 0.577 0.614 

RHODE ISLAND URBAN 0.297 0.295 

SOUTH CAROLINA RURAL 0.191 0.190 

SOUTH CAROLINA URBAN 0.207 0.203 

SOUTH DAKOTA RURAL 0.286 0.287 

SOUTH DAKOTA URBAN 0.214 0.219 

TENNESSEE RURAL 0.203 0.207 

TENNESSEE URBAN 0.188 0.190 

TEXAS RURAL 0.251 0.235 

TEXAS URBAN 0.203 0.197 

UTAH RURAL 0.481 0.474 

UTAH URBAN 0.335 0.334 

VERMONT RURAL 0.439 0.456 

VERMONT URBAN 0.353 0.397 

VIRGINIA RURAL 0.219 0.226 

VIRGINIA URBAN 0.241 0.238 

WASHINGTON RURAL 0.300 0.330 

WASHINGTON URBAN 0.330 0.360 

WEST VIRGINIA RURAL 0.312 0.283 

WEST VIRGINIA URBAN 0.300 0.319 

WISCONSIN RURAL 0.328 0.344 

WISCONSIN URBAN 0.294 0.291 

WYOMING RURAL 0.429 0.400 

WYOMING URBAN 0.262 0.269 
CMS-1613-FC 248 

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

 In the CY 2006 OPPS final rule with comment period (70 FR 68556), we 

finalized a payment increase for rural SCHs of 7.1 percent for all services and procedures 

paid under the OPPS, excluding drugs, biologicals, brachytherapy sources, and devices 

paid under the pass-through payment policy in accordance with section 1833(t)(13)(B) of 

the Act, as added by section 411 of the Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. L. 108-173). Section 1833(t)(13) of the Act 

provided the Secretary the authority to make an adjustment to OPPS payments for rural 

hospitals, effective January 1, 2006, if justified by a study of the difference in costs by 

APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a 

difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a 

payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid 

under the OPPS, excluding separately payable drugs and biologicals, brachytherapy 

sources, and devices paid under the pass-through payment policy, in accordance with 

section 1833(t)(13)(B) of the Act. 

 In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 

68227), for purposes of receiving this rural adjustment, we revised § 419.43(g) of the 

regulations to clarify that EACHs also are eligible to receive the rural SCH adjustment, 

assuming these entities otherwise meet the rural adjustment criteria. Currently, two 

hospitals are classified as EACHs, and as of CY 1998, under section 4201(c) of 

Pub. L. 105-33, a hospital can no longer become newly classified as an EACH. 
CMS-1613-FC 249 

 This adjustment for rural SCHs is budget neutral and applied before calculating 

outlier payments and copayments. We stated in the CY 2006 OPPS final rule with 

comment period (70 FR 68560) that we would not reestablish the adjustment amount on 

an annual basis, but we may review the adjustment in the future and, if appropriate, 

would revise the adjustment. We provided the same 7.1 percent adjustment to rural 

SCHs, including EACHs, again in CYs 2008 through 2014. Further, in the CY 2009 

OPPS/ASC final rule with comment period (73 FR 68590), we updated the regulations at 

§ 419.43(g)(4) to specify, in general terms, that items paid at charges adjusted to costs by 

application of a hospital-specific CCR are excluded from the 7.1 percent payment 

adjustment. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for the CY 2015 OPPS, 

we proposed to continue our policy of a 7.1 percent payment adjustment that is done in a 

budget neutral manner for rural SCHs, including EACHs, for all services and procedures 

paid under the OPPS, excluding separately payable drugs and biologicals, devices paid 

under the pass-through payment policy, and items paid at charges reduced to costs.

 Comment: Several commenters supported the proposed continuation of the 7.1 

percent rural SCH adjustment. Several commenters, including MedPAC, also 

recommended that CMS update the analysis in the near future to assess if the 7.1 percent 

payment adjustment remains a valid figure. 

 Response: We appreciate the commenters’ support. We agree that it is 

appropriate to continue the 7.1 percent adjustment for rural SCHs (including EACHs) as 

we proposed for CY 2015. As we indicated in the proposed rule (79 FR 40968), we may 

reassess the 7.1 percent rural adjustment in the near future by examining differences 
CMS-1613-FC 250 

between urban hospitals’ costs and rural hospitals’ costs using updated claims, cost 

reports, and provider information. 

 After consideration of the public comments we received, we are finalizing our 

CY 2015 proposal to continue our policy of a 7.1 percent payment adjustment that is 

done in a budget neutral manner for rural SCHs, including EACHs, for all services and 

procedures paid under the OPPS, excluding separately payable drugs and biologicals, 

devices paid under the pass-through payment policy, and items paid at charges reduced to 

costs. 

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

the Act 

1. Background 

 Since the inception of the OPPS, which was authorized by the Balanced Budget 

Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid the 11 hospitals that meet the 

criteria for cancer hospitals identified in section 1886(d)(1)(B)(v) of the Act under the 

OPPS for covered outpatient hospital services. These cancer hospitals are exempted from 

payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget 

Refinement Act of 1999 (Pub. L. 106-113), Congress established section 1833(t)(7) of 

the Act, “Transitional Adjustment to Limit Decline in Payment,” to determine OPPS 

payments to cancer and children’s hospitals based on their pre-BBA payment amount 

(often referred to as “held harmless”). 

 As required under section 1833(t)(7)(D)(ii) of the Act, a cancer hospital receives 

the full amount of the difference between payments for covered outpatient services under 

the OPPS and a “pre-BBA amount.” That is, cancer hospitals are permanently held 
CMS-1613-FC 251 

harmless to their “pre-BBA amount,” and they receive transitional outpatient payments 

(TOPs) or hold harmless payments to ensure that they do not receive a payment that is 

lower under the OPPS than the payment they would have received before implementation 

of the OPPS, as set forth in section 1833(t)(7)(F) of the Act. The “pre-BBA amount” is 

the product of the hospital’s reasonable costs for covered outpatient services occurring in 

the current year and the base payment-to-cost ratio (PCR) for the hospital defined in 

section 1833(t)(7)(F)(ii) of the Act. The “pre-BBA amount,” including the determination 

of the base PCR, are defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet E, 

Part B, of the Hospital Cost Report or the Hospital Health Care Complex Cost Report 

(Form CMS-2552-96 and Form CMS-2552-10, respectively) as applicable each year. 

Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality calculations. 

 Section 3138 of the Affordable Care Act amended section 1833(t) of the Act by 

adding a new paragraph (18), which instructs the Secretary to conduct a study to 

determine if, under the OPPS, outpatient costs incurred by cancer hospitals described in 

section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed outpatient costs 

incurred by other hospitals furnishing services under section 1833(t) of the Act, as 

determined appropriate by the Secretary. Section 1833(t)(18)(A) of the Act requires the 

Secretary to take into consideration the cost of drugs and biologicals incurred by cancer 

and other hospitals. Section 1833(t)(18)(B) of the Act provides that if the Secretary 

determines that cancer hospitals’ costs are greater than other hospitals’ costs, the 

Secretary shall provide an appropriate adjustment under section 1833(t)(2)(E) of the Act 

to reflect these higher costs. In 2011, after conducting the study required by 

section 1833(t)(18)(A) of the Act, we determined that outpatient costs incurred by the 
CMS-1613-FC 252 

11 specified cancer hospitals were greater than the costs incurred by other OPPS 

hospitals. For a complete discussion regarding the cancer hospital cost study, we refer 

readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 through 

74201). 

 Based on these findings, we finalized a policy to provide a payment adjustment to 

the 11 specified cancer hospitals that reflects their higher outpatient costs as discussed in 

the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). 

Specifically, we adopted a policy to provide additional payments to the cancer hospitals 

so that each cancer hospital’s final PCR for services provided in a given calendar year is 

equal to the weighted average PCR (which we refer to as the “target PCR”) for other 

hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and 

is calculated using the most recent submitted or settled cost report data that are available 

at the time of final rulemaking for the calendar year. The amount of the payment 

adjustment is made on an aggregate basis at cost report settlement. We note that the 

changes made by section 1833(t)(18) of the Act do not affect the existing statutory 

provisions that provide for TOPs for cancer hospitals. The TOPs are assessed as usual 

after all payments, including the cancer hospital payment adjustment, have been made for 

a cost reporting period. For CYs 2012 and 2013, the target PCR for purposes of the 

cancer hospital payment adjustment was 0.91. For CY 2014, the target PCR for purposes 

of the cancer hospital payment adjustment was 0.89. 

2. Payment Adjustment for Certain Cancer Hospitals for CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40968), for CY 2015, we 

proposed to continue our policy to provide additional payments to cancer hospitals so that 
CMS-1613-FC 253 

each cancer hospital’s final PCR is equal to the weighted average PCR (or “target PCR”) 

for the other OPPS hospitals using the most recent submitted or settled cost report data 

that were available at the time of the development of the proposed rule. To calculate the 

proposed CY 2015 target PCR, we used the same extract of cost report data from HCRIS, 

as discussed in section II.A. of the proposed rule, used to estimate costs for the CY 2015 

OPPS. Using these cost report data, we included data from Worksheet E, Part B, for each 

hospital, using data from each hospital’s most recent cost report, whether as submitted or 

settled. 

 We then limited the dataset to the hospitals with CY 2013 claims data that we 

used to model the impact of the proposed CY 2015 APC relative payment weights (3,881 

hospitals) because it is appropriate to use the same set of hospitals that we used to 

calibrate the modeled CY 2015 OPPS. The cost report data for the hospitals in this 

dataset were from cost report periods with fiscal year ends ranging from 2012 to 2013. 

We then removed the cost report data of the 47 hospitals located in Puerto Rico from our 

dataset because we do not believe that their cost structure reflects the costs of most 

hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of 

hospital-weighted statistics. We also removed the cost report data of 27 hospitals 

because these hospitals had cost report data that were not complete (missing aggregate 

OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in 

the study would have both the payment and cost data necessary to calculate a PCR for 

each hospital, leading to a proposed analytic file of 3,807 hospitals with cost report data. 

 Using this smaller dataset of cost report data, we estimated that, on average, the 

OPPS payments to other hospitals furnishing services under the OPPS were 
CMS-1613-FC 254 

approximately 89 percent of reasonable cost (weighted average PCR of 0.89). Therefore, 

we proposed that the payment amount associated with the cancer hospital payment 

adjustment to be determined at cost report settlement would be the additional payment 

needed to result in a proposed target PCR equal to 0.89 for each cancer hospital. Table 

13 of the proposed rule (79 FR 40969) indicated the estimated percentage increase in 

OPPS payments to each cancer hospital for CY 2015 due to the cancer hospital payment 

adjustment policy. 

 Comment: Several commenters noted that cancer hospitals have significantly 

higher costs than other OPPS hospitals and agreed with CMS’ proposal to provide the 

proposed payment adjustment. 

 Response: We appreciate the commenters’ support of our proposal. As described 

in detail below, we performed the same analysis as in previous years comparing the PCR 

for these cancer hospitals relative to other OPPS hospitals. That study indicates that there 

is a difference in PCRs between these hospital types. Accordingly, we are finalizing a 

cancer hospital adjustment with a target PCR of 0.89 based on that analysis. 

 After consideration of the public comments we received, we are finalizing our 

proposal to establish the target PCR equal to 0.89 for each cancer hospital. For this final 

rule with comment period, we have rerun our calculations to determine the target PCR 

using the latest available cost data and have determined that 0.89 is still the correct target 

PCR. We limited the dataset to the hospitals with CY 2013 claims data that we used to 

model the impact of the final CY 2015 APC relative payment weights (3,808 hospitals). 

The cost report data for the hospitals in this dataset were from cost report periods with 

fiscal year ends ranging from 2011 to 2013. We removed the cost report data of the 47 
CMS-1613-FC 255 

hospitals located in Puerto Rico from our dataset and also removed the cost report data of 

14 hospitals that had cost report data that were not complete, leading to a final analytic 

file of 3,747 hospitals with cost report data. 

 Using this smaller dataset of cost report data, we estimated that, on average, the 

OPPS payments to other hospitals furnishing services under the OPPS are approximately 

89 percent of reasonable cost (weighted average PCR of 0.89). Therefore, we are 

finalizing that the payment amount associated with the cancer hospital payment 

adjustment to be determined at cost report settlement would be the additional payment 

needed to result in a target PCR equal to 0.89 for each cancer hospital. 

 Table 14 below indicates the estimated percentage increase in OPPS payments to 

each cancer hospital for CY 2015 due to the cancer hospital payment adjustment policy. 

The actual amount of the CY 2015 cancer hospital payment adjustment for each cancer 

hospital will be determined at cost report settlement and will depend on each hospital’s 

CY 2015 payments and costs. We note that the changes made by section 1833(t)(18) of 

the Act do not affect the existing statutory provisions that provide for TOPs for cancer 

hospitals. The TOPs will be assessed as usual after all payments, including the cancer 

hospital payment adjustment, have been made for a cost reporting period. 

TABLE 14.—ESTIMATED CY 2015 HOSPITAL-SPECIFIC PAYMENT 

ADJUSTMENT FOR CANCER HOSPITALS TO BE PROVIDED AT COST 

REPORT SETTLEMENT 

Provider 

Number Hospital Name 

Estimated 

Percentage 

Increase in 

OPPS 

Payments 

for CY 

2015 
CMS-1613-FC 256 

Provider 

Number Hospital Name 

Estimated 

Percentage 

Increase in 

OPPS 

Payments 

for CY 

2015 

050146 City of Hope Comprehensive Cancer Center 15.5 

050660 USC Norris Cancer Hospital 22.0 

100079 Sylvester Comprehensive Cancer Center 15.8 

100271 H. Lee Moffitt Cancer Center & Research Institute 19.9 

220162 Dana-Farber Cancer Institute 47.6 

330154 Memorial Sloan-Kettering Cancer Center 46.7 

330354 Roswell Park Cancer Institute 16.6 

360242 James Cancer Hospital & Solove Research Institute 35.1 

390196 Fox Chase Cancer Center 18.5 

450076 M.D. Anderson Cancer Center 60.1 

500138 Seattle Cancer Care Alliance 53.9 

 
CMS-1613-FC 257 

G. Hospital Outpatient Outlier Payments 

1. Background 

 The OPPS provides outlier payments to hospitals to help mitigate the financial 

risk associated with high-cost and complex procedures, where a very costly service could 

present a hospital with significant financial loss. As explained in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 74958 through 74960), we set our 

projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate 

total payments under the OPPS for the prospective year. Outlier payments are provided 

on a service-by-service basis when the cost of a service exceeds the APC payment 

amount multiplier threshold (the APC payment amount multiplied by a certain amount) 

as well as the APC payment amount plus a fixed-dollar amount threshold (the APC 

payment plus a certain amount of dollars). In CY 2014, the outlier threshold was met 

when the hospital’s cost of furnishing a service exceeded 1.75 times (the multiplier 

threshold) the APC payment amount and exceeded the APC payment amount plus $2,900 

(the fixed-dollar amount threshold). If the cost of a service exceeds both the multiplier 

threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of 

the amount by which the cost of furnishing the service exceeds 1.75 times the APC 

payment amount. Beginning with CY 2009 payments, outlier payments are subject to a 

reconciliation process similar to the IPPS outlier reconciliation process for cost reports, 

as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 

through 68599). 

 It has been our policy to report the actual amount of outlier payments as a percent 

of total spending in the claims being used to model the OPPS. Our current estimate of 
CMS-1613-FC 258 

total outlier payments as a percent of total CY 2013 OPPS payment, using available 

CY 2013 claims and the revised OPPS expenditure estimate for the FY 2015 President’s 

Budget Mid-Session Review, is approximately 1.4 percent of the total aggregated OPPS 

payments. Therefore, for CY 2013, we estimate that we paid 0.4 percent above the 

CY 2013 outlier target of 1.0 percent of total aggregated OPPS payments. 

 Using CY 2013 claims data and CY 2014 payment rates, we currently estimate 

that the aggregate outlier payments for CY 2014 will be approximately 0.8 percent of the 

total CY 2014 OPPS payments. The difference between 0.8 percent and the 1.0 percent 

target is reflected in the regulatory impact analysis in section XXII. of this final rule with 

comment period. We provide estimated CY 2015 outlier payments for hospitals and 

CMHCs with claims included in the claims data that we used to model impacts in the 

Hospital–Specific Impacts - Provider-Specific Data file on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

2. Outlier Calculation 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40970), for CY 2015, we 

proposed to continue our policy of estimating outlier payments to be 1.0 percent of the 

estimated aggregate total payments under the OPPS. We proposed that a portion of that 

1.0 percent, an amount equal to 0.47 percent of outlier payments (or 0.0047 percent of 

total OPPS payments) would be allocated to CMHCs for PHP outlier payments. This is 

the amount of estimated outlier payments that would result from the proposed CMHC 

outlier threshold as a proportion of total estimated OPPS outlier payments. As discussed 

in section VIII.D. of the proposed rule, for CMHCs, we proposed to continue our 
CMS-1613-FC 259 

longstanding policy that if a CMHC’s cost for partial hospitalization services, paid under 

either APC 0172 (Level I Partial Hospitalization (3 services) for CMHCs) or APC 0173 

(Level II Partial Hospitalization (4 or more services) for CMHCs), exceeds 3.40 times the 

payment rate for APC 0173, the outlier payment would be calculated as 50 percent of the 

amount by which the cost exceeds 3.40 times the APC 0173 payment rate. For further 

discussion of CMHC outlier payments, we refer readers to section VIII.D. of the 

proposed rule and this final rule with comment period. 

 To ensure that the estimated CY 2015 aggregate outlier payments would equal 

1.0 percent of estimated aggregate total payments under the OPPS, we proposed that the 

hospital outlier threshold be set so that outlier payments would be triggered when a 

hospital’s cost of furnishing a service exceeds 1.75 times the APC payment amount and 

exceeds the APC payment amount plus $3,100. 

 We calculated the proposed fixed-dollar threshold of $3,100 using the standard 

methodology most recently used for CY 2014 (78 FR 74959 through 74960). For 

purposes of estimating outlier payments for the proposed rule, we used the 

hospital-specific overall ancillary CCRs available in the April 2014 update to the 

Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, 

such as the most current CCRs, which are maintained by the MACs and used by the 

OPPS Pricer to pay claims. The claims that we use to model each OPPS update lag by 

2 years. 

 In order to estimate the CY 2015 hospital outlier payments for the proposed rule, 

we inflated the charges on the CY 2013 claims using the same inflation factor of 1.1146 

that we used to estimate the IPPS fixed-dollar outlier threshold for the FY 2015 
CMS-1613-FC 260 

IPPS/LTCH PPS proposed rule (79 FR 28321). We used an inflation factor of 1.0557 to 

estimate CY 2014 charges from the CY 2013 charges reported on CY 2013 claims. The 

methodology for determining this charge inflation factor is discussed in the FY 2015 

IPPS/LTCH PPS proposed rule (79 FR 28321) and final rule (79 FR 50374). As we 

stated in the CY 2005 OPPS final rule with comment period (69 FR 65845), we believe 

that the use of these charge inflation factors are appropriate for the OPPS because, with 

the exception of the inpatient routine service cost centers, hospitals use the same ancillary 

and outpatient cost centers to capture costs and charges for inpatient and outpatient 

services. 

 As noted in the CY 2007 OPPS/ASC final rule with comment period 

(71 FR 68011), we are concerned that we could systematically overestimate the OPPS 

hospital outlier threshold if we did not apply a CCR inflation adjustment factor. 

Therefore, we proposed to apply the same CCR inflation adjustment factor that we 

proposed to apply for the FY 2015 IPPS outlier calculation to the CCRs used to simulate 

the proposed CY 2015 OPPS outlier payments to determine the fixed-dollar threshold. 

Specifically, for CY 2015, we proposed to apply an adjustment factor of 0.9813 to the 

CCRs that were in the April 2014 OPSF to trend them forward from CY 2014 to 

CY 2015. The methodology for calculating this proposed adjustment was discussed in 

the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321) and finalized in the FY 2015 

IPPS/LTCH PS final rule (79 FR 50374). 

 To model hospital outlier payments for the proposed rule, we applied the overall 

CCRs from the April 2014 OPSF file after adjustment (using the proposed CCR inflation 

adjustment factor of 0.9813 to approximate CY 2015 CCRs) to charges on CY 2013 
CMS-1613-FC 261 

claims that were adjusted (using the proposed charge inflation factor of 1.1146 to 

approximate CY 2015 charges). We simulated aggregated CY 2015 hospital outlier 

payments using these costs for several different fixed-dollar thresholds, holding the 

1.75 multiple threshold constant and assuming that outlier payments would continue to be 

made at 50 percent of the amount by which the cost of furnishing the service would 

exceed 1.75 times the APC payment amount, until the total outlier payments equaled 

1.0 percent of aggregated estimated total CY 2015 OPPS payments. We estimated that a 

proposed fixed-dollar threshold of $3,100, combined with the proposed multiple 

threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated 

total OPPS payments to outlier payments. For CMHCs, we proposed that, if a CMHC’s 

cost for partial hospitalization services, paid under either APC 0172 or APC 0173, 

exceeds 3.40 times the payment rate for APC 0173, the outlier payment would be 

calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 

0173 payment rate. 

 Section 1833(t)(17)(A) of the Act, which applies to hospitals as defined under 

section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required 

for the quality measures selected by the Secretary, in the form and manner required by 

the Secretary under 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to 

their OPD fee schedule increase factor, that is, the annual payment update factor. The 

application of a reduced OPD fee schedule increase factor results in reduced national 

unadjusted payment rates that will apply to certain outpatient items and services 

furnished by hospitals that are required to report outpatient quality data and that fail to 

meet the Hospital OQR Program requirements. For hospitals that fail to meet the 
CMS-1613-FC 262 

Hospital OQR Program requirements, we proposed to continue the policy that we 

implemented in CY 2010 that the hospitals’ costs will be compared to the reduced 

payments for purposes of outlier eligibility and payment calculation. For more 

information on the Hospital OQR Program, we refer readers to section XIII. of this final 

rule with comment period. 

 Comment: A few commenters suggested that CMS not increase the outlier 

payment fixed dollar threshold from $2,900 to $3,100. One commenter suggested that 

CMS maintain the CY 2014 fixed-dollar threshold of $2,900, while another commenter 

suggested that CMS lower the CY 2014 fixed-dollar threshold because CMS’ projection 

of CY 2014 outlier payments in the proposed rule estimated that outlier payments would 

be below the target of 1.0 percent of OPPS payments. 

 Response: We set the proposed CY 2015 outlier payment fixed-dollar threshold 

at $3,100 so that projected outlier payments would equal 1.0 percent of total OPPS 

payments. We projected that CY 2014 outlier payments would fall below the 1.0 percent 

target with the $2,900 threshold. However, we estimated that changes to recalibrate 

APCs and other payment policy changes would result in outlier payments greater than the 

1.0 percent target in CY 2015 if we did not increase the fixed-dollar threshold. As 

discussed below, based on the more recent data available for this final rule with comment 

period, the CY 2015 outlier payment fixed-dollar threshold will be $2,775. When 

combined with the multiple threshold of 1.75 times the APC payment rate, this 

fixed-dollar threshold will allocate an estimated 1.0 percent of projected total OPPS 

payments to outlier payments for CY 2015. 

3. Final Outlier Calculation 
CMS-1613-FC 263 

 Consistent with historical practice, we used updated data for this final rule with 

comment period. For CY 2015, we are applying the overall CCRs from the July 2014 

OPSF file after adjustment (using the CCR inflation adjustment factor of 0.9821 to 

approximate CY 2015 CCRs) to charges on CY 2013 claims that were adjusted (using the 

charge inflation factor of 1.1044 to approximate CY 2015 charges). These are the same 

CCR adjustment and charge inflation factors that were used to set the IPPS fixed-dollar 

threshold for the FY 2015 IPPS/LTCH PPS final rule (79 FR 50379 through 50380). We 

simulated aggregated CY 2015 hospital outlier payments using these costs for several 

different fixed-dollar thresholds, holding the 1.75 multiple threshold constant and 

assuming that outlier payments will continue to be made at 50 percent of the amount by 

which the cost of furnishing the service would exceed 1.75 times the APC payment 

amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total 

CY 2015 OPPS payments. We estimate that a fixed-dollar threshold of $2,775, combined 

with the multiple threshold of 1.75 times the APC payment rate, will allocate 1.0 percent 

of aggregated total OPPS payments to outlier payments. For CMHCs, if a CMHC’s cost 

for partial hospitalization services, paid under either APC 0172 or APC 0173, exceeds 

3.40 times the payment rate for APC 0173, the outlier payment will be calculated as 

50 percent of the amount by which the cost exceeds 3.40 times the APC 0173 payment 

rate. 

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

Medicare Payment 

 The basic methodology for determining prospective payment rates for HOPD 

services under the OPPS is set forth in existing regulations at 42 CFR Part 419, Subparts 
CMS-1613-FC 264 

C and D. For this CY 2015 OPPS/ASC final rule with comment period, the payment rate 

for most services and procedures for which payment is made under the OPPS is the 

product of the conversion factor calculated in accordance with section II.B. of this final 

rule with comment period and the relative payment weight determined under section II.A. 

of this final rule with comment period. Therefore, the national unadjusted payment rate 

for most APCs contained in Addendum A to this final rule with comment period (which 

is available via the Internet on the CMS Web site) and for most HCPCS codes to which 

separate payment under the OPPS has been assigned in Addendum B to this final rule 

with comment period (which is available via the Internet on the CMS Web site) was 

calculated by multiplying the CY 2015 scaled weight for the APC by the CY 2015 

conversion factor. 

 We note that section 1833(t)(17) of the Act, which applies to hospitals as defined 

under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to submit data 

required to be submitted on quality measures selected by the Secretary, in the form and 

manner and at a time specified by the Secretary, incur a reduction of 2.0 percentage 

points to their OPD fee schedule increase factor, that is, the annual payment update 

factor. The application of a reduced OPD fee schedule increase factor results in reduced 

national unadjusted payment rates that apply to certain outpatient items and services 

provided by hospitals that are required to report outpatient quality data and that fail to 

meet the Hospital OQR Program (formerly referred to as the Hospital Outpatient Quality 

Data Reporting Program (HOP QDRP)) requirements. For further discussion of the 

payment reduction for hospitals that fail to meet the requirements of the Hospital OQR 

Program, we refer readers to section XIII. of this final rule with comment period. 
CMS-1613-FC 265 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40971 through 40972), we 

demonstrated the steps on how to determine the APC payments that will be made in a 

calendar year under the OPPS to a hospital that fulfills the Hospital OQR Program 

requirements and to a hospital that fails to meet the Hospital OQR Program requirements 

for a service that has any of the following status indicator assignments: “J1,” “P,” “Q1,” 

“Q2,” “Q3,” “R,” “S,” “T,” “U,” or “V” (as defined in Addendum D1 to the proposed 

rule), in a circumstance in which the multiple procedure discount does not apply, the 

procedure is not bilateral, and conditionally packaged services (status indicator of “Q1” 

and “Q2”) qualify for separate payment. We are finalizing the methodology as proposed 

and demonstrate below how to calculate final CY 2015 OPPS payments using the same 

parameters. 

 We note that, although blood and blood products with status indicator “R” and 

brachytherapy sources with status indicator “U” are not subject to wage adjustment, they 

are subject to reduced payments when a hospital fails to meet the Hospital OQR Program 

requirements. We note that we are creating new status indicator “J1” to reflect the 

comprehensive APCs discussed in section II.A.2.e. of this final rule with comment 

period. We also note that we are deleting status indicator “X” as part of the CY 2015 

packaging policy for ancillary services, discussed in section II.A.3. of this final rule with 

comment period. 

 We did not receive any public comments on the proposed calculation of an 

adjusted Medicare payment. Therefore, we are finalizing the calculation of an adjusted 

Medicare payment, where appropriate, in the manner described as follows. Individual 

providers interested in calculating the payment amount that they will receive for a 
CMS-1613-FC 266 

specific service from the national unadjusted payment rates presented in Addenda A and 

B to this final rule with comment period (which are available via the Internet on the CMS 

Web site) should follow the formulas presented in the following steps. For purposes of 

the payment calculations below, we refer to the national unadjusted payment rate for 

hospitals that meet the requirements of the Hospital OQR Program as the “full” national 

unadjusted payment rate. We refer to the national unadjusted payment rate for hospitals 

that fail to meet the requirements of the Hospital OQR Program as the “reduced” national 

unadjusted payment rate. The reduced national unadjusted payment rate is calculated by 

multiplying the reporting ratio of 0.980 times the “full” national unadjusted payment rate. 

The national unadjusted payment rate used in the calculations below is either the full 

national unadjusted payment rate or the reduced national unadjusted payment rate, 

depending on whether the hospital met its Hospital OQR Program requirements in order 

to receive the full CY 2015 OPPS fee schedule increase factor of 2.2 percent. 

 Step 1. Calculate 60 percent (the labor-related portion) of the national unadjusted 

payment rate. Since the initial implementation of the OPPS, we have used 60 percent to 

represent our estimate of that portion of costs attributable, on average, to labor. We refer 

readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 through 

18497) for a detailed discussion of how we derived this percentage. During our 

regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS 

final rule with comment period (70 FR 68553), we confirmed that this labor-related share 

for hospital outpatient services is appropriate. 

 The formula below is a mathematical representation of Step 1 and identifies the 

labor-related portion of a specific payment rate for a specific service. 
CMS-1613-FC 267 

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

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

 Step 2. Determine the wage index area in which the hospital is located and 

identify the wage index level that applies to the specific hospital. We note that under the 

CY 2015 OPPS policy for transitioning wage indexes into the new OMB labor market 

area delineations, a hold harmless policy for the wage index may apply, as discussed in 

section II.C. of this final rule with comment period. The wage index values assigned to 

each area reflect the geographic statistical areas (which are based upon OMB standards) 

to which hospitals are assigned for FY 2015 under the IPPS, reclassifications through the 

MGCRB, section 1886(d)(8)(B) “Lugar” hospitals, reclassifications under section 

1886(d)(8)(E) of the Act, as defined in § 412.103 of the regulations, and hospitals 

designated as urban under section 601(g) of Pub. L. 98-21. (For further discussion of the 

changes to the FY 2015 IPPS wage indices, as applied to the CY 2015 OPPS, we refer 

readers to section II.C. of this final rule with comment period.) As we proposed, we are 

continuing to apply a wage index floor of 1.00 to frontier States, in accordance with 

section 10324 of the Affordable Care Act of 2010. 

 Step 3. Adjust the wage index of hospitals located in certain qualifying counties 

that have a relatively high percentage of hospital employees who reside in the county, but 

who work in a different county with a higher wage index, in accordance with section 505 

of Pub. L. 108-173. Addendum L to this final rule with comment period (which is 

available via the Internet on the CMS Web site) contains the qualifying counties and the 

associated wage index increase developed for the FY 2015 IPPS and listed as Table 4J in 

the FY 2015 IPPS/LTCH PPS final rule (79 FR 49854) and available via the Internet on 
CMS-1613-FC 268 

the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/index.html. This step is to be followed only if the hospital is 

not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the 

Act. 

 Step 4. Multiply the applicable wage index determined under Steps 2 and 3 by 

the amount determined under Step 1 that represents the labor-related portion of the 

national unadjusted payment rate. 

 The formula below is a mathematical representation of Step 4 and adjusts the 

labor-related portion of the national unadjusted payment rate for the specific service by 

the wage index. 

Xa

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

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

 Step 5. Calculate 40 percent (the nonlabor-related portion) of the national 

unadjusted payment rate and add that amount to the resulting product of Step 4. The 

result is the wage index adjusted payment rate for the relevant wage index area. 

 The formula below is a mathematical representation of Step 5 and calculates the 

remaining portion of the national payment rate, the amount not attributable to labor, and 

the adjusted payment for the specific service.

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

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

Adjusted Medicare Payment = Y + Xa. 

 Step 6. If a provider is an SCH, as set forth in the regulations at § 412.92, or an 

EACH, which is considered to be an SCH under section 1886(d)(5)(D)(iii)(III) of the 
CMS-1613-FC 269 

Act, and located in a rural area, as defined in § 412.64(b), or is treated as being located in 

a rural area under § 412.103, multiply the wage index adjusted payment rate by 1.071 to 

calculate the total payment. 

 The formula below is a mathematical representation of Step 6 and applies the 

rural adjustment for rural SCHs. 

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

 We are providing examples below of the calculation of both the full and reduced 

national unadjusted payment rates that will apply to certain outpatient items and services 

performed by hospitals that meet and that fail to meet the Hospital OQR Program 

requirements, using the steps outlined above. For purposes of this example, we used a 

provider that is located in Brooklyn, New York that is assigned to CBSA 35614. This 

provider bills one service that is assigned to APC 0019 (Level I Excision/Biopsy). The 

CY 2015 full national unadjusted payment rate for APC 0019 is approximately $378.41. 

The reduced national unadjusted payment rate for APC 0019 for a hospital that fails to 

meet the Hospital OQR Program requirements is approximately $370.84. This reduced 

rate is calculated by multiplying the reporting ratio of 0.980 by the full unadjusted 

payment rate for APC 0019. 

 The FY 2015 wage index for a provider located in CBSA 35614 in New York is 

1.2973. This is based on the 1-year 50/50 transition blend between the wage index under 

the old CBSA 35644 (1.3115) and the wage index under the new CBSA 35614 (1.2831). 

The labor-related portion of the full national unadjusted payment is approximately 

$294.55 (.60 * $378.41 * 1.2973). The labor-related portion of the reduced national 

unadjusted payment is approximately $288.65 (.60 * $370.84 * 1.2973). The 
CMS-1613-FC 270 

nonlabor-related portion of the full national unadjusted payment is approximately 

$151.36 (.40 * $378.41). The nonlabor-related portion of the reduced national unadjusted 

payment is approximately $148.34 (40 * $370.84). The sum of the labor-related and 

nonlabor-related portions of the full national adjusted payment is approximately $445.91 

($294.55 + $151.36). The sum of the reduced national adjusted payment is 

approximately $436.99 ($288.65 + $148.34). 

I. Beneficiary Copayments 

1. Background 

 Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining 

the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. 

Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national 

unadjusted copayment amount for a covered OPD service (or group of such services) 

furnished in a year in a manner so that the effective copayment rate (determined on a 

national unadjusted basis) for that service in the year does not exceed a specified 

percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 

copayment rate for a covered OPD service paid under the OPPS in CY 2006, and in 

calendar years thereafter, shall not exceed 40 percent of the APC payment rate.

 Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or 

group of such services) furnished in a year, the national unadjusted copayment amount 

cannot be less than 20 percent of the OPD fee schedule amount. However, section 

1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be 

collected for a procedure performed in a year to the amount of the inpatient hospital 

deductible for that year. 
CMS-1613-FC 271 

 Section 4104 of the Affordable Care Act eliminated the Part B coinsurance for 

preventive services furnished on and after January 1, 2011, that meet certain 

requirements, including flexible sigmoidoscopies and screening colonoscopies, and 

waived the Part B deductible for screening colonoscopies that become diagnostic during 

the procedure. Our discussion of the changes made by the Affordable Care Act with 

regard to copayments for preventive services furnished on and after January 1, 2011, may 

be found in section XII.B. of the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72013). 

2. OPPS Copayment Policy 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40973), for CY 2015, we 

proposed to determine copayment amounts for new and revised APCs using the same 

methodology that we implemented beginning in CY 2004. (We refer readers to the 

November 7, 2003 OPPS final rule with comment period (68 FR 63458).) In addition, 

we proposed to use the same standard rounding principles that we have historically used 

in instances where the application of our standard copayment methodology would result 

in a copayment amount that is less than 20 percent and cannot be rounded, under standard 

rounding principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66687) in which we discuss our rationale for applying 

these rounding principles.) The proposed national unadjusted copayment amounts for 

services payable under the OPPS that would be effective January 1, 2015, were shown in 

Addenda A and B to the proposed rule (which are available via the Internet on the CMS 

Web site). As discussed in section XII.G. of the proposed rule, for CY 2015, the 

Medicare beneficiary’s minimum unadjusted copayment and national unadjusted 
CMS-1613-FC 272 

copayment for a service to which a reduced national unadjusted payment rate applies 

equals the product of the reporting ratio and the national unadjusted copayment, or the 

product of the reporting ratio and the minimum unadjusted copayment, respectively, for 

the service. 

 We note that OPPS copayments may increase or decrease each year based on 

changes in the calculated APC payment rates due to updated cost report and claims data, 

and any changes to the OPPS cost modeling process. However, as described in the 

CY 2004 OPPS/ASC final rule with comment period, the development of the copayment 

methodology generally moves beneficiary copayments closer to 20 percent of OPPS APC 

payments (68 FR 63458 through 63459). 

 We did not receive any public comments regarding the proposed methodology for 

calculating copayments for CY 2015. Therefore, for the reasons set forth in this final rule 

with comment period, we are finalizing our proposed CY 2015 copayment methodology 

without modification. 

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

 Individuals interested in calculating the national copayment liability for a 

Medicare beneficiary for a given service provided by a hospital that met or failed to meet 

its Hospital OQR Program requirements should follow the formulas presented in the 

following steps. 

 Step 1. Calculate the beneficiary payment percentage for the APC by dividing the 

APC’s national unadjusted copayment by its payment rate. For example, using 

APC 0019, approximately $75.68 is 20 percent of the full national unadjusted payment 

rate of approximately $378.41. For APCs with only a minimum unadjusted copayment in 
CMS-1613-FC 273 

Addenda A and B to this final rule with comment period (which are available via the 

Internet on the CMS Web site), the beneficiary payment percentage is 20 percent. 

 The formula below is a mathematical representation of Step 1 and calculates the 

national copayment as a percentage of national payment for a given service. 

B is the beneficiary payment percentage. 

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

 Step 2. Calculate the appropriate wage-adjusted payment rate for the APC for the 

provider in question, as indicated in Steps 2 through 4 under section II.H. of this final 

rule with comment period. Calculate the rural adjustment for eligible providers as 

indicated in Step 6 under section II.H. of this final rule with comment period. 

 Step 3. Multiply the percentage calculated in Step 1 by the payment rate 

calculated in Step 2. The result is the wage-adjusted copayment amount for the APC.

 The formula below is a mathematical representation of Step 3 and applies the 

beneficiary payment percentage to the adjusted payment rate for a service calculated 

under section II.H. of this final rule with comment period, with and without the rural 

adjustment, to calculate the adjusted beneficiary copayment for a given service. 

 Wage-adjusted copayment amount for the APC = Adjusted Medicare 

Payment * B. 

 Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted 

Medicare Payment * 1.071) * B. 

 Step 4. For a hospital that failed to meet its Hospital OQR Program requirements, 

multiply the copayment calculated in Step 3 by the reporting ratio of 0.980. 
CMS-1613-FC 274 

 The unadjusted copayments for services payable under the OPPS that will be 

effective January 1, 2015, are shown in Addenda A and B to this final rule with comment 

period (which are available via the Internet on the CMS Web site). We note that the 

national unadjusted payment rates and copayment rates shown in Addenda A and B to 

this final rule with comment period reflect the full CY 2015 OPD fee schedule increase 

factor discussed in section II.B. of this final rule with comment period. 

 In addition, as noted above, section 1833(t)(8)(C)(i) of the Act limits the amount 

of beneficiary copayment that may be collected for a procedure performed in a year to the 

amount of the inpatient hospital deductible for that year. 

III. OPPS Ambulatory Payment Classification (APC) Group Policies 

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

 CPT and Level II HCPCS codes are used to report procedures, services, items, 

and supplies under the hospital OPPS. Specifically, CMS recognizes the following codes 

on OPPS claims: 

● Category I CPT codes, which describe surgical procedures and medical 

services; 

● Category III CPT codes, which describe new and emerging technologies, 

services, and procedures; and 

● Level II HCPCS codes, which are used primarily to identify products, supplies, 

temporary procedures, and services not described by CPT codes. 

 CPT codes are established by the American Medical Association (AMA) and the 

Level II HCPCS codes are established by the CMS HCPCS Workgroup. These codes are 

updated and changed throughout the year. CPT and HCPCS code changes that affect the 
CMS-1613-FC 275 

OPPS are published both through the annual rulemaking cycle and through the OPPS 

quarterly update Change Requests (CRs). CMS releases new Level II HCPCS codes to 

the public or recognizes the release of new CPT codes by the AMA and makes these 

codes effective (that is, the codes can be reported on Medicare claims) outside of the 

formal rulemaking process via OPPS quarterly update CRs. Based on our review, we 

assign the new CPT and Level II HCPCS codes to interim status indicator (SI) and 

APC assignments. These interim assignments are finalized in the OPPS/ASC final 

rules. This quarterly process offers hospitals access to codes that may more accurately 

describe items or services furnished and/or provides payment or more accurate payment 

for these items or services in a timelier manner than if CMS waited for the annual 

rulemaking process. We solicit public comments on these new codes and finalize our 

proposals related to these codes through our annual rulemaking process. 

 We note that, under the OPPS, the APC assignment determines the payment 

rate for an item, procedure, or service. Items, procedures, or services not paid 

separately under the hospital OPPS are assigned to the appropriate status 

indicators. Section XI. of the CY 2015 OPPS/ASC proposed rule provided a 

discussion of the various status indicators used under the OPPS. Assigning 

procedures to certain status indicators would generate separate payment for the 

service furnished, while assignment to other status indicators would not.

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), in Table 14 (Table 15 

of this final rule with comment period), we summarized our process for updating codes 

through our OPPS quarterly update CRs, seeking public comments, and finalizing their 

treatment under the OPPS. We noted that because the payment rates associated with 
CMS-1613-FC 276 

codes effective July 1 were not available to us in time for incorporation into the Addenda 

to the proposed rule, the Level II HCPCS codes and the Category III CPT codes 

implemented through the July 2014 OPPS quarterly update CR were not included in 

Addendum B of the proposed rule (which is available via the Internet on the CMS Web 

site), while those codes based upon the April 2014 OPPS quarterly update were included 

in Addendum B. Nevertheless, we requested public comments on the codes included in 

the July 2014 OPPS quarterly update and included these codes in the preamble of the 

proposed rule. 

TABLE 15.—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS 

CODES 

OPPS 

Quarterly 

Update CR Type of Code Effective Date 

Comments 

Sought When Finalized 

April l, 2014 Level II HCPCS 

Codes April 1, 2014 

CY 2015 

OPPS/ASC 

proposed rule 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

July 1, 2014 

Level II HCPCS 

Codes July 1, 2014 

CY 2015 

OPPS/ASC 

proposed rule 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

Category I 

(certain vaccine 

codes) and III 

CPT codes 

July 1, 2014 

CY 2015 

OPPS/ASC 

proposed rule 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

October 1, 2014 Level II HCPCS 

Codes October 1, 2014

CY 2015 

OPPS/ASC final 

rule with 

comment period 

CY 2016 

OPPS/ASC final 

rule with 

comment period 

January 1, 2015 Level II HCPCS 

Codes January 1, 2015 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

CY 2016 

OPPS/ASC final 

rule with 

comment period 
CMS-1613-FC 277 

OPPS 

Quarterly 

Update CR Type of Code Effective Date 

Comments 

Sought When Finalized 

Category I and 

III CPT Codes January 1, 2015 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

CY 2016 

OPPS/ASC final 

rule with 

comment period 

 This process is discussed in detail below. We have separated our discussion into 

two sections based on whether we solicited public comments in the CY 2015 OPPS/ASC 

proposed rule or whether we will be soliciting public comments in this CY 2015 

OPPS/ASC final rule with comment period. We note that we will be seeking public 

comments in this CY 2015 OPPS/ASC final rule with comment period on the interim 

APC and status indicator assignments for new CPT and Level II HCPCS codes that will 

be effective January 1, 2015. In the CY 2015 OPPS/ASC proposed rule (79 FR 40977), 

we also noted that we sought public comments in the CY 2014 OPPS/ASC final rule with 

comment period on the interim APC and status assignments for new Level II HCPCS 

codes that became effective October 1, 2013, or January 1, 2014. These new and revised 

codes, with an effective date of October 1, 2013, or January 1, 2014, were flagged with 

comment indicator “NI” (New code, interim APC assignment; comments will be 

accepted on the interim APC assignment for the new code) in Addendum B to the 

CY 2014 OPPS/ASC final rule with comment period to indicate that we were assigning 

them an interim payment status and an APC and payment rate, if applicable, and were 

subject to public comment following publication of the CY 2014 OPPS/ASC final rule 

with comment period. We are responding to public comments and finalizing our interim 
CMS-1613-FC 278 

OPPS treatment of these codes in this CY 2015 OPPS/ASC final rule with comment 

period. 

 We received public comments on some new codes that were assigned to comment 

indicator “NI” in Addendum B of the CY 2014 OPPS/ASC final rule with comment 

period. We respond to those comments in sections III.C. of this CY 2015 OPPS/ASC 

final rule with comment period. 

1. Treatment of New CY 2014 Level II HCPCS and CPT Codes Effective April 1, 2014 

and July 1, 2014 for Which We Solicited Public Comments in the CY 2015 OPPS/ASC 

Proposed Rule 

 Through the April 2014 OPPS quarterly update CR (Transmittal 2903, Change 

Request 8653, dated March 11, 2014) and the July 2014 OPPS quarterly update CR 

(Transmittal 2971, Change Request 8776, dated May 23, 2014), we recognized several 

new HCPCS codes for separate payment under the OPPS. 

 Effective April 1, 2014, we made effective four new Level II HCPCS codes and 

also assigned them to appropriate interim OPPS status indicators and APCs. Through the 

April 2014 OPPS quarterly update CR, we allowed separate payment for three of the four 

new Level II HCPCS codes. Specifically, as displayed in Table 15 in the proposed rule 

(79 FR 40975), we provided separate payment for HCPCS codes C9021, C9739, and 

C9740. HCPCS code Q2052 was assigned to status indicator “N” to indicate the service 

described by this code is packaged under the OPPS.

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40974), we solicited public 

comments on the proposed APC and status indicator assignments, where applicable, for 

the Level II HCPCS codes listed in Table 15 of that proposed rule (HCPCS codes C9021, 
CMS-1613-FC 279 

C9739, C9740, and Q2052). We did not receive any public comments on the proposed 

APC and status indicator assignments for HCPCS codes C9021 and Q2052. Because 

HCPCS code Q2052 will only be billed by pharmacy suppliers, we are modifying our 

CY 2015 proposal to continue to assign HCPCS code Q2052 to status indicator “N.” 

Instead, for CY 2015, we are reassigning HCPCS code Q2052 from OPPS status 

indicator “N” to “E” (Not paid by Medicare when submitted on outpatient claims (any 

outpatient bill type)). We are adopting as final, without modification, the proposed APC 

and status indicator assignments for HCPCS code C9021 for CY 2015. We note that we 

received some public comments on HCPCS codes C9739 and C9740, which we address 

in section III.C.3.e. of this final rule with comment period. 

 Effective for CY 2015, the HCPCS Workgroup replaced HCPCS code C9021 

with HCPCS code J9301. Table 16 below shows the complete long descriptor for 

HCPCS code J9301. Consistent with our general policy of using permanent HCPCS 

codes (that is, “J” codes) rather than using temporary HCPCS codes (that is, “C” codes 

and “Q” codes) for the reporting of drugs under the OPPS in order to streamline coding, 

we are showing the replacement HCPCS code for C9021, which is effective 

January 1, 2015, in Table 16. 

 In this final rule with comment period, we are assigning the Level II HCPCS 

codes listed in Table 16 below to the specified APCs and status indicators for CY 2015. 

The final payment rates for these codes, where applicable, can be found in Addendum B 

to this final rule with comment period (which is available via the Internet on the CMS 

Web site). 

 
CMS-1613-FC 280 

TABLE 16.—FINAL CY 2015 STATUS INDICATORS AND APC ASSIGNMENTS 

FOR THE LEVEL II HCPCS CODES THAT WERE NEWLY IMPLEMENTED 

IN APRIL 2014 

CY 2014 

HCPCS 

Code 

CY 2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Final 

CY 2015 

Status 

Indicator 

Final 

CY 2015 

APC 

C9021 J9301 Injection, obinutuzumab, 10mg G 1476 

C9739 C9739 

Cystourethroscopy, with insertion of 

transprostatic implant; 1 to 3 

implants 

T 0162 

C9740 C9740 

Cystourethroscopy, with insertion of 

transprostatic implant; 4 or more 

implants 

T 1564 

Q2052 Q2052 

Services, supplies and accessories 

used in the home under the Medicare 

intravenous immune globulin (IVIG) 

demonstration 

E N/A 

 Effective July 1, 2014, we made effective several new CPT and Level II HCPCS 

codes and also assigned them to appropriate interim OPPS status indicators and APCs. 

Through the July 2014 OPPS quarterly update CR, we allowed separate payment under 

the OPPS for four new Level II HCPCS codes and 17 new Category III CPT codes 

effective July 1, 2014. Specifically, as displayed in Table 16 in the proposed rule, we 

allowed separate payment for HCPCS codes C2644, C9022, C9134, and Q9970. We 

note that HCPCS code Q9970 replaced HCPCS code C9441 (Injection, ferric 

carboxymaltose, 1 mg), beginning July 1, 2014. HCPCS code C9441 was made effective 

January 1, 2014, but the code was deleted June 30, 2014, because it was replaced with 

HCPCS code Q9970. HCPCS code C9441 was granted pass-through payment status 

when the code was implemented on January 1, 2014. Because HCPCS code Q9970 

describes the same drug as HCPCS code C9441, in the CY 2015 OPPS/ASC proposed 
CMS-1613-FC 281 

rule (79 FR 40975), we proposed to continue the pass-through payment status for HCPCS 

code Q9970, and assign the HCPCS Q-code to the same APC and status indicator as its 

predecessor HCPCS C-code, as shown in Table 16 of the proposed rule. Specifically, we 

proposed to assign HCPCS code Q9970 to APC 9441 (Inj, Ferric Carboxymaltose) and 

status indicator “G.” 

 In addition, the HCPCS Workgroup established HCPCS code Q9974, effective 

July 1, 2014, to replace HCPCS codes J2271 (Injection, morphine sulfate, 100mg) and 

J2275 (Injection, morphine sulfate (preservative-free sterile solution), per 10 mg). Both 

of these HCPCS J-codes were assigned to status indicator “N” (Packaged Services). As a 

result of the establishment of new HCPCS code Q9974 as a replacement for HCPCS 

codes J2271 and J2275, the payment indicator for HCPCS codes J2271 and J2275 was 

changed to “E” (Not Payable by Medicare), effective July 1, 2014. Also, because 

HCPCS code Q9974 describes the same services that were described by HCPCS codes 

J2271 and J2275, in the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we proposed 

to continue to assign HCPCS code Q9974 to the same status indicator as its predecessor 

HCPCS J-codes. Specifically, we proposed to assign HCPCS code Q9974 to status 

indicator “N,” effective July 1, 2014. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we also proposed to 

assign the Level II HCPCS codes listed in Table 16 to the specified proposed APCs and 

status indicators set forth in Table 16 of the proposed rule. This table included a 

complete list of the Level II HCPCS codes that were made effective July 1, 2014. The 

codes that were made effective July 1, 2014, did not appear in Addendum B to the 

proposed rule, and as a result, the proposed payment rates along with the proposed status 
CMS-1613-FC 282 

indicators and proposed APC assignments, where applicable, for CY 2015 were provided 

in Table 16 of the proposed rule. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), we solicited public 

comments on the proposed status indicators and APC assignments for the HCPCS codes 

that were listed in Table 16 of the proposed rule. We did not receive any public 

comments on the proposed APC and status indicator assignments for HCPCS codes 

C9022, C9134, Q9970, and Q9974 for CY 2015. Therefore, we are adopting as final, 

without modification, the proposed APC and status indicator assignments for these four 

Level II HCPCS codes for CY 2015. We note that we received a public comment on 

HCPCS code C2644, which is addressed in section II.A.2.d.3. of this final rule with 

comment period. 

 The HCPCS Workgroup replaced HCPCS code C9022 with HCPCS code J1322, 

effective January 1, 2015. Because HCPCS code J1322 describes the same drug with the 

same dosage descriptor as its predecessor code, HCPCS code C9022, this drug will 

continue to receive pass-through payment status in CY 2015. Therefore, we are 

assigning HCPCS code J1322 to the same APC and status indicator as its predecessor 

code, HCPCS code C9022, as shown in Table 17 below. 

 In addition, the HCPCS Workgroup replaced HCPCS code C9134 with HCPCS 

code J7181, effective January 1, 2015. Because HCPCS code J7181 does not describe 

the same dosage descriptor as its predecessor code, HCPCS code J7181 has been 

assigned to a new APC. Specifically, HCPCS code C9134 had a dosage descriptor of “10 

i.u.,” while HCPCS code J7181 has a dosage descriptor of “i.u.” Therefore, effective 

January 1, 2015, we are assigning HCPCS code J7181 to APC 1746, which is a different 
CMS-1613-FC 283 

APC assignment than the APC assignment for HCPCS code C9134, to maintain data 

consistency for future rulemakings. Because the predecessor code, HCPCS code C9134, 

was granted pass-through payment status, HCPCS code J7181 will continue to be 

assigned to status indicator “G” for CY 2015. 

 We also note that the HCPCS Workgroup replaced HCPCS code Q9970 with 

HCPCS code J1439, effective January 1, 2015. Because HCPCS code J1439 describes 

the same drug with the same dosage descriptor as its predecessor code, HCPCS code 

Q9970, this drug will continue to receive pass-through payment status in CY 2015. 

Therefore, we are assigning HCPCS code J1439 to the same APC and status indicator as 

its predecessor code, HCPCS code Q9970, as shown in Table 17 below. 

 Further, the HCPCS Workgroup replaced HCPCS code Q9974 with HCPCS code 

J2274, effective January 1, 2015. Because HCPCS code J2274 describes the same drug 

with the same dosage descriptor as its predecessor code, HCPCS code Q9974, this drug 

will continue its packaged status indicator. Therefore, we are assigning HCPCS code 

J2274 to the same status indicator as its predecessor code, HCPCS code Q9974, as also 

shown in Table 17 below. 

 Table 17 below includes a complete list of the Level II HCPCS codes that were 

made effective July 1, 2014, with their final status indicators and APC assignments for 

CY 2015. The final payment rates for these codes, where applicable, can be found in 

Addendum B to this final rule with comment period (which is available via the Internet 

on the CMS Web site).
CMS-1613-FC 284 

TABLE 17.—FINAL CY 2015 STATUS INDICATORS AND APC ASSIGNMENTS 

FOR THE LEVEL II HCPCS CODES THAT WERE NEWLY IMPLEMENTED 

IN JULY 2014 

CY 

2014 

HCPCS 

Code 

CY 2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Final 

CY 2015 

Status 

Indicator

Final 

CY 

2015 

APC 

C2644 C2644 Brachytherapy source, cesium-131 chloride 

solution, per millicurie U 2644 

C9022 J1322 Injection, elosulfase alfa, 1mg G 1480 

C9134 J7181 Factor XIII A-Subunit (Recombinant), Per IU G 1746 

Q9970 J1439 Injection, ferric carboxymaltose, 1mg G 9441 

Q9974 J2274 Injection, morphine sulfate, preservative-free for 

epidural or intrathecal use, 10 mg N N/A 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40975), for CY 2015, we 

proposed to continue our established policy of recognizing Category I CPT vaccine codes 

for which FDA approval is imminent and Category III CPT codes that the AMA releases 

in January of each year for implementation in July through the OPPS quarterly update 

process. Under the OPPS, Category I CPT vaccine codes and Category III CPT codes 

that are released on the AMA Web site in January are made effective in July of the same 

year through the July quarterly update CR, consistent with the AMA’s implementation 

date for the codes. For the July 2014 update, there were no new Category I CPT vaccine 

codes. 

 Through the July 2014 OPPS quarterly update CR (Transmittal 2971, Change 

Request 8776, dated May 23, 2014), we assigned interim OPPS status indicators and 

APCs for 17 of the 27 new Category III CPT codes that were made effective 

July 1, 2014. Specifically, as displayed in Table 17 in the proposed rule, we made 
CMS-1613-FC 285 

interim OPPS status indicators and APC assignments for Category III CPT codes 0347T, 

0348T, 0349T, 0350T, 0355T, 0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 

0368T, 0370T, 0371T, 0372T, and 0373T. Table 17 of the proposed rule listed the 

Category III CPT codes that were implemented on July 1, 2014, along with the proposed 

status indicators, proposed APC assignments, and proposed payment rates, where 

applicable, for CY 2015. We did not receive any public comments on the proposed APC 

and status indicator assignments for Category III CPT codes 0347T, 0348T, 0349T, 

0350T, 0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 0370T, 0371T, 

0372T, and 0373T. Therefore, we are adopting as final, without modification, the 

proposed APC and status indicator assignments for these 16 CPT codes for CY 2015. 

We received a public comment on CPT codes 0335T, which we address in section 

III.C.2.6. of this final rule with comment period. We also received specific public 

comments on CPT codes 0351T, 0352T, 0353T, and 0354T, which are addressed in 

section II.C.6.b. of this final rule with comment period. Table 18 below lists the 

Category III CPT codes that were implemented in July 2014, along with their final status 

indicators and APC assignments for CY 2015. The final payment rates for these codes, 

where applicable, can be found in Addendum B to this final rule with comment period 

(which is available via the Internet on the CMS Web site). 

TABLE 18.—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 

2014

CY 

2014 

CPT 

Code

CY 

2015 

CPT 

Code 

CY 2015 Long Descriptor

Final 

CY 2015 

Status 

Indicator

Final 

CY 2015 

APC
CMS-1613-FC 286 

0347T 0347T Placement of interstitial device(s) in bone for 

radiostereometric analysis (RSA) Q1 0420 

0348T 0348T 

Radiologic examination, radiostereometric 

analysis (RSA); spine, (includes, cervical, 

thoracic and lumbosacral, when performed) 

Q1 0261 

0349T 0349T 

Radiologic examination, radiostereometric 

analysis (RSA); upper extremity(ies), (includes 

shoulder, elbow and wrist, when performed) 

Q1 0261 

0350T 0350T 

Radiologic examination, radiostereometric 

analysis (RSA); lower extremity(ies), (includes 

hip, proximal femur, knee and ankle, when 

performed) 

Q1 0261 

0351T 0351T 

Optical coherence tomography of breast or 

axillary lymph node, excised tissue, each 

specimen; real time intraoperative 

N N/A 

0352T 0352T 

Optical coherence tomography of breast or 

axillary lymph node, excised tissue, each 

specimen; interpretation and report, real time 

or referred 

B N/A 

0353T 0353T 

Optical coherence tomography of breast, 

surgical cavity; real time intraoperative N N/A 

0354T 0354T 

Optical coherence tomography of breast, 

surgical cavity; interpretation and report, real 

time or referred 

B N/A 

0355T 0355T 

Gastrointestinal tract imaging, intraluminal 

(eg, capsule endoscopy), colon, with 

interpretation and report 

T 0142 

0356T 0356T 

Insertion of drug-eluting implant (including 

punctal dilation and implant removal when 

performed) into lacrimal canaliculus, each 

Q1 0698 

0358T 0358T 

Bioelectrical impedance analysis whole body 

composition assessment, supine position, with 

interpretation and report 

Q1 0340 
CMS-1613-FC 287 

0359T 0359T 

Behavior identification assessment, by the 

physician or other qualified health care 

professional, face-to-face with patient and 

caregiver(s), includes administration of 

standardized and non-standardized tests, 

detailed behavioral history, patient observation 

and caregiver interview, interpretation of test 

results, discussion of findings and 

recommendations with the primary 

guardian(s)/caregiver(s), and preparation of 

report 

V 0632 

0360T 0360T 

Observational behavioral follow-up 

assessment, includes physician or other 

qualified health care professional direction 

with interpretation and report, administered by 

one technician; first 30 minutes of technician 

time, face-to-face with the patient 

V 0632 

0361T 0361T 

Observational behavioral follow-up 

assessment, includes physician or other 

qualified health care professional direction 

with interpretation and report, administered by 

one technician; each additional 30 minutes of 

technician time, face-to-face with the patient 

(List separately in addition to code for primary 

service) 

N N/A 

0362T 0362T 

Exposure behavioral follow-up assessment, 

includes physician or other qualified health 

care professional direction with interpretation 

and report, administered by physician or other 

qualified health care professional with the 

assistance of one or more technicians; first 30 

minutes of technician(s) time, face-to-face 

with the patient 

V 0632 
CMS-1613-FC 288 

0363T 0363T 

Exposure behavioral follow-up assessment, 

includes physician or other qualified health 

care professional direction with interpretation 

and report, administered by physician or other 

qualified health care professional with the 

assistance of one or more technicians; each 

additional 30 minutes of technician(s) time, 

face-to-face with the patient (List separately in 

addition to code for primary procedure) 

N N/A 

0364T 0364T 

Adaptive behavior treatment by protocol, 

administered by technician, face-to-face with 

one patient; first 30 minutes of technician time 

S 0322 

0365T 0365T 

Adaptive behavior treatment by protocol, 

administered by technician, face-to-face with 

one patient; each additional 30 minutes of 

technician time (List separately in addition to 

code for primary procedure) 

N N/A 

0366T 0366T 

Group adaptive behavior treatment by 

protocol, administered by technician, face-toface with two or more patients; first 30 

minutes of technician time 

S 0325 

0367T 0367T 

Group adaptive behavior treatment by 

protocol, administered by technician, face-toface with two or more patients; each additional 

30 minutes of technician time (List separately 

in addition to code for primary procedure) 

N N/A 

0368T 0368T 

Adaptive behavior treatment with protocol 

modification administered by physician or 

other qualified health care professional with 

one patient; first 30 minutes of patient face-toface time 

S 0322 

0369T 0369T 

Adaptive behavior treatment with protocol 

modification administered by physician or 

other qualified health care professional with 

one patient; each additional 30 minutes of 

patient face-to-face time (List separately in 

addition to code for primary procedure) 

N N/A 
CMS-1613-FC 289 

 Further, in the CY 2015 OPPS/ASC proposed rule, we solicited public comments 

on the proposed CY 2015 status indicators, APC assignments, and payment rates for the 

Level II HCPCS codes and the Category III CPT codes that were made effective 

April 1, 2014, and July 1, 2014. These codes were listed in Tables 15, 16, and 17 of the 

proposed rule. We also proposed to finalize the status indicator and APC assignments 

and payment rates for these codes, if applicable, in this CY 2015 OPPS/ASC final rule 

with comment period. Because the new Category III CPT and Level II HCPCS codes 

that became effective for July were not available to us in time for incorporation into the 

Addenda to the proposed rule, our policy is to include the codes, the proposed status 

0370T 0370T 

Family adaptive behavior treatment guidance, 

administered by physician or other qualified 

health care professional (without the patient 

present) 

S 0324 

0371T 0371T 

Multiple-family group adaptive behavior 

treatment guidance, administered by physician 

or other qualified health care professional 

(without the patient present) 

S 0324 

0372T 0372T 

Adaptive behavior treatment social skills 

group, administered by physician or other 

qualified health care professional face-to-face 

with multiple patients 

S 0325 

0373T 0373T 

Exposure adaptive behavior treatment with 

protocol modification requiring two or more 

technicians for severe maladaptive behavior(s); 

first 60 minutes of technicians' time, face-toface with patient 

S 0323 

0374T 0374T 

Exposure adaptive behavior treatment with 

protocol modification requiring two or more 

technicians for severe maladaptive behavior(s); 

each additional 30 minutes of technicians' time 

face-to-face with patient (List separately in 

addition to code for primary procedure) 

N N/A 
CMS-1613-FC 290 

indicators, proposed APCs (where applicable), and proposed payment rates (where 

applicable) in the preamble of the proposed rule, but not in the Addenda to the proposed 

rule. These codes were listed in Tables 16 and 17, respectively, of the proposed rule. We 

also proposed to incorporate these codes into Addendum B to this CY 2015 OPPS/ASC 

final rule with comment period, which is consistent with our annual OPPS update policy. 

The Level II HCPCS codes implemented or modified through the April 2014 OPPS 

update CR and displayed in Table 15 were included in Addendum B to the proposed rule 

(which is available via the Internet on the CMS Web site), where the proposed CY 2015 

payment rates for these codes were also shown. 

We did not receive any additional public comments on this process. The final 

APC and status indicator assignments and payment rates, if applicable, for the Level II 

HCPCS codes and the Category III CPT codes that were implemented or modified 

through the April 2014 or July 2014 OPPS update CR can be found in Tables 16, 17, and 

18, or in Addendum B to this final rule with comment period (which is available via the 

Internet on the CMS Web site).

2. Process for New Level II HCPCS Codes That Became Effective October 1, 2014 and 

New CPT and Level II HCPCS Codes That Will Become Effective January 1, 2015 for 

Which We Are Soliciting Public Comments in This CY 2015 OPPS/ASC Final Rule with 

Comment Period 

 As has been our practice in the past, we incorporate those new Category I and III 

CPT codes and new Level II HCPCS codes that are effective January 1 in the final rule 

with comment period updating the OPPS for the following calendar year. These codes 

are released to the public via the CMS HCPCS (for Level II HCPCS codes) and AMA 
CMS-1613-FC 291 

Web sites (for CPT codes), and also through the January OPPS quarterly update CRs. In 

the past, we also have released new Level II HCPCS codes that are effective 

October 1 through the October OPPS quarterly update CRs and incorporated these new 

codes in the final rule with comment period updating the OPPS for the following calendar 

year. For CY 2015, these codes are flagged with comment indicator “NI” in Addendum 

B to this OPPS/ASC final rule with comment period to indicate that we are assigning 

them an interim payment status which is subject to public comment. In addition, the CPT 

and Level II HCPCS codes that will become effective January 1, 2015, are flagged with 

comment indicator “NI” in Addendum B to this CY 2015 OPPS/ASC final rule with 

comment period. Specifically, the status indicator and the APC assignment and payment 

rate, if applicable, for all such codes flagged with comment indicator “NI” are open to 

public comment in this final rule with comment period, and we will respond to these 

public comments in the OPPS/ASC final rule with comment period for the next year’s 

OPPS/ASC update. In the CY 2015 OPPS/ASC proposed rule (79 FR 40977), we 

proposed to continue this process for CY 2015. Specifically, for CY 2015, we proposed 

to include in Addendum B to the CY 2015 OPPS/ASC final rule with comment period 

the following new HCPCS codes: 

● New Level II HCPCS codes effective October 1, 2014, that would be 

incorporated in the October 2014 OPPS quarterly update CR; 

● New Category I and III CPT codes effective January 1, 2015, that would be 

incorporated in the January 2015 OPPS quarterly update CR; and 

● New Level II HCPCS codes effective January 1, 2015, that would be 

incorporated in the January 2015 OPPS quarterly update CR. 
CMS-1613-FC 292 

 As stated above, the October 1, 2014 and January 1, 2015 codes are flagged with 

comment indicator “NI” in Addendum B to this CY 2015 OPPS/ASC final rule with 

comment period to indicate that we have assigned the codes an interim OPPS payment 

status for CY 2015. We are inviting public comments on the interim status indicator and 

APC assignments and payment rates for these codes, if applicable, that will be finalized 

in the CY 2016 OPPS/ASC final rule with comment period. 

3. Process for Soliciting Public Comments for New and Revised CPT Codes Released by 

the AMA 

We generally incorporate the new CPT codes that are effective January 1 in the 

OPPS/ASC final rule with comment period. We establish interim APC and status 

indicator assignments for these new codes for the coming year, and request comments on 

the interim assignments in the OPPS/ASC final rule with comment period. Similarly, we 

establish interim APC and status indicator assignments for existing CPT codes that have 

substantial revision to their code descriptors that necessitate a change in the current APC 

assignments, and request comments on the interim assignments in the OPPS/ASC final 

rule with comment period. In both cases, we assign these new and revised codes to OPPS 

comment indicator “NI” (New code for the next calendar year or existing code with 

substantial revision to its code descriptor in the next calendar year as compared to current 

calendar year, interim APC assignment; comments will be accepted on the interim APC 

assignment for the new code.) in the OPPS/ASC final rule with comment period. We 

respond to comments and finalize the APC and status indicator assignments for these 

CPT codes in the following year’s OPPS/ASC final rule with comment period. 
CMS-1613-FC 293 

a. Current Process for Accepting Comments on New and Revised CPT Codes for a Year

 As described above, under the hospital OPPS, our current process for both new 

CPT codes and existing CPT codes with substantial revisions to the code descriptors that 

are released by the AMA for use beginning January 1 is to flag these codes with comment 

indicator “NI” in Addendum B to the OPPS/ASC final rule with comment period to 

indicate that the codes are new for the calendar year and have been assigned interim 

APCs and status indicators, and that we are accepting public comments on the interim 

APC and status indicator assignments. We address public comments received and 

finalize the APC and status indicator assignments for the codes in the next year’s 

OPPS/ASC final rule with comment period. For example, the new CPT codes that were 

effective January 1, 2014, were assigned to comment indicator “NI” in Addendum B to 

the CY 2014 OPPS/ASC final rule with comment period. We respond to public 

comments received on the CY 2014 OPPS/ASC final rule with comment period and 

finalize the APC and status indicator assignments for these codes in this CY 2015 

OPPS/ASC final rule with comment period. We include the final APC and status 

indicator assignments for these codes in Addendum B to this final rule with comment 

period (which is available via the Internet on the CMS Web site). 

 Many stakeholders have expressed concern with the process we use to recognize 

new and revised CPT codes. They believe that CMS should publish proposed APC and 

status indicator assignments for the new and revised CPT codes that will be effective 

January 1 in the OPPS/ASC proposed rule for that calendar year, and request public 

comments prior to finalizing the assignments. Further, the stakeholders believe that 

seeking public input on the APC and status indicator assignments for these new and 
CMS-1613-FC 294 

revised codes would assist CMS in assigning the CPT codes to appropriate APCs. 

Similar concerns have been expressed regarding our process for assigning interim 

payment values for revalued, and new and revised codes, under the Medicare Physician 

Fee Schedule (MPFS). We refer readers to the CY 2015 MPFS proposed rule for a 

detailed discussion of this issue as it relates to the MPFS (79 FR 40359 through 40364). 

 Like the MPFS, the OPPS and the ASC payment system rely principally upon the 

Current Procedural Terminology (CPT®) coding system maintained by the AMA to 

identify specific services for billing and payment purposes. CPT is the standard code set 

adopted under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) 

for outpatient services. The AMA CPT Editorial Panel’s coding cycle occurs 

concurrently with our calendar year rulemaking cycle for the OPPS and the ASC 

payment system. However, the OPPS/ASC proposed rules are published prior to the 

publication of the CPT codes that are made public in the Fall with a January 1 effective 

date, and we are currently unable to include these codes in the OPPS/ASC proposed 

rules. Consequently, we establish in the final rule with comment period interim APC and 

status indicator assignments for new and revised CPT codes that have an effective date of 

January 1, and we make payment based on those interim designations for one year, while 

accepting public comments on the final rule with comment period. We then respond to 

those public comments received and make final APC and status indicator assignments in 

the next year’s final rule with comment period. 

b. Modification of Process for New and Revised CPT Codes That Are Effective January 

1 
CMS-1613-FC 295 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40977 through 40979), we 

proposed to make changes in the process we use to establish APC assignments and status 

indicators for new and revised codes. We proposed that, for new and revised CPT codes 

that we receive from the AMA’s CPT Editorial Panel too late for inclusion in the 

proposed rule for a year, we would delay adoption of the new and revised codes for that 

year, and instead, adopt coding policies and payment rates that conform, to the extent 

possible, to the policies and payment rates in place for the previous year. We proposed to 

adopt these conforming coding and payment policies on an interim basis pending the 

result of our specific proposals for status indicator and APC assignments for these new 

and revised codes through notice and comment rulemaking in the OPPS/ASC proposed 

rule for the following year. Because the changes in CPT codes are effective on January 1 

of each year, and CMS would not have established status indicator or APC assignments 

for these new or revised codes, it would not be practicable for Medicare to use those CPT 

codes. In this circumstance, we proposed to create HCPCS G-codes to describe the 

predecessor codes for any codes that were revised or deleted as part of the annual CPT 

coding changes, but that we did not receive in time to include proposed APC and status 

indicator assignments in the proposed rule. However, if certain CPT codes are revised in 

a manner that would not affect the cost of inputs (for example, a minor change to CPT 

code descriptors), we would use these revised codes and continue to assign those codes to 

their current APC. For example, under this proposed process, if a single CPT code was 

separated into two codes and we did not receive those codes until May 2015, we would 

assign each of those CPT codes to status indicator “B” in the final rule with comment 

period, to indicate that an alternate code is recognized under the OPPS. Hospitals could 
CMS-1613-FC 296 

not use those two new CPT codes to bill Medicare for outpatient services the first year 

after the CPT effective date of the codes. Instead, we would create a HCPCS G-code 

with the same description as the single predecessor CPT code, and continue to use the 

same APC and status indicator assignment for the new G-code during the year. We 

would propose APC and status indicator assignments for the two new CPT codes during 

rulemaking in CY 2016, accept and respond to public comments on the proposed 

assignments, and establish final APC and status indicator assignments for the codes in the 

final rule for payment beginning in CY 2017. 

 For new codes that describe wholly new services, as opposed to new or revised 

codes that describe services for which APC and status indicator assignments are already 

established, we would make every effort to work with the AMA’s CPT Editorial Panel to 

ensure that we received the codes in time to propose payment rates in the proposed rule. 

However, if we do not receive the code for a wholly new service in time to include 

proposed APC and status indicator assignments in the proposed rule for a year, we would 

need to establish interim APC and status indicator assignments for the initial year 

because there would be no predecessor code we could use as a reference to establish a 

G-code in order to continue current payment policies for such a service. We proposed to 

continue to establish the initial APC and status indicator assignments for these wholly 

new services as interim final assignments, and to follow our current process to solicit and 

respond to public comments and finalize the APC and status indicator assignments in the 

subsequent year. 

 We recognize that the use of HCPCS G-codes may place an administrative burden 

on those providers that bill for services under the OPPS and the ASC payment system. 
CMS-1613-FC 297 

However, the proposed use of G-codes would permit us to propose and accept public 

comment on the APC and status indicator assignments for the vast majority of new and 

revised codes before they take effect. We are hopeful that the AMA’s CPT Editorial 

Panel ultimately will be able to adjust its timelines and processes so that most, if not all, 

of the annual coding changes can be addressed in the proposed rule before the new and 

revised CPT codes take effect on January 1. If the AMA’s CPT Editorial Committee can 

make adjustments to its schedule, we would not need to use G-codes as described above 

for the purpose of maintaining outdated coding and APC and status indicator assignments 

for a year until we can include proposed APC and status indicator assignments for the 

new and revised codes in a proposed rule. We proposed to implement the revised CMS 

process for establishing APC and status indicator assignments for new and revised codes 

for CY 2016. However, we indicated in the proposed rule that we would consider 

alternative implementation dates if that would allow time for the AMA’s CPT Editorial 

Panel to adjust its schedule in order to avoid the necessity to use numerous HCPCS 

G-codes. 

 In summary, in conjunction with the proposals presented in the CY 2015 MPFS 

proposed rule to revise the process used to address new, revised, and potentially 

misvalued codes under the MPFS, in the CY 2015 OPPS/ASC proposed rule 

(79 FR 40977 through 40979), we proposed to include in the OPPS/ASC proposed rule 

the proposed APC and status indicator assignments for the vast majority of new and 

revised CPT codes before they are used for payment purposes under the OPPS and ASC 

payment system. We would address new and revised CPT codes for the upcoming year 

that are available in time for the proposed rule by proposing APC and status indicator 
CMS-1613-FC 298 

assignments for the codes. Otherwise, we will delay adoption of the new and revised 

codes for a year while using methods (including creating G-codes that describe the 

predecessor codes) to maintain the existing APC and status indicator assignments until 

the following year when we would include proposed assignments for the new and revised 

codes in the proposed rule. We proposed to follow this revised process except in the case 

of a new CPT code that describes a wholly new service (such as a new technology or new 

surgical procedure) that has not previously been addressed under the OPPS. For codes 

that describe wholly new services for which we do not receive timely information from 

the AMA, we proposed to establish interim APC and status indicator assignments in the 

OPPS/ASC final rules with comment period, as is our current process. The proposed 

revised process would eliminate our current practice of assigning interim APC and status 

indicators for the vast majority of new and revised CPT codes that take effect on 

January 1 each year. We invited public comments on this proposal. We indicated in the 

proposed rule that we were specifically interested in receiving public comments on the 

following topics: 

● Is this proposal preferable to the present process? Are there other alternatives? 

● If we were to implement this proposal, is it better to move forward with the 

changes or is more time needed to make the transition and, therefore, implementation 

should be delayed beyond CY 2016? 

● Are there alternatives other than the use of HCPCS G-codes that would allow 

us to address the annual CPT code changes through notice and comment rather than 

interim final rulemaking? 
CMS-1613-FC 299 

● Is the process we have proposed for wholly new services appropriate? How 

should we define new services? 

● Are there any classes of services, other than new services, that should remain 

on an interim final schedule? 

 Comment: The majority of the commenters supported the proposal to modify the 

current process of recognizing new and revised CPT codes because it would provide an 

opportunity for the public to comment on specific APC and status indicator assignments 

prior to those assignments being finalized. However, several commenters disagreed with 

our proposed implementation date of CY 2016 and requested that CMS work with the 

AMA to determine an appropriate implementation date. Other commenters suggested 

that CMS finalize the proposal but urged CMS to work with the AMA on an appropriate 

timeline that considers the AMA’s CPT and RUC (Specialty Society Relative Value 

Update Committee) meeting dates as well as CMS’ OPPS and MPFS regulation schedule. 

The AMA supported the proposal but requested that CMS finalize the proposal for CY 

2017 rather than CY 2016 because the CPT codes for the CY 2016 update are almost 

complete. 

 Response: We appreciate the commenters’ support for our proposal. We believe 

that publishing our proposed status indicator and APC assignments for the new and 

revised CPT codes in the proposed rule would alleviate some concerns expressed by 

stakeholders in the past that some of our interim APC assignments were not appropriate, 

and that the APC assignment process could be improved if we had the benefit of public 

comments before adopting final APC and status indicator assignments for new and 

revised codes. This new process of proposing and requesting public comments before 
CMS-1613-FC 300 

finalizing the APC and status indicator assignments for new and revised codes allows 

both CMS and stakeholders the benefit of public notice and comment prior to the use of 

the new and revised codes for payment purposes. When we receive information on the 

new and revised codes from the AMA in time to include proposals for new and revised 

codes in the proposed rule before the codes are effective the following January 1, the 

revised process allows public notice and comment before finalizing APC and status 

indicator assignments for the codes during the calendar year before the CPT codes 

become effective. In addition, this new process eliminates the need to make interim APC 

and status indicator assignments for new and revised CPT codes, which has been 

unpopular among some providers because the interim assignments are used for payment 

for a year before we address public comments and make any appropriate changes to an 

APC or status indicator assignment in the subsequent year’s final rule. 

 Although the AMA and several commenters requested that we modify our 

proposal by finalizing this new process for the CY 2017 OPPS update, we disagree with 

this recommendation. We believe the new process that permits an opportunity for public 

comment on proposed APC and status indicator assignments for the vast majority of new 

and revised codes before they are finalized and used for payment purposes will be 

beneficial to CMS and to hospitals and other stakeholders, and we see no reason to delay 

implementation of this policy change. Therefore, beginning with the CY 2016 OPPS 

update, we will publish proposed APC and status indicator assignments for any new and 

revised CPT codes for January 1, 2016 that are publicly released by the AMA in time for 

us to consider them for inclusion in the OPPS/ASC proposed rule. After review of the 

public comments received on the proposed rule, we will finalize the status indicator and 
CMS-1613-FC 301 

APC assignments for those new and revised CPT codes in the CY 2016 OPPS/ASC final 

rule. Because the APC assignments would be final, we would no longer request 

comments in the OPPS/ASC final rules for these new and revised CPT codes that are 

included in the proposed rule. For any new and revised codes released too late for us to 

consider them for inclusion in the CY 2016 OPPS/ASC proposed rule, we will create 

HCPCS G-codes that reflect the same description(s), and APC and status indicator 

assignments, as their predecessor codes. These HCPCS G-codes will be used during 

CY 2016, and then we will include proposals for the corresponding new and revised 

codes and APC and status indicator assignments in the CY 2017 OPPS/ASC proposed 

rule. 

 Comment: Most commenters opposed the use of temporary HCPCS G-codes and 

requested that CMS not implement the HCPCS G-code process if it finalizes the proposal 

to change to process for new and revised CPT codes. The commenters recommended not 

establishing temporary HCPCS G-codes because these codes would be extremely 

burdensome for providers to use. The commenters stated that establishing HCPCS 

G-codes for services or procedures that are already described by existing CPT codes 

would be too confusing for hospitals, physicians, and other third party insurers to 

accurately claim costs for these procedures, and that using two different sets of codes for 

the same procedure or service could result in erroneous claims. 

 Response: As described above, we plan to publish the new and revised CPT 

codes that are publicly available and provided to us in time for evaluation in the CY 2016 

OPPS/ASC proposed rule. Specifically, in the CY 2016 OPPS/ASC proposed rule, we 

expect to publish new and revised CPT codes that would be effective January 1, 2016, 
CMS-1613-FC 302 

with the proposed status indicator and APC assignments, and request public comments on 

these proposed assignments as long as we receive them in time for inclusion in the 

proposed rule. We would finalize the status indicator and APC assignments for these 

new and revised CPT codes in the CY 2016 OPPS/ASC final rule. 

 However, for those new and revised CPT codes that are not publicly available in 

time for the OPPS/ASC proposed rule, we will create HCPCS G-codes that mirror the 

predecessor CPT codes and retain the current APC and status indicator assignments for a 

year until we can include proposed status indicator and APC assignments in the following 

year’s proposed rule. These HCPCS G-codes will be assigned to comment indicator “NI” 

to indicate that the codes are new and open for comment for 60 days after display of 

the OPPS/ASC final rule with comment period. This is consistent with our current 

policy of seeking public comments on new CPT and Level II HCPCS codes with interim 

APC and status indicator assignments that were not previously published in the proposed 

rule. For new and revised codes, we recognize that there is a trade-off between the 

benefit of considering public comments on the proposed APC and status indicator 

assignments before they take effect and the potential confusion caused by the use of 

HCPCS G-codes. We anticipate that the use of HCPCS G-codes will be largely a 

temporary solution or may not be necessary in the OPPS, and we expect to work closely 

with the AMA to minimize the need for them. We note that, under the MPFS, we 

generally do not develop values for new and revised CPT codes until we receive 

recommendations provided by the AMA’s RUC. In contrast, under the OPPS, we use 

only the publicly available new and revised CPT codes and their descriptors to develop 
CMS-1613-FC 303 

APC and status indicator assignments. As such, we anticipate that the need to use 

HCPCS G-codes under the OPPS will be less frequent than under the MPFS. 

 After consideration of the public comments we received, we are finalizing our 

proposal. For the new and revised CPT codes that we receive timely from the AMA’s 

CPT Editorial Panel, we are finalizing our proposal to include these codes that would be 

effective January 1 in the OPPS/ASC proposed rules, along with proposed APC and 

status indicator assignments for them, and to finalize the APC and status indicator 

assignments in the OPPS/ASC final rules beginning with the CY 2016 OPPS update. For 

those new and revised CPT codes that we receive too late for inclusion in the OPPS/ASC 

proposed rule, we are finalizing our proposal to create and use HCPCS G-codes that 

mirror the predecessor CPT codes and retain the current APC and status indicator 

assignments for a year until we can propose APC and status indicator assignments in the 

following year’s rulemaking cycle. We note that even if we find that we need to create 

HCPCS G-codes in place of certain CPT codes for the MPFS proposed rule, we do not 

anticipate that these HCPCS G-codes will always be necessary for OPPS purposes. We 

will make every effort to include proposed APC and status indicator assignments for all 

new and revised CPT codes that the AMA makes publicly available in time for us to 

include them in the proposed rule, and to avoid the resort to HCPCS G-codes and the 

resulting delay in utilization of the most current CPT codes. We also are finalizing our 

proposal to make interim APC and status indicator assignments for CPT codes that are 

not available in time for the proposed rule and that describe wholly new services (such as 

new technologies or new surgical procedures), solicit public comments, and finalize the 
CMS-1613-FC 304 

specific APC and status indicator assignments for those codes in the following year’s 

final rule. 

B. OPPS Changes--Variations within APCs 

1. Background 

 Section 1833(t)(2)(A) of the Act requires the Secretary to develop a classification 

system for covered hospital outpatient department services. Section 1833(t)(2)(B) of the 

Act provides that the Secretary may establish groups of covered OPD services within this 

classification system, so that services classified within each group are comparable 

clinically and with respect to the use of resources. In accordance with these provisions, 

we developed a grouping classification system, referred to as Ambulatory Payment 

Classifications (APCs), as set forth in § 419.31 of the regulations. We use Level I and 

Level II HCPCS codes to identify and group the services within each APC. The APCs 

are organized such that each group is homogeneous both clinically and in terms of 

resource use. Using this classification system, we have established distinct groups of 

similar services. We also have developed separate APC groups for certain medical 

devices, drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy devices 

that are not packaged into the payment for the procedure. 

 We have packaged into the payment for each procedure or service within an APC 

group the costs associated with those items and services that are typically ancillary and 

supportive to a primary diagnostic or therapeutic modality and, in those cases, are an 

integral part of the primary service they support. Therefore, we do not make separate 

payment for these packaged items or services. In general, packaged items and services 

include, but are not limited to the items and services listed in § 419.2(b) of the 
CMS-1613-FC 305 

regulations. A further discussion of packaged services is included in section II.A.3. of 

this final rule with comment period. 

 In CY 2008, we implemented composite APCs to provide a single payment for 

groups of services that are typically performed together during a single clinical encounter 

and that result in the provision of a complete service (72 FR 66650 through 66652). For 

CY 2014, we provided composite APC payments for nine categories of services: 

● Mental Health Services Composite (APC 0034) 

● Cardiac Electrophysiologic Evaluation and Ablation Composite (APC 8000) 

● Low Dose Rate (LDR) Prostate Brachytherapy Composite (APC 8001) 

● Ultrasound Composite (APC 8004) 

● CT and CTA without Contrast Composite (APC 8005) 

● CT and CTA with Contrast Composite (APC 8006) 

● MRI and MRA without Contrast Composite (APC 8007) 

● MRI and MRA with Contrast Composite (APC 8008) 

● Extended Assessment & Management Composite (APC 8009) 

 A further discussion of composite APCs is included in section II.A.2.f. of this 

final rule with comment period. We note that, as a consequence of the new 

comprehensive APC policy, APC 8000 (Cardiac Electrophysiologic Evaluation and 

Ablation Composite) is being deleted. 

 Under the OPPS, we generally pay for hospital outpatient services on a 

rate-per-service basis, where the service may be reported with one or more HCPCS 

codes. Payment varies according to the APC group to which the independent service or 

combination of services is assigned. Each APC relative payment weight represents the 
CMS-1613-FC 306 

hospital cost of the services included in that APC, relative to the hospital cost of the 

services included in APC 0634 (Hospital Clinic Visits). The APC relative payment 

weights are scaled to APC 0634 because it is the hospital clinic visit APC and clinic visits 

are among the most frequently furnished services in the hospital outpatient setting. 

 Section 1833(t)(9)(A) of the Act requires the Secretary to review, no less than 

annually, and revise the APC groups, the relative payment weights, and the wage and 

other adjustments to take into account changes in medical practice, changes in 

technology, the addition of new services, new cost data, and other relevant information 

and factors. Section 1833(t)(9)(A) of the Act also requires the Secretary to consult with 

an expert outside advisory panel composed of an appropriate selection of representatives 

of providers to review (and advise the Secretary concerning) the clinical integrity of the 

APC groups and the relative payment weights (the Panel recommendations for specific 

services for the CY 2015 OPPS and our responses to them are discussed in the relevant 

specific sections throughout this final rule with comment period). 

 Finally, section 1833(t)(2) of the Act provides that, subject to certain exceptions, 

the items and services within an APC group cannot be considered comparable with 

respect to the use of resources if the highest cost for an item or service in the group is 

more than 2 times greater than the lowest cost for an item or service within the same 

group (referred to as the “2 times rule”). The statute authorizes the Secretary to make 

exceptions to the 2 times rule in unusual cases, such as low-volume items and services 

(but the Secretary may not make such an exception in the case of a drug or biological that 

has been designated as an orphan drug under section 526 of the Federal Food, Drug, and 

Cosmetic Act). 
CMS-1613-FC 307 

2. Application of the 2 Times Rule 

 In accordance with section 1833(t)(2) of the Act and § 419.31 of the regulations, 

we annually review the items and services within an APC group to determine, with 

respect to comparability of the use of resources, if the cost of the highest cost item or 

service within an APC group is more than 2 times greater than the cost of the lowest cost 

item or service within that same group. In making this determination, we consider only 

those HCPCS codes that are significant based on the number of claims. We note that, for 

purposes of identifying significant procedure codes for examination under the 2 times 

rule, we consider procedure codes that have more than 1,000 single major claims or 

procedure codes that have both greater than 99 single major claims and contribute at least 

2 percent of the single major claims used to establish the APC cost to be significant 

(75 FR 71832). This longstanding definition of when a procedure code is significant for 

purposes of the 2 times rule was selected because we believe that a subset of 1,000 claims 

(or less than 1,000 claims) is negligible within the set of approximately 100 million 

single procedure or single session claims we use for establishing costs. Similarly, a 

procedure code for which there are fewer than 99 single bills and which comprises less 

than 2 percent of the single major claims within an APC will have a negligible impact on 

the APC cost. In the CY 2015 OPPS/ASC proposed rule (79 FR 40981), for CY 2015, 

we proposed to make exceptions to this limit on the variation of costs within each APC 

group in unusual cases, such as low-volume items and services. 

 In the CY 2015 OPPS/ASC proposed rule, we identified the APCs with violations 

of the 2 times rule for CY 2015 (79 FR 40980). Therefore, we proposed changes to the 

procedure codes assigned to these APCs in Addendum B to the CY 2015 OPPS/ASC 
CMS-1613-FC 308 

proposed rule. We noted that Addendum B did not appear in the printed version of the 

Federal Register as part of the CY 2015 OPPS/ASC proposed rule. Rather, it was 

published and made available via the Internet on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a violation of 

the 2 times rule or to improve clinical and resource homogeneity, we proposed to 

reassign these procedure codes to new APCs that contain services that are similar with 

regard to both their clinical and resource characteristics. In many cases, the proposed 

procedure code reassignments and associated APC reconfigurations for CY 2015 

included in the proposed rule are related to changes in costs of services that were 

observed in the CY 2013 claims data newly available for CY 2015 ratesetting. We also 

proposed changes to the status indicators for some procedure codes that were not 

specifically and separately discussed in the proposed rule. In these cases, we proposed to 

change the status indicators for these procedure codes because we believe that another 

status indicator would more accurately describe their payment status from an OPPS 

perspective based on the policies that we proposed for CY 2015. In addition, we 

proposed to rename existing APCs or create new clinical APCs to complement the 

proposed procedure code reassignments. Addendum B to the CY 2015 OPPS/ASC 

proposed rule identified with a comment indicator “CH” those procedure codes for which 

we proposed a change to the APC assignment or status indicator, or both, that were 

initially assigned in the April 2014 Addendum B Update (available via the Internet on the 

CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html). In contrast, Addendum B to this final rule 
CMS-1613-FC 309 

with comment period (available via the Internet on the CMS Web site) identifies with the 

“CH” comment indicator the final CY 2015 changes compared to the HCPCS codes’ 

status as reflected in the October 2014 Addendum B update. 

 
CMS-1613-FC 310 

3. Exceptions to the 2 Times Rule 

 As discussed earlier, we may make exceptions to the 2 times rule limit on the 

variation of costs within each APC group in unusual cases such as low-volume items and 

services. Taking into account the APC changes that we proposed for CY 2015, we 

reviewed all of the APCs to determine which APCs would not meet the requirements of 

the 2 times rule. We used the following criteria to evaluate whether to propose 

exceptions to the 2 times rule for affected APCs: 

● Resource homogeneity; 

● Clinical homogeneity; 

● Hospital outpatient setting utilization; 

● Frequency of service (volume); and 

● Opportunity for upcoding and code fragments. 

 Based on the CY 2013 claims data available for the CY 2015 OPPS/ASC 

proposed rule, we found 9 APCs with violations of the 2 times rule. We applied the 

criteria as described above to identify the APCs that we proposed to make exceptions for 

under the 2 times rule for CY 2015, and identified 9 APCs that met the criteria for an 

exception to the 2 times rule based on the CY 2013 claims data available for the proposed 

rule. We did not include in that determination those APCs where a 2 times rule violation 

was not a relevant concept, such as APC 0375 (Ancillary Outpatient Services when 

Patient Expires), which has an APC cost set based on multiple procedure claims. 

Therefore, we only identified those APCs, including those with criteria-based costs, such 

as device-dependent APCs, with violations of the 2 times rule. For a detailed discussion 
CMS-1613-FC 311 

of these criteria, we refer readers to the April 7, 2000 OPPS final rule with comment 

period (65 FR 18457 and 18458). 

 We note that, for cases in which a recommendation by the Panel appears to result 

in or allow a violation of the 2 times rule, we generally accept the Panel’s 

recommendation because those recommendations are based on explicit consideration 

(that is, a review of the latest OPPS claims data and group discussion of the issue) of 

resource use, clinical homogeneity, site of service, and the quality of the claims data used 

to determine the APC payment rates. 

 Table 18 of the proposed rule (79 FR 40981) listed the 9 APCs that we proposed 

to make exceptions for under the 2 times rule for CY 2015 based on the criteria cited 

above and claims data submitted between January 1, 2013, and December 31, 2013, and 

processed on or before December 31, 2013. For the final rule with comment period, we 

stated that we intend to use claims data for dates of service between January 1, 2013, and 

December 31, 2013, that were processed on or before June 30, 2014, and updated CCRs, 

if available. Therefore, after considering the public comments we received on the 

CY 2015 OPPS/ASC proposed rule and making changes to APC assignments based on 

those comments, we analyzed the CY 2013 claims data used for this final rule with 

comment period to identify the APCs with violations of the 2 times rule. Based on the 

final CY 2013 claims data, we found 12 APCs with violations of the 2 times rule for this 

final rule with comment period, which is 3 more APCs that violated the 2 times rule 

compared to those indicated in the proposed rule. We applied the criteria as described 

earlier to identify the APCs that are exceptions to the 2 times rule for CY 2015, and 

identified three new APCs that meet the criteria for exception to the 2 times rule for this 
CMS-1613-FC 312 

final rule with comment period, but that did not meet the criteria using proposed rule 

claims data. Specifically, we found that the following three new APCs violated the 2 

times rule: 

● APC 0095 (Cardiac Rehabilitation); 

● APC 0388 (Discography); and 

● APC 0420 (Level III Minor Procedures). 

 After consideration of the public comments we received and our review of the 

CY 2013 costs from hospital claims and cost report data available for this final rule with 

comment period, we are finalizing our proposals with some modifications. Specifically, 

we are finalizing our proposal to except 7 of the 9 proposed APCs from the 2 times rule 

for CY 2015: APCs 0057, 0066, 0330, 0433, 0450, 0634, and 0661. In contrast, we are 

not finalizing our proposal to except 2 of the 9 proposed APCs from the 2 times rule: 

APC 0012 (Level I Debridement & Destruction) and APC 0015 (Level II Debridement & 

Destruction). Our data analysis for this final rule with comment period revealed that 

these two APCs no longer violate the 2 times rule. Table 19 below lists 10 APCs that we 

are excepting from the 2 times rule for CY 2015 based on the criteria above and a review 

of updated claims data. We note that, for cases in which a recommendation by the HOP 

Panel appears to result in or allow a violation of the 2 times rule, we generally accept the 

Panel’s recommendation because those recommendations are based on explicit 

consideration of resource use, clinical homogeneity, site of service, and the quality of the 

claims data used to determine the APC payment rates. The geometric mean costs for 

hospital outpatient services for these and all other APCs that were used in the 

development of this final rule with comment period can be found on the CMS Web site 
CMS-1613-FC 313 

at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

TABLE 19.—FINAL APC EXCEPTIONS TO THE 2 TIMES RULE 

 FOR CY 2015 

CY 2015 

APC CY 2015 APC Title 

0057 Bunion Procedures 

0066 Level V Radiation Therapy 

0095 Cardiac Rehabilitation 

0330 Dental Procedures 

0388 Discography 

0420 Level III Minor Procedures 

0433 Level II Pathology 

0450 Level I Minor Procedures 

0634 Hospital Clinic Visits 

0661 Level III Pathology 

The final costs for hospital outpatient services for these and all other APCs that 

were used in the development of this final rule with comment period can be found on the 

CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html.

C. OPPS APC-Specific Policies 

1. Cardiovascular and Vascular Services: Cardiac Telemetry (APC 0213) 

 For CY 2015, we proposed to reassign CPT code 93229 (External mobile 

cardiovascular telemetry with electrocardiographic recording, concurrent computerized 

real time data analysis and greater than 24 hours of accessible ECG data storage 

(retrievable with query) with ECG triggered and patient selected events transmitted to a 

remote attended surveillance center for up to 30 days; technical support for connection 

and patient instructions for use, attended surveillance, analysis and transmission of daily 
CMS-1613-FC 314 

and emergent data reports as prescribed by a physician or other qualified health care 

professional) from APC 0209 (Level II Extended EEG, Sleep, and Cardiovascular 

Studies), with a proposed rule payment rate of approximately $239 to APC 0213 (Level I 

Extended EEG, Sleep, and Cardiovascular Studies), with a proposed payment rate of 

approximately $175. 

 Comment: One commenter opposed CMS’ proposal to reassign CPT code 93229 

to APC 0213 and stated that the hospital costs used to set the CY 2015 proposed payment 

rate is based on faulty claims data, which include miscoded claims reporting the service 

submitted by hospitals. The commenter indicated that based on its internal analysis of 

the CY 2013 hospital claims data, which were used as the basis for the CY 2015 

proposed APC reassignment, several hospitals reported costs of under $100 for the 

procedure described by CPT code 93229. The commenter stated that the service 

described by CPT code 93229 involves the use of sophisticated technology requiring 

attended surveillance on a 24-hour, 7 days a week basis by a technician for up to 30 days. 

According to the commenter, this particular service requires resources that are greater 

than $100. The commenter further explained that the service described by CPT code 

93229 requires up to 30 days of electrocardiogram (ECG) monitoring through an external 

device worn by the patient at home that captures, stores, and transmits ECG data in 

real-time through wireless technology to a receiving or monitoring center (the hospital 

outpatient facility). These data are then reviewed by certified cardiac technicians and the 

ordering physician is provided with daily reports. The commenter added that this 

procedure is performed primarily (approximately 90 percent of the time) by independent 

diagnostic testing facilities (IDTFs) and infrequently performed by hospitals, typically 
CMS-1613-FC 315 

under arrangements with IDTFs. The commenter believed that the CY 2015 proposed 

payment rate of approximately $175 for APC 0213 is significantly lower than the 

CY 2014 MPFS payment rate of $669. The commenter stated that the actual cost of 

providing the service is approximately $795. Therefore, the commenter recommended 

that CMS either reassign CPT code 93229 to APC 0435 (Level III Extended EEG, Sleep, 

and Cardiovascular Studies), which has a proposed payment rate of approximately $853, 

or establish a new APC for outpatient cardiac telemetry services that accurately reflects 

the costs associated with providing this service. 

 Response: CPT code 93229 became effective January 1, 2009. We believe that 5 

years is sufficient time to understand what procedure CPT code 93229 describes and how 

to appropriately report this service on hospital claims. Based on our analysis of the 

CY 2013 hospital outpatient claims data used for this final rule with comment period, we 

are unable to determine whether hospitals are miscoding the claims reporting this service. 

For all APCs whose payment rates are based upon relative payment weights, we note that 

the quality and accuracy of reported units and charges influence the geometric mean costs 

that are the basis for our payment rates, especially the geometric mean costs for low 

volume items and services. Beyond our standard OPPS trimming methodology 

(described in section II.A.2. of this final rule with comment period) that we apply to those 

claims that have passed various types of claims processing edits, it is not our general 

policy to determine the accuracy of hospital coding and charging practices for the 

purposes of ratesetting (75 FR 71838). We rely on hospitals to accurately report all of 

the services provided to beneficiaries using the established HCPCS and CPT codes that 

appropriately describe the procedures performed in accordance with their code 
CMS-1613-FC 316 

descriptors and the CPT Editorial Panel’s and CMS’ instructions, as applicable, and to 

include these charges and costs on their Medicare hospital cost report appropriately. In 

addition, we do not specify the methodologies that hospitals must use to set charges for 

this or any other service. 

 We recognize that the MPFS pays separately for CPT code 93229. However, the 

MPFS and the OPPS are very different payment systems. Each system is established 

under a different set of statutory and regulatory principles, and the policies established 

under the MPFS do not necessarily affect the payment policies under the OPPS. 

Moreover, we do not agree with the commenter that CPT code 93229 should be 

reassigned to APC 0435. Based on the claims data available for this final rule with 

comment period, we believe that APC 0213 is the most appropriate APC to reassign CPT 

code 93229 based on the clinical homogeneity and resource costs in relation to the other 

procedures assigned to this APC. Our analysis of the latest hospital outpatient CY 2013 

claims data shows a final geometric mean cost of approximately $105 for CPT code 

93229 based on 3,505 single claims (out of 3,579 total claims), which is not inconsistent 

with the geometric mean cost of approximately $183 for APC 0213, which is the lowest 

cost APC in the extended EEG, sleep, and cardiovascular studies series of APCs. 

 In response to the commenter’s concern regarding miscoding of hospital claims 

reporting the service described by CPT code 93229, we remind hospitals that CPT code 

93229 is not the appropriate procedure code to use to report Holter monitoring (CPT 

codes 93224 through 93227), or event monitoring (CPT codes 93268 through 93278) 

procedures. CPT code 93229 should be used to report continuous outpatient 

cardiovascular monitoring that includes up to 30 consecutive days of real-time cardiac 
CMS-1613-FC 317 

monitoring. In particular, the 2014 CPT Code Book describes the procedure described by 

CPT code 93229 as a mobile cardiovascular telemetry service and defines it as: 

“Mobile cardiovascular telemetry (MCT): continuously records the 

electrocardiographic rhythm from external electrodes placed on the patient's body. 

Segments of the ECG data are automatically (without patient intervention) transmitted to 

a remote surveillance location by cellular or landline telephone signal. The segments of 

the rhythm, selected for transmission, are triggered automatically (MCT device 

algorithm) by rapid and slow heart rates or by the patient during a symptomatic episode. 

There is continuous real time data analysis by preprogrammed algorithms in the device 

and attended surveillance of the transmitted rhythm segments by a surveillance center 

technician to evaluate any arrhythmias and to determine signal quality. The surveillance 

center technician reviews the data and notifies the physician or other qualified health care 

professional depending on the prescribed criteria” (2014 CPT Professional Edition; page 

549).

 We expect that hospitals would only report CPT code 93229 on hospital claims 

for providing the mobile telemetry service that is described above. 

 In summary, after consideration of the public comment we received, we are 

finalizing our CY 2015 proposal, without modification, to reassign CPT code 93229 to 

APC 0213 for CY 2015. Consistent with our policy of reviewing APC assignments 

annually, we will reevaluate the cost of CPT code 93229 and its APC assignment for the 

CY 2016 rulemaking. 

2. Gastrointestinal (GI) Services: Upper GI Procedures (APCs 0142, 0361, 0419, and 

0422) 
CMS-1613-FC 318 

 In the CY 2014 OPPS/ASC final rule with comment period, we assigned CPT 

codes 43211 (Esophagoscopy, flexible transoral; with endoscopic mucosal resection), and 

43254 (Esophagogastroduodenoscopy, flexible, transoral; with endoscopic mucosal 

resection) to APC 0141 (Level I Upper GI Procedures) on an interim basis. In addition, 

we assigned CPT code 43240 (Upper gastrointestinal endoscopy including esophagus, 

stomach, and either the duodenum and/or jejunum as appropriate; with transmural 

drainage of pseudocyst) to APC 0419 (Level II Upper GI Procedures), CPT code 91035 

(Esophagus, gastroesophageal reflux test; with mucosal attached telemetry ph electrode 

placement, recording, analysis and interpretation) to APC 0361 (Level II Alimentary 

Tests), and CPT code 0355T (Gastrointestinal tract imaging, intraluminal (eg, capsule 

endoscopy), colon, with interpretation and report) to APC 0142 (Level I Small Intestine 

Endoscopy). 

 For CY 2015, we proposed to reassign CPT codes 43211 and 43254 from 

APC 0141 to APC 0419. We also proposed to continue to assign CPT code 43240 to 

APC 0419; CPT code 91035 to APC 0361; and CPT code 0355T to APC 0142. 

 Comment: Several commenters requested that CMS reassign CPT codes 43211 

and 43254 from APC 0141 to APC 0419 in response to the CY 2014 OPPS/ASC final 

rule with comment period. The commenters believed that the reassignment would be 

consistent with the resource and clinical homogeneity principles used to assign services 

to appropriate classification groupings. In response to the CY 2015 OPPS/ASC proposed 

rule, the same commenters supported CMS’ proposal to reassign CPT codes 43211 and 

43254 to APC 0419 for the CY 2015 OPPS update, and applauded CMS for considering 

the suggestions made in response to the commenters’ concerns. One commenter 
CMS-1613-FC 319 

requested that CMS consider reassigning CPT codes 43211 and 43254 from APC 0141 to 

APC 0422 (Level III Upper GI Procedures) instead of from APC 0141 to APC 0419 as 

proposed. Based on an analysis of the CY 2013 OPPS claims data performed by the 

commenter, the commenter believed that the geometric mean costs associated with 

endoscopic mucosal resection (EMR) procedures are more closely aligned with the 

geometric mean cost of APC 0422 than APC 0419. 

 Response: EMR CPT codes 43211 and 43254 became effective January 1, 2014. 

As with all new codes, our policy has been to assign the service to an APC based on input 

from a variety of sources, including but not limited to, a review of the clinical similarity 

of the service in comparison to existing procedures; input from CMS medical advisors; 

information from interested specialty societies; and a review of all other information 

available to us. Based on the complexity of these procedures and input from our medical 

advisors, we believe that APC 0419 appropriately reflects the clinical homogeneity and 

resource costs associated with performing EMR procedures. Therefore, after 

consideration of the public comments we received, we are finalizing our CY 2015 

proposal, without modification, to reassign CPT codes 43211 and 43254 from APC 0141 

to APC 0419 for the CY 2015 OPPS update. As we do every year, we will review our 

claims data for these services for the CY 2016 OPPS rulemaking. 

 Comment: Several commenters expressed concern with CMS’ proposal to 

continue to assign CPT code 43240 to APC 0419, and requested that CMS reassign the 

CPT code to APC 0384 (GI Procedures with Stents) based on the clinical similarity of the 

service to other procedures assigned to this APC. 
CMS-1613-FC 320 

 Response: Based on our analysis of the latest hospital outpatient claims data used 

for this final rule with comment period, we agree with the commenters that a more 

appropriate APC reassignment is necessary for CPT code 43240. However, we believe 

that the most appropriate APC reassignment is APC 0422 (Level III Upper GI 

Procedures) rather than APC 0384. Our claims data show a geometric mean cost of 

approximately $1,574 for CPT code 43240 based on 44 single claims (out of 142 total 

claims), which is more comparable to the geometric mean cost of approximately $1,987 

for APC 0422 than to the geometric mean cost of approximately $3,294 for APC 0384. 

Therefore, after consideration of the public comments we received, we are modifying our 

proposal regarding the APC reassignment of CPT code 43240. Specifically, we are 

reassigning CPT code 43240 from APC 0419 to APC 0422 for CY 2015. 

 Comment: Several commenters expressed concern regarding the inadequate 

payment rate for CPT code 91035 under Medicare’s ASC payment system, and requested 

that CMS reassign CPT code 91035 from APC 0361 to APC 0142 as a means to increase 

the payment rate in the ASC setting. The commenters noted that APC 0142 includes 

other capsule-based procedures that are clinically similar to the procedure described by 

CPT code 91035, such as the procedure described by CPT code 91112 (Gastrointestinal 

transit and pressure measurement, stomach through colon, wireless capsule, with 

interpretation and report). The commenters further explained that the procedures 

described by CPT codes 91035 and 91112 both involve the use of a capsule to collect pH 

and other data from the patient’s gastrointestinal tract over a period of several days. 

 Response: Based on our analysis of the latest hospital outpatient claims data used 

for this final rule with comment period, we believe that CPT code 91035 is appropriately 
CMS-1613-FC 321 

assigned to APC 0361 to ensure adequate payment for the service in any hospital 

outpatient setting. Our claims data show a geometric mean cost of approximately $466 

for CPT code 91035 based on 1,272 single claims (out of 5,099 total claims), while 

claims data for CPT code 91112 show a geometric mean cost of approximately $774 

based on 353 single claims (out of 412 total claims). The geometric mean cost of APC 

0361 is approximately $341 and the geometric mean cost of APC 0142 is approximately 

$884, which is almost twice the geometric cost of CPT code 91035. In addition, 

assigning CPT code 91035 to APC 0142 would create a violation of the 2 times rule 

within APC 0142 because the geometric mean cost of the highest cost significant 

procedure assigned to APC 0142 (CPT code 44361, with a geometric mean cost of 

approximately $1,019) is 2.2 times the geometric mean cost of CPT code 91035. 

Therefore, APC 0142 would not be an appropriate assignment for CPT code 91035. We 

are finalizing our CY 2015 proposal to continue to assign CPT code 91035 to APC 0361. 

 Comment: In response to the CY 2014 OPPS/ASC final rule with comment 

period, several commenters requested that CMS assign CPT code 0355T, which became 

effective July 1, 2014, to APC 0142 for the CY 2015 OPPS update. The commenters 

believed that the procedure described by CPT code 0355T is similar to the procedures 

described by existing GI capsule endoscopy CPT codes 91110 (Gastrointestinal tract 

imaging, intraluminal (eg, capsule endoscopy), esophagus through ileum, with 

interpretation and report), 91111 (Gastrointestinal tract imaging, intraluminal (eg, capsule 

endoscopy), esophagus with interpretation and report), and 91112 (Gastrointestinal transit 

and pressure measurement, stomach through colon, wireless capsule, with interpretation 

and report), which are all assigned to APC 0142. 
CMS-1613-FC 322 

 Response: As published in Table 17 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 40976), we proposed to continue to assign this new code to APC 0142. We agree 

with the commenters that GI endoscopy CPT codes 0355T, 91110, 91111, and 91112 are 

clinically similar. Therefore, we are finalizing our CY 2015 proposal, without 

modification, to continue to assign CPT code 0355T to APC 0142, As a result, all four 

GI endoscopy procedures described by CPT codes 0355T, 91110, 91111, and 91112 will 

be assigned to APC 0142 for the CY 2015 OPPS update. 

 We remind hospitals that because the payment rates associated with new codes 

that become effective July 1 are not available to us in time for incorporation into the 

Addenda to the proposed rule, the Level II HCPCS codes and the Category III CPT codes 

implemented through the July 2014 OPPS quarterly update CR were not included in 

Addendum B to the proposed rule (which is available via the Internet on the CMS Web 

site). However, we listed the codes and their proposed APC assignments in the preamble 

of the proposed rule. 

 The final CY 2015 payment rate for all of the CPT codes discussed can be found 

in Addendum B to this CY 2015 OPPS/ASC final rule with comment period (which is 

available via the Internet on the CMS Web site). 

3. Genitourinary Services 

a. Gynecologic Procedures (APCs 0188, 0189, 0192, 0193, and 0202) 

 For the CY 2014 OPPS update, we made several changes to specific APC 

assignments, which included the female reproductive APCs; APC 0192, APC 0193, and 

APC 0195. These proposed changes were listed in Addendum B to the CY 2014 

OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site). 
CMS-1613-FC 323 

With respect to these three APCs, based on claims data available for the CY 2014 

OPPS/ASC proposed rule, only APC 0193 showed a violation of the 2 times rule. We 

note that, under the OPPS, we may make exceptions to the 2 times rule based on the 

variation of costs within each APC group in unusual cases such as low-volume items and 

services. In the case of APC 0193, we believed that it was necessary to make an 

exception to the 2 times rule for the CY 2014 OPPS update because this APC sufficiently 

reflected the clinical and resource coherence of the Level V female reproductive 

procedures. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40982), we discussed our 

proposal to make further changes to the existing female reproductive APCs; APC 0188, 

APC 0189, APC 0191, APC 0192, APC 0193, APC 0195, and APC 0202 based on a 

presentation made at the March 10, 2014 Panel meeting. Specifically, one presenter 

expressed concern regarding the reassignment of the female reproductive procedures 

within existing APCs 0192 (Level IV Female Reproductive Procedures), 0193 (Level V 

Female Reproductive Procedures), and 0195 (Level VI Female Reproductive Procedures) 

that became effective with the CY 2014 OPPS update. The presenter stated that the 

proposed changes would compromise beneficiary access to pelvic floor repair 

procedures, and urged the Panel to request that CMS reconsider its packaging policy for 

the procedures assigned to APCs 0193 and 0195 and allow stakeholders the opportunity 

to work with CMS to appropriately reassign these procedures to accurately account for 

the clinical complexity associated with providing these services. In addition, the 

presenter requested that CMS delay the conversion of existing APC 0202 (Level VII 

Female Reproductive Procedures) to a C-APC to allow for further study of the 
CMS-1613-FC 324 

complexity of pelvic floor repair procedures. After review of the information provided 

by the presenter and examination of the hospital outpatient claims data available for the 

CY 2015 OPPS/ASC proposed rule, the Panel did not make any recommendations 

regarding any of the female reproductive APCs. 

 For the CY 2015 OPPS update, based on our review of the latest hospital 

outpatient claims data available for the CY 2015 OPPS/ASC proposed rule, there were no 

violations of the 2 times rule within any of the female reproductive APCs (79 FR 40982). 

However, we proposed to restructure the female reproductive APCs to more 

appropriately reflect the resource and clinical characteristics of the procedures assigned 

to each APC. The proposed restructuring resulted in the use of five APCs for the 

CY 2015 OPPS update, as compared to the seven APCs used for the CY 2014 OPPS 

update. We believe that the proposed five-level APC structure will provide more 

accurate payments for the female reproductive procedures furnished to Medicare 

beneficiaries. 

 Tables 21 and 22 of the proposed rule (79 FR 40983) showed the current 

CY 2014 and proposed CY 2015 female reproductive APCs. Specifically, Table 21 

showed the female reproductive APCs, APC titles, and their status indicator assignments 

for CY 2014, while Table 22 showed the proposed female reproductive APCs, APC titles, 

and their status indicator assignments for CY 2015. In the proposed rule, we noted that 

one of the five levels of the female reproductive APCs, APC 0202, is proposed to be 

converted to a C-APC. We refer readers to section II.A.2.e. of this final rule with 

comment period for further discussion of our comprehensive APC policy. 
CMS-1613-FC 325 

 In addition, for CY 2015, we proposed to consolidate the two existing 

hysteroscopy APCs; APC 0190 (Level I Hysteroscopy) and APC 0387 (Level II 

Hysteroscopy). Specifically, we proposed to delete APC 0387 and to reassign the 

procedures currently assigned to this APC to APC 0190. In conjunction with this 

proposed reassignment, we proposed to rename APC 0190 from “Level II Hysteroscopy” 

to “Hysteroscopy.” Based on the hospital outpatient claims data available for the 

CY 2015 OPPS/ASC proposed rule, we believe that the two-leveled structure of the 

hysteroscopy APCs is no longer necessary because the single-leveled hysteroscopy APC 

sufficiently reflects the resources and clinical similarities of all the hysteroscopic 

procedures. We note that, for CY 2014, the payment rates for APCs 0190 and 0387 are 

$1,763 and $2,818, respectively. For CY 2015, the proposed payment rate for APC 0190 

was approximately $2,014. 

 Comment: Many commenters supported CMS’ proposal to reassign several of the 

female reproductive procedures to APC 0202 and stated that the proposed restructuring of 

these APCs more appropriately reflects clinical and resource homogeneity among similar 

procedures. 

 Response: We appreciate the commenters’ support. 

 Comment: Some commenters opposed CMS’ proposal to reassign CPT code 

57155 (Insertion of uterine tandem and/or vaginal ovoids for clinical brachytherapy) from 

APC 0193 (Level IV Female Reproductive Procedures) to APC 0192 (Level III Female 

Reproductive Procedures) for the CY 2015 OPPS update. According to the commenters, 

the proposed CY 2015 OPPS payment rate of approximately $501 for CPT code 57155 is 

significantly lower than the CY 2014 OPPS payment rate of approximately $1,375, which 
CMS-1613-FC 326 

represents a 63-percent reduction in the payment for this service. The commenters noted 

that the APC assignment for this procedure has varied between APC 0192 and APC 0193 

since the inception of the code, and recommended that CMS reexamine the procedures 

assigned to APCs 0192, 0193, and 0202 to ensure that the proposed structure of these 

APCs provides the most appropriate payment for the services assigned to each APC. 

Some commenters requested that CMS continue to assign CPT code 57155 to APC 0193 

for the CY 2015 update. The commenters also recommended that CMS closely monitor 

medical practice patterns to ensure beneficiary access to this treatment if CMS finalizes 

the proposal to reassign CPT code 57155 to APC 0192. 

 Response: CPT code 57155 became effective January 1, 2002. Since that time, 

CPT code 57155 has been assigned to either APC 0192 or APC 0193. For CYs 2002, 

2003, and 2006 through 2013, CPT code 57155 was assigned to APC 0192. For CYs 

2004, 2005, and 2014, CPT code 57155 was assigned to APC 0193. Consistent with 

CMS’ statutory requirement under section 1833(t)(9) of the Act to review and revise 

APC assignments annually and to construct the most appropriate APC groupings as well 

as, to the extent desirable, correct any 2 times rule violations, we evaluated the resource 

consumption and clinical coherence associated with the female reproductive APCs for the 

CY 2015 OPPS update. Based on an analysis of the latest hospital outpatient claims data 

for this final rule with comment period, CPT code 57155 has a geometric mean cost of 

approximately $731 based on 858 single claims (out of 2,461 total claims). The 

geometric mean costs for the significant procedures assigned to APC 0192 range between 

approximately $398 (for CPT code 56605) and $731 (for CPT code 57155). Therefore, 

we believe that CPT code 57155 is appropriately assigned to APC 0192 based on the 
CMS-1613-FC 327 

comparable resource costs associated with the other procedures assigned to this APC and 

are not making any changes to our proposal for this final rule with comment period. We 

note that APC 0192 had a proposed payment rate of approximately $501, which was 

based on hospital outpatient claims data submitted between January 1, 2013, and 

December 31, 2013, and processed on or before December 31, 2013. For this final rule 

with comment period, the final payment rate for APC 0192 is approximately $487, which 

is based on hospital outpatient claims data submitted between January 1, 2013, and 

December 31, 2013, and processed on or before June 30, 2014. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to reassign CPT code 57155 from APC 0193 to 

APC 0192 for CY 2015. 

 Comment: Several commenters requested that CMS not finalize the proposal to 

consolidate the two existing hysteroscopy APCs. Instead, the commenters suggested that 

CMS maintain the two-leveled structure of the hysteroscopy APCs to differentiate the 

less costly diagnostic hysteroscopic services from the more resource-intensive 

hysteroscopic procedures. One commenter stated that the reconfiguration of these APCs 

for CY 2015 is premature and warrants more discussion prior to finalizing a proposal 

regarding this issue. Another commenter believed that it is not clinically coherent to 

combine the diagnostic hysteroscopy procedure described by CPT code 58555 with a 

significant therapeutic procedure, such as a hysteroscopic myomectomy described by 

CPT code 58561. The commenter explained that all of the gynecology specialty societies 

recommend minimally invasive alternatives to hysterectomy when available. In addition, 
CMS-1613-FC 328 

the commenter believed that the proposal to consolidate the hysteroscopy APCs would 

provide incentives for hospitals to encourage treatment that is not the standard of care. 

 Response: Based on a review of the latest hospital outpatient claims data for the 

CY 2015 OPPS update, we believe that restructuring and consolidating the gynecology 

APCs is prudent in order to improve the comparability of resource and clinical similarity 

of all the hysteroscopy procedures assigned to a specific APC. In addition, we disagree 

with the commenter’s assertion regarding hospitals’ incentives to deliver substandard 

care for the purposes of financial gain. We believe that hospitals and physicians will 

offer their patients the appropriate care and treatment, which may or may not employ an 

expensive medical device. 

 Comment: Several commenters suggested that modifications to the proposed 

APC assignments for certain related procedures be considered if CMS finalizes the 

proposal to restructure and consolidate the female reproductive APCs. One commenter 

suggested that CMS reassign CPT codes 58561 and 58563 to APC 0202 instead of APC 

0190 based on the clinical similarities in relation to the other procedures assigned to 

APC 0202. 

 Response: Based on input from our medical advisors, we agree with the 

commenter that APC 0202 is the most appropriate APC assignment for CPT codes 58561 

and 58563 based on their clinical similarity in relation to the other procedures assigned to 

this APC. We note that APC 0202 is designated as a C-APC for the CY 2015 OPPS 

update. Further information on C-APCs can be found in section II.A.2.e. of this final rule 

with comment period. 
CMS-1613-FC 329 

 Comment: One commenter suggested that CMS reconsider the proposal to 

consolidate the hysteroscopy APCs and establish two separate APCs for female 

reproductive procedures; one for the more resource-intensive hysteroscopic procedures 

and another for the lower-cost and less complex hysteroscopic procedures. Specifically, 

the commenter recommended assigning the following seven resource-intensive female 

reproductive procedures to a higher-paying APC, with a geometric mean cost ranging 

between approximately $3,010 and $4,350: CPT codes 58353, 58356, 58561, 58563, 

58565, 58559, and 58560. The commenter also suggested assigning the following four 

less complex female reproductive procedures to a lower-paying APC, with a geometric 

mean cost ranging between approximately $1,758 and $2,099: CPT codes 58555, 58558, 

58562, and 58579. Another commenter believed that the necessary resources required to 

provide the service described by CPT code 58555 are significantly less than the resources 

required to provide the service described by CPT code 58561. The commenter stated that 

the resource costs for providing the services described by CPT codes 58353, 58561, 

58563, and 58565 are similar and recommended that these procedures be assigned to the 

same APC. 

 Response: We reviewed our latest hospital outpatient claims data used for this 

final rule with comment period for all of the hysteroscopic procedures. Based on our 

review and after consideration of the public comments we received, we are modifying our 

proposal regarding the proposed APC assignments for several of the hysteroscopic 

procedures for the CY 2015 OPPS update. Specifically, we are deleting APC 0190 and 

reassigning the eight procedures that were proposed to be assigned to this APC to APC 

0188, APC 0193, or APC 0202. 
CMS-1613-FC 330 

 In summary, after consideration of the public comments received, we are 

finalizing our proposals with some modifications. For the hysteroscopy procedure APCs, 

we proposed to reassign all of the procedures assigned to APC 0387 to APC 0190, which 

resulted in a one-leveled APC containing all of the hysteroscopy procedures. 

Specifically, we proposed to delete APC 0387 (Level II Hysteroscopy), and to rename 

APC 0190 “Hysteroscopy.” However, based on our analysis of the hospital outpatient 

claims data available for this final rule with comment period, we are modifying our 

proposal. Instead, we are reassigning all of the hysteroscopy procedures that we 

proposed to assign to APC 0190 to one of the female reproductive APCs. That is, we are 

reassigning all of the procedures proposed for reassignment to APC 0190 to APC 0188, 

APC 0193, or APC 0202. Consequently, with no procedures remaining in APC 0190, we 

deleted this APC for CY 2015. In addition, we are finalizing our proposal to restructure 

the female reproductive APCs to more appropriately reflect the resource and clinical 

characteristics of the procedures assigned to each APC. Specifically, we are finalizing 

our proposal to assign all of the female reproductive procedures to APCs 0188, 0189, 

0192, 0193, or 0202. In addition, because of our revision to the hysteroscopy procedures 

APCs, we are revising the APC titles for the five female reproductive APCs; APC 0188, 

APC 0189, APC 0192, APC 0193, and APC 0202, from “Female Reproductive 

Procedures” to “Gynecologic Procedures” to more appropriately describe the procedures 

assigned to these APCs. Table 20 below lists the hysteroscopic procedures CPT codes, 

along with their long descriptors, proposed CY 2015 OPPS status indicators and APC 

assignments, as well as their final CY 2015 OPPS status indicators and APC assignments. 

Table 21 below lists the final APC titles and status indicators for the gynecologic 
CMS-1613-FC 331 

procedure APCs. The final CY 2015 payment rates for the gynecologic procedures 

APCs, as well as the hysteroscopic procedures CPT codes listed in Table 21 can be 

found in Addendum B to this CY 2015 OPPS/ASC final rule with comment period 

(which is available via the Internet on the CMS Web site). 

 
CMS-1613-FC 332 

TABLE 20.—FINAL CY 2015 APC ASSIGNMENTS FOR THE 

HYSTEROSCOPIC PROCEDURES

CPT 

Code Long Descriptor 

Proposed 

CY 2015 

OPPS SI 

Proposed 

CY 2015 

OPPS 

APC 

Final 

CY 

2015 

OPPS 

SI 

Final 

CY 2015 

OPPS 

APC 

58353 Endometrial ablation, thermal, 

without hysteroscopic guidance J1 0202 J1 0202 

58356 

Endometrial cryoablation with 

ultrasonic guidance, including 

endometrial curettage, when 

performed 

J1 0202 J1 0202 

58555 Hysteroscopy, diagnostic 

(separate procedure) T 0190 T 0193 

58558 

Hysteroscopy, surgical; with 

sampling (biopsy) of 

endometrium and/or 

polypectomy, with or without d 

& c 

T 0190 T 0193 

58559 

Hysteroscopy, surgical; with 

lysis of intrauterine adhesions 

(any method) 

T 0190 J1 0202 

58560 

Hysteroscopy, surgical; with 

division or resection of 

intrauterine septum (any method) 

T 0190 J1 0202 

58561 Hysteroscopy, surgical; with 

removal of leiomyomata T 0190 J1 0202 

58562 

Hysteroscopy, surgical; with 

removal of impacted foreign 

body 

T 0190 T 0193 

58563 

Hysteroscopy, surgical; with 

endometrial ablation (eg, 

endometrial resection, 

electrosurgical ablation, 

thermoablation) 

T 0190 J1 0202 

58565 

Hysteroscopy, surgical; with 

bilateral fallopian tube 

cannulation to induce occlusion 

by placement of permanent 

implants 

J1 0202 J1 0202 

58579 Unlisted hysteroscopy procedure, 

uterus T 0190 T 0188 
CMS-1613-FC 333 

TABLE 21.—FINAL CY 2015 APC TITLES FOR GYNECOLOGIC 

PROCEDURES 

CY 

2015 

APC 

Proposed 

CY 2015 

APC Title Final CY 2015 APC Title 

Final CY 

2015 

Status 

Indicator 

0188 

Level I Female Reproductive 

Procedures Level I Gynecologic Procedures T 

0189 

Level II Female Reproductive 

Procedures Level II Gynecologic Procedures T 

0192 

Level III Female Reproductive 

Procedures Level III Gynecologic Procedures T 

0193 

Level IV Female Reproductive 

Procedures Level IV Gynecologic Procedures T 

0202 

Level V Female Reproductive 

Procedures Level V Gynecologic Procedures J1 

b. Cystourethroscopy, Transprostatic Implant Procedures, and Other Genitourinary 

Procedures (APCs 0160, 0161, 0162, 0163, and 1564) 

 For the CY 2015 OPPS update, based on our review of the latest hospital 

outpatient claims data available for the CY 2015 OPPS/ASC proposed rule, we proposed 

to restructure the APCs containing cystourethroscopy and other genitourinary procedures 

to more appropriately reflect the resource costs and clinical characteristics of the 

procedures assigned within each APC (79 FR 40987). We note that, for the CY 2014 

OPPS update, there are five levels of APCs that contain cystourethroscopy and 

genitourinary procedures. These APCs were listed in Table 26 of the CY 2015 

OPPS/ASC proposed rule (79 FR 40986), along with their status indicator assignments 

for CY 2014. The proposed restructuring resulted in the use of four APCs for the 

CY 2015 OPPS update, as compared to the five APCs used for the CY 2014 OPPS 

update. Specifically, based on our review and evaluation of the procedures assigned to 

these APCs and the latest hospital outpatient claims data available, in the CY 2015 
CMS-1613-FC 334 

OPPS/ASC proposed rule, we proposed to delete APC 0429 (Level V Cystourethroscopy 

and Other Genitourinary Procedures) and reassign the procedures that were previously 

assigned to this APC to either APC 0161 (Level I Cystourethroscopy and Other 

Genitourinary Procedures) or APC 0163 (Level IV Cystourethroscopy and Other 

Genitourinary Procedures). We believe that the procedures currently assigned to APC 

0429 would be more appropriately assigned to either APC 0161 or APC 0163 based on 

their geometric mean costs for the CY 2015 OPPS update. Further, we believe that this 

proposed restructuring appropriately categorizes all of the cystourethroscopy and other 

genitourinary procedures that are comparable clinically and with respect to resource use 

within an APC group. We also proposed to delete APC 0169 (Lithotripsy) because the 

one procedure, specifically the procedure described by CPT code 50590 (Lithotripsy, 

extracorporeal shock wave), that was assigned to this APC was proposed for 

reassignment to APC 0163 (79 FR 40987). Table 27 of the CY 2015 OPPS/ASC 

proposed rule (79 FR 40987) listed the proposed APCs that contain cystourethroscopy 

and other genitourinary procedures, the APC titles, and the proposed status indicator 

assignments for CY 2015. The proposed payment rates for the specific APCs listed in 

Table 27 were listed in Addendum A to the proposed rule. The proposed payment rates 

for the specific cystourethroscopy and other genitourinary procedure codes were listed in 

Addendum B to the proposed rule. (Addenda A and B to the proposed rule are available 

via the Internet on the CMS Web site.) 

 Comment: Several commenters opposed CMS’ proposal to delete APC 0169 and 

reassign the extracorporeal shock wave lithotripsy (ESWL) CPT code 50590 to APC 

0163. The commenters noted that the procedure described by CPT code 50590 is 
CMS-1613-FC 335 

classified as a noninvasive therapy and is not similar, clinically or with respect to 

resource costs, to the other more invasive surgical urological procedures that are 

proposed for assignment to APC 0163. One commenter stated that the ESWL procedure 

does not involve the use of an endoscope and, therefore, should not be assigned to APC 

0163. This commenter believed that the payment rate for APC 0163 would be influenced 

by dominating the claims data for CPT code 50590 because ESWL is a commonly 

performed procedure resulting in a significant high volume of single frequency claims. 

The commenter requested that CMS delay finalizing this proposal or, alternatively, 

reassign CPT code 50590 to APC 0162 (Level III Cystourethroscopy and Other 

Genitourinary Procedures) because this APC encompasses a broader and more diverse 

grouping of procedures than APC 0163. 

 Response: As part of our standard annual OPPS update process, we review each 

APC assignment for the clinical similarity and resource homogeneity of the procedures 

assigned to each APC. An analysis of our latest hospital outpatient claims data available 

for this final rule with comment period revealed a geometric mean cost of approximately 

$3,094 based on 32,370 single claims (out of 44,816 total claims) for CPT code 50590, 

which is comparable to the geometric mean cost of approximately $3,230 for APC 0163. 

The significant procedures assigned to APC 0163 have geometric mean costs ranging 

between $2,946 and $4,088. We do not agree with the commenters that APC 0162 is the 

more appropriate APC assignment because the geometric mean cost for this APC, 

approximately $2,163, is significantly lower than the geometric mean cost of 

approximately $3,094 for CPT code 50590. In addition, the geometric mean cost of APC 

0163 (using proposed rule data) and without CPT code 50590 assigned to this APC was 
CMS-1613-FC 336 

approximately $3,058, which is close to the final rule geometric mean cost of CPT code 

50590 of $3,094. Although the ESWL procedure does not involve the use of an 

endoscope, we note that not every procedure proposed for reassignment, or ultimately 

reassigned, to APC 0163 uses an endoscope. In addition, we do not agree with the 

commenters that the ESWL procedure is not clinically similar to the other procedures 

assigned to APC 0163. There are no general rules for clinical similarity that apply to all 

APCs. Instead, the evaluation of clinical similarity depends upon the particular 

characteristics of the services being evaluated for a particular APC assignment. The use 

of single procedure APCs, like APC 0169, the APC to which CPT code 50590 is assigned 

for CY 2014, generally is not considered appropriate under the OPPS because payment 

rates based on a single procedure code’s geometric mean cost is more consistent with a 

fee schedule than a prospective payment system. However, there are limited 

circumstances in which we assign a single procedure code to an APC; for example, the 

intraocular procedures assigned to an APC series. Specifically, APC 0673 (Level III 

Intraocular Procedures) has a geometric mean cost of approximately $3,239. APC 0293 

(Level IV Intraocular Procedures) is the next higher level APC in the intraocular 

procedures APC series, and it has a single procedure (CPT code 65770 

(Keratoprosthesis)) assigned to it, which has a geometric mean cost of approximately 

$8,766. The highest cost procedure assigned to APC 0673 is CPT code 67113 (Repair of 

complex retinal detachment), which has a geometric mean cost of approximately $4,065. 

The geometric mean cost of CPT code 65770 is significantly higher, 2.2 times the 

geometric mean cost of CPT code 67113. Therefore, we assigned CPT code 65770 to a 

different APC because the resource costs are not similar. Because the procedure 
CMS-1613-FC 337 

described by CPT code 65770 is an intraocular surgery and there are no other APCs that 

contain clinically similar procedures, we assigned CPT code 65770 to APC 0293 without 

any other procedures. Continuing in this series, we assigned CPT code 0308T (Insertion 

of intraocular telescope prosthesis including removal of crystalline lens) to APC 0351 

(Level V Intraocular Procedures) without any other procedures. CPT code 0308T has a 

geometric mean cost of approximately $23,947, which is 2.73 times the geometric mean 

cost of the procedure described by CPT code 65770, which is assigned to APC 0293, 

which is one level lower than APC 0351 in the intraocular procedures APC series. CPT 

code 0308T is the only procedure code assigned to APC 0351 because there are no other 

procedures that are similar in terms of resource costs. We do not believe that similar 

APC series assignment is applicable to CPT code 50590. Therefore, we proposed to 

reassign CPT code 50590 to APC 0163 and delete APC 0169 (79 FR 40986 through 

40987). In summary, based on our review of the latest hospital outpatient claims data for 

this final rule with comment period, we believe that CPT code 50590 would be 

appropriately assigned to APC 0163 based on its clinical and resource similarity to the 

other procedures assigned to APC 0163, several of which are dedicated to kidney stone 

removal. Therefore, we are finalizing our proposal, without modification, to assign CPT 

code 50590 to APC 0163 for CY 2015. 

 Comment: One commenter requested that CMS not finalize the proposal to delete 

APC 0429, and suggested that CMS maintain this APC until data become available for 

CPT code 52356 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy; with 

lithotripsy including insertion of indwelling ureteral stent (eg, Gibbons or double-J 

type)), which became effective January 1, 2014. 
CMS-1613-FC 338 

 Response: We believe that CPT code 52356 is appropriately categorized by APC 

0163 based on its similarity to the other procedures assigned to this APC. Because CPT 

code 52356 became effective January 1, 2014, we expect to have claims data for the 

procedure described by this code available for the CY 2016 OPPS rulemaking cycle. We 

note that, consistent with CMS’ policy of reviewing APC assignments annually in 

accordance with the statutory requirement, we will reevaluate the APC assignment for 

CPT code 52356 for the CY 2016 OPPS update. Therefore, after consideration of the 

public comment we received, we are finalizing our proposals, without modification, to 

delete APC 0429 and to assign CPT code 52356 to APC 0163 for CY 2015. 

 Comment: Some commenters disagreed with CMS’ proposal to reassign CPT 

code 55875 (Transperineal placement of needles or catheters into prostate for interstitial 

radioelement application, with or without cystoscopy) from APC 0163 to APC 0162. 

The commenters stated that the proposal would result in a 28-percent reduction in the 

payment for this service when the CY 2014 payment rate of approximately $2,905 for 

APC 0163 is compared to the CY 2015 proposed payment rate of approximately $2,091 

for APC 0162. The commenters noted that CPT code 55875 has been assigned to APC 

0163 since the code’s inception in CY 2007, and believed that the proposed payment rate 

for APC 0163 more accurately reflects the resources necessary to provide this service. 

The commenters urged CMS to maintain the APC assignment of CPT code 55875 to 

APC 0163. 

 Response: Analysis of our latest hospital claims data used for this final rule with 

comment period revealed a geometric mean cost of approximately $2,501 for CPT code 

55875 based on 703 single claims (out of 4,681 total claims), which is comparable to the 
CMS-1613-FC 339 

geometric mean cost of approximately $2,163 for APC 0162. We do not agree with the 

commenters that APC 0163 is the more appropriate APC because its geometric mean cost 

of approximately $3,230 is significantly higher than the geometric mean cost of 

approximately $2,501 for CPT code 55875. We believe that CPT code 55875 is 

appropriately assigned to APC 0162 based on its clinical homogeneity and resource costs 

to the procedures currently assigned to this APC. Therefore, after consideration of the 

public comments we received, we are finalizing our proposal, without modification, to 

reassign CPT code 55875 to APC 0162 for CY 2015. 

 Comment: One commenter opposed CMS’ proposal to reassign CPT code 53850 

(Transurethral destruction of prostate tissue; by microwave thermotherapy) from APC 

0429 to APC 0161. The commenter stated that the CY 2015 proposed payment rate for 

APC 0161 is approximately $1,235, which is significantly lower than the CY 2014 

payment rate of approximately $3,304 for APC 0429. The commenter suggested that 

CMS reassign CPT code 53850 to APC 0163, the APC to which CPT code 53852 

(Transurethral destruction of prostate tissue; by radiofrequency thermotherapy) is 

proposed to be reassigned. The commenter explained that both procedures are similar in 

clinical technique because both procedures use a thermal approach as an alternative to 

open prostatectomy or transurethral resection of the prostate for the treatment of benign 

prostatic hyperplasia (BPH). 

 Response: As has been our practice since the implementation of the OPPS in 

2000, we review, on an annual basis, the APC assignments for the procedures and 

services paid under the OPPS. Based on the latest hospital outpatient claims data used 

for this final rule with comment period, our analysis does not support the reassignment of 
CMS-1613-FC 340 

CPT code 53850 to APC 0163. Our analysis of the claims data shows a geometric mean 

cost of approximately $1,542 for CPT code 53850 based on 107 single claims (out of 142 

total claims), which is relatively similar to the geometric mean cost of approximately 

$1,273 for APC 0161. While we acknowledge that both procedures are similar, our 

analysis of the claims data shows that the resource costs of providing the procedure 

described by CPT code 53852 is significantly higher than the resource cost of providing 

the procedure described by CPT code 53850. Specifically, the geometric mean cost for 

CPT code 53852 is approximately $3,339 based on 98 single claims (out of 156 total 

claims), which is comparable to the geometric mean cost of APC 0163 of approximately 

$3,230. We do not agree with the commenters that APC 0163 is the more appropriate 

APC assignment because its geometric mean cost is significantly higher than the 

geometric mean cost of CPT code 53850 of approximately $1,542. We believe that CPT 

code 53850 would be appropriately assigned to APC 0161 based on its clinical 

homogeneity and resource costs to the procedures currently assigned to this APC. 

Therefore, after consideration of the public comment we received, we are finalizing our 

proposal, without modification, to reassign CPT code 53850 from APC 0429 to APC 

0161 for CY 2015. 

 In addition, effective April 1, 2014, we created HCPCS codes C9739 

(Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants) and C9740 

(Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants) as a 

result of an application to assign the transprostatic implant procedures (TIPs) to a New 

Technology APC. We assigned HCPCS codes C9739 and C9740 to APCs 0162 (Level 

III Cystourethroscopy and other Genitourinary Procedures) and 1564 (New Technology - 
CMS-1613-FC 341 

Level XXVII), respectively, based on the estimated costs of the procedures, which 

include 1 to 3 implants in the case of procedures described by HCPCS code C9739, and 4 

or more implants in the case of procedures described by HCPCS code C9740. We based 

the number of implants for HCPCS codes C9739 and C9740 on the number of implant 

utilization data per patient that the New Technology applicant provided within its 

approved application. The CY 2014 payment rates for APCs 0162 and 1564 are 

$2,007.32 and $4,750.00, respectively. 

 The AMA’s CPT Editorial Panel recently created two new codes for this 

technology, which become effective on January 1, 2015: CPT codes 52441 

(Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; single 

implant) and 52442 (Cystourethroscopy, with insertion of permanent adjustable 

transprostatic implant; each additional permanent adjustable transprostatic implant (List 

separately in addition to code for primary procedure)). 

 Comment: One commenter stated that the TIPs described by HCPCS codes 

C9739 and C9740 do not receive adequate payment under the OPPS because of the code 

descriptors for these procedure codes as they relate to the number of implants allowed in 

each respective code (1 to 3 implants for HCPCS code C9739 and 4 or more implants for 

HCPCS code C9740), when categorized by the APCs in which these services are 

assigned. The commenter also believed that the TIPs are unable to be performed in the 

ASC setting because of the inadequate payment rate for the specific APCs. The 

commenter believed that the procedures described by HCPCS codes C9739 and C9740 

are device dependent because a majority of the procedures’ costs are associated with the 

costs of the implants, with a mean of 4.9 implants per procedure. The commenter also 
CMS-1613-FC 342 

believed that there is considerable variation in the number of implants used for each 

procedure. The commenter believed that the ASC payment is extremely low because the 

procedures are not designated as “device intensive” in the ASC setting (that is, the 

procedures are not assigned to ASC payment indicator “J8”), nor are the procedures 

assigned to a C-APC under the OPPS, which would most likely allow for the 

performance of the device-intensive treatment in the ASC setting, similar to most of the 

proposed C-APCs that are defined as device-intensive APCs. The commenter stated that 

the proposed OPPS payments for HCPCS codes C9739 and C9740 are inadequate to 

cover both the costs of the number of implants required and the cost of the procedure. 

The commenter recommended several possible APC assignments to improve the 

payments for TIPs. The commenter recommended using new CPT codes 52441 and 

52442 to report the TIPs under the OPPS, and assigning the procedures to C-APC 0385 

(Level I Urogenital Procedures) because the proposed payment rate for C-APC 0385 of 

approximately $7,659 is comparable to the estimated cost of performing TIPs using 5 

implants, which is approximately $7,519. The commenter’s second recommendation was 

to continue to report the performance of the TIPs using HCPCS codes C9739 and C9740, 

and to assign HCPCS code C9740 to APC 0385, as described previously, and HCPCS 

code C9739 to APC 0202 (Level V Female Reproductive Procedures) and remove 

“Female” from the title of APC 0202. According to the commenter, the proposed 

payment for APC 0202 of approximately $4,366 is equivalent to the cost of a TIP using 2 

or 3 implants. The commenter believed that because APC 0202 is designated as a 

C-APC, the ASC payment for the procedure would also prove to be adequate. The 

commenter’s third recommendation was to use new CPT codes 52441 and 52442 to 
CMS-1613-FC 343 

report TIPs and to assign the procedure codes to APC 0168 (Level II Urethral 

Procedures) on an interim basis until OPPS claims data are available for these codes. The 

commenter believed that the proposed payment rate for APC 0168 of approximately 

$2,533 more appropriately equates to the cost of a single implant procedure described by 

CPT code 52441, while additional implant procedures described by CPT code 52442 

would be paid at 50 percent, or approximately $1,267, because APC 0168 is subject to 

the multiple procedure discount (that is, the APC is assigned to status indicator “T”), 

which, the commenter claimed, more appropriately equates to the estimated cost of 

providing the procedure described by CPT code 52442 of approximately $1,248. 

However, the commenter noted that, because APC 0168 is not a C-APC, payment for the 

procedure may not be designated as “device intensive” to ensure adequate ASC payment. 

The commenter recommended that CMS consider any procedure that has device costs 

that are greater than 40 percent as device intensive. 

 Response: We agree with the commenter that the cost of the implants associated 

with the procedures described by HCPCS codes C9739 and C9740 represents the 

majority of the costs of the procedures. We considered those costs and the variation in 

the number of implants per procedure when we created HCPCS codes C9739 and C9740 

and assigned the procedure codes to APCs 0162 and 1564, respectively. We believe that 

HCPCS codes C9739 and C9740 are preferable to the new CPT codes 52441 and 52442 

with respect to OPPS and ASC payments because the new codes describe complete 

procedures instead of the insertion of individual implants, which are almost always 

incomplete procedures because patients usually receive multiple implants. We do not 

believe that any of the APCs recommended by the commenter are appropriate for 
CMS-1613-FC 344 

assignment of HCPCS codes C9739 and C9740 at this time because our usual policy with 

new codes is to wait until we have OPPS claims data available before making an APC 

reassignment. In regard to the ASC payment for the procedures, neither APC 0162 nor 

APC 1564 is designated as device intensive. Therefore, the multiple procedure payment 

reduction under OPPS applies to the entire payment amount under the ASC payment as 

well. Currently, there is no policy regarding designating services that are assigned to a 

New Technology APC as device intensive for the ASC setting. We may consider such a 

policy in future rulemakings. 

 We will maintain payment for the cystourethroscopy with insertion of TIPs using 

HCPCS codes C9739 and C9740 because we believe that the code descriptors more 

appropriately reflect complete procedures and the distribution of implant utilization per 

patient. For CY 2015, we are maintaining our APC assignments for HCPCS codes 

C9739 and C9740 to APCs 0162 and 1564, respectively. The APC assignments for 

HCPCS codes C9739 and C9740 are initial APC assignments until we obtain claims data 

for these two codes for the CY 2016 OPPS update. The final CY 2015 geometric mean 

costs for APC 0162 is approximately $2,163, and the final CY 2015 payment rate (there 

are no geometric mean costs for New Technology APCs, only payment bands) for APC 

1564 is approximately $4,750. CPT codes 52441 and 52442 will not be payable under 

the OPPS for CY 2015; we are assigning these two CPT codes to status indicator “B” 

(Codes that are not recognized by OPPS when submitted on an outpatient hospital Part B 

bill type (12x and 13x)). 

 After consideration of the public comments we received, we also are finalizing 

our proposal to restructure the APCs containing cystourethroscopy, transprostatic implant 
CMS-1613-FC 345 

procedures, and other genitourinary procedures, and to use a four-level APC grouping to 

classify the procedures based on our analysis of the latest hospital outpatient claims data 

available for this final rule with comment period. The final payment rates for the 

cystourethroscopy, transprostatic implant procedures, and other genitourinary procedure 

codes, as well as the specific CPT codes on which we received public comments and that 

are discussed in this section, can be found in Addendum B to this final rule with 

comment period, which is available via the Internet on the CMS Web site. The final 

payment rates for APCs 0160, 0161, 0162, and 0163, which are the final CY 2015 

cystourethroscopy, transprostatic implant procedures, and other genitourinary APCs, can 

be found in Addendum A to this final rule with comment period, which is also available 

via the Internet on the CMS Web site. 

 We remind commenters that every year we revise, if necessary, the APC 

assignments for procedure codes based on our analysis of the latest hospital outpatient 

claims data. We anticipate that there will be further significant revisions to the urologyrelated APCs in futures years because the current overall APC structure is suboptimal and 

can be improved with respect to the clinical similarity and resource similarity of the 

groupings. In addition, we note that section 1833(t)(9)(A) of the Act requires the 

Secretary to review, on a recurring basis occurring no less than annually, and revise 

the groups, the relative payment weights, and the wage and other adjustments to 

take into account changes in medical practice, changes in technology, the addition of 

new services, new cost data, and other relevant information and factors. Although 

we do not discuss every APC change in the proposed and final rules with comment 

period, these changes are listed in Addendum B to the proposed and final rules with 
CMS-1613-FC 346 

comment period. Specifically, procedure codes with proposed revisions to the APC 

and/or status indicator assignments are assigned to comment indicator “CH” (Active 

HCPCS code in current year and next calendar year, status indicator and/or APC 

assignment has changed) in Addendum B to the proposed rule.

 
CMS-1613-FC 347 

c. Level IV Anal/Rectal Procedures (APC 0150) 

 We created HCPCS code C9735 (Anoscopy; with directed submucosal 

injection(s), any substance) effective April 1, 2013, and assigned the service to APC 0150 

(Level IV Anal/Rectal Procedures) for CY 2013, which had a payment rate of $2,365.97. 

We maintained the assignment of HCPCS code C9735 to APC 0150 for CY 2014, with a 

payment rate of $2,501.31. HCPCS code C9735 involves injection of a bulking agent, 

L8605 (Injectable bulking agent dextranomer/hyaluronic acid copolymer implant, anal 

canal, 1 ml, includes shipping and necessary supplies). One commenter in response to 

the CY 2014 OPPS/ASC proposed rule believed that the proposed assignment for 

HCPCS code C9735 to APC 0150 was inappropriate, and asserted that the entire HCPCS 

code C9735 procedure costs far more than the proposed payment rate for APC 0150. The 

commenter recommended creating a new Level V Anal/Rectal Procedures APC, 

composed of HCPCS code C9735, and two other procedures. CMS responded in the 

CY 2014 OPPS/ASC final rule with comment period that HCPCS code C9735 became 

effective April 1, 2013, so there were no claims data yet on this procedure, and that our 

longstanding policy is to wait until there are claims data on a new procedure before 

reassigning the service to another clinical APC (78 FR 74981). We did not agree with 

the commenters that creating a Level V Anal/Rectal Procedures APC was warranted for 

CY 2014. We believed that the suggested Level V APC would have a low volume of 

single frequency claims, and HCPCS code C9735 had no claims volume at that time. We 

stated that the low volume of claims for such an APC would contribute to APC cost and 

payment volatility. 
CMS-1613-FC 348 

 For CY 2015, we proposed to maintain the assignment of HCPCS code C9735 to 

APC 0150, which had a proposed payment rate of $2,612.71. The AMA’s CPT Editorial 

Panel created new Category III CPT code 0377T (Anoscopy with directed submucosal 

injection of bulking agent for fecal incontinence), which describes the procedure 

performed by HCPCS code C9735, to be effective January 1, 2015. 

 Comment: A few commenters recommended that CMS divide APC 0150 into 

two APCs by creating a higher cost Level V Anal/Rectal Procedures APC. The 

commenters stated that there are four procedure codes that have a geometric mean cost 

that is more than $500 higher than the proposed geometric mean cost of APC 0150, 

which is $2,735.52, and one procedure code that has a geometric mean cost that is 

approximately $300 higher than the proposed geometric mean cost of APC 0150. One 

commenter specifically stated that the proposed payment rate for APC 0150 is 

insufficient to cover the cost of the procedure described by HCPCS code C9735, which is 

one of the five procedure codes recommended for assignment to the suggested Level V 

Anal/Rectal Procedures APC, because the proposed payment rate for APC 0150 is lower 

than the total cost of the procedure. The commenter pointed out that the proposed 

geometric mean cost of HCPCS code C9735 is $3,241.32, which is considerably higher 

that the proposed geometric mean cost of APC 0150, which is $2,735.52. The 

commenter also recommended creating a Level V Anal/Rectal Procedures APC, and 

assigning HCPCS code C9735 and other codes to this recommended APC. In addition, 

the commenter recommended that CMS use new CPT code 0377T for hospitals to report 

the anoscopy with directed submucosal injection of bulking agent for fecal incontinence 

procedure, effective January 1, 2015. 
CMS-1613-FC 349 

 Response: The claims data available for this final rule with comment period, 

which are used to establish final payment rates for the CY 2015 OPPS, show a geometric 

mean cost of approximately $2,698 for APC 0150, while the geometric mean cost for 

HCPCS code C9735 is approximately $2,863 based on 56 single frequency claims. We 

believe that the geometric mean cost of HCPCS code C9735 is similar to the geometric 

mean cost of APC 0150. Further, the procedure described by HCPCS code C9735 is no 

longer one of the five highest cost procedures assigned to APC 0150 based on claims data 

available for this final rule with comment period. Similarly, there are other higher cost, 

lower volume procedures with geometric mean costs that are greater than the geometric 

mean cost of APC 0150, but do not create a violation of the 2 times rule because of the 

APC assignment. For instance, CPT code 46762 (Sphincteroplasty, anal, for 

incontinence, adult; implantation artificial sphincter) has a final rule geometric mean cost 

of approximately $11,873 based on 9 single frequency claims. The volume of claims for 

this CPT code is too low to consider this procedure significant for purposes of evaluating 

a potential violation of the 2 times rule. Therefore, we do not believe that the range of 

costs for the significant procedures assigned to APC 0150 warrants the creation of a 

higher level APC. Based on claims data available for this final rule with comment 

period, the five highest cost procedures assigned to APC 0150 have a total number of 

single frequency claims that equals less than 220 claims. The suggested Level V 

Anal/Rectal Procedures APC would have a low volume of single frequency claims and 

would contribute to APC cost and payment volatility, as was the case when based on 

CY 2014 claims data. As we stated in the CY 2014 OPPS/ASC final rule with comment 

period, we are not accepting the commenter’s recommendation because a low volume 
CMS-1613-FC 350 

APC will contribute to the APC’s cost volatility, which in turn contributes to payment 

volatility for the procedures assigned to the low volume APC (78 FR 74981). 

 After consideration of the public comments we received regarding the 

composition of APC 0150, we are finalizing our proposal to continue to assign HCPCS 

code C9735 to APC 0150 for CY 2015. The CY 2015 final geometric mean cost of APC 

0150 is approximately $2,698. In addition, new CPT code 0377T also is assigned to APC 

0150 for CY 2015 because we agree with the commenters that HCPCS code C9735 

should be deleted after December 31, 2014. We are instructing hospitals to use CPT code 

0377T to report this service beginning with the code’s effective date, January 1, 2015. 

d. Percutaneous Renal Cryoablation (APC 0423) 

 For CY 2014, we assigned CPT codes 50593 (Ablation, renal tumor(s), unilateral, 

percutaneous, cryotherapy) and 0340T (Ablation, pulmonary tumor(s), including pleura 

or chest wall when involved by tumor extension, percutaneous, cryoablation, unilateral, 

includes imaging guidance) to APC 0423 (Level II Percutaneous Abdominal and Biliary 

Procedures), which has a payment rate of $4,106.19. For CY 2015, we proposed to 

continue to assign these two CPT codes to APC 0423, with a proposed payment rate of 

$4,053.32. 

 Comment: One commenter believed that CMS’ proposal to continue to assign 

CPT codes 50593 and 0340T to APC 0423 does not accurately reflect the costs incurred 

when performing these cryoablation procedures. The commenter noted that APC 0423 

includes several other radiofrequency ablation and endoscopy procedures, which do not 

include high-cost device systems like the cryoablation procedures described by CPT 

codes 50593 and 0340T. Although the commenter acknowledged that there is no 
CMS-1613-FC 351 

violation of the 2 times rule, the commenter stated that the proposed geometric mean cost 

of CPT code 50593 is significantly higher than the proposed geometric mean cost of APC 

0423. In addition, the commenter asserted that the cryoablation procedures described by 

CPT codes 50593 and 0340T are not clinically similar to other procedures assigned to 

APC 0423. The commenter further noted that less than half of claims used to establish 

the proposed geometric mean cost of CPT code 50593 were correctly coded, and did not 

include the device HCPCS code C2618 (Probe, cryoablation). The commenter 

recommended that CMS create a new Level III Percutaneous Abdominal and Biliary 

Procedures APC, and assign CPT codes 50593 and 0340T to this APC.

 Response: We disagree with the commenter that the proposed geometric mean 

cost of CPT code 50593, which is $4,937.12 is significantly higher than the proposed 

geometric mean cost of APC 0423, which is $4,243.84. The claims data available for this 

final rule with comment period show a geometric mean cost of approximately $4,249 for 

APC 0423, and approximately $4,985 for CPT code 50593, which is based on 749 single 

frequency claims. The geometric mean cost of CPT code 50593 is the highest cost 

procedure assigned to APC 0423, but is well within a normal range of costs associated 

with the other procedures assigned to this APC, and does not approach the 2 times limit 

that would create a violation of the 2 times rule. CPT code 0340T has no claims at this 

time because the procedure code became effective beginning in CY 2014. Therefore, we 

do not believe that a new Level III Percutaneous Abdominal and Biliary Procedures APC 

is warranted based on the geometric mean cost of CPT code 50593 relative to the 

geometric mean cost of APC 0423. We also remind the commenter that we typically do 

not investigate allegations of hospital cost underreporting or incorrect coding. As we 
CMS-1613-FC 352 

stated in the CY 2011 OPPS/ASC final rule with comment period, “Beyond our standard 

OPPS trimming methodology . . . that we apply to those claims that have passed various 

types of claims processing edits, it is not our general policy to judge the accuracy of 

hospital coding and charging for purposes of ratesetting” (75 FR 71838). We believe that 

the cryoablation procedures described by CPT codes 50593 and 0340T are clinically 

similar to the other procedures assigned to APC 0423. Many of the procedures assigned 

to APC 0423 are ablative procedures, and all of the procedures assigned to this APC are 

abdominal or biliary. Therefore, we are finalizing the CY 2015 proposal, without 

modification, to continue to assign CPT codes 50593 and 0340T to APC 0423. We will 

specifically review the APC assignment of CPT code 0340T when claims data for this 

service become available. 

4. Nervous System Services 

a. Chemodenervation (APC 0206) 

 For CY 2015, we proposed to continue to assign CPT code 64616 

(Chemodenervation of muscle(s); neck muscle(s), excluding muscles of the larynx, 

unilateral (eg, for cervical dystonia, spasmodic torticollis)) to APC 0204 (Level I Nerve 

Injections), with a proposed payment rate of approximately $218. We note that CPT 

code 64616 became effective January 1, 2014. 

 Comment: One commenter requested that CMS reassign CPT code 64616 from 

APC 0204 to APC 0206 (Level II Nerve Injections), which had a proposed payment rate 

of approximately $375. The commenter noted that this recommendation for APC 

reassignment was also submitted in response to the CY 2014 OPPS/ASC final rule with 

comment period. The commenter stated that APC 0206 is the APC that was assigned to 

CPT code 64613 (Chemodenervation of muscle(s); neck muscle(s) (eg, for spasmodic 
CMS-1613-FC 353 

torticollis, spasmodic dysphonia), which is the predecessor code for CPT code 64616 in 

effect prior to January 1, 2014. Based on the commenter’s analysis of the CY 2013 

hospital outpatient claims data that was used for the CY 2015 OPPS/ASC proposed rule, 

the commenter believed that APC 0206 is the most appropriate APC assignment for CPT 

code 64616 based on the resource costs and clinical homogeneity of the predecessor 

code, CPT code 64613, in relation to the other procedures assigned to APC 0206. 

 Response: We reviewed the latest hospital outpatient claims data reporting the 

service described by predecessor code, CPT code 64613, and the replacement code, CPT 

code 64616. We acknowledge that the procedure described by CPT code 64616 was 

previously described by CPT code 64613. Based on our analysis of the latest hospital 

outpatient claims data available for this final rule with comment period, we agree with 

the commenter’s recommendation that CPT code 64616 should be reassigned from APC 

0204 to APC 0206 for the CY 2015 update. Specifically, we reviewed the latest 

hospital outpatient claims data for CPT code 64613 based on claims submitted by 

hospitals for dates of service between January 1, 2013, and December 31, 2013, that 

were processed on or before June 30, 2014. Our review of the latest claims data shows 

a geometric mean cost of approximately $322 for CPT code 64613 based on 11,177 

single claims (out of 13,743 total claims), which is comparable to the geometric mean 

cost of approximately $387 for APC 0206. There are 21 procedures assigned to APC 

0206 and the geometric mean costs for the procedures with significant claims data range 

approximately between $322 (for CPT code 64613) and $536 (for CPT code 62270). 

Based on these data, we agree with the commenter that APC 0206 is the most appropriate 

APC assignment for CPT code 64616 based on clinical homogeneity to the other 
CMS-1613-FC 354 

procedures assigned to this APC and the resource similarity of the predecessor code, CPT 

code 64613, to the other procedures assigned to APC 0206. 

 Therefore, after consideration of the public comment we received, we are not 

adopting our proposal to continue to assign CPT code 64616 to APC 0204. Instead, we 

are reassigning CPT code 64616 to APC 0206 for the CY 2015 OPPS update. The final 

CY 2015 payment rate for CPT code 64616 can be found in Addendum B to this 

CY 2015 OPPS/ASC final rule with comment period (which is available via the 

Internet on the CMS Web site).

b. Epidural Lysis (APCs 0203 and 0207) 

 For CY 2015, we proposed to continue to assign CPT code 62263 (Percutaneous 

lysis of epidural adhesions using solution injection (eg, hypertonic saline, enzyme) or 

mechanical means (eg, catheter) including radiologic localization (includes contrast when 

administered), multiple adhesiolysis sessions; 2 or more days) to APC 0203 (Level IV 

Nerve Injections), with a proposed payment rate of approximately $1,524. We also 

proposed to continue to assign CPT code 62264 (Percutaneous lysis of epidural adhesions 

using solution injection (eg, hypertonic saline, enzyme) or mechanical means (eg, 

catheter) including radiologic localization (includes contrast when administered), 

multiple adhesiolysis sessions; 1 day) to APC 0207 (Level III Nerve Injections), with a 

proposed payment rate of approximately $683. 

 Comment: One commenter opposed CMS’ proposals to continue to assign CPT 

code 62263 to APC 0203 and CPT code 62264 to APC 0207. The commenter stated that 

CMS has overcompensated for the cost of providing the service described by CPT code 

62263 by assigning the procedure to APC 0203. Alternatively, the commenter believed 
CMS-1613-FC 355 

that CMS has undercompensated the cost of providing the service described by CPT code 

62264 by assigning the procedure to APC 0207. The commenter stated that the resources 

utilized during the performance of the services described by both CPT codes are 

comparable, and each CPT code should be reassigned to a more appropriate APC to 

ensure adequate payment for the services provided. 

 Response: We reviewed the latest hospital outpatient claims data reporting 

services described by CPT codes 62263 and 62264 for dates of service between 

January 1, 2013, and December 31, 2013, that were processed on or before 

June 30, 2014. For CPT code 62263, our analysis of the claims data shows a geometric 

mean cost of approximately $1,215 based on 70 single claims (out of 88 total claims), 

which is comparable to the geometric mean cost of approximately $1,525 for APC 0203. 

For CPT code 62264, our analysis of the claims data shows a geometric mean cost of 

approximately $798 based on 1,971 single claims (out of 4,174 total claims), which is 

comparable to the geometric mean cost of approximately $697 for APC 0207. Therefore, 

we believe that the procedures described by CPT code 66263 and CPT code 62264 are 

appropriately assigned to APCs 0203 and 0207, respectively, based on clinical and 

resource similarities in relation to the other procedures assigned to these APCs. We 

remind the commenter that the OPPS is a system of averages, in which the costs of 

services, calculated from the most recent year’s claims data, are weighted relative to the 

other services in the system, for that given year. Furthermore, as has been our practice 

since the implementation of the OPPS, we annually review all the items and services 

within an APC group to determine, with respect to comparability of the use of resources, 

any violations of the 2 times rule. In making this determination, we review our claims 
CMS-1613-FC 356 

data and determine whether we need to make changes to the current APC assignments for 

the following year. We will reevaluate the APC assignment for CPT codes 62263 and 

62264 for the CY 2016 OPPS rulemaking. 

 After consideration of the public comment that we received, we are finalizing our 

CY 2015 proposal, without modification, to continue to assign CPT code 62263 to APC 

0203 and CPT code 62264 to APC 0207. The final CY 2015 payment rates for the two 

procedures can be found in Addendum B to this CY 2015 OPPS/ASC final rule with 

comment period (which is available via the Internet on the CMS Web site).c. 

Transcranial Magnetic Stimulation (TMS) Therapy (APC 0218)

 Since July 2006, CPT codes have existed to describe Transcranial Magnetic 

Stimulation (TMS) therapy. The initial CPT codes were temporary Category III CPT 

codes, specifically, CPT codes 0160T (Therapeutic repetitive transcranial magnetic 

stimulation treatment planning) and 0161T (Therapeutic repetitive transcranial magnetic 

stimulation treatment delivery and management, per session), that became effective July 

1, 2006. For CY 2011, the CPT Editorial Panel deleted CPT code 0160T on December 

31, 2010, and replaced this procedure code with CPT code 90867 (Therapeutic repetitive 

transcranial magnetic stimulation (tms) treatment; initial, including cortical mapping, 

motor threshold determination, delivery and management), effective January 1, 2011. 

Similarly, CPT code 0161T was deleted on December 31, 2010, and was replaced with 

CPT code 90868 (Therapeutic repetitive transcranial magnetic stimulation (tms) 

treatment; subsequent delivery and management, per session), effective January 1, 2011. 

In CY 2012, the CPT Editorial Panel established an additional TMS therapy code, 

specifically, CPT code 90869 (Therapeutic repetitive transcranial magnetic stimulation 
CMS-1613-FC 357 

(tms) treatment; subsequent motor threshold re-determination with delivery and 

management), that became effective January 1, 2012. 

 For the CY 2014 update, CPT codes 90867 and 90868 were assigned to 

APC 0216 (Level II Nerve and Muscle Tests), with a payment rate of $216.79, and CPT 

code 90869 was assigned to APC 0218 (Level II Nerve and Muscle Tests), with a 

payment rate of $127.75. For the CY 2015 update, as listed in Addendum B to the 

CY 2015 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 90869 

to APC 0218, with a proposed payment rate of approximately $160. In addition, we 

proposed to reassign CPT codes 90867 and 90868 from APC 0216 to APC 0218, the 

same APC assignment for CPT code 90869. 

 Comment: One commenter disagreed with CMS’ proposal to reassign CPT codes 

90867 and 90868 from APC 0216 to APC 0218, and to continue to assign CPT code 

90869 to APC 0218. The commenter stated that the proposed addition of certain nerve 

conduction study codes to APC 0218 for the CY 2015 update has negatively affected the 

proposed payment rate for APC 0218. The commenter believed that this proposal 

resulted in a decreased payment rate of approximately $160 for APC 0218, compared to 

the CY 2014 payment rate of approximately $217; thereby effectuating a potential 

financial loss for the provider with each treatment because a typical course of TMS 

therapy includes a total of 25 daily treatment sessions. In addition, the commenter stated 

that assigning CPT codes 90867, 90868, and 90869 to APC 0218 is clinically 

inappropriate because these CPT codes describe therapy services, whereas the other 

procedure codes assigned to APC 0218 describe diagnostic tests (simple nerve 

conduction and electromyography studies). To correct the perceived clinical and 
CMS-1613-FC 358 

resource discrepancies, the commenter suggested that CMS establish a new APC 

specifically for the TMS therapy codes, and that CMS title the APC “Transcranial 

Magnetic Stimulation.” 

 Response: We believe that APC 0218 is the most appropriate APC assignment 

for the three TMS therapy CPT codes. The CPT codes describing the procedures 

assigned to APC 0218 all describe noninvasive services that affect the nervous system. 

Based on the latest hospital outpatient claims data used for this final rule with comment 

period, our analysis revealed that the resources associated with providing the services 

described by CPT codes 90867, 90868, and 90869 are comparable to the other services 

assigned to APC 0218. Specifically, based on CY 2013 claims data used for this final 

rule with comment period, the geometric mean cost for CPT code 90867 is approximately 

$210 based on 72 single claims (out of 72 total claims), the geometric mean cost for CPT 

code 90868 is approximately $201 based on 2,513 single claims (out of 2,516 total 

claims), and the geometric mean cost for CPT code 90869 is approximately $194 based 

on 28 single claims (out of 30 total claims). In addition, a review of the procedures 

assigned to APC 0218 shows that the range of geometric mean cost for the services 

assigned to APC 0218 is approximately between $95 (for CPT code 95937) and $327 (for 

CPT code 95875), which is comparable to the geometric mean costs for all three TMS 

therapy CPT codes. Based on the clinical and resource similarities in relation to the other 

procedures currently assigned to APC 0218, we believe that the TMS therapy codes 

would be appropriately assigned to APC 0218. 

 After consideration of the public comment we received, we are finalizing our 

CY 2015 proposal, without modification, to reassign CPT codes 90867 and 90868 from 
CMS-1613-FC 359 

APC 0216 to APC 0218, and to continue to assign CPT code 90869 to APC 0218 for 

CY 2015. 

5. Ocular Services: Ophthalmic Procedures and Services 

 For the CY 2015 OPPS update, based on our evaluation of the latest hospital 

outpatient claims data, we proposed to restructure all of the ophthalmic APCs to better 

reflect the costs and clinical characteristics of the procedures within each APC. This 

proposed restructuring resulted in the use of 13 APCs for the ophthalmology-related 

procedures for the CY 2015 OPPS update, as compared to the 24 APCs used for the 

CY 2014 OPPS update. We believe that this major restructuring and consolidation of 

APCs more appropriately categorizes all of the ophthalmology-related procedures and 

services within an APC group, such that the services within each newly-configured APC 

are more comparable clinically and with respect to resource use. Tables 19 and 20 in the 

proposed rule showed the current CY 2014 and proposed CY 2015 ophthalmologyrelated APCs. Specifically, Table 19 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 40981) showed the CY 2014 ophthalmology-related APCs and status indicator 

assignments, while Table 20 showed the proposed restructured ophthalmology-related 

APCs and their status indicator assignments for CY 2015 (79 FR 40981 through 40982). 

The proposed payment rates for the ophthalmology-related APCs listed in Table 20 were 

listed in Addendum B to the proposed rule (which is available via the Internet on the 

CMS Web site). 

 In the CY 2015 OPPS/ASC proposed rule, we invited public comments on this 

proposal. 
CMS-1613-FC 360 

 Comment: Several commenters stated that the proposed restructuring and 

consolidation of the CY 2015 ophthalmic APC is substantial, and requested that CMS not 

finalize this proposal. The commenters also stated that CMS has not provided 

information regarding the criteria used to differentiate the various levels of treatments or 

procedures for the restructured 13 ophthalmic APCs. The commenters stated that the 

configuration and structure of the existing 24 APCs do not appear to be inconsistent with 

the requirements for clinical coherence or resource use. The commenters disagreed with 

CMS’ proposal to establish broader categories within these APCs, and indicated that such 

a change in APC groupings has the potential to aggregate procedures that vary 

significantly in resource costs and clinical coherence. In addition, the commenters stated 

that some of the procedures in the restructured ophthalmic APCs appear to be 

inappropriately categorized. For example, the restructuring of the ophthalmic APCs has 

resulted in the consolidation of cornea procedures within one of the restructured APCs, 

and the procedures are no longer assigned to a separate classification grouping based on 

the previous APC configurations. The commenters pointed out that the major cornea 

transplant codes have been reassigned to restructured APC 0673 (Level III Intraocular 

Procedures), along with procedures that treat glaucoma and retina conditions. The 

commenters further explained that the equipment used for these services when performed 

in alternative settings and the depths of the condition of the eye and the appropriate 

treatments vastly differ, as does the time and other resources necessary to perform these 

types of surgeries. As a result, the commenters believed that additional APCs are needed 

to appropriately categorize ophthalmic procedures based on clinical homogeneity and 

resource consumption. The commenters also requested the opportunity to work with 
CMS-1613-FC 361 

CMS to make appropriate adjustments to the restructured ophthalmic APC groupings to 

ensure clinical coherence and to minimize payment variances for these procedures. 

 Response: Consistent with CMS’ statutory requirement under section 1833(t)(9) 

of the Act to review and revise APC assignments annually and to construct the most 

appropriate APC groupings, as well as, to the extent desirable, correct any 2 times rule 

violations, we evaluated the resource consumption and clinical coherence associated with 

the ophthalmic APCs for the CY 2015 update. Based on our analysis of the latest 

hospital outpatient claims data used for this final rule with comment period and 

understanding of the clinical aspects of these procedures, we believe that the restructured 

and consolidated ophthalmic APCs more appropriately group these 

ophthalmology-related services according to their current resource costs, as well as their 

clinical characteristics. The former ophthalmic procedures APC structure unnecessarily 

separated, from a clinical and resource similarity prospective, ophthalmic procedures 

based on disease state or traditional subdivisions within ophthalmic surgery. APC 

groupings were never intended to precisely track traditional ophthalmology subspecialty 

divisions, such as cornea surgery, retina surgery, or glaucoma surgery, as the commenters 

suggested. We also believe that larger APC groupings are more consistent with a 

prospective payment system than smaller groupings. We note that we regularly accept 

meetings from interested parties throughout the year, and we encourage stakeholders to 

continue a dialogue with us during the rulemaking cycle and throughout the year on our 

continuing efforts to improve the coherence of the OPPS APC groupings. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to restructure and consolidate the ophthalmic APCs. 
CMS-1613-FC 362 

Table 22 below shows the final ophthalmology-related APCs and their status indicator 

assignments for CY 2015. The final payment rates for these APCs can be found in 

Addendum B to this CY 2015 OPPS/ASC final rule with comment period (which is 

available via the Internet on the CMS Web site). We also remind the public that we 

review the OPPS and APC structures and assignments annually and may propose 

additional restructurings of the APCs and procedure code assignments for other clinical 

areas and APC groupings in CY 2016 and future rulemakings. 

TABLE 22.—FINAL CY 2015 APC ASSIGNMENTS FOR THE OPHTHALMIC 

PROCEDURES AND SERVICES 

Final 

CY 2015 

APC Final CY 2015 APC Title Description 

Final 

CY 2015 

Status 

Indicator 

0230 Level I Eye Tests & Treatments S 

0231 Level III Eye Tests & Treatments S 

0233 Level II Intraocular Procedures T 

0238 Level I Extraocular, Repair, and Plastic Eye Procedures T 

0239 Level II Extraocular, Repair, and Plastic Eye Procedures T 

0240 Level III Extraocular, Repair, and Plastic Eye Procedures T 

0242 Level IV Extraocular, Repair, and Plastic Eye Procedures T 

0247 Laser Eye Procedures T 

0255 Level I Intraocular Procedures T 

0293 Level IV Intraocular Procedures J1 

0351 Level V Intraocular Procedures J1 

0673 Level III Intraocular Procedures T 

0698 Level II Eye Tests & Treatments S 

6. Imaging 

a. Echocardiography Services Without Contrast (APCs 0269, 0270, and 0697) 

 We proposed to continue to use for the CY 2015 update the three APCs that 

describe echocardiography services without contrast, APC 0697 (Level I Echocardiogram 
CMS-1613-FC 363 

Without Contrast), APC 0269 (Level II Echocardiogram Without Contrast), and APC 

0270 (Level III Echocardiogram Without Contrast), and to maintain the CY 2014 HCPCS 

code assignments for these APCs. 

 Comment: One commenter requested that CMS reexamine the services assigned 

to the APCs for echocardiography services without contrast. In particular, the commenter 

requested that CMS reassign CPT codes 76825 (Echocardiography, fetal, cardiovascular 

system, real time with image documentation (2D), with or without M-mode recording;) 

and 76826 (Echocardiography, fetal, cardiovascular system, real time with image 

documentation (2D), with or without M-mode recording; follow-up or repeat study) from 

APC 0697 to APC 0269 based on the clinical and resource similarities to the other 

echocardiography procedures assigned to APC 0269. 

 Response: Based on our review of the latest hospital outpatient claims data 

available for this final rule with comment period, we agree with the commenter that CPT 

codes 76825 and 76826 should be reassigned to APC 0269, which more appropriately 

supports the clinical and resource homogeneity of the APCs rather than reassigning the 

procedure codes to APC 0697. The geometric mean cost of CPT code 76825 is 

approximately $384, and the geometric mean cost of CPT code 76826 is approximately 

$285. These costs are sufficiently close to the geometric mean cost of CPT code 93306 

((Echocardiography, transthoracic, real time with image documentation (2D), includes 

M-mode recording, when performed, complete, with spectral Doppler echocardiography, 

and with color flow Doppler echocardiography), which is approximately $430. CPT code 

93306 comprises 93 percent of the service volume within APC 0269. By reassigning 

CPT codes 76825 and 76826 to APC 0269, only one procedure code would remain in 
CMS-1613-FC 364 

APC 0697. Therefore, we also are reassigning CPT code 93308 (Echocardiography, 

transthoracic, real time with image documentation (2D), includes M-mode recording, 

when performed, follow-up or limited study) from APC 0697 to APC 0267 (Level III 

Diagnostic and Screening Ultrasound) for CY 2015. We are deleting APC 0697 for the 

CY 2015 OPPS update because all of the procedure codes previously assigned to APC 

0697 have been reassigned to more appropriate APCs to ensure adequate payment for the 

services provided and the clinical and resource homogeneity of APCs. 

b. Optical Coherence Tomography (OCT) Procedures of the Breast 

 For the July 2014 quarterly update, the CPT Editorial Panel established four new 

Category III CPT codes to describe optical coherence tomography (OCT) procedures of 

the breast: CPT code 0351T (Optical coherence tomography of breast or axillary lymph 

node, excised tissue, each specimen; real time intraoperative); CPT code 0352T (Optical 

coherence tomography of breast or axillary lymph node, excised tissue, each specimen; 

interpretation and report, real time or referred); CPT code 0353T (Optical coherence 

tomography of breast, surgical cavity; real time intraoperative); and CPT code 0354T 

(Optical coherence tomography of breast, surgical cavity; interpretation and report, real 

time or referred). As listed in Table 17 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 40976), we proposed to assign CPT codes 0351T and 0353T to OPPS status 

indicator “N” (paid under OPPS; payment is packaged into payment for other services; 

there is no separate APC payment.), and CPT codes 0352T and 0354T to OPPS status 

indicator “B” (codes that are not recognized by OPPS when submitted on an outpatient 

hospital Part B bill type (12x and 13x). 
CMS-1613-FC 365 

Comment: Some commenters expressed concern regarding CMS’ proposal to 

assign CPT codes 0351T and 0353T to OPPS status indicator “N” and noted that both 

procedures describe independent, unique services and should be assigned to specific 

APCs. The commenters recommended assigning CPT codes 0351T and 0353T to any 

one of the following APCs: APC 0028 (Level I Breast and Skin Surgery), which had a 

proposed payment rate of approximately $2,176; APC 0029 (Level II Breast and Skin 

Surgery), which had a proposed payment rate of approximately $3,018; or APC 0030 

(Level III Breast and Skin Surgery), which had a proposed payment rate of approximately 

$4,150. 

 Response: Consistent with our packaging policy for intraoperative procedures, 

we proposed to assign CPT codes 0351T and 0353T to OPPS status indicator “N” 

because both procedure codes describe supportive dependent services that are performed 

during independent procedures. As clarified in the CY 2008 OPPS final rule with 

comment period (72 FR 66627), we define “intraoperative” procedures as services that 

are provided during and, therefore, on the same date of service as another procedure that 

is separately payable under the OPPS. We further define intraoperative as services that 

support the performance of an independent procedure and are provided in the same 

operative session as the independent procedure. Both of the procedures described by 

CPT codes 0351T and 0353T must always be performed in conjunction with another 

procedure; specifically, the surgical procedure is performed followed by the breast OCT 

to improve the surgical outcome. We believe that these procedure codes clearly describe 

services that conform to the definition of “intraoperative” procedures. For further 

information on our policy for intraoperative services under the hospital OPPS, we refer 
CMS-1613-FC 366 

readers to the CY 2008 OPPS final rule with comment period (72 FR 66627 through 

66630). 

 In summary, we believe that CPT codes 0351T and 0353T are procedures that 

support the performance of an independent procedure and are provided in the same 

operative session as the independent procedure. Specifically, we believe that both 

procedures are provided during and, therefore, on the same date of service as another 

procedure that is separately payable under the OPPS. In addition, we believe that CPT 

codes 0351T and 0353T are always integral to, and dependent upon, the independent 

procedure that they support. Therefore, payment for these services will be packaged 

because the procedures would generally be performed on the same date as another 

procedure that is separately payable under the OPPS. After consideration of the public 

comments we received, we are finalizing our proposals to assign CPT codes 0351T and 

0353T to OPPS status indicator “N” and CPT codes 0352T and 0354T to OPPS status 

indicator “B” for CY 2015. 

c. Parathyroid Planar Imaging (APCs 0263, 0317, 0406, and 0414) 

 For CY 2015, we proposed to assign CPT code 78071 (Parathyroid planar 

imaging (including subtraction, when performed); with tomographic (SPECT)) to 

APC 0263 (Level I Miscellaneous Radiology Procedures), for which we proposed a 

CY 2015 geometric mean cost of approximately $357. We also proposed to assign CPT 

code 78072 (Parathyroid planar imaging (including subtraction, when performed); with 

tomographic (SPECT), and concurrently acquired computed tomography (CT) for 

anatomical localization) to APC 0317 (Level II Miscellaneous Radiology Procedures), 

for which we proposed a CY 2015 geometric mean cost of approximately $577. In 
CMS-1613-FC 367 

addition, we proposed to change the status indicators for CPT codes 78071 and 78072 

from “X” to “S.” 

 Comment: Commenters agreed with CMS’ proposal to assign CPT codes 78071 

and 78072 to status indicator “S,” but opposed the proposal to assign CPT code 78071 to 

APC 0263. The commenters believed that CPT codes 78071 and 78072 should be 

assigned to the nuclear medicine APCs instead of the radiology APCs because the 

nuclear medicine APCs are more representative of the resources utilized in the 

performance of these procedures. The commenters suggested that CMS assign CPT 

codes 78071 and 78072 to either APC 0414 (Level II Tumor/Infection Imaging) or 0408 

(Level III Tumor/Infection Imaging). 

 Response: We agree with the commenters that the resources utilized in the 

performance of the procedures described by CPT codes 78071 and 78072 are more 

comparable to the procedures assigned to the nuclear medicine APCs. However, we do 

not agree with the commenters that CPT codes 78071 and 78072 are more appropriately 

assigned to either APC 0408 or APC 0414. We believe that APC 0406 (Level I 

Tumor/Infection Imaging) is the most appropriate APC assignment for CPT codes 78071 

and 78072 because the procedures currently assigned to APC 0406 are similar to the 

procedures described by CPT codes 78071 and 78072 in clinical nature and resource 

utilization. The final CY 2015 APC geometric mean costs of approximately $362 for 

CPT code 78071 and approximately $427 for CPT code 78072 are similar to the 

geometric mean costs of the significant procedures assigned to APC 0406, which range 

between approximately $307 and approximately $427. 
CMS-1613-FC 368 

 After consideration of the public comments we received, we are not finalizing our 

CY 2015 proposal to assign CPT codes 78071 and 78072 to APCs 0263 and 0317, 

respectively. Instead, based on consideration of the public comments we received, for 

CY 2015, we are assigning CPT codes 78071 and 78072 to APC 0406, which has a final 

CY 2015 APC geometric mean cost of approximately $391. 

7. Radiology Oncology 

a. Proton Beam Therapy and Magnetoencephalography (MEG) Services (APCs 0065, 

0412, 0446, 0664, and 0667) 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we proposed several 

changes to the radiation therapy APCs for CY 2015. To correct a violation of the 2 times 

rule within APC 0664 (Level I Proton Beam Radiation Therapy), we proposed to reassign 

CPT code 77520 from APC 0664 to APC 0412 (Level III Radiation Therapy). We 

believe that CPT code 77520 is both clinically similar and comparable in geometric mean 

cost to the other services assigned to APC 0412. We also proposed to reassign CPT code 

77522 from APC 0664 to proposed newly renamed APC 0667 (Level IV Radiation 

Therapy) because we believe that the procedure described by CPT code 77522 is both 

clinically similar and comparable in geometric mean cost to the other services assigned to 

APC 0667. Because there would be no other codes assigned to APC 0664 if these 

proposed reassignments are finalized, we also proposed to delete APC 0664 for CY 2015 

(79 FR 40989). In addition, we proposed to rename existing APC 0667 to “Level IV 

Radiation Therapy” (instead of using the existing title of “Level II Proton Beam 

Radiation Therapy”), to make the title consistent with other APCs in the radiation therapy 

series. In conjunction with this proposed change, we proposed to reassign the following 
CMS-1613-FC 369 

three services to proposed newly renamed APC 0667 for CY 2015: CPT codes 77522, 

77523, and 77525. 

 Comment: Commenters generally supported CMS’ proposals regarding the 

radiation therapy APCs, with one exception. The commenters supported the proposal to 

reassign CPT code 77520 from APC 0664 to APC 0412. However, the commenters 

expressed concern regarding the proposal to reassign CPT code 77522 from APC 0664 to 

proposed newly renamed APC 0667. Commenters disagreed with CMS’ determination 

that the procedure described by CPT code 77522 is clinically similar and comparable in 

geometric mean cost to the other services assigned to APC 0667 in 2014, specifically the 

procedures described by CPT codes 77523 and 77525. The commenters recommended 

that CMS maintain the assignment of CPT code 77522 to APC 0664 and not delete the 

classification grouping, which would result in CPT code 77522 being the only service 

assigned to this APC. 

 Response: We appreciate the commenters’ support for our proposals regarding 

the radiation therapy APCs, specifically our proposal to reassign CPT code 77520 from 

APC 0664 to APC 0412. In regard to the proposed reassignment of CPT code 77522 

from APC 0664 to APC 0667, we disagree with the commenters for the following 

reasons. The three CPT codes, 77522, 77523, and 77525, are similar clinically. All three 

of these CPT codes describe procedures that involve proton beam therapy delivery 

services with a continuum of complexity. The procedure described by CPT code 77520 

is the least complex. The procedure described by CPT code 77522 is more complex than 

the procedure described by CPT code 77520, and the procedure described by CPT code 

77523 is more complex than the procedure described by CPT code 77522. The procedure 
CMS-1613-FC 370 

described by CPT code 77525 is the most complex procedure of the series proposed to be 

reassigned to APC 0667. We proposed to reassign CPT code 77520 from APC 0664 to 

APC 0412 because of the resource comparability with respect to the other procedures 

involving proton beam therapy delivery services assigned to APC 0412, not based on the 

clinical dissimilarity with respect to the procedures assigned to APC 0664. In regard to 

the remaining three procedures involving proton beam therapy delivery services (the 

procedures described by CPT codes 77522, 77523, and 77525), we believe that these 

procedures are clinically similar, but each has a slightly varying level of complexity 

relative to the others. The proposed configuration of APC 0667 only contains the three 

proton beam therapy delivery services described by CPT codes 77522, 77523, and 77525, 

and does not include any other service codes. APC 0667 is the most clinically 

homogeneous APC under the OPPS to assign these services that would ensure adequate 

payment, with the exception of single service APCs. With regard to the resource 

comparability of the procedures described by CPT codes 77522, 77523 and 77525, the 

lowest geometric mean cost among these procedures is associated with the procedure 

described by CPT code 77522, which is approximately $1,033, and the highest geometric 

mean cost is associated with the procedure described by CPT code 77525, which is 

approximately $1,244. The statutory prong that dictates when resources become 

dissimilar between two services is the 2 times rule. Based on the limitations imposed by 

the 2 times rule, the highest cost significant service assigned to an APC cannot exceed the 

lowest cost by greater than two times. In this case, the geometric mean cost of the 

procedure described by CPT code 77525 is only 1.2 times the geometric mean cost of the 

procedure described by CPT code 77522, which is well within the 2 times limit. 
CMS-1613-FC 371 

Therefore, we determined that the resource similarity among the services proposed to be 

reassigned to APC 0667 is comparable. In addition, we generally prefer to assign 

procedures to the most appropriate APC that would ensure adequate payment, as opposed 

to using single-service APCs, which the commenters recommended for the procedure 

described by CPT code 77522, unless no other reasonable options exist, because singleservice APCs are more consistent with a fee schedule than a prospective payment system. 

 Therefore, we are finalizing the following proposals affecting the proton beam 

therapy services for CY 2015: (1) we are reassigning CPT code 77520 from APC 0664 

to APC 0412; (2) we are reassigning CPT code 77522 from 0664 to APC 0667;( 3) we 

are reassigning CPT codes 77523 and 77525 to APC 0667; (4) we are deleting 

APC 0664; and (5) we are renaming APC 0667 to “Level IV Radiation Therapy.” 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40989), we also proposed to 

delete APC 0065 (IORT, MRgFUS, and MEG) because we proposed to reassign the 

services assigned to this APC to more appropriate APCs based on clinical similarities and 

comparable geometric mean cost. With respect to MEG services, we proposed to 

reassign the MEG CPT codes 95965 and 95966 from APC 0065 to APC 0446 (Level IV 

Nerve and Muscle Services), which would only contain MEG services. 

 Comment: One commenter applauded CMS for the establishment of new APC 

0446, the APC to which the MEG procedures are proposed to be reassigned. The 

commenter believed that the reassignment of CPT codes 95965 and 95966 would produce 

more accurate data related to MEG usage. Alternatively, one commenter expressed 

concern that the current proposal does not adequately cover the costs associated with 

providing MEG services, and urged CMS to work with hospitals and other stakeholders 
CMS-1613-FC 372 

to ensure that HOPDs submit claims correctly to capture the full costs of providing these 

services. 

 Response: Based on our analysis of the latest hospital outpatient claims data used 

for this final rule with comment period, we believe that the establishment of APC 0446 is 

necessary to ensure clinical and resource homogeneity and adequate payment for MEG 

services. Therefore, after consideration of the public comments we received, we are 

finalizing our CY 2015 proposal without modification. As we do every year, we will 

review our claims data for these services for the CY 2016 OPPS rulemaking. 

b. Stereotactic Radiosurgery Services (SRS) and Magnetic Resonance Image Guided 

Focused Ultrasound (MRgFUS) (APC 0066) 

 For CY 2015, for SRS, we proposed to continue to assign CPT code 77373 

(Stereotactic body radiation therapy, treatment delivery, per fraction to 1 or more lesions, 

including image guidance, entire course not to exceed 5 fractions) to APC 0066, with a 

proposed payment rate of approximately $1,893. We also proposed to rename APC 0066 

from “Level I Stereotactic Radiosurgery” to “Level V Radiation Therapy” 

(79 FR 40989). 

 In addition, we proposed to continue to assign CPT codes 77371 (Radiation 

treatment delivery, stereotactic radiosurgery (SRS), complete course of treatment of 

cranial lesion(s) consisting of 1 session; multi-source cobalt 60 based) and 77372 

(Radiation treatment delivery, stereotactic radiosurgery (SRS), complete course of 

treatment of cranial lesion(s) consisting of 1 session; linear accelerator based) to APC 

0067 (Single Session Cranial Stereotactic Radiosurgery), with a proposed payment rate of 

approximately $9,768. We also proposed to rename APC 0067 from “Level II 
CMS-1613-FC 373 

Stereotactic Radiosurgery” to “Single Session Cranial Stereotactic Radiosurgery,” which 

we proposed as a C-APC. For further discussion regarding C-APCs and SRS CPT codes 

77371 and 77372 assigned to C-APC 0067, we refer readers to section II.A.2.e. of this 

final rule with comment period. 

 Comment: Several commenters requested that CMS reinstate the use of SRS 

G-codes because the SRS CPT codes do not accurately describe current clinical practices 

or adequately cover the cost of providing fractionated linac-based SRS. 

 Response: For the CY 2014 update, we finalized our proposal to adopt the full 

range of SRS CPT codes and to discontinue the use of the remaining SRS G-codes under 

the OPPS. HOPDs must use and report SRS CPT codes 77371, 77372, and 77371 to 

describe the delivery of stereotactic radiosurgery treatment services under the OPPS. For 

a full discussion of this issue, we refer readers to the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74989 through 749995). In addition, for the CY 2015 update, 

HCPCS code G0173 (Linear accelerator based stereotactic radiosurgery, complete course 

of therapy in one session), and HCPCS code G0251 ((Linear accelerator based 

stereotactic radiosurgery, delivery including collimator changes and custom plugging, 

fractionated treatment, all lesions, per session, maximum five sessions per course of 

treatment)) will be deleted, effective December 31, 2014, because these codes will no 

longer be used under the MPFS. However, HCPCS code G0339 (Image-guided robotic 

linear accelerator-based stereotactic radiosurgery, complete course of therapy in one 

session or first session of fractionated treatment) and HCPCS code G0340 (Image-guided 

robotic linear accelerator-based stereotactic radiosurgery, delivery including collimator 

changes and custom plugging, fractionated treatment, all lesions, per session, second 
CMS-1613-FC 374 

through fifth sessions, maximum five sessions per course of treatment) will continue to 

be used under the MPFS and, therefore, will continue to be active codes for the CY 2015 

MPFS update. However, HCPCS codes G0339 and G0340 will not be active codes for 

the CY 2015 OPPS update. Instead, HOPDs must use and report SRS CPT codes 77371, 

77372, and 77373 to describe the delivery of stereotactic radiosurgery treatment services 

under the OPPS. 

 Comment: Many commenters requested that CMS reassign HCPCS code G0251 

to a different APC to resolve a violation of the 2 times rule within APC 0066. Several 

commenters recommended excluding the claims data for HCPCS code G0251 prior to 

determining the final payment rate for APC 0066. The commenters indicated that 

HCPCS code G0251 is used most often for fractionated cranial SRS, not for stereotactic 

body radiation therapy (SBRT), as described by CPT code 77373. 

 Response: Both HCPCS code G0251 and CPT code 77373 describe fractionated 

cranial stereotactic radiosurgery services that involve between 2 and 5 fractions of 

treatment. Single-session cranial SRS are reported using either CPT code 77371 or 

77372. Based on the code descriptor, we believe that the service described by HCPCS 

code G0251 is appropriately crosswalked to the service described by CPT code 77373. 

We explained the code crosswalk in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74991). 

 We note that, under the OPPS, we may make exceptions to the 2 times rule in 

unusual cases, such as low-volume items or services. For the CY 2015 update (taking 

into consideration the APC changes that we proposed for CY 2015), we reviewed all of 

the APCs to determine which APCs would not satisfy the requirement of the 2 times rule. 
CMS-1613-FC 375 

In the case of APC 0066, we believe that it is necessary to make an exception to the 2 

times rule for this APC because the three G-codes that caused the violation of the 2 times 

rule to occur have been crosswalked to CPT code 77373. We expect to have claims data 

for only CPT code 77373 available for the CY 2016 rulemaking. At that time, we will 

reevaluate the APC assignments for all of the SRS CPT codes. 

 In addition to our proposal to continue to assign SRS CPT code 77373 to 

APC 0066, we proposed to assign all four of the MRgFUS procedures to APC 0066 

because in the past MRgFUS services were assigned to the same APC as some of the 

former SRS G-codes for fractionated linac-based SRS. Specifically, for CY 2015, we 

proposed to reassign HCPCS codes 0071T (Focused ultrasound ablation of uterine 

leiomyomata, including mr guidance; total leiomyomata volume less than 200 cc of 

tissue), 0072T (Focused ultrasound ablation of uterine leiomyomata, including mr 

guidance; total leiomyomata volume greater or equal to 200 cc of tissue), C9734 

(Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, 

with magnetic resonance (mr) guidance), and 0301T (Destruction/reduction of malignant 

breast tumor with externally applied focused microwave, including interstitial placement 

of disposable catheter with combined temperature monitoring probe and microwave 

focusing sensocatheter under ultrasound thermotherapy guidance) from APC 0065 

(IORT, MRgFUS, and MEG) to APC 0066. We proposed to delete APC 0065 for 

CY 2015. 

 Comment: Several commenters stated that the proposed payment rate for APC 

0066 of approximately $1,893 does not adequately reflect the level of resources required 

to perform MRgFUS procedures. Instead, the commenters believed that the MRgFUS 
CMS-1613-FC 376 

procedures are similar to the stereotactic radiosurgery procedures that are assigned to 

C-APC 0067 in terms of treatment set-up, delivery of radiation, and post-procedure 

recovery. The commenters further believed that the MRgFUS procedures would be more 

appropriately assigned to a C-APC from a clinical and resource perspective. The 

commenters explained that certain procedures are commonly reported in conjunction with 

MRgFUS procedures, similar to stereotactic radiosurgery procedures. Therefore, the 

commenters recommended that CMS reassign the MRgFUS procedures to C-APC 0067. 

 Response: CPT codes 0071T and 0072T became effective January 1, 2005. CPT 

code 0301T became effective January 1, 2012. HCPCS code C9734 became effective 

April 1, 2013. Currently, we do not have any single claims reporting any of the four 

MRgFUS procedures. However, because we are deleting APC 0065, we believe that 

reassigning these procedures to APC 0066 for the CY 2015 update is more appropriate 

because, in the past, MRgFUS services were assigned to the same APC as some of the 

former fractionated linac-based SRS G-codes. We also believe that the MRgFUS 

procedures are clinically dissimilar to single-session cranial SRS because MRgFUS 

procedures may involve more than one treatment session. However, we will review and 

consider the comments related to C-APC 0067 in a future annual update. 

 After consideration of the public comments we received, we are finalizing our 

proposal without modification. Specifically, for SRS CPT code 77373, we are finalizing 

our proposal to continue to assign this code to APC 0066 for the CY 2015 update. In 

addition, we are finalizing our proposal to reassign MRgFUS HCPCS codes 0071T, 

0072T, 0301T, and C9734 from APC 0065 to APC 0066 for CY 2015. We are deleting 

APC 0065 for CY 2015. Because we are deleting APC 0065, we are renaming APC 0066 
CMS-1613-FC 377 

from “Level I Stereotactic Radiosurgery” to “Level V Radiation Therapy.” The final 

payment rates for SRS CPT code 77373 and MRgFUS HCPCS codes 0071T, 0072T, 

0301T, and C9734 can be found in Addendum B to this final rule with comment period, 

which is available via the Internet on the CMS Web site. 

8. Respiratory Services: Level II Endoscopy Lower Airway (APC 0415) 

 In the CY 2015 OPPS/ASC proposed rule, we proposed to continue the APC 

assignment of the procedure codes that have been historically assigned to APC 0415 

(Level II Endoscopy Lower Airway). Commenters responding to the CY 2014 

OPPS/ASC proposed rule had recommended that CMS split the procedure codes assigned 

to APC 0415 into two levels of lower airway endoscopy APCs. We did not split APC 

0415 into two levels for CY 2014, as the commenters suggested, because the geometric 

mean costs would have been based on a relatively low volume of single frequency claims 

and would have potentially effectuated APC and cost volatility (78 FR 74996). In the 

CY 2015 OPPS/ASC proposed rule, we did not propose any changes to the composition 

of APC 0415. There were not any violations of the 2 times rule for the services assigned 

to APC 0415 based on claims data available for the proposed rule. The proposed 

geometric mean cost of APC 0415 was approximately $2,368. 

 Comment: Several commenters recommended that CMS create a Level III Lower 

Airway Endoscopy APC and assign the procedure codes currently assigned and proposed 

for continued assignment to APC 0415 to this newly created APC based on geometric 

mean costs, procedure complexity, and clinical similarity. Specifically, one commenter 

recommended that CMS assign CPT code 31647 (Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when performed; with balloon occlusion, when 

performed, assessment of air leak, airway sizing, and insertion of bronchial valve(s), 
CMS-1613-FC 378 

initial lobe) to the recommended Level III APC. Another commenter recommended that 

CMS assign CPT code 31626 (Bronchoscopy, rigid or flexible, including fluoroscopic 

guidance, when performed; with placement of fiducial markers, single or multiple) to the 

recommended Level III APC. One commenter recommended that seven specific 

procedure codes be assigned to the newly created Level III APC, namely: CPT codes 

31634 (Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when 

performed; with balloon occlusion, with assessment of air leak, with administration of 

occlusive substance (eg, fibrin glue), if performed), 31638 (Bronchoscopy, rigid or 

flexible, including fluoroscopic guidance, when performed; with revision of tracheal or 

bronchial stent inserted at previous session (includes tracheal/bronchial dilation as 

required)), 31626, 31631 (Bronchoscopy, rigid or flexible, including fluoroscopic 

guidance, when performed; with placement of tracheal stent(s) (includes 

tracheal/bronchial dilation as required)), 31636 (Bronchoscopy, rigid or flexible, 

including fluoroscopic guidance, when performed; with placement of bronchial stent(s) 

(includes tracheal/bronchial dilation as required), initial bronchus), 31660 

(Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with 

bronchial thermoplasty, 1 lobe), and 31661 (Bronchoscopy, rigid or flexible, including 

fluoroscopic guidance, when performed; with bronchial thermoplasty, 2 or more lobes). 

The commenters believed that a new Level III Lower Airway Endoscopy APC would 

more accurately reflect the costs of expensive lower airway procedures that utilize new 

technologies. 

 Response: We believe that there is considerable clinical similarity in regard to the 

procedures assigned to APC 0415. All of the procedures are lower airway bronchoscopy 
CMS-1613-FC 379 

procedures and are generally clinically more complex than the lower airway endoscopy 

procedures assigned to APC 0076 (Level I Endoscopy Lower Airway). We do not 

believe that the range of costs for the significant procedures assigned to APC 0415 

warrants the creation of a Level III lower airway endoscopy APC. The final rule 

geometric mean cost for APC 0415 is approximately $2,341. Several of the procedures 

that the commenters recommended for assignment to the recommended Level III APC 

have final rule geometric mean costs comparable to the geometric mean cost of 

APC 0415. For CY 2015, CPT code 31634 has a final geometric mean cost of 

approximately $1,539; CPT code 31638 has a final geometric mean cost of 

approximately $2,320; and CPT code 31626 has a final geometric mean cost of 

approximately $2,897. The other CPT codes recommended by the commenters have 

somewhat higher approximate geometric mean costs, namely: CPT code 31631 (which 

has a geometric mean cost of approximately $3,488), CPT code 31661 (which has a 

geometric mean cost of approximately $3,789), CPT code 31660 (which has a geometric 

mean cost of approximately $3,840), and CPT code 31636 (which has a geometric mean 

cost of approximately $4,090). Assigning any of these procedures to APC 0415 does not 

create a violation of the 2 times rule when compared to the geometric mean cost of the 

lowest significant procedure assigned to this APC, CPT code 31629 (Bronchoscopy, rigid 

or flexible, including fluoroscopic guidance, when performed; with transbronchial needle 

aspiration biopsy(s), trachea, main stem and/or lobar bronchus(i)), which is 

approximately $2,186. Among the procedures discussed above, CPT codes 31626 and 

31660 describe the only significant procedures assigned to this APC and are the 

procedures that we would normally apply the 2 times rule provisions. There are not any 
CMS-1613-FC 380 

violations of the 2 times rule in regard to these procedures’ costs. Although CPT code 

31647 has a considerably higher geometric mean cost of approximately $5,373 based on 

11 single frequency claims, it is not a significant procedure. We would not reassign this 

procedure to another APC based on a violation of the 2 times rule. Moreover, 

considering the final rule claims data for the five highest cost procedures assigned to 

APC 0415, the total number of single frequency claims is 649. The possible composition 

of a Level III lower airway endoscopy APC would still be based on a low volume of 

claims, similar to the low volume of claims in regard to the Level III lower airway 

endoscopy APC recommended by the commenters in CY 2014. As we stated in the 

CY 2014 OPPS/ASC final rule with comment period, a low-volume APC would 

contribute to the APC’s cost volatility, which in turn contributes to payment volatility for 

the procedures assigned to the low-volume APC (78 FR 74996). 

 After consideration of the public comments we received regarding the 

composition of APC 0415, we are finalizing our proposal to continue the assignment of 

the procedure codes that have been historically assigned to APC 0415 for CY 2015. 

However, for CY 2016, we will explore possible changes to the lower airway endoscopy 

APCs as a part of our broader efforts to thoroughly review, revise, and consolidate APCs 

to improve both clinical and resource homogeneity. The CY 2015 final geometric mean 

cost of APC 0415 is approximately $2,341. 

9. Other Services 

a. Epidermal Autograft (APC 0327) 

 In the CY 2014 OPPS/ASC final rule with comment period, we assigned CPT 

code 15110 to APC 0329 (Level IV Skin Repair), with a payment rate of approximately 
CMS-1613-FC 381 

$2,260. The payment rate for CPT code 15110 was derived from the latest hospital 

outpatient claims data used for the CY 2014 ratesetting, which showed a geometric mean 

cost of approximately $2,174 based on 10 single claims (out of 29 total claims ). 

 As stated in section III.B. of this final rule with comment period, we review, on 

an annual basis, the APC assignments for all services and items paid under the OPPS. 

Analysis of the latest hospital outpatient claims data available for the CY 2015 

OPPS/ASC proposed rule showed a geometric mean cost for CPT code 15110 of 

approximately $774 based on 90 single claims (out of 122 total claims). Therefore, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 40987), we proposed to reassign CPT code 

15110 from APC 0329 to APC 0327 (Level II Skin Procedures), which has a geometric 

mean cost of approximately $451. We believe that APC 0327 is the most appropriate 

APC assignment for CPT code 15110 when considering the similarities in relation to the 

other procedures assigned to this APC. 

 In addition, we proposed to revise the APC titles for the four skin repair APCs 

(79 FR 40987). Specifically, we proposed to rename APC 0326 from “Level I Skin 

Repair” to “Level I Skin Procedures,” APC 0327 from “Level II Skin Repair” to “Level 

II Skin Procedures,” APC 0328 from “Level III Skin Repair” to “Level III Skin 

Procedures,” and APC 0329 from “Level IV Skin Repair” to “Level IV Skin Procedures.” 

 Table 28 of the proposed rule (79 FR 40987) showed the long descriptor, as well 

as the proposed CY 2015 APC and status indicator assignment for CPT code 15110. The 

proposed CY 2015 payment rate for CPT code 15110 can be found in Addendum B to the 

proposed rule (which is available via the Internet on the CMS Web site). 
CMS-1613-FC 382 

 Comment: Several commenters requested that CMS reevaluate the claims data 

for CPT code 15110, and recommended that CMS not finalize the proposal to reassign 

the procedure code to APC 0327. The commenters stated that the procedure described by 

CPT code 15110 allows patients with chronic or non-healing wounds to recover much 

sooner and without the use of expensive surgical interventions, which has resulted in cost 

savings for hospitals, patients, and payers. Other commenters suggested that CMS 

reassign CPT code 15110 to APC 0328 (Level III Skin Procedures), which has a 

proposed CY 2015 payment rate of approximately $1,408. The commenters believed that 

APC 0328 has clinically similar procedures and is more comparable to the geometric 

mean costs of CPT code 15110. Another commenter believed that the low volume of 

claims data for CPT code 15110 is attributable to providers and hospitals miscoding the 

performance of the service by not including the cost of the device. 

 Response: We reviewed the historical claims data for CPT code 15110, dating 

back to CY 2008, which is the first year that claims data for this code became available. 

As listed in Table 23 below, for CY 2008 through CY 2013, the payment rate for CPT 

code 15110 has ranged between $288.30 and $393.38 based on a range of single claims 

between 3 and 8. In addition, for the CY 2014 update, which was based on hospital 

outpatient claims data that were submitted between January 1, 2012, and 

December 31, 2012, and processed on or before June 30, 2013, the payment rate for CPT 

code 15110 was significantly higher (approximately $2,260.46) based on 10 single 

claims. However, as has been our practice since the implementation of the OPPS in 

2000, we review, on an annual basis, the APC assignments for the procedures and 

services paid under the OPPS. Based on the latest hospital outpatient claims data used 
CMS-1613-FC 383 

for this final rule with comment period, our analysis does not support the continued 

assignment of CPT code 15110 to APC 0329, which is the APC to which the procedure 

was assigned during CY 2014, or the suggested APC 0328. We examined the latest 

hospital outpatient claims data for CPT code 15110 for dates of service between 

January 1, 2013, and December 31, 2013, that were processed on or before 

June 30, 2014. Our analysis of the claims data shows a geometric mean cost for CPT 

code 15110 of approximately $748 based on 127 single claims (out of 165 total 

claims). We do not believe that APC 0328 is the most appropriate APC assignment 

because the geometric mean cost for this APC is approximately $1,460, which is 

significantly higher than the geometric mean cost for CPT code 15110, which is 

approximately $748. Assigning CPT code 15110 to APC 0328 would result in an 

overpayment for the service provided. We believe that APC 0327 is the most 

appropriate APC assignment for CPT code 15110 based on clinical homogeneity to 

the other skin-related procedures assigned to this APC. 

TABLE 23.—HISTORICAL AND CURRENT OPPS CLAIMS AND PAYMENT 

INFORMATION FOR CPT CODE 15110 

Calendar Year 

(CY) 

OPPS 

Payment 

Rate 

Single 

Claims 

Total 

Claims 

2008 $288.30 3 16 

2009 $292.68 3 15 

2010 $299.19 8 22 

2011 $319.74 5 16 

2012 $344.98 4 19 

2013 $393.38 4 30 

2014 $2,260.46 10 29 

2015 $429.95 127 165 
CMS-1613-FC 384 

 Further, based on our analysis of the CY 2013 hospital outpatient claims data 

used for this final rule with comment period, we are unable to determine whether 

hospitals are miscoding claims reporting this service. For all APCs whose payment rates 

are based upon relative payment weights, we note that the quality and accuracy of 

reported units and charges influence the geometric mean costs that are the basis for our 

payment rates, especially for low-volume items and services. Beyond our standard OPPS 

trimming methodology (described in section II.A.2. of this final rule with comment 

period) that we apply to those claims that have passed various types of claims processing 

edits, it is not our general policy to determine the accuracy of hospital coding and 

charging practices for purposes of ratesetting (75 FR 71838). We rely on hospitals to bill 

all HCPCS codes accurately in accordance with their code descriptors and CPT and CMS 

instructions, as applicable, and to report charges on claims and charges and costs on their 

Medicare hospital cost report appropriately. In addition, we do not specify the 

methodologies that hospitals must use to set charges for this or any other service. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to reassign CPT code 15110 to APC 0327 for CY 2015. 

The final payment rate for CPT code 15110 can be found in Addendum B to this final 

rule with comment period, which is available via the Internet on the CMS Web site. 

b. Image-Guided Breast Biopsy Procedures and Image-Guided Abscess Drainage 

Procedures (APCs 0005 and 0007) 

 For the CY 2014 OPPS update, the AMA’s CPT Editorial Panel deleted the 

image-guided breast biopsy CPT codes 19102 and 19103 and replaced these procedure 

codes with six new CPT codes that “bundled” payment for associated imaging services, 
CMS-1613-FC 385 

effective January 1, 2014. As shown in Table 23 of the proposed rule (79 FR 40983), 

CPT codes 19102 and 19103 described percutaneous image-guided breast biopsies using 

specific devices. Specifically, CPT code 19102 described a breast biopsy performed 

using a core needle, and CPT code 19103 described a breast biopsy performed using 

either a vacuum-assisted or rotating device. 

 In CY 2013, to appropriately report the performance of an image-guided breast 

biopsy using a core needle, an automated vacuum-assisted device, or a rotating biopsy 

device, multiple procedure codes were required to identify the specific service performed. 

That is, a procedure code describing the device-related breast biopsy procedure was 

required to be reported in combination with the procedure code describing the 

localization device used during the procedures, as well as the specific image-guidance 

procedure codes describing the imaging service. Table 23 of the proposed rule showed 

how image-guided breast biopsy procedures were reported prior to CY 2014. Table 23 of 

the proposed rule also showed the CY 2013 OPPS status indicators, APC assignments, 

and payment rates for the breast biopsy procedure codes, the localization devices used 

during the procedures, and the specific image-guidance procedure codes describing the 

imaging service. 

 For the CY 2014 OPPS update, the AMA’s CPT Editorial Panel grouped the 

multiple procedures that describe these imaging services into single comprehensive 

service codes; specifically, CPT codes 19081, 19082, 19083, 19084, 19085, and 19086. 

Table 24 of the proposed rule showed the six new CPT codes that replaced obsolete CPT 

codes 19102 and 19103. These comprehensive breast biopsy procedure codes are 

differentiated based on the use of specific imaging-guidance devices--specifically 
CMS-1613-FC 386 

imaging services performed using stereotactic guidance, ultrasound guidance, or 

magnetic-resonance guidance. 

 As has been our practice since the implementation of the OPPS in 2000, we 

review all new procedure codes before assigning the codes to an APC. Consistent with 

our longstanding policy for the treatment of new codes, we assigned these new 

replacement CPT codes to interim APCs for CY 2014. Based on our understanding of 

the resources required to furnish the service as defined in the code descriptor, as well as 

input from our medical advisors, we assigned replacement CPT codes 19081, 19083, and 

19085 to APC 0005 (Level II Needle Biopsy/Aspiration Except Bone Marrow) for the 

CY 2014 OPPS update. In addition, we assigned new CPT codes 19081, 19083, and 

19085 to comment indicator “NI” in Addendum B to the CY 2014 OPPS/ASC final rule 

with comment period (which is available via the CMS Web site) to indicate that the codes 

were new with an interim APC assignment that was subject to public comment. We note 

that, for the CY 2014 OPPS update, we finalized our policy to package all add-on codes 

(except those for drug administration), effective January 1, 2014. Consequently, payment 

for replacement CPT codes 19082, 19084, and 19086, which describe add-on procedures, 

was packaged for CY 2014. 

 At the Panel’s March 10, 2014 meeting, one presenter requested that CMS 

reassign comprehensive CPT codes 19081, 19083, and 19085 from APC 0005 (Level II 

Needle Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS payment 

rate of $702.08, to APC 0037 (Level IV Needle Biopsy/Aspiration Except Bone 

Marrow), which has a CY 2014 OPPS payment rate of $1,223.25. The presenter 

indicated that it is inappropriate to combine all of the new replacement CPT codes into 
CMS-1613-FC 387 

one APC without regard for the imaging modality or device used to perform the 

procedure. The presenter also requested that CMS maintain the historic assignment of 

the predecessor CPT codes cost data until claims data become available for the new 

comprehensive CPT codes. The Panel agreed with the presenter and recommended that 

CMS reassign the new replacement comprehensive CPT codes, as the presenter 

suggested. 

 In light of the public presentation, the Panel’s recommendation, and our 

longstanding policy of reviewing, on an annual basis, the APC assignments for all 

services and items paid under the OPPS, we evaluated the geometric mean costs 

associated with all of the procedures assigned to the existing four needle biopsy APCs, 

specifically, APCs 0004 (Level I Needle Biopsy/Aspiration Except Bone Marrow), 0005, 

0685 (Level III Needle Biopsy/Aspiration Except Bone Marrow), and 0037. In the 

CY 2015 OPPS/ASC proposed rule (79 FR 40984), based on our review of the latest 

hospital outpatient claims data available for the proposed rule, we proposed to reassign 

all of the procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 0005 

based on clinical and resource homogeneity. If CMS finalizes this proposed revision, 

there would be no procedures assigned to APCs 0685 or 0037. Therefore, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 40984), we proposed to delete APCs 0685 

and 0037 for CY 2015. 

 Consequently, for the CY 2015 OPPS update, we proposed to only use two needle 

biopsy APCs, specifically, APCs 0004 and 0005. The proposed reassignment of all of 

the procedures assigned to APCs 0685 and 0037 results in increased payment rates for 

both APCs 0004 and 0005. For CY 2015, the proposed payment rate for APC 0004 is 
CMS-1613-FC 388 

approximately $494, which is 20 percent higher than the CY 2014 OPPS payment rate of 

approximately $411. Similarly, the proposed payment rate for APC 0005 is 

approximately $1,062, which is 51 percent higher than the CY 2014 OPPS payment rate 

of approximately $702. Therefore, we proposed to continue to assign CPT codes 19081, 

19083, and 19085 to APC 0005 for the CY 2015 OPPS update (79 FR 40985). In 

addition, we proposed to continue to package payment for add-on CPT codes 19082, 

19084, and 19086 under the OPPS for CY 2015, consistent with our packaging policy for 

add-on codes that was implemented on January 1, 2014. Because we proposed to delete 

APC 0037 we believe that the proposed increased payment rate for APC 0005 is 

consistent with the Panel’s recommendation to reassign CPT codes 19081, 19083, and 

19085 to an appropriate APC based on resource utilization and clinical coherence. 

 Comment: Commenters supported CMS’ proposal to continue to assign CPT 

codes 19081, 19083, and 19085 to APC 0005. The commenters stated that the 

assignment of these CPT codes to APC 0005 is clinically coherent and more accurately 

captures the resource cost associated with providing these services when compared to the 

CY 2014 APC assignment. 

 Response: We appreciate the commenters’ support.

 Comment: Some commenters expressed concern regarding the inadequate 

payment for ancillary services associated with multiple biopsies that may be performed 

on the same date of service. The commenters indicated that patients sometimes present 

with multiple lesions, which requires a biopsy of each lesion. According to the 

commenters, prior to the establishment of the comprehensive CY 2014 breast biopsy CPT 

codes, hospitals would report each biopsy, imaging guidance, and marker or localization 
CMS-1613-FC 389 

placements separately. The commenters requested that CMS provide guidance on how to 

report multiple biopsies performed on the same date of service. 

 Response: We expect hospitals to report the performance of breast biopsies using 

the comprehensive breast biopsy CPT codes, consistent with the latest CPT coding 

guidelines. As stated in the CY 2014 CPT code book, image-guided breast biopsies, 

including the placement of localization devices when performed, are reported using the 

comprehensive breast biopsy CPT codes 19081 through 19086. Image-guided placement 

of localization devices without the performance of a biopsy are required to be reported 

using CPT codes 19281 through 19288. In addition, when more than one biopsy is 

performed using the same imaging modality, hospitals are required to report each biopsy 

using an add-on code. However, if more than one biopsy is performed using different 

imaging modalities, hospitals are required to report a separate primary code for each 

additional imaging modality. 

 We note that it is extremely important that hospitals use all of the required 

HCPCS codes to report the performance of all services they furnish, consistent with the 

code descriptors, CPT and/or CMS instructions, and correct coding principles, whether 

payment for the services is made separately or packaged. The accuracy of the OPPS 

payment rates depends on the quality and completeness of the claims data that hospitals 

submit for the services they furnish to Medicare beneficiaries. 

 After consideration of the public comments we received, we are finalizing 

our proposal to continue to assign CPT codes 19081, 19083, and 19085 to APC 0005 

for CY 2015. In addition, we are finalizing our proposal to continue to package payment 

for add-on CPT codes 19082, 19084, and 19086 under the OPPS for CY 2015, consistent 
CMS-1613-FC 390 

with our packaging policy for add-on codes that was implemented on January 1, 2014. 

Furthermore, we are finalizing our proposal to delete APC 0037 because we believe that 

the proposed increased payment rate for APC 0005 is consistent with the Panel’s 

recommendation to reassign CPT codes 19081, 19083, and 19085 to an appropriate APC 

based on resource utilization and clinical coherence. Table 24 below shows the final 

status indicators, APC assignments, and payment rates for the image-guided breast 

biopsy CPT codes 19081 through 19086. 

TABLE 24.—FINAL CY 2015 APCs TO WHICH IMAGE-GUIDED 

BREAST BIOPSY PROCEDURE CODES ARE ASSIGNED 

CPT 

Code Long Descriptor 

CY 

2014 

SI 

CY 

2014 

APC 

CY 

2014 

Paymen

t 

Final 

CY 

2015 

SI 

Final 

CY 

2015 

APC 

Final CY 

2015 

Payment 

19081 

Biopsy, breast, with 

placement of breast 

localization device(s) (eg, 

clip, metallic pellet), when 

performed, and imaging of 

the biopsy specimen, when 

performed, 

percutaneous; first lesion, 

including stereotactic 

guidance 

T 0005 $702.08 T 0005 $1,052.22 

19082 

Biopsy, breast, with 

placement of breast 

localization device(s) (eg, 

clip, metallic pellet), when 

performed, and imaging of 

the biopsy specimen, when 

performed, 

percutaneous; each 

additional lesion, including 

stereotactic guidance (List 

separately in addition to 

code for primary 

procedure) 

N N/A N/A N N/A N/A 
CMS-1613-FC 391 

CPT 

Code Long Descriptor 

CY 

2014 

SI 

CY 

2014 

APC 

CY 

2014 

Paymen

t 

Final 

CY 

2015 

SI 

Final 

CY 

2015 

APC 

Final CY 

2015 

Payment 

19083 

Biopsy, breast, with 

placement of breast 

localization device(s) (eg, 

clip, metallic pellet), when 

performed, and imaging of 

the biopsy specimen, when 

performed, 

percutaneous; first lesion, 

including ultrasound 

guidance 

T 0005 $702.08 T 0005 $1,052.22 

19084 

Biopsy, breast, with 

placement of breast 

localization device(s) (eg, 

clip, metallic pellet), when 

performed, and imaging of 

the biopsy specimen, when 

performed, 

percutaneous; each 

additional lesion, including 

ultrasound guidance (List 

separately in addition to 

code for primary 

procedure) 

N N/A N/A N N/A N/A 

19085 

Biopsy, breast, with 

placement of breast 

localization device(s) (eg, 

clip, metallic pellet), when 

performed, and imaging of 

the biopsy specimen, when 

performed, 

percutaneous; first lesion, 

including magnetic 

resonance guidance 

T 0005 $702.08 T 0005 $1,052.22 

19086 

Biopsy, breast, with 

placement of breast 

localization device(s) (eg, 

clip, metallic pellet), when 

performed, and imaging of 

the biopsy specimen, when 

performed, 

percutaneous; each 

additional lesion, including 

magnetic resonance 

N N/A N/A N N/A N/A 
CMS-1613-FC 392 

CPT 

Code Long Descriptor 

CY 

2014 

SI 

CY 

2014 

APC 

CY 

2014 

Paymen

t 

Final 

CY 

2015 

SI 

Final 

CY 

2015 

APC 

Final CY 

2015 

Payment 

guidance (List separately in 

addition to code for primary 

procedure) 

 In addition to the proposal to maintain the APC assignment of the breast biopsy 

comprehensive CPT codes to APC 0005, we also discussed in the CY 2015 OPPS/ASC 

proposed rule our proposal to reassign CPT code 10030 from APC 0006 (Level I Incision 

& Drainage) to APC 0007 (Level II Incision and Drainage). We note that, for the 

CY 2014 OPPS update, the AMA’s CPT Editorial Panel established CPT code 10030 to 

report the bundled service of image-guided fluid collection drainage by catheter for 

percutaneous soft tissue, and CPT code 49407 to report the bundled service of imageguided fluid collection drainage by catheter for peritoneal, retroperitoneal, transvaginal or 

transrectal collections, effective January 1, 2014. As shown in Table 25 of the CY 2015 

OPPS/ASC proposed rule, which showed the long descriptors for CPT codes 10030 and 

49407, and as listed in Addendum B to the CY 2014 OPPS/ASC final rule with comment 

period, we assigned CPT code 10030 to APC 0006, with a payment rate of $159.66 and 

CPT code 49407 to APC 0685, with a payment rate of $757.76. As listed in 

Addendum B to the CY 2014 OPPS/ASC final rule with comment period, both procedure 

codes were assigned to comment indicator “NI” to indicate that the codes were new codes 

and assigned interim APC and status indicator assignments that were subject to public 

comment. 

 At the Panel’s March 10, 2014 meeting, one presenter requested that CMS 

reassign CPT codes 10030 and 49407 from APC 0006 and APC 0685, respectively, to 
CMS-1613-FC 393 

APC 0037 (Level IV Needle Biopsy/Aspiration Except Bone Marrow), which has a 

CY 2014 OPPS payment rate of $1,223.25. The commenter noted that similar procedures 

also are assigned to APC 0037. Specifically, the presenter indicated that all the 

image-guided fluid collection drainage procedures should be treated as one clinically 

cohesive group and assigned to APC 0037. The Panel agreed with the presenter and 

recommended that CMS reassign CPT code 49407 to APC 0037. However, the Panel did 

not agree with the presenter that CPT code 10030 would be more appropriately assigned 

to APC 0037. Rather, the Panel believed that the most appropriate APC assignment for 

CPT code 10030 would be APC 0007. We agreed with the Panel’s recommendation that 

CPT code 10030 should be assigned to APC 0007. Therefore, in the CY 2015 

OPPS/ASC proposed rule (79 FR 40986), we proposed to reassign CPT code 10030 from 

APC 0006 to APC 0007 for the CY 2015 OPPS update. In light of the Panel’s 

recommendation to reassign CPT code 49407 and the image-guided breast biopsy 

procedures to APC 0037 and APC 0007, respectively, and our longstanding policy of 

reviewing, on an annual basis, the APC assignments for all services and items paid under 

the OPPS, we evaluated the geometric mean costs associated with the procedures 

assigned to the existing four needle biopsy APCs, as previously stated, and proposed to 

reassign the procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 

0005 based on clinical and resource homogeneity and to delete APCs 0685 and 0037 for 

CY 2015. Specifically, we proposed to reassign CPT code 49407 from APC 0685 to 

APC 0005 for CY 2015, and to delete APCs 0037 and 0685. Table 25 of the proposed 

rule also showed the long descriptors for CPT codes 10030 and 49407, and their 

proposed status indicator and APC assignments for the CY 2015 OPPS update. The 
CMS-1613-FC 394 

proposed CY 2015 payment rate for CPT codes 10030 and 49407 can be found in 

Addendum B to this CY 2015 OPPS/ASC proposed rule (which is available via the 

Internet on the CMS Web site). 

 Comment: Some commenters recommended that CMS reassign CPT code 10030 

from APC 0006 to APC 0005. The commenters stated that, according to an internal 

analysis, CPT code 10030 is comparable with respect to clinical and resource 

characteristics and costs to the other abscess drainage procedures assigned to APC 0005. 

 Response: In light of the Panel’s recommendation to reassign the procedure to 

APC 0007 and because CPT code 10030 is a new code for CY 2014, we are not accepting 

the commenters’ suggestion to assign this procedure to APC 0005. Rather, we are 

reassigning CPT code 10030 from APC 0006 to APC 0007 for the CY 2015 OPPS 

update, as recommended by the Panel. We note that we will have CY 2014 hospital 

claims data available for CPT codes 10030 and 49407 in preparation for the CY 2016 

OPPS rulemaking. At that time, we will reevaluate the APC assignments for all the 

abscess drainage CPT codes. 

Therefore, after consideration of the public comments we received, we are 

finalizing our proposal, without modification, to reassign CPT code 10030 from APC 

0006 to APC 0007. In addition, we are finalizing our proposal to reassign the procedures 

assigned to APCs 0685 and 0037 to either APC 0004 or APC 0005 based on clinical and 

resource homogeneity. Because there would be no other procedures assigned to APCs 

0685 and 0037 as a result of this reassignment, we are finalizing our proposal to delete 

APCs 0685 and 0037 for CY 2015. The final CY 2015 payment rate for CPT codes 
CMS-1613-FC 395 

10030 and 49407 can be found in Addendum B to this CY 2015 OPPS/ASC final rule 

(which is available via the Internet on the CMS Web site). 

c. Negative Pressure Wound Therapy (NPWT) (APCs 0012, 0013, 0015 and 0016) 

 For CY 2015, we proposed to assign all of the NPWT services to APC 0015 

(Level II Debridement & Destruction), with a proposed payment rate of $141.66. We 

proposed to continue to assign CPT code 97606 (Negative pressure wound therapy (eg, 

vacuum assisted drainage collection), including topical application(s), wound assessment, 

and instruction(s) for ongoing care, per session; total wound(s) surface area greater than 

50 square centimeters) to APC 0015. In addition, for the CY 2015 OPPS update, we 

proposed to reassign CPT code 97605 (Negative pressure wound therapy (eg, vacuum 

assisted drainage collection), including topical application(s), wound assessment, and 

instruction(s) for ongoing care, per session; total wound(s) surface area less than or equal 

to 50 square centimeters) from APC 0013 (Level II Debridement & Destruction), the 

APC to which the procedure is assigned for CY 2014, to APC 0015. As listed in Table 

29 of the CY 2015 OPPS/ASC proposed rule (79 FR 40916), we also proposed to 

reassign HCPCS codes G0456 (Negative pressure wound therapy (eg. vacuum assisted 

drainage collection) using a mechanically-powered device, not durable medical 

equipment, including provision of cartridge and dressing(s), topical application(s), wound 

assessment, and instructions for ongoing care, per session; total wounds(s) surface area 

less than or equal to 50 square centimeters) and G0457 (Negative pressure wound therapy 

(eg. vacuum assisted drainage collection) using a mechanically-powered device, not 

durable medical equipment, including provision of cartridge and dressing(s), topical 

application(s), wound assessment, and instructions for ongoing care, per session; total 
CMS-1613-FC 396 

wounds(s) surface area greater than 50 square centimeters) from APC 0016 (Level III 

Debridement & Destruction) to APC 0015. 

 We note that CPT codes 97605 and 97606 became effective on January 1, 2005, 

and describe the type of NPWT services that employ durable medical equipment (DME). 

Alternatively, HCPCS codes G0456 and G0457, which are relatively new codes that 

became effective on January 1, 2013, were established by CMS to provide a payment 

mechanism for NPWT services furnished using disposable supplies instead of DME. We 

proposed to maintain the assignment of status indicator “T” to these two codes. 

 For the CY 2013 OPPS update, we assigned CPT code 97605 to APC 0013 (Level 

II Debridement & Destruction), with a payment rate of $71.54 and CPT code 97606 to 

APC 0015 (Level III Debridement & Destruction), with a payment rate of $106.96. In 

addition, we assigned HCPCS codes G0456 and G0457 to APC 0016 (Level IV 

Debridement & Destruction), with a payment rate of $209.65. 

 For the CY 2014 OPPS update, we continued to assign CPT code 97605 to 

APC 0013 and CPT code 97606 to APC 0015. We also continued to assign HCPCS 

codes G0456 and G0457 to APC 0016, with a payment rate of $274.81. We note that we 

stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75001) that 

some commenters requested the reassignment of HCPCS codes G0456 and G0457 to a 

higher paying APC, with a payment rate specifically ranging between $450 and $500. 

The commenters believed that a higher paying APC would be more reflective of the cost 

of providing NPWT services using disposable supplies. We further stated that because 

HCPCS codes G0456 and G0457 were new codes for the CY 2013 OPPS update, we 

expected to have claims data available for these codes during the CY 2015 rulemaking 
CMS-1613-FC 397 

cycle and, at that time, we would reevaluate the APC assignments for these services in 

preparation for the CY 2015 OPPS update. 

 For the CY 2015 OPPS update, we analyzed the latest hospital outpatient claims 

data available for the CY 2015 OPPS/ASC proposed rule, which was based on claims 

submitted between January 1, 2013 and December 31, 2013, and processed on or before 

December 31, 2013. The data indicated that the geometric mean cost of APC 0013 was 

comparable to the geometric mean cost of APC 0015. Therefore, in the CY 2015 

OPPS/ASC proposed rule (79 FR 40988), we proposed to combine these APCs by 

reassigning all of the procedures from APC 0013 to APC 0015; delete APC 0013, and 

retain APC 0015 for the CY 2015 OPPS update. In addition, we proposed to rename the 

Debridement and Destruction APC series (excluding APC 0012) as follows: APC 0015 

(Level II Debridement and Destruction); APC 0016 (Level III Debridement and 

Destruction); and APC 0017 (Level IV Debridement and Destruction). 

 Furthermore, the CY 2013 claims data available for the proposed rule also 

indicated that the geometric mean cost for HCPCS code G0456 was approximately $152 

based on 4,509 single claims (out of 5,772 total claims), and approximately $193 for 

HCPCS code G0457 based on 386 single claims (out of 591 total claims). The claims 

data also showed that the geometric mean cost for CPT code 97605 was approximately 

$101 based on 58,901 single claims (out of 75,378 total claims), and approximately $140 

for CPT code 97606 based on 6,722 single claims (out of 9,063 total claims). The 

proposed geometric mean costs of HCPCS codes G0456 and G0457, and CPT codes 

97605 and 97606 were all comparable to the proposed geometric mean cost for APC 

0015 of approximately $148. Based on analysis of the most recent claims data available 
CMS-1613-FC 398 

for the proposed rule, we stated that we believed that the most appropriate assignment for 

all of the NPWT services was APC 0015 based on the clinical and resource 

homogeneity of the services assigned to this APC. The next higher cost APC in the 

series, APC 0016, had a proposed geometric mean cost of approximately $284, 

which was significantly higher than the proposed geometric mean cost of any of the 

NPWT services. Therefore, in the CY 2015 OPPS/ASC proposed rule, we proposed to 

continue to assign CPT code 97606 to APC 0015, reassign CPT code 97605 from 

APC 0013 to APC 0015, and reassign HCPCS codes G0456 and G0457 from APC 0016 

to APC 0015 for the CY 2015 OPPS update. 

 Comment: Most commenters requested that CMS continue to assign the 

disposable NPWT HCPCS codes G0456 and G0457 to APC 0016 for the CY 2015 OPPS 

update, which is the same APC to which these services are assigned for CY 2014. The 

commenters believed that hospitals may have miscoded claims reporting these services 

and, consequently, the CY 2015 proposed payment rate of approximately $142 for 

HCPCS codes G0456 and G0457 is insufficient because the CY 2013 OPPS claims data 

do not accurately capture the cost of the disposable supplies that is included in providing 

the service. One commenter stated that the cost of the disposable NPWT supplies range 

between $200 and $700 per case. The commenter provided copies of individual invoices 

that were forwarded to various hospitals from the manufacturer that showed a cost of 

approximately $220 for one disposable NPWT system. In addition, based on its analysis 

of charges reported by hospitals, the commenter believed that hospitals failed to 

understand the differences between the type of NPWT services that employ DME, which 

are described by CPT codes 97605 and 97606, and the type of disposable NPWT services 
CMS-1613-FC 399 

described by HCPCS G-codes. The commenter stated that, according to its data analysis, 

there was no difference in hospital charges for the two types of NPWT services reported 

on claims. The commenter believed that hospitals miscoded these claims because they 

may have believed that the services described by the CPT codes for the type of NPWT 

services that use DME are similar to the services described by the disposable NPWT 

HCPCS G-codes. Several commenters explained that the cost of the type of NPWT 

services that use DME does not include the cost of the devices and supplies that are used 

to provide the services described by the HCPCS G-codes. The commenter speculated 

that, although it appeared that hospitals did not include the cost of the disposable devices 

when reporting their charges for the services described by the disposable NPWT HCPCS 

G-codes, hospitals should have included such costs. Therefore, the commenters urged 

CMS to continue to assign HCPCS codes G0456 and G0457 to APC 0016 for the CY 

2015 OPPS update. 

 Response: Based on the significant number of claims that are available for this 

final rule with comment period, we believe that APC 0015 best reflects the clinical 

characteristics and resource costs of HCPCS codes G0456 and G0457. In addition, we do 

not believe that continuing to assign HCPCS codes G0456 and G0457 to APC 0016 

would be appropriate for CY 2015. Our analysis of the latest hospital outpatient claims 

data available for this CY 2015 OPPS/ASC final rule with comment period, which is 

based on claims submitted between January 1, 2013 and December 31, 2013, and 

processed on or before June 30, 2014, indicates that the geometric mean costs for both 

HCPCS codes (G0456 and G0457) are very similar to the geometric mean cost of 

APC 0015. Specifically, our latest hospital outpatient claims data for this final rule with 
CMS-1613-FC 400 

comment period show a geometric mean cost of approximately $158 for HCPCS code 

G0456 based on 5,198 single claims (out of 6,645 total claims), which is close to the 

geometric mean cost of APC 0015, which is approximately $152. Similarly, our claims 

data show a geometric mean cost of approximately $202 for HCPCS code G0457 based 

on 476 single claims (out of 676 total claims), which is also closer to the geometric mean 

cost of APC 0015, which is approximately $152 than the geometric mean cost of 

APC 0016, which is approximately $294. 

 In addition, we are not convinced that hospitals are reporting the same charges for 

the two types of NPWT services (DME-based and disposable) because a review of the 

latest claims data shows that the geometric mean costs for the most highly utilized 

procedures described by HCPCS code G0456 (geometric mean cost of approximately 

$158) and CPT code 97605 (geometric mean cost of approximately $101) are 

significantly different. This difference in costs captured in the claims data demonstrates 

that hospitals are not reporting identical charges for the different types of NPWT 

services, DME and disposable-based. Furthermore, we note that for all APCs whose 

payment rates are based upon relative payment weights, the quality and accuracy of 

reported units and charges influence the geometric mean costs that are the basis for our 

payment rates, especially for low volume items and services. However, beyond our 

standard OPPS trimming methodology (described in section II.A.2. of this final rule with 

comment period) that we apply to those claims that have passed various types of claims 

processing edits, it is not our general policy to judge the accuracy of hospital coding and 

charging for purposes of ratesetting (75 FR 71838). We rely on hospitals to bill all 

HCPCS codes accurately in accordance with their code descriptors and CPT and CMS 
CMS-1613-FC 401 

instructions, as applicable, and to report charges on claims and charges and costs on their 

Medicare hospital cost reports appropriately. In addition, we do not specify the 

methodologies that hospitals must use to set charges for this or any other service. 

Therefore, based on the latest hospital outpatient claims data available for this final rule 

with comment period, we believe that APC 0015 best reflects the clinical characteristics 

and resource costs of HCPCS codes G0456 and G0457. 

 Comment: One commenter recommended that CMS make certain changes to 

APCs 0015 and 0016. Specifically, the commenter recommended that CMS lower the 

geometric mean cost for APC 0016 to $190, which would result in reassigning certain 

codes that were in APC 0015 whose geometric mean cost met or exceeded this amount to 

APC 0016. This commenter stated that such reassignment would retain HCPCS codes 

G0456 and G0457 in APC 0016. 

 Response: We believe that the proposed structures of APCs 0015 and 0016 (aside 

from the few code reassignments that are being made for the purpose of resolving a 

violation of the 2 times rule in APC 0015 that are discussed below) are optimal in terms 

of clinical and resource homogeneity. The geometric mean cost range for significant 

procedures assigned to APC 0015 is between approximately $110 (for CPT code 17250) 

and approximately $201 (for CPT code 11100). The geometric mean cost range for 

significant procedures assigned to APC 0016 is between approximately $230 (for CPT 

code 17282) and approximately $368 (for CPT code 11043). Reassigning HCPCS code 

G0456 from APC 0015 to APC 0016 would either violate the 2 times rule in APC 0016 

or necessitate dividing APC 0016 into two APCs, which we do not believe is appropriate 

or necessary. Both of these options are undesirable, especially given that the geometric 
CMS-1613-FC 402 

mean cost of HCPCS code G0456 (approximately $158) is comparable to the geometric 

mean cost of APC 0015 (approximately $152). 

 In summary, based on the latest claims data used for this final rule with comment 

period, we believe that HCPCS codes G0456 and G0457 are appropriately assigned in 

APC 0015 for the CY 2015 update based on the clinical and resource similarity to the 

other procedures in APC 0015. As has been our practice since the implementation of the 

OPPS in 2000, we review, on an annual basis, the APC assignments for the procedures 

and services paid under the OPPS. We will again review the APC assignments for all the 

NPWT services in light of the CY 2014 claims data and the proposed APC structures for 

clinically relevant APCs and determine whether an APC reassignment for any of the 

NPWT codes would be appropriate in the CY 2016 rulemaking. 

 In addition, in the CY 2015 OPPS/ASC proposed rule, there were violations of 

the 2 times rule noted for both APCs 0012 and 0015 (79 FR 40981). Every year we make 

every effort to minimize the number of APCs that are listed as exceptions to the 2 times 

rule. To resolve the violations of the 2 times rule in APCs 0012 and 0015, we are making 

the following code reassignments: 

● CPT codes 11719, 11720, 11721, 11740, and 17340, and HCPCS code G0127 

from APC 0012 to APC 0340. 

● CPT codes 11901, 12014, 96920, and 97605 from APC 0015 to APC 0012. 

 These code reassignments eliminated the 2 times rule violations that existed in 

APCs 0012 and 0015 in the CY 2015 OPPS/ASC proposed rule. We note that APC 0012 

is one of the APCs included in the ancillary services packaging policy that is discussed in 

section II.A.3.c.(1) of this final rule with comment period. Because CPT code 97605 is 
CMS-1613-FC 403 

assigned to APC 0012, the code will be conditionally packaged and assigned to status 

indicator “Q1” for CY 2015. 

 After consideration of the public comments we received, we are finalizing our 

CY 2015 proposal, with modification. Specifically, we are finalizing our proposal to 

assign CPT code 97606 and HCPCS codes G0456 and G0457 to APC 0015. However, 

we are reassigning CPT code 97605 from our proposed APC 0015 to APC 0012 for 

the CY 2015 update to eliminate the violation of the 2 times rule that existed in APC 

0015 based on claims data available for the proposed rule. 

 In addition, for the CY 2015 update, the CPT Editorial Panel established two 

new CPT codes to describe disposable NPWT services and revised the long 

descriptors for existing CPT codes 97605 and 97606, effective January 1, 2015. 

Consistent with our general policy of using permanent codes rather than using 

temporary HCPCS G-codes in order to streamline coding, we are deleting HCPCS 

codes G0456 and G0457 because they are replaced with two new CPT codes 

effective January 1, 2015. Table 25 below shows the replacement CPT codes for 

HCPCS codes G0456 and G0457 as well as the revised long descriptors for existing 

CPT codes 97605 and 97606. The final CY 2015 payment rate for the NPWT 

services codes can be found in Addendum B to this final rule with comment period 

(which is available via the Internet on the CMS Web site). Like all new codes 

effective January 1, 2015, the APC assignments for the new disposable NPWT CPT 

codes are open for comment for 60 days after display of this CY 2015 OPPS/ASC 

final rule with comment period. 

TABLE 25.—FINAL APC ASSIGNMENTS FOR THE NPWT 

SERVICES FOR CY 2015 
CMS-1613-FC 404 

CY 

2014 

CPT/ 

HCPCS 

Code 

CY 

2015 

CPT 

Code 

CY 2015 Long Descriptor

Proposed 

CY 2015 

OPPS SI 

Proposed 

CY 2015 

OPPS 

APC 

Final 

CY 

2015 

OPPS 

SI 

Final 

CY 

2015 

OPPS 

APC 

97605 97605 

Negative pressure wound 

therapy (eg, vacuum 

assisted drainage 

collection), utilizing 

durable medical equipment 

(DME), including topical 

application(s), wound 

assessment, and 

instruction(s) for ongoing 

care, per session; total 

wound(s) surface area less 

than or equal to 50 square 

centimeters

T 0015 Q1 0012 

97606 97606 

Negative pressure wound 

therapy (eg, vacuum 

assisted drainage 

collection), utilizing 

durable medical equipment 

(DME), including topical 

application(s), wound 

assessment, and 

instruction(s) for ongoing 

care, per session; total 

wound(s) surface area 

greater than 50 square 

centimeters

T 0015 T 0015 
CMS-1613-FC 405 

CY 

2014 

CPT/ 

HCPCS 

Code 

CY 

2015 

CPT 

Code 

CY 2015 Long Descriptor

Proposed 

CY 2015 

OPPS SI 

Proposed 

CY 2015 

OPPS 

APC 

Final 

CY 

2015 

OPPS 

SI 

Final 

CY 

2015 

OPPS 

APC 

G0456 97607 

Negative pressure wound 

therapy, (eg, vacuum 

assisted drainage 

collection), utilizing 

disposable, non-durable 

medical equipment 

including provision of 

exudate management 

collection system, topical 

application(s), wound 

assessment, and 

instructions for ongoing 

care, per session; total 

wound(s) surface area less 

than or equal to 50 square 

centimeters

T 0015 T 0015 

G0457 97608 

Negative pressure wound 

therapy, (eg, vacuum 

assisted drainage 

collection), utilizing 

disposable, non-durable 

medical equipment 

including provision of 

exudate management 

collection system, topical 

application(s), wound 

assessment, and 

instructions for ongoing 

care, per session; total 

wound(s) surface area 

greater than 50 square 

centimeters

T 0015 T 0015 

 
CMS-1613-FC 406 

d. Platelet Rich Plasma (PRP) (APC 0327) 

 For CY 2015, we proposed to continue to assign HCPCS code G0460 

(Autologous platelet rich plasma for chronic wounds/ulcers, including phlebotomy, 

centrifugation, and all other preparatory procedures, administration and dressings, per 

treatment) to APC 0327 (Level II Debridement & Destruction), with a proposed payment 

rate of approximately $431. We note that HCPCS code G0460, which became effective 

July 1, 2013, describes both the procedure and product components associated with the 

autologous platelet rich plasma service. 

 Comment: One commenter requested that CMS exempt HCPCS code G0460 

from the geographic wage index variations to enable hospitals to more willingly 

participate in the AutoloGel Coverage with Evidence Development (CED) protocols. 

According to the commenter, HOPDs are reluctant to enroll in the CED protocols 

because they are concerned that the proposed APC payment rate will not cover the cost of 

the product, the procedure, the overhead, and the additional administrative effort 

associated with CED data collection requirements. In addition, the commenter requested 

that CMS establish a final payment rate for APC 0327 based on the geometric mean cost 

of $496.99 to help achieve some stability regarding the payment for the procedures 

assigned to this APC. 

 Response: We note that comments related to CED protocols or data collection are 

outside the scope of the proposed rule. With regard to the geographic wage index 

exemption requested by the commenter, we have never made such an exception. Under 

the hospital OPPS, all procedures and services that include devices are wage adjusted. 

Moreover, the payment rates for procedures and APCs are not based on a specific 
CMS-1613-FC 407 

projected amount. The final payment rate for APC 0327 is based on the geometric mean 

cost of all the procedures described by the HCPCS codes assigned to this APC. We 

believe that the procedure described by HCPCS code G0460 is appropriately assigned to 

APC 0327 for the CY 2015 OPPS update based on the clinical and resource similarities 

in relation to the other procedures assigned to APC 0327. We note that, for this final rule 

with comment period, which is based on hospital outpatient claims submitted 

between January 1, 2013, and December 31, 2013, that were processed on or before 

June 30, 2014, our latest hospital outpatient claims data show no claims reporting 

the service described by HCPCS code G0460. As has been our practice since the 

implementation of the OPPS in 2000, we review, on an annual basis, the APC 

assignments for the procedures and services paid under the OPPS. We will review the 

APC assignment for HCPCS code G0460 when sufficient claims data become available 

to determine whether a reassignment to a more appropriate APC is necessary for the CY 

2016 update. After consideration of the public comment we received, we are finalizing 

our proposal, without modification, to continue to assign HCPCS code G0460 to APC 

0327 for CY 2015. The final CY 2015 payment rate for HCPCS code G0460 can be 

found in Addendum B to this CY 2015 OPPS/ASC final rule (which is available via the 

Internet on the CMS Web site). 

IV. OPPS Payment for Devices 

A. Pass-Through Payments for Devices 

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

a. Background 

 Section 1833(t)(6)(B)(iii) of the Act sets forth the period for which a device category 

eligible for transitional pass-through payments under the OPPS may be in effect. The 
CMS-1613-FC 408 

implementing regulation at 42 CFR 419.66(g) provides that this pass-through payment eligibility 

period begins on the date CMS establishes a particular transitional pass-through category of 

devices. We may establish a new device category for pass-through payment in any quarter, and 

under our established policy, we base the pass-through status expiration date for a device 

category on the date on which pass-through payment is effective for the category; that is, the date 

CMS establishes a particular category of devices eligible for transitional pass-through payments. 

We propose and finalize the dates for expiration of pass-through status for device categories as 

part of the OPPS annual update. 

 We also have an established policy to package the costs of the devices that are no longer 

eligible for pass-through payments into the costs of the procedures with which the devices are 

reported in the claims data used to set the payment rates (67 FR 66763). Brachytherapy sources, 

which are now separately paid in accordance with section 1833(t)(2)(H) of the Act, are an 

exception to this established policy. 

b. CY 2015 Policy 

 There currently is one device category eligible for pass-through payment, which we 

established effective October 1, 2013: HCPCS code C1841 (Retinal prosthesis, includes all 

internal and external components). Recognizing that this device category has been eligible for at 

least 2 years, but not more than 3 years, of pass-through status by the end of CY 2015, in the CY 

2015 OPPS/ASC proposed rule (79 FR 40989), we proposed the expiration of pass-through 

payment for HCPCS code C1841 devices on December 31, 2015. Therefore, in accordance with 

our established policy, beginning with CY 2016, we proposed to package the costs of the HCPCS 

code C1841 devices into the costs related to the procedures with which the device is reported in 

the hospital claims data (79 FR 40989 through 40990). 
CMS-1613-FC 409 

 Comment: A few commenters requested that CMS extend the pass-through payment 

period for the device described by HCPCS code C1841 due to delay of the first date of sale of the 

device until January 2014. The commenters asserted that the delay was due to various regulatory 

delays, including the Food and Drug Administration’s (FDA’s) Humanitarian Device Exemption 

(HDE) approval process and Federal Communications Commission (FCC) regulations regarding 

utilization of a radiofrequency (RF) band approval. The commenters therefore requested that 

CMS use the date of the first sale or the date of the first HCPCS code C1841 device implant 

(January 16, 2014) to “reset” the start date for pass-through payment eligibility, which would 

result in another year of pass-through payment status. 

 Response: According to 42 CFR 419.66(g), “CMS limits the eligibility for a passthrough payment established under this section to a period of at least 2 years, but not more than 3 

years, beginning on the date that CMS establishes a category of devices” (emphasis added). We 

cannot extend the pass-through payment status of HCPCS code C1841 beyond CY 2015 because 

such an extension would make the pass-through payment status effective longer than the 

maximum 3-year period permitted under 42 CFR 419.66(g). Moreover, the HCPCS code C1841 

device category was made effective in the OPPS on October 1, 2013. The HCPCS code C1841 

device category will have had more than 2 years of pass-through payment status as of 

December 31, 2015. Extending pass-through payment status through December 31, 2016, as 

requested by the commenter, would afford the HCPCS code C1841 device category longer than 

the 3-year maximum pass-through payment period. Therefore, after consideration of the public 

comments we received, we are finalizing our proposal to expire HCPCS code C1841 device 

category from pass-through payment status after December 31, 2015. We are finalizing our 

proposal to package the costs for devices described by HCPCS code C1841 into the costs of the 

procedure with which the device is reported in the hospital claims data used in the development 
CMS-1613-FC 410 

of the OPPS relative payment weights that will be used to establish the ASC payment rates for 

CY 2016. 

 With the expiration of HCPCS code C1841 device category from pass-through payment 

status at the end of CY 2015, there are no other currently active categories for which we would 

expire pass-through status in CY 2015. If we create new device categories for pass-through 

payment status during the remainder of CY 2014 or during CY 2015, we will propose future 

expiration dates in accordance with 42 CFR 419.66(g). 

2. Provisions for Reducing Transitional Pass-through Payments to Offset Costs Packaged into 

APC Groups 

a. Background 

 Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional pass-through payment 

for an eligible device as the amount by which the hospital’s charges for a device, adjusted to cost 

(the cost of the device) exceeds the portion of the otherwise applicable Medicare outpatient 

department fee schedule amount (the APC payment amount) associated with the device. We have 

an established policy to estimate the portion of each APC payment rate that could reasonably be 

attributed to the cost of the associated devices that are eligible for pass-through payments 

(66 FR 59904) for purposes of estimating the portion of the otherwise applicable APC payment 

amount associated with pass-through devices. For eligible device categories, we deduct an 

amount that reflects the portion of the APC payment amount that we determine is associated with 

the cost of the device, defined as the device APC offset amount, from the charges adjusted to cost 

for the device, as provided by section 1833(t)(6)(D)(ii) of the Act, to determine the pass-through 

payment amount for the eligible device. We have consistently used an established methodology 

to estimate the portion of each APC payment rate that could reasonably be attributed to the cost 

of an associated device eligible for pass-through payment, using claims data from the period used 
CMS-1613-FC 411 

for the most recent recalibration of the APC rates (72 FR 66751 through 66752). We establish 

and update the applicable device APC offset amounts for eligible pass-through device categories 

through the transmittals that implement the quarterly OPPS updates. 

 We published a list of all procedural APCs with the CY 2014 portions (both percentages 

and dollar amounts) of the APC payment amounts that we determined are associated with the cost 

of devices on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The dollar amounts are used as the device APC 

offset amounts. In addition, in accordance with our established practice, the device APC offset 

amounts in a related APC are used in order to evaluate whether the cost of a device in an 

application for a new device category for pass-through payment is not insignificant in relation to 

the APC payment amount for the service related to the category of devices, as specified in our 

regulations at § 419.66(d). 

 Beginning in CY 2010, we include packaged costs related to implantable biologicals in 

the device offset calculations in accordance with our policy that the pass-through evaluation 

process and payment methodology for implantable biologicals that are surgically inserted or 

implanted (through a surgical incision or a natural orifice) and that are newly approved for passthrough status beginning on or after January 1, 2010, be the device pass-through process and 

payment methodology only (74 FR 60476). 

b. CY 2015 Policy 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), we proposed to continue, for 

CY 2015, our established methodology to estimate the portion of each APC payment rate that 

could reasonably be attributed to (that is, reflect) the cost of an associated device eligible for 

pass-through payment, using claims data from the period used for the most recent recalibration of 

the APC payment rates. We proposed to continue our policy, for CY 2015, that the pass-through 
CMS-1613-FC 412 

evaluation process and pass-through payment methodology for implantable biologicals that are 

surgically inserted or implanted (through a surgical incision or a natural orifice) and that are 

newly approved for pass-through status, be the device pass-through process and payment 

methodology only. The rationale for this policy is provided in the CY 2010 OPPS/ASC final rule 

with comment period (74 FR 60471 through 60477). We also proposed to continue our 

established policies for calculating and setting the device APC offset amounts for each device 

category eligible for pass-through payment. In addition, we proposed to continue to review each 

new device category on a case-by-case basis to determine whether device costs associated with 

the new category are already packaged into the existing APC structure. If device costs packaged 

into the existing APC structure are associated with the new category, we proposed to deduct the 

device APC offset amount from the pass-through payment for the device category. As stated 

earlier, these device APC offset amounts also would be used in order to evaluate whether the cost 

of a device in an application for a new device category for pass-through payment is not 

insignificant in relation to the APC payment amount for the service related to the category of 

devices (§ 419.66(d)). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40990), for CY 2015, we also proposed 

to continue our policy established in CY 2010 to include implantable biologicals in our

calculation of the device APC offset amounts. In addition, we proposed to continue to calculate 

and set any device APC offset amount for any new device pass-through category that includes a 

newly eligible implantable biological beginning in CY 2015, using the same methodology we 

have historically used to calculate and set device APC offset amounts for device categories 

eligible for pass-through payment, and to include the costs of implantable biologicals in the 

calculation of the device APC offset amounts (79 FR 40990). 

 In addition, in the CY 2015 OPPS/ASC proposed rule (79 FR 40900), we proposed to 

update the list of all procedural APCs with the final CY 2015 portions of the APC payment 
CMS-1613-FC 413 

amounts that we determine are associated with the cost of devices on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html so that this information is available for use by the 

public in developing potential CY 2015 device pass-through payment applications and by CMS in 

reviewing those applications. 

 Comment: One commenter objected to CMS’ proposal to continue its policy of 

evaluating implantable biological pass-through applications through the device evaluation 

process. The commenter believed that all biologicals should be evaluated through the drug and 

biological pass-through process, which is intended for the evaluation of drugs and biologicals. 

 Response: We have discussed our rationale for this policy in the CY 2010 OPPS/ASC 

final rule (74 FR 60463). Implantable biologicals function as implantable medical devices and 

are used in the HOPD in surgical procedures in a manner similar to implantable medical devices. 

Therefore, since CY 2010, we have treated them as medical devices for pass-through payment 

purposes. In addition, like implantable medical devices, implantable biologicals are treated as 

packaged surgical supplies in the OPPS under 42 CFR 419.2(b)(16). For these reasons, we will 

continue to treat implantable biologicals as devices for pass-through payment purposes in CY 

2015. 

 After consideration of the public comment we received, we are finalizing, without 

modification, the aforementioned proposed policies for calculation of the device APC offset 

amounts for CY 2015. In addition, we are updating, on the CMS Web site at 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html, the list of all procedural APCs with the final CY 

2015 portions of the APC payment amounts that we determine are associated with the cost of 
CMS-1613-FC 414 

devices so that this information is available for use by the public in developing potential CY 2015 

device pass-through payment applications and by CMS in reviewing those applications. 

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

1. Background 

 To ensure equitable OPPS payment when a hospital receives a device without cost or 

with full credit, in CY 2007, we implemented a policy to reduce the payment for specified devicedependent APCs by the estimated portion of the APC payment attributable to device costs (that is, 

the device offset) when the hospital receives a specified device at no cost or with full credit (71 

FR 68071 through 68077). Hospitals are instructed to report no cost/full credit cases on the claim 

using the “FB” modifier on the line with the procedure code in which the no cost/full credit 

device is used. In cases in which the device is furnished without cost or with full credit, the 

hospital is instructed to report a token device charge of less than $1.01. In cases in which the 

device being inserted is an upgrade (either of the same type of device or to a different type of 

device) with a full credit for the device being replaced, the hospital is instructed to report as the 

device charge the difference between its usual charge for the device being implanted and its usual 

charge for the device for which it received full credit. In CY 2008, we expanded this payment 

adjustment policy to include cases in which hospitals receive partial credit of 50 percent or more 

of the cost of a specified device. Hospitals are instructed to append the “FC” modifier to the 

procedure code that reports the service provided to furnish the device when they receive a partial 

credit of 50 percent or more of the cost of the new device. We refer readers to the CY 2008 

OPPS/ASC final rule with comment period for more background information on the “FB” and 

“FC” payment adjustment policies (72 FR 66743 through 66749). 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 

75007), beginning in CY 2014, we modified our policy of reducing OPPS payment for specified 
CMS-1613-FC 415 

APCs when a hospital furnishes a specified device without cost or with a full or partial credit. 

For CY 2013 and prior years, our policy had been to reduce OPPS payment by 100 percent of the 

device offset amount when a hospital furnishes a specified device without cost or with a full 

credit and by 50 percent of the device offset amount when the hospital receives partial credit in 

the amount of 50 percent or more of the cost for the specified device. For CY 2014, we reduced 

OPPS payment, for the applicable APCs, by the full or partial credit a hospital receives for a 

replaced device. Specifically, under this modified policy, hospitals are required to report on the 

claim the amount of the credit in the amount portion for value code “FD” (Credit Received from 

the Manufacturer for a Replaced Medical Device) when the hospital receives a credit for a 

replaced device that is 50 percent or greater than the cost of the device. For CY 2014, we also 

limited the OPPS payment deduction for the applicable APCs to the total amount of the device 

offset when the “FD” value code appears on a claim. 

2. Policy for CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992), for CY 2015, 

we proposed to continue our existing policy of reducing OPPS payment for specified APCs when 

a hospital furnishes a specified device without cost or with a full or partial credit. Specifically, 

for CY 2015, we proposed to continue to reduce the OPPS payment, for the applicable APCs 

listed in Table 31 of the proposed rule, by the full or partial credit a provider receives for a 

replaced device. Under this proposed policy, hospitals would continue to be required to report on 

the claim the amount of the credit in the amount portion for “FD” when the hospital receives a 

credit for a replaced device listed in Table 32 of the proposed rule that is 50 percent or greater 

than the cost of the device. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40990 through 40992), for CY 2015, 

we also proposed to continue using the three criteria established in the CY 2007 OPPS/ASC final 
CMS-1613-FC 416 

rule with comment period for determining the APCs to which our proposed CY 2015 policy 

would apply (71 FR 68072 through 68077). Specifically: (1) All procedures assigned to the 

selected APCs must involve implantable devices that would be reported if device insertion 

procedures were performed; (2) the required devices must be surgically inserted or implanted 

devices that remain in the patient’s body after the conclusion of the procedure (at least 

temporarily); and (3) the device offset amount must be significant, which, for purposes of this 

policy, is defined as exceeding 40 percent of the APC cost. We also proposed to continue to 

restrict the devices to which the APC payment adjustment would apply to a specific set of costly 

devices to ensure that the adjustment would not be triggered by the implantation of an 

inexpensive device whose cost would not constitute a significant proportion of the total payment 

rate for an APC. We stated that we continue to believe these criteria are appropriate because no 

cost devices and device credits are likely to be associated with particular cases only when the 

device must be reported on the claim and is of a type that is implanted and remains in the body 

when the beneficiary leaves the hospital. We believe that the reduction in payment is appropriate 

only when the cost of the device is a significant part of the total cost of the APC into which the 

device cost is packaged, and that the 40-percent threshold is a reasonable definition of a 

significant cost. 

 Comment: One commenter urged CMS to discontinue its current policy of reducing 

OPPS payment for specified APCs when a hospital furnishes a specified device without cost or 

with a full or partial credit. The commenter stated that procedures which involve the replacement 

of a device are of greater complexity than the original insertion of the device. The commenter 

recommended that, because the replacement procedures are not paid at a higher rate, CMS not 

further penalize the hospital by reducing the OPPS payment when the device is furnished without 

cost or with a full or partial credit to the hospital. 
CMS-1613-FC 417 

Response: We do not agree with the commenter and believe that it is appropriate to 

reduce the OPPS payment for specified APCs when a hospital furnishes a specified device 

without cost or with a full or partial credit. 

 After consideration of the public comments we received, we are finalizing our proposals 

to continue our existing policy of reducing OPPS payment for specified APCs when a hospital 

furnishes a specified device without cost or with a full or partial credit, and to continue using the 

three criteria established in the CY 2007 OPPS/ASC final rule with comment period (71 FR 

68072 through 68077) for determining the APCs to which our CY 2015 policy will apply. 

 We examined the offset amounts calculated from the CY 2015 final rule with comment 

period data and the clinical characteristics of the final CY 2015 APCs to determine which APCs 

meet the criteria for CY 2015. Table 26 below lists the APCs to which the payment adjustment 

policy for no cost/full credit and partial credit devices will apply in CY 2015. Table 27 below 

lists the devices to which the payment adjustment policy for no cost/full credit and partial credit 

devices will apply in CY 2015. 

 Based on the final CY 2013 claims data available for this CY 2015 OPPS/ASC final rule 

with comment period, we have updated the lists of APCs and devices to which the no cost/full 

credit and partial credit device adjustment policy will apply for CY 2015, consistent with the 

three criteria discussed earlier in this section. 

TABLE 26.—APCs TO WHICH THE NO COST/FULL CREDIT AND PARTIAL 

CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY 2015 

CY 2015 APC CY 2015 APC Title 

0039 Level III Neurostimulator & Related Procedures 

0061 Level II Neurostimulator & Related Procedures 
CMS-1613-FC 418 

CY 2015 APC CY 2015 APC Title 

0064 Level III Treatment Fracture/Dislocation 

0089 Level III Pacemaker and Similar Procedures 

0090 Level II Pacemaker and Similar Procedures 

0107 Level I ICD and Similar Procedures 

0108 Level II ICD and Similar Procedures 

0227 Implantation of Drug Infusion Device 

0229 Level II Endovascular Procedures 

0259 Level VII ENT Procedures 

0293 Level IV Intraocular Procedures 

0318 Level IV Neurostimulator & Related Procedures 

0319 Level III Endovascular Procedures 

0351 Level V Intraocular Procedures 

0385 Level I Urogenital Procedures 

0386 Level II Urogenital Procedures 

0425 Level V Musculoskeletal Procedures Except Hand and Foot 

0655 Level IV Pacemaker and Similar Procedures 

 
CMS-1613-FC 419 

TABLE 27.—DEVICES TO WHICH THE NO COST/FULL CREDIT AND PARTIAL 

CREDIT DEVICE PAYMENT ADJUSTMENT POLICY WILL APPLY IN CY 2015 

CY 2015 Device 

HCPCS Code CY 2015 Short Descriptor 

C1721 AICD, dual chamber 

C1722 AICD, single chamber 

C1728 Cath, brachytx seed adm 

C1764 Event recorder, cardiac 

C1767 Generator, neurostim, imp 

C1771 Rep dev, urinary, w/sling 

C1772 Infusion pump, programmable 

C1776 Joint device (implantable) 

C1777 Lead, AICD, endo single coil 

C1778 Lead, neurostimulator 

C1779 Lead, pmkr, transvenous VDD 

C1785 Pmkr, dual, rate-resp 

C1786 Pmkr, single, rate-resp 

C1789 Prosthesis, breast, imp 

C1813 Prosthesis, penile, inflatab 

C1815 Pros, urinary sph, imp 

C1818 Integrated keratoprosthesis 

C1820 Generator, neuro rechg bat sys 

C1840 Lens, intraocular (telescopic) 

C1881 Dialysis access system 

C1882 AICD, other than sing/dual 
CMS-1613-FC 420 

CY 2015 Device 

HCPCS Code CY 2015 Short Descriptor 

C1891 Infusion pump, non-prog, perm 

C1895 Lead, AICD, endo dual coil 

C1896 Lead, AICD, non sing/dual 

C1897 Lead, neurostim, test kit 

C1898 Lead, pmkr, other than trans 

C1899 Lead, pmkr/AICD combination 

C1900 Lead coronary venous 

C2619 Pmkr, dual, non rate-resp 

C2620 Pmkr, single, non rate-resp 

C2621 Pmkr, other than sing/dual 

C2622 Prosthesis, penile, non-inf 

C2626 Infusion pump, non-prog, temp 

C2631 Rep dev, urinary, w/o sling 

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

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

and Radiopharmaceuticals 

1. Background 

 Section 1833(t)(6) of the Act provides for temporary additional payments or 

“transitional pass-through payments” for certain drugs and biologicals. Throughout this 

final rule with comment period, the term “biological” is used because this is the term that 

appears in section 1861(t) of the Act. “Biological” as used in this final rule with 

comment period includes “biological product” or “biologic” as defined in the Public 
CMS-1613-FC 421 

Health Service Act. As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget 

Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this provision requires the Secretary 

to make additional payments to hospitals for: current orphan drugs, as designated under 

section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs and biologicals 

and brachytherapy sources used in cancer therapy; and current radiopharmaceutical drugs 

and biologicals. “Current” refers to drugs or biologicals that are outpatient hospital 

services under Medicare Part B for which payment was made on the first date the hospital 

OPPS was implemented. 

 Transitional pass-through payments also are provided for certain “new” drugs and 

biologicals that were not being paid for as an HOPD service as of December 31, 1996 

and whose cost is “not insignificant” in relation to the OPPS payments for the procedures 

or services associated with the new drug or biological. For pass-through payment 

purposes, radiopharmaceuticals are included as “drugs.” As required by statute, 

transitional pass-through payments for a drug or biological described in 

section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not 

more than 3 years, after the payment was first made for the product as a hospital 

outpatient service under Medicare Part B. CY 2015 pass-through drugs and biologicals 

and their designated APCs are assigned status indicator “G” in Addenda A and B to this 

final rule with comment period, which are available via the Internet on the CMS Web 

site. 

 Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through payment 

amount, in the case of a drug or biological, is the amount by which the amount 

determined under section 1842(o) of the Act for the drug or biological exceeds the 
CMS-1613-FC 422 

portion of the otherwise applicable Medicare OPD fee schedule that the Secretary 

determines is associated with the drug or biological. If the drug or biological is covered 

under a competitive acquisition contract under section 1847B of the Act, the pass-through 

payment amount is determined by the Secretary to be equal to the average price for the 

drug or biological for all competitive acquisition areas and the year established under 

such section as calculated and adjusted by the Secretary. However, we note that the 

Part B drug competitive acquisition program (CAP) has been postponed since CY 2009, 

and such a program has not been reinstated for CY 2015. 

 This methodology for determining the pass-through payment amount is set forth 

in regulations at 42 CFR 419.64. These regulations specify that the pass-through 

payment equals the amount determined under section 1842(o) of the Act minus the 

portion of the APC payment that CMS determines is associated with the drug or 

biological. Section 1847A of the Act establishes the average sales price (ASP) 

methodology, which is used for payment for drugs and biologicals described in 

section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP 

methodology, as applied under the OPPS, uses several sources of data as a basis for 

payment, including the ASP, the wholesale acquisition cost (WAC), and the average 

wholesale price (AWP). In this final rule with comment period, the term “ASP 

methodology” and “ASP-based” are inclusive of all data sources and methodologies 

described therein. Additional information on the ASP methodology can be found on the 

CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-BDrugs/McrPartBDrugAvgSalesPrice/index.html. 
CMS-1613-FC 423 

 The pass-through application and review process for drugs and biologicals is 

explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HospitalOutpatientPPS/passthrough_payment.html. 

2. Drugs and Biologicals with Expiring Pass-Through Payment Status in CY 2014

In the CY 2015 OPPS/ASC proposed rule (79 FR 40992), we proposed that the 

pass-through status of 9 drugs and biologicals would expire on December 31, 2014, as 

listed in Table 33 of the proposed rule (79 FR 40993). All of these drugs and biologicals 

will have received OPPS pass-through payment for at least 2 years and no more than 3 

years by December 31, 2014. These drugs and biologicals were approved for 

pass-through status on or before January 1, 2013. With the exception of those groups of 

drugs and biologicals that are always packaged when they do not have pass-through 

status (specifically, diagnostic radiopharmaceuticals; contrast agents; anesthesia drugs; 

drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a 

diagnostic test or procedure; and drugs and biologicals that function as supplies when 

used in a surgical procedure), our standard methodology for providing payment for drugs 

and biologicals with expiring pass-through status in an upcoming calendar year is to 

determine the product’s estimated per day cost and compare it with the OPPS drug 

packaging threshold for that calendar year (which is $95 for CY 2015), as discussed 

further in section V.B.2. of this final rule with comment period. If the estimated per day 

cost for the drug or biological is less than or equal to the applicable OPPS drug packaging 

threshold, we would package payment for the drug or biological into the payment for the 

associated procedure in the upcoming calendar year. If the estimated per day cost of the 

drug or biological is greater than the OPPS drug packaging threshold, we would provide 
CMS-1613-FC 424 

separate payment at the applicable relative ASP-based payment amount (which is ASP+6 

percent for CY 2015, as discussed further in section V.B.3. of this final rule with 

comment period). 

 Comment: Commenters, including several hospitals, physicians, and a 

manufacturer, requested that CMS continue to pay separately for Exparel® (bupivacaine 

liposome injectable suspension) described by HCPCS code C9290 (Injection, bupivicaine 

liposome, 1 mg) once pass-through payment status expires on December 31, 2014. 

Commenters disagreed with CMS’ proposal to package Exparel® as a surgical supply and 

stated that the drug is used to control postoperative pain and is not used in the actual 

surgical procedure. In addition, commenters noted that the product cost of Exparel®

exceeds the proposed CY 2015 packaging threshold of $90 and is not FDA-approved as a 

local anesthetic. 

 Response: We disagree with the commenters’ characterization of Exparel® as not 

functioning as a surgical supply because it is indicated for the alleviation of postoperative 

pain. The indications and usage of Exparel® as listed in the FDA-approved label are as 

follows: “Exparel® is a liposome injection of bupivacaine, an amide-type local 

anesthetic, indicated for administration into the surgical site to produce postsurgical 

analgesia.” Exparel® is injected immediately after the surgical procedure while the 

patient is still on the operating room table at the surgical wound site to control 

postoperative pain, which is an important part of the surgical care of the patient affecting 

the surgical outcome. In the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74925 through 74939), we finalized our policy at 42 CFR 419.2(b)(16) to 

unconditionally package all drugs and biologicals that function as supplies in a surgical 
CMS-1613-FC 425 

procedure. According to OPPS policy, drugs, biologicals, radiopharmaceuticals, 

implantable medical devices, and other items and products that are not equipment can be 

supplies in the OPPS (78 FR 43571 and 43575). While the commenter stated that the 

cost of Exparel® exceeds the drug packaging threshold, we emphasize that cost 

consideration is not a factor in determining whether an item is a surgical supply. We 

consider all items related to the surgical outcome and provided during the hospital stay in 

which the surgery is performed, including postsurgical pain management drugs, to be part 

of the surgery for purposes of our drug and biological surgical supply packaging policy. 

Therefore, for CY 2015, we are finalizing our proposal to package Exparel® described by 

HCPCS code C9290 and to assign status indicator “N” to the code for CY 2015. 

 Comment: A few commenters recommended that CMS continue pass-through 

payment status for new drugs, specifically diagnostic radiopharmaceuticals and contrast 

agents, for a full 3 years. The commenters asserted that providing pass-through payment 

status for 3 years would help provide a more current and accurate data set on which to 

base payment amounts of the procedure when the diagnostic radiopharmaceutical or 

contrast agent is subsequently packaged. The commenters further recommended that 

CMS expire pass-through payment status for drugs and biologicals on a quarterly as 

opposed to an annual basis. 

 Response: As we stated in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74287), the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68363), and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75010), and as described in section V.A. of this final rule with comment period, 

section 1833(t)(6)(c)(i)(II) of the Act permits CMS to make pass-through payments for a 
CMS-1613-FC 426 

period of at least 2 years, but not more than 3 years, after the product’s first payment as a 

hospital outpatient service under Medicare Part B OPPS. We continue to believe that this 

period of payment appropriately facilitates dissemination of these new products into 

clinical practice and facilitates the collection of sufficient hospital claims data reflective 

of their costs for future OPPS ratesetting. Our longstanding practice has been to provide 

pass-through payment for a period of 2 to 3 years, with expiration of pass-through 

payment status proposed and finalized through the annual rulemaking process. Each 

year, when proposing to expire the pass-through payment status of certain drugs and 

biologicals, we examine our claims data for these products. We observe that hospitals 

typically have incorporated these products into their chargemasters based on the 

utilization and costs observed in our claims data. Under the existing pass-through 

payment policy, we begin pass-through payment on a quarterly basis, depending on when 

applications are submitted to us for consideration. We are confident that the period of 

time for which drugs, biologicals, contrast agents, and radiopharmaceuticals receive 

pass-through payment status, which is at least 2 but no more than 3 years, is appropriate 

for CMS to collect the sufficient amount of data to make a packaging determination. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to expire the pass-through payment status of the nine 

drugs and biologicals listed in Table 28 below. Table 28 lists the drugs and biologicals 

for which pass-through payment status will expire on December 31, 2014, the status 

indicators, and the assigned APCs for CY 2015. 
CMS-1613-FC 427 

TABLE 28.—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH PAYMENT STATUS 

EXPIRES DECEMBER 31, 2014 

CY 2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Final 

CY 2015 

SI 

Final 

CY 2015 

APC 

C9290 Injection, bupivicaine liposome, 1 mg N N/A 

C9293 Injection, glucarpidase, 10 units K 9293 

J0178 Injection, aflibercept, 1 mg vial K 1420 

J0716 Injection, centruroides (scorpion) immune 

f(ab)2, up to 120 milligrams K 1431 

J9019 Injection, asparaginase (erwinaze), 1,000 iu K 9289 

J9306 Injection, pertuzumab, 1 mg K 1471 

Q4131 EpiFix, per square centimeter N N/A 

Q4132 Grafix core, per square centimeter N N/A 

Q4133 Grafix prime, per square centimeter N N/A 

3. Drugs, Biologicals, and Radiopharmaceuticals with New or Continuing Pass-Through 

Payment Status in CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40993), we proposed to 

continue pass-through payment status in CY 2015 for 22 drugs and biologicals. None of 

these drugs and biologicals will have received OPPS pass-through payment for at least 2 

years and no more than 3 years by December 31, 2014. These drugs and biologicals, 

which were approved for pass-through status between January 1, 2013 and July 1, 2014, 

were listed in Table 34 of the proposed rule (79 FR 40994). The APCs and HCPCS 

codes for these drugs and biologicals approved for pass-through status through 

July 1, 2014 were assigned status indicator “G” in Addenda A and B to the proposed rule. 

Addenda A and B to the proposed rule are available via the Internet on the CMS Web 

site. 
CMS-1613-FC 428 

 Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for 

pass-through drugs and biologicals (the pass-through payment amount) as the difference 

between the amount authorized under section 1842(o) of the Act and the portion of the 

otherwise applicable OPD fee schedule that the Secretary determines is associated with 

the drug or biological. Payment for drugs and biologicals with pass-through status under 

the OPPS is currently made at the physician’s office payment rate of ASP+6 percent. We 

stated in the proposed rule that we believe it is consistent with the statute to propose to 

continue to provide payment for drugs and biologicals with pass-through status at a rate 

of ASP+6 percent in CY 2015, which is the amount that drugs and biologicals receive 

under section 1842(o) of the Act. 

 Therefore, for CY 2015, we proposed to pay for pass-through drugs and 

biologicals at ASP+6 percent, equivalent to the rate these drugs and biologicals would 

receive in the physician’s office setting in CY 2015. We proposed that a $0.00 

pass-through payment amount would be paid for most pass-through drugs and biologicals 

under the CY 2015 OPPS because the difference between the amount authorized under 

section 1842(o) of the Act, which is ASP+6 percent, and the portion of the otherwise 

applicable OPD fee schedule that the Secretary determines is appropriate, proposed at 

ASP+6 percent, is $0. 

 In the case of policy-packaged drugs (which include the following: contrast 

agents; diagnostic radiopharmaceuticals; anesthesia drugs; drugs, biologicals, and 

radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure and drugs; and biologicals that function as supplies when used in a surgical 

procedure), we proposed that their pass-through payment amount would be equal to 
CMS-1613-FC 429 

ASP+6 percent for CY 2015 because, if not on pass-through status, payment for these 

products would be packaged into the associated procedure. 

 In addition, we proposed to continue to update pass-through payment rates on a 

quarterly basis on the CMS Web site during CY 2015 if later quarter ASP submissions 

(or more recent WAC or AWP information, as applicable) indicate that adjustments to the 

payment rates for these pass-through drugs or biologicals are necessary. For a full 

description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 

comment period (70 FR 68632 through 68635). 

 In CY 2015, as is consistent with our CY 2014 policy for diagnostic and 

therapeutic radiopharmaceuticals, we proposed to provide payment for both diagnostic 

and therapeutic radiopharmaceuticals that are granted pass-through payment status based 

on the ASP methodology. As stated above, for purposes of pass-through payment, we 

consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or 

therapeutic radiopharmaceutical receives pass-through payment status during CY 2015, 

we proposed to follow the standard ASP methodology to determine the pass-through 

payment rate that drugs receive under section 1842(o) of the Act, which is ASP+6 

percent. If ASP data are not available for a radiopharmaceutical, we proposed to provide 

pass-through payment at WAC+6 percent, the equivalent payment provided to 

pass-through drugs and biologicals without ASP information. If WAC information also 

is not available, we proposed to provide payment for the pass-through 

radiopharmaceutical at 95 percent of its most recent AWP. 

 Comment: Several commenters supported CMS’ proposal to provide payment at 

ASP+6 percent for drugs, biologicals, contrast agents, and radiopharmaceuticals that are 
CMS-1613-FC 430 

granted pass-through payment status. A few commenters requested that CMS provide an 

additional payment for radiopharmaceuticals that are granted pass-through payment 

status. 

 Response: As discussed above, the statute provides that mandated pass-through 

payment for pass-through drugs and biologicals for CY 2015 equals the amount 

determined under section 1842(o) of the Act minus the portion of the otherwise 

applicable APC payment that CMS determines is associated with the drug or biological. 

Therefore, the pass-through payment is determined by subtracting the otherwise 

applicable payment amount under the OPPS (ASP+6 percent for CY 2015) from the 

amount determined under section 1842(o) of the Act (ASP+6 percent). 

 Regarding the commenters’ request that CMS provide an additional payment for 

radiopharmaceuticals that are granted pass-through payment status, we note that, for 

CY 2015, consistent with our CY 2014 payment policy for diagnostic and therapeutic 

radiopharmaceuticals, we proposed to provide payment for both diagnostic and 

therapeutic radiopharmaceuticals with pass-through payment status based on the ASP 

methodology. As stated above, the ASP methodology, as applied under the OPPS, uses 

several sources of data as a basis for payment, including the ASP, the WAC if the ASP is 

unavailable, and 95 percent of the radiopharmaceutical’s most recent AWP if the ASP 

and WAC are unavailable. For purposes of pass-through payment, we consider 

radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or 

therapeutic radiopharmaceutical receives pass-through payment status during CY 2015, 

we proposed to follow the standard ASP methodology to determine its pass-through 

payment rate under the OPPS to account for the acquisition and pharmacy overhead 
CMS-1613-FC 431 

costs, including compounding costs. We continue to believe that a single payment is 

appropriate for diagnostic radiopharmaceuticals with pass-through payment status in 

CY 2015, and that the payment rate of ASP+6 percent (or payment based on the ASP 

methodology) is appropriate to provide payment for both the radiopharmaceutical’s 

acquisition cost and any associated nuclear medicine handling and compounding costs. 

We refer readers to section V.B.3. of this final rule with comment period for further 

discussion of payment for therapeutic radiopharmaceuticals based on ASP information 

submitted by manufacturers, and readers also may refer to the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 

 After consideration of the public comments we received, we are finalizing our 

proposal to provide payment for drugs, biologicals, diagnostic and therapeutic 

radiopharmaceuticals, and contrast agents that are granted pass-through payment status 

based on the ASP methodology. If a diagnostic or therapeutic radiopharmaceutical 

receives pass- through status during CY 2015, we will follow the standard ASP 

methodology to determine the pass-through payment rate that drugs receive under section 

1842(o) of the Act, which is ASP+6 percent. If ASP data are not available for a 

radiopharmaceutical, we will provide pass-through payment at WAC+6 percent, the 

equivalent payment provided to pass-through drugs and biologicals without ASP 

information. If WAC information also is not available, we will provide payment for the 

pass-through radiopharmaceutical at 95 percent of its most recent AWP. 

 As discussed in more detail in section II.A.3. of this final rule with comment 

period, we implemented a policy whereby payment for the following nonpass-through 

items is packaged into payment for the associated procedure: diagnostic 
CMS-1613-FC 432 

radiopharmaceuticals; contrast agents; anesthesia drugs; drugs, biologicals, and 

radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure; and drugs and biologicals that function as supplies when used in a surgical 

procedure. As stated earlier, pass-through payment is the difference between the amount 

authorized under section 1842(o) of the Act and the portion of the otherwise applicable 

OPD fee schedule that the Secretary determines is associated with the drug or biological. 

Because payment for a drug that is policy-packaged would otherwise be packaged if the 

product did not have pass-through payment status, we believe the otherwise applicable 

OPPS payment amount would be equal to the policy-packaged drug APC offset amount 

for the associated clinical APC in which the drug or biological is utilized. The 

calculation of the policy-packaged drug APC offset amounts is described in more detail 

in section V.A.4. of this final rule with comment period. It follows that the copayment 

for the nonpass-through payment portion (the otherwise applicable fee schedule amount 

that we would also offset from payment for the drug or biological if a payment offset 

applies) of the total OPPS payment for those drugs and biologicals, therefore, would be 

accounted for in the copayment for the associated clinical APC in which the drug or 

biological is used. 

 According to section 1833(t)(8)(E) of the Act, the amount of copayment 

associated with pass-through items is equal to the amount of copayment that would be 

applicable if the pass-through adjustment was not applied. Therefore, as we did in 

CY 2014, in the CY 2015 OPPS/ASC proposed rule, we proposed to continue to set the 

associated copayment amount to zero for CY 2015 for pass-through drugs and biologicals 

that would otherwise be packaged if the item did not have pass-through payment status. 
CMS-1613-FC 433 

The 22 drugs and biologicals that we proposed would continue to have pass-through 

payment status for CY 2015 or have been granted pass-through payment status as of 

January 2015 were shown in Table 34 of the proposed rule (79 FR 40994). 

 Comment: Commenters supported the CY 2015 proposal to continue to set the 

associated copayment amounts for pass-through diagnostic radiopharmaceuticals and 

contrast agents that would otherwise be packaged if the product did not have 

pass-through payment status to zero. The commenters noted that this policy is consistent 

with statutory requirements and provides cost-saving benefits to Medicare beneficiaries. 

 Response: We appreciate the commenters’ support of our proposal. As discussed 

in the CY 2015 OPPS/ASC proposed rule (79 FR 40993 through 40994), we believe that 

for drugs and biologicals that are “policy-packaged,” the copayment for the 

nonpass-through payment portion of the total OPPS payment for this subset of drugs and 

biologicals is accounted for in the copayment of the associated clinical APC in which the 

drug or biological is used. According to section 1833(t)(8)(E) of the Act, the amount of 

copayment associated with pass-through items is equal to the amount of copayment that 

would be applicable if the pass-through adjustment was not applied. Therefore, we 

believe that the copayment amount should be zero for drugs and biologicals that are 

“policy-packaged,” including diagnostic radiopharmaceuticals and contrast agents. We 

also believe that the copayment amount should be zero for anesthesia drugs that would 

otherwise be packaged if the item did not have pass-through payment status. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to continue to set the associated copayment amount for 

pass-through diagnostic radiopharmaceuticals, contrast agents, and anesthesia drugs that 
CMS-1613-FC 434 

would otherwise be packaged if the item did not have pass-through payment status to 

zero for CY 2015. 

 The 35 drugs and biologicals that will continue to have pass-through payment 

status for CY 2015 or have been granted pass-through payment status as of 

January 1, 2015 are shown in Table 29 below. As is our standard methodology, we 

annually review new permanent HCPCS codes and delete temporary HCPCS C-codes if 

an alternate permanent HCPCS code is available for purposes of OPPS billing and 

payment. Table 29 below includes those coding changes. 
CMS-1613-FC 435 

TABLE 29.—DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT 

STATUS IN CY 2015 

CY 

2014 

HCPCS 

Code 

CY 

2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Final 

CY 

2015 

SI 

Final 

CY 

2015 

APC 

A9520 A9520 Technetium Tc 99m tilmanocept, diagnostic, 

up to 0.5 millicuries G 1463 

N/A A9586 Florbetapir f18, diagnostic, per study dose, 

up to 10 millicuries G 1664 

C9021 J9301 Injection, obinutuzumab, 10 mg G 1476 

C9022 J1322 Injection, elosulfase alfa, 1mg G 1480 

C9023 J3145 Injection, testosterone undecanoate, 1 mg G 1487 

C9025 C9025 Injection, ramucirumab, 5 mg G 1488 

C9026 C9026 Injection, vedolizumab, 1 mg G 1489 

N/A C9027 Injection, pembrolizumab, 1 mg G 1490 

C9132 C9132 Prothrombin complex concentrate (human), 

Kcentra, per i.u. of Factor IX activity G 9132 

C9133 J7200 Factor ix (antihemophilic factor, 

recombinant), Rixubus, per i.u. G 1467 

C9134 J7181 Injection, Factor XIII A-subunit, 

(recombinant), per i.u. G 1746 

C9135 J7201 Injection, factor ix, fc fusion protein 

(recombinant), per i.u. G 1486 

N/A C9136 Injection, factor viii, fc fusion protein, 

(recombinant), per i.u. G 1656 

C9441 J1439 Injection, ferric carboxymaltose, 1 mg G 9441 

N/A C9349 FortaDerm, and FortaDerm Antimicrobial, 

any type, per square centimeter G 1657 

N/A C9442 Injection, belinostat, 10 mg G 1658 

N/A C9443 Injection, dalbavancin, 10 mg G 1659 

N/A C9444 Injection, oritavancin, 10 mg G 1660 

N/A C9446 Injection, tedizolid phosphate, 1 mg G 1662 

N/A C9447 

Injection, phenylephrine and ketorolac, 4 ml 

vial G 1663 

C9497 C9497 Loxapine, inhalation powder, 10 mg G 9497 

J1446 J1446 Injection, tbo-filgrastim, 5 micrograms G 1477 

J1556 J1556 Injection, immune globulin (Bivigam), 500 

mg 

G 9130 

J3060 J3060 Injection, taliglucerase alfa, 10 units G 9294 

J7315 J7315 Mitomycin, ophthalmic, 0.2 mg G 1448 
CMS-1613-FC 436 

CY 

2014 

HCPCS 

Code 

CY 

2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Final 

CY 

2015 

SI 

Final 

CY 

2015 

APC 

J7316 J7316 Injection, Ocriplasmin, 0.125mg G 9298 

J7508 J7508 Tacrolimus, Extended Release, Oral, 0.1 mg G 1465 

J9047 J9047 Injection, carfilzomib, 1 mg G 9295 

J9262 J9262 Injection, omacetaxine mepesuccinate, 0.01 

mg 

G 9297 

J9354 J9354 Injection, ado-trastuzumab emtansine, 1 mg G 9131 

J9371 J9371 Injection, Vincristine Sulfate Liposome, 1 

mg 

G 1466 

J9400 J9400 Injection, Ziv-Aflibercept, 1 mg G 9296 

Q4121 Q4121 Theraskin, per square centimeter G 1479 

Q4122 Q4122 Dermacell, per square centimeter G 1419 

Q4127 Q4127 Talymed, per square centimeter G 1449 

4. Provisions for Reducing Transitional Pass-Through Payments for Policy-Packaged 

Drugs and Biologicals to Offset Costs Packaged into APC Groups 

a. Background 

 Prior to CY 2008, diagnostic radiopharmaceuticals and contrast agents were paid 

separately under the OPPS if their mean per day costs were greater than the applicable 

year’s drug packaging threshold. In CY 2008 (72 FR 66768), we began a policy of 

packaging payment for all nonpass-through diagnostic radiopharmaceuticals and contrast 

agents as ancillary and supportive items and services into their associated nuclear 

medicine procedures. Therefore, beginning in CY 2008, nonpass-through diagnostic 

radiopharmaceuticals and contrast agents were not subject to the annual OPPS drug 

packaging threshold to determine their packaged or separately payable payment status, 

and instead all nonpass-through diagnostic radiopharmaceuticals and contrast agents were 

packaged as a matter of policy. 
CMS-1613-FC 437 

 For CY 2014, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74925), we continued to package payment for all nonpass-through diagnostic 

radiopharmaceuticals, contrast agents, and anesthesia drugs, and we began packaging all 

nonpass-through drugs, biologicals, and radiopharmaceuticals that function as supplies 

when used in a diagnostic test or procedure and drugs and biologicals that function as 

supplies when used in a surgical procedure. These packaging policies are codified at 

42 CFR 419.2(b). 

b. Payment Offset Policy for Diagnostic Radiopharmaceuticals 

 As previously noted, radiopharmaceuticals are considered to be drugs for OPPS 

pass-through payment purposes. As described above, section 1833(t)(6)(D)(i) of the Act 

specifies that the transitional pass-through payment amount for pass-through drugs and 

biologicals is the difference between the amount paid under section 1842(o) of the Act 

and the otherwise applicable OPD fee schedule amount. Because a payment offset is 

necessary in order to provide an appropriate transitional pass-through payment, we 

deduct from the pass-through payment for diagnostic radiopharmaceuticals an amount 

reflecting the portion of the APC payment associated with predecessor 

radiopharmaceuticals in order to ensure no duplicate radiopharmaceutical payment is 

made. 

 In CY 2009, we established a policy to estimate the portion of each APC payment 

rate that could reasonably be attributed to the cost of predecessor diagnostic 

radiopharmaceuticals when considering a new diagnostic radiopharmaceutical for 

pass-through payment (73 FR 68638 through 68641). Specifically, we use the 

policy-packaged drug offset fraction for APCs containing nuclear medicine procedures, 
CMS-1613-FC 438 

calculated as 1 minus the following: the cost from single procedure claims in the APC 

after removing the cost for policy-packaged drugs divided by the cost from single 

procedure claims in the APC. To determine the actual APC offset amount for 

pass-through diagnostic radiopharmaceuticals that takes into consideration the otherwise 

applicable OPPS payment amount, we multiply the policy-packaged drug offset fraction 

by the APC payment amount for the nuclear medicine procedure with which the 

pass-through diagnostic radiopharmaceutical is used and, accordingly, reduce the 

separate OPPS payment for the pass-through diagnostic radiopharmaceutical by this 

amount. For CY 2015, as we did in CY 2014, we proposed to continue to apply the 

diagnostic radiopharmaceutical offset policy to payment for pass-through diagnostic 

radiopharmaceuticals. 

 There is currently one diagnostic radiopharmaceutical with pass-through status 

under the OPPS. HCPCS code A9520 (Technetium Tc 99m tilmanocept, diagnostic, up 

to 0.5 millicuries) was granted pass-through payment status beginning October 1, 2013. 

We currently apply the established radiopharmaceutical payment offset policy to 

pass-through payment for this product. 

 Table 35 of the CY 2015 OPPS/ASC proposed rule (79 FR 40995) displayed the 

proposed APCs to which nuclear medicine procedures would be assigned in CY 2015 and 

for which we expect that an APC offset could be applicable in the case of diagnostic 

radiopharmaceuticals with pass-through status. 

 Comment: A few commenters requested that CMS reinstate the “FB” modifier to 

specified nuclear medicine procedures in cases in which the diagnostic 
CMS-1613-FC 439 

radiopharmaceutical is received at no cost or full credit. The commenters requested that 

the policy be maintained for CY 2015 and beyond. 

 Response: As we discussed in the CY2014 OPPS/ASC final rule with comment 

period (78 FR 75016), our review of claims data showed that hospitals rarely received 

diagnostic radiopharmaceuticals at no cost or full credit. Therefore, we do not believe 

that the “FB” modifier policy is warranted for diagnostic radiopharmaceuticals. 

 Comment: A few commenters agreed that pass-through payment status for 

HCPCS code A9520 should be extended for CY 2015. 

 Response: We appreciate the commenters’ support. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to continue to apply the diagnostic radiopharmaceutical 

offset policy to payment for pass-through diagnostic radiopharmaceuticals, as described 

in the CY 2015 OPPS/ASC proposed rule (79 FR 40994 through 40995). We will 

continue to reduce the payment amount for procedures in the APCs listed in Table 30 in 

this final rule with comment period by the full policy-packaged offset amount appropriate 

for diagnostic radiopharmaceuticals. 

 Table 30 below displays the APCs to which nuclear medicine procedures will be 

assigned in CY 2015 and for which we expect that an APC offset could be applicable in 

the case of diagnostic radiopharmaceuticals with pass-through payment status. 

TABLE 30.—APCs TO WHICH A DIAGNOSTIC RADIOPHARMACEUTICAL 

OFFSET MAY BE APPLICABLE IN CY 2015 

CY 2015 

APC 

CY 2015 APC Title 

0308 Positron Emission Tomography (PET) Imaging 

0377 Level II Cardiac Imaging 
CMS-1613-FC 440 

CY 2015 

APC 

CY 2015 APC Title 

0378 Level II Pulmonary Imaging 

0389 Level I Non-imaging Nuclear Medicine 

0390 Level I Endocrine Imaging 

0391 Level II Endocrine Imaging 

0392 Level II Non-imaging Nuclear Medicine 

0393 Hematologic Processing & Studies 

0394 Hepatobiliary Imaging 

0395 GI Tract Imaging 

0396 Bone Imaging 

0398 Level I Cardiac Imaging 

0400 Hematopoietic Imaging 

0401 Level I Pulmonary Imaging 

0402 Level II Nervous System Imaging 

0403 Level I Nervous System Imaging 

0404 Renal and Genitourinary Studies 

0406 Level I Tumor/Infection Imaging 

0408 Level III Tumor/Infection Imaging 

0414 Level II Tumor/Infection Imaging 

c. Payment Offset Policy for Contrast Agents 

 Section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through 

payment amount for pass-through drugs and biologicals is the difference between the 

amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee 

schedule amount. Because a payment offset is necessary in order to provide an 

appropriate transitional pass-through payment, we deduct from the pass-through payment 

for contrast agents an amount reflecting the portion of the APC payment associated with 

predecessor contrast agents in order to ensure no duplicate contrast agent payment is 

made. 

 In CY 2010, we established a policy to estimate the portion of each APC payment 

rate that could reasonably be attributed to the cost of predecessor contrast agents when 

considering new contrast agents for pass-through payment (74 FR 60482 through 60484). 
CMS-1613-FC 441 

Specifically, we use the policy-packaged drug offset fraction for procedural APCs, 

calculated as 1 minus the following: the cost from single procedure claims in the APC 

after removing the cost for policy packaged drugs divided by the cost from single 

procedure claims in the APC. To determine the actual APC offset amount for 

pass-through contrast agents that takes into consideration the otherwise applicable OPPS 

payment amount, in the CY 2015 OPPS/ASC proposed rule (79 FR 40995), we proposed 

to multiply the policy packaged drug offset fraction by the APC payment amount for the 

procedure with which the pass-through contrast agent is used and, accordingly, reduce the 

separate OPPS payment for the pass-through contrast agent by this amount. For 

CY 2015, as we did in CY 2014, we proposed to continue to apply our standard contrast 

agents offset policy to payment for pass-through contrast agents (we refer readers to the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75017) for the final 

CY 2014 policy and the CY 2015 OPPS/ASC proposed rule (79 FR 40995 through 

40996) for the proposed CY 2015 policy). 

 Although there are currently no contrast agents with pass-through payment status 

under the OPPS, we believe that a payment offset is necessary in the event that a new 

contrast agent is approved for pass-through status during CY 2015 in order to provide an 

appropriate transitional pass-through payment for new contrast agents. We proposed to 

identify procedural APCs for which we expect a contrast offset could be applicable in the 

case of a pass-through contrast agent as any procedural APC with a policy-packaged drug 

amount greater than $20 that is not a nuclear medicine APC identified in Table 35 of the 

proposed rule, and these APCs were displayed in Table 36 of the proposed rule. The 

methodology used to determine a proposed threshold cost for application of a contrast 
CMS-1613-FC 442 

agent offset policy is described in detail in the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60483 through 60484). For CY 2015, we proposed to continue 

to recognize that when a contrast agent with pass-through status is billed with any 

procedural APC listed in Table 36 of the proposed rule (79 FR 40995 through 40996), a 

specific offset based on the procedural APC would be applied to payment for the contrast 

agent to ensure that duplicate payment is not made for the contrast agent. 

 We did not receive any public comments on this proposal. Therefore, we are 

finalizing our proposal for CY 2015 without modification. We will continue to recognize 

that when a contrast agent with pass-through payment status is billed with any procedural 

APC listed in Table 31 below, a specific offset based on the procedural APC will be 

applied to the payment for the contrast agent to ensure that duplicate payment is not made 

for the contrast agent. 

TABLE 31.—APCs TO WHICH A CONTRAST AGENT OFFSET MAY BE 

APPLICABLE FOR CY 2015 

CY 2015 

APC CY 2015 APC Title 

0080 Diagnostic Cardiac Catheterization 

0083 Coronary Angioplasty, Valvuloplasty, and Level I Endovascular 

Revascularization 

0093 Vascular Reconstruction/Fistula Repair 

0152 Level I Percutaneous Abdominal and Biliary Procedures 

0177 Level I Echocardiogram With Contrast 

0178 Level II Echocardiogram With Contrast 

0229 Level II Endovascular Revascularization of the Lower Extremity 

0278 Diagnostic Urography 

0279 Level II Angiography and Venography 

0280 Level III Angiography and Venography 

0283 Computed Tomography with Contrast 

0284 Magnetic Resonance Imaging and Magnetic Resonance 

Angiography with Contrast 
CMS-1613-FC 443 

CY 2015 

APC CY 2015 APC Title 

0333 Computed Tomography without Contrast followed by Contrast 

0334 Combined Abdomen and Pelvis CT with Contrast 

0337 Magnetic Resonance Imaging and Magnetic Resonance 

Angiography without Contrast followed by Contrast 

0375 Ancillary Outpatient Services When Patient Expires 

0383 Cardiac Computed Tomographic Imaging 

0388 Discography 

0442 Dosimetric Drug Administration 

0662 CT Angiography 

0668 Level I Angiography and Venography 

8006 CT and CTA with Contrast Composite 

8008 MRI and MRA with Contrast Composite 

d. Payment Offset Policy for Drugs, Biologicals, and Radiopharmaceuticals That 

Function as Supplies When Used in a Diagnostic Test or Procedure and Drugs and 

Biologicals That Function as Supplies When Used in a Surgical Procedure 

 Section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through 

payment amount for pass-through drugs and biologicals is the difference between the 

amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee 

schedule amount. In the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74925), we finalized our policy to package drugs, biologicals, and 

radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure and drugs and biologicals that function as supplies when used in a surgical 

procedure. As a part of this policy, we specifically finalized that skin substitutes and 

stress agents used in myocardial perfusion imaging (MPI) be policy packaged in 

CY 2014, in addition to diagnostic radiopharmaceuticals, contrast agents, and anesthesia 

drugs (78 FR 75019). Because a payment offset is necessary in order to provide an 
CMS-1613-FC 444 

appropriate transitional pass-through payment, we finalized a policy for CY 2014 to 

deduct from the pass-through payment for skin substitutes and stress agents an amount 

reflecting the portion of the APC payment associated with predecessor skin substitutes 

and stress agents in order to ensure no duplicate skin substitute or stress agent payment is 

made (78 FR 75019). 

 In CY 2014, we established a policy to estimate the portion of each APC payment 

rate that could reasonably be attributed to the cost of predecessor skin substitutes or stress 

agents when considering a new skin substitute or stress agent for pass-through payment 

(78 FR 75019). Specifically, in the case of pass-through skin substitutes, we use the 

policy-packaged drug offset fraction for skin substitute procedural APCs, calculated as 

1 minus the following: the cost from single procedure claims in the APC after removing 

the cost for policy-packaged drugs divided by the cost from single procedure claims in 

the APC. Because policy packaged radiopharmaceuticals also would be included in the 

drug offset fraction for the APC to which MPI procedures are assigned, in the case of 

pass-through stress agents, we use the policy-packaged drug offset fraction for the 

procedural APC, calculated as 1 minus the following: the cost from single procedure 

claims in the APC after removing the cost for policy-packaged drugs excluding 

policy-packaged diagnostic radiopharmaceuticals divided by the cost from single 

procedure claims in the APC. To determine the actual APC offset amount for 

pass-through skin substitutes and pass-through stress agents that takes into consideration 

the otherwise applicable OPPS payment amount, we multiply the policy-packaged drug 

offset fraction by the APC payment amount for the procedure with which the 

pass-through skin substitute or pass-through stress agent is used and, accordingly, reduce 
CMS-1613-FC 445 

the separate OPPS payment for the pass-through skin substitute or pass-through stress 

agent by this amount (78 FR 75019). In the CY 2015 OPPS/ASC proposed rule 

(79 FR 40996), for CY 2015, as we did in CY 2014, we proposed to continue to apply the 

skin substitute and stress agent offset policy to payment for pass-through skin substitutes 

and stress agents. 

 There are currently six skin substitutes (HCPCS codes Q4121, Q4122, Q4127, 

Q4131, Q4132, and Q4133) with pass-through payment status under the OPPS. We 

currently apply the established skin substitute payment offset policy to pass-through 

payment for these products. Table 37 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 40996) displayed the proposed APCs to which skin substitute procedures would 

be assigned in CY 2015 and for which we expect that an APC offset could be applicable 

in the case of skin substitutes with pass-through status. 

 Although there are currently no stress agents with pass-through status under the 

OPPS, we believe that a payment offset is necessary in the event that a new stress agent is 

approved for pass-through status during CY 2015 in order to provide an appropriate 

transitional pass through payment for new stress agents. Table 38 of the CY 2015 

OPPS/ASC proposed rule (79 FR 40996) displayed the proposed APCs to which MPI 

procedures would be assigned in CY 2015 and for which we expect that an APC offset 

could be applicable in the case of a stress agent with pass-through status. 

 We did not receive any public comments on these proposals. Therefore, we are 

finalizing our proposal, without modification, to recognize that when a skin substitute 

with pass-through payment status is billed with any procedural APC listed in Table 32 

below, a specific offset based on the procedural APC will be applied to the payment for 
CMS-1613-FC 446 

the skin substitute to ensure that duplicate payment is not made for the skin substitute. In 

addition, when a stress agent with pass-through payment status is billed with any 

procedural APC listed in Table 33 below, a specific offset based on the procedural APC 

will be applied to the payment for the stress agent to ensure that duplicate payment is not 

made for the stress agent. Table 32 below displays the APCs to which skin substitute 

procedures will be assigned in CY 2015 and for which we expect that an APC offset 

could be applicable in the case of skin substitutes with pass-through payment status. 

Table 33 below displays the APCs to which MPI procedures will be assigned in CY 2015 

and for which we expect that an APC offset could be applicable in the case of a stress 

agent with pass-through payment status. 

TABLE 32.—APCs TO WHICH A SKIN SUBSTITUTE OFFSET MAY BE 

APPLICABLE FOR CY 2015 

CY 2015 

APC CY 2015 APC Title 

0328 Level III Skin Repair 

0329 Level IV Skin Repair 

TABLE 33.—APCs TO WHICH A STRESS AGENT OFFSET MAY BE 

APPLICABLE FOR CY 2015 

CY 2015 

APC CY 2015 APC Title 

0100 Cardiac Stress Tests 

0377 Level II Cardiac Imaging 

 As we proposed, we will continue to post annually on the CMS Web site at 

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
CMS-1613-FC 447 

Payment/HospitalOutpatientPPS/index.html a file that contains the APC offset amounts 

that will be used for that year for purposes of both evaluating cost significance for 

candidate pass-through device categories and drugs and biologicals and establishing any 

appropriate APC offset amounts. Specifically, the file will continue to provide the 

amounts and percentages of APC payment associated with packaged implantable devices, 

policy-packaged drugs, and threshold packaged drugs and biologicals for every OPPS 

clinical APC. 

B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without 

Pass-Through Payment Status 

1. Background 

 Under the CY 2013 OPPS, we currently pay for drugs, biologicals, and 

radiopharmaceuticals that do not have pass-through payment status in one of two ways: 

as a packaged payment included in the payment for the associated service, or as a 

separate payment (individual APCs). We explained in the April 7, 2000 OPPS final rule 

with comment period (65 FR 18450) that we generally package the cost of drugs and 

radiopharmaceuticals into the APC payment rate for the procedure or treatment with 

which the products are usually furnished. Hospitals do not receive separate payment for 

packaged items and supplies, and hospitals may not bill beneficiaries separately for any 

packaged items and supplies whose costs are recognized and paid within the national 

OPPS payment rate for the associated procedure or service. 

 Packaging costs into a single aggregate payment for a service, procedure, or 

episode-of-care is a fundamental principle that distinguishes a prospective payment 

system from a fee schedule. In general, packaging the costs of items and services into the 
CMS-1613-FC 448 

payment for the primary procedure or service with which they are associated encourages 

hospital efficiencies and also enables hospitals to manage their resources with maximum 

flexibility. 

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

a. Background 

 As indicated in section V.B.1. of this final rule with comment period, in 

accordance with section 1833(t)(16)(B) of the Act, the threshold for establishing separate 

APCs for payment of drugs and biologicals was set to $50 per administration during 

CYs 2005 and 2006. In CY 2007, we used the four quarter moving average Producer 

Price Index (PPI) levels for Pharmaceutical Preparations (Prescription) to trend the 

$50 threshold forward from the third quarter of CY 2005 (when the Pub. L. 108-173 

mandated threshold became effective) to the third quarter of CY 2007. We then rounded 

the resulting dollar amount to the nearest $5 increment in order to determine the CY 2007 

threshold amount of $55. Using the same methodology as that used in CY 2007 (which 

is discussed in more detail in the CY 2007 OPPS/ASC final rule with comment period 

(71 FR 68085 through 68086)), we set the packaging threshold for establishing separate 

APCs for drugs and biologicals at $90 for CY 2014. 

 Following the CY 2007 methodology, for the CY 2015 OPPS/ASC proposed rule 

(79 FR 40997), we used the most recently available four quarter moving average PPI 

levels to trend the $50 threshold forward from the third quarter of CY 2005 to the third 

quarter of CY 2015 and rounded the resulting dollar amount ($91.46) to the nearest $5 

increment, which yielded a figure of $90. In performing this calculation, we used the 

most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for 
CMS-1613-FC 449 

Human Use (Prescription) (Bureau of Labor Statistics (BLS) series code WPUSI07003) 

from CMS’ Office of the Actuary (OACT). We refer below to this series generally as the 

PPI for Prescription Drugs. 

 Based on the calculations described above, we proposed a packaging threshold for 

CY 2015 of $90. (For a more detailed discussion of the OPPS drug packaging threshold 

and the use of the PPI for Prescription Drugs, we refer readers to the CY 2007 

OPPS/ASC final rule with comment period (71 FR 68085 through 68086).) 

 Following the CY 2007 methodology, for this CY 2015 OPPS/ASC final rule 

with comment period, we used the most recently available four quarter moving average 

PPI levels to trend the $50 threshold forward from the third quarter of CY 2005 to the 

third quarter of CY 2015 and rounded the resulting dollar amount ($93.48) to the nearest 

$5 increment, which yielded a figure of $95. In performing this calculation, we used the 

most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for 

Human Use (Prescription) (Bureau of Labor Statistics (BLS) series code WPUSI07003) 

from CMS’ Office of the Actuary (OACT). Therefore, for this CY 2015 OPPS/ASC final 

rule with comment period, using the CY 2007 OPPS methodology, we are establishing a 

packaging threshold for CY 2015 of $95. 

b. Cost Threshold for Packaging of Payment for HCPCS Codes That Describe Certain 

Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals 

(“Threshold-Packaged Drugs”) 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 40997), to determine the 

proposed CY 2015 packaging status for all nonpass-through drugs and biologicals that 

are not policy packaged, we calculated, on a HCPCS code-specific basis, the per day cost 
CMS-1613-FC 450 

of all drugs, biologicals, and therapeutic radiopharmaceuticals (collectively called 

“threshold-packaged” drugs) that had a HCPCS code in CY 2013 and were paid (via 

packaged or separate payment) under the OPPS. We used data from CY 2013 claims 

processed before January 1, 2014 for this calculation. However, we did not perform this 

calculation for those drugs and biologicals with multiple HCPCS codes that include 

different dosages, as described in section V.B.2.c. of the proposed rule, or for the 

following policy-packaged items that we proposed to continue to package in CY 2015: 

diagnostic radiopharmaceuticals; contrast agents; anesthesia drugs; drugs, biologicals, 

and radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure; and drugs and biologicals that function as supplies when used in a surgical 

procedure. 

 In order to calculate the per day costs for drugs, biologicals, and therapeutic 

radiopharmaceuticals to determine their proposed packaging status in CY 2015, we used 

the methodology that was described in detail in the CY 2006 OPPS proposed rule 

(70 FR 42723 through 42724) and finalized in the CY 2006 OPPS final rule with 

comment period (70 FR 68636 through 68638). For each drug and biological HCPCS 

code, we used an estimated payment rate of ASP+6 percent (which is the payment rate 

we proposed for separately payable drugs and biologicals for CY 2015, as discussed in 

more detail in section V.B.3.b. of the proposed rule) to calculate the CY 2015 proposed 

rule per day costs. We used the manufacturer submitted ASP data from the fourth quarter 

of CY 2013 (data that were used for payment purposes in the physician’s office setting, 

effective April 1, 2014) to determine the proposed rule per day cost. 
CMS-1613-FC 451 

 As is our standard methodology, for CY 2015, we proposed to use payment rates 

based on the ASP data from the fourth quarter of CY 2013 for budget neutrality 

estimates, packaging determinations, impact analyses, and completion of Addenda A and 

B to the proposed rule (which are available via the Internet on the CMS Web site) 

because these were the most recent data available for use at the time of development of 

the proposed rule. These data also were the basis for drug payments in the physician’s 

office setting, effective April 1, 2014. For items that did not have an ASP-based payment 

rate, such as some therapeutic radiopharmaceuticals, we used their mean unit cost derived 

from the CY 2013 hospital claims data to determine their per day cost. 

 We proposed to package items with a per day cost less than or equal to $90, and 

identify items with a per day cost greater than $90 as separately payable. Consistent with 

our past practice, we crosswalked historical OPPS claims data from the CY 2013 HCPCS 

codes that were reported to the CY 2014 HCPCS codes that we displayed in Addendum 

B to the proposed rule (which is available via the Internet on the CMS Web site) for 

payment in CY 2015. 

 Comment: The majority of the commenters opposed the continuation of the 

OPPS packaging threshold of $90 for CY 2015. The commenters believed that, over the 

past 5 years, CMS has rapidly increased the packaging threshold, which contradicts 

Congressional intent. As such, the commenters recommended that CMS eliminate the 

packaging threshold and provide separate payment for all drugs with HCPCS codes or 

freeze the packaging threshold at the current level ($90). 

 Response: As stated in the CY 2007 OPPS/ASC final rule with comment period 

(71 FR 68086), we believe that packaging certain items is a fundamental component of a 
CMS-1613-FC 452 

prospective payment system, that updating the packaging threshold of $50 for the 

CY 2005 OPPS is consistent with industry and government practices, and that the PPI for 

Prescription Drugs is an appropriate mechanism to gauge Part B drug inflation. 

Therefore, because of our continued belief that packaging is a fundamental component of 

a prospective payment system that continues to provide important flexibility and 

efficiency in the delivery of high quality hospital outpatient services, we are not adopting 

commenters’ recommendations to pay separately for all drugs, biologicals, and 

radiopharmaceuticals for CY 2015 or to eliminate the packaging threshold or to freeze 

the packaging threshold at $90. 

 Since publication of the CY 2015 OPPS/ASC proposed rule, consistent with our 

policy of updating the packaging threshold with more recently available data for this final 

rule with comment period, we have again followed the CY 2007 methodology for 

CY 2015 and used updated four quarter moving average PPI index levels provided by the 

CMS Office of the Actuary to trend the $50 threshold forward from the third quarter of 

CY 2005 to the third quarter of CY 2015. We then rounded the resulting updated dollar 

amount ($93.48) to the nearest $5 increment, which yielded a figure of $95. Therefore, 

after consideration of the public comments we received, and consistent with our 

methodology for establishing the packaging threshold using the most recent PPI forecast 

data, we are adopting a CY 2015 packaging threshold of $95. 

 Our policy during previous cycles of the OPPS has been to use updated ASP and 

claims data to make final determinations of the packaging status of HCPCS codes for 

drugs, biologicals, and therapeutic radiopharmaceuticals for the OPPS/ASC final rule 

with comment period. We note that it is also our policy to make an annual packaging 
CMS-1613-FC 453 

determination for a HCPCS code only when we develop the OPPS/ASC final rule with 

comment period for the update year. Only HCPCS codes that are identified as separately 

payable in the final rule with comment period are subject to quarterly updates. For our 

calculation of per day costs of HCPCS codes for drugs and biologicals in this CY 2015 

OPPS/ASC final rule with comment period, we used ASP data from the first quarter of 

CY 2014, which is the basis for calculating payment rates for drugs and biologicals in the 

physician’s office setting using the ASP methodology, effective July 1, 2014, along with 

updated hospital claims data from CY 2013. We note that we also used these data for 

budget neutrality estimates and impact analyses for this CY 2015 OPPS/ASC final rule 

with comment period. 

 Payment rates for HCPCS codes for separately payable drugs and biologicals 

included in Addenda A and B to this final rule with comment period are based on ASP 

data from the second quarter of CY 2014. These data are the basis for calculating 

payment rates for drugs and biologicals in the physician’s office setting using the ASP 

methodology, effective October 1, 2014. These payment rates will then be updated in the 

January 2015 OPPS update, based on the most recent ASP data to be used for physician’s 

office and OPPS payment as of January 1, 2015. For items that do not currently have an 

ASP-based payment rate, we recalculated their mean unit cost from all of the CY 2013 

claims data and updated cost report information available for this CY 2015 final rule with 

comment period to determine their final per day cost. 

 Consequently, the packaging status of some HCPCS codes for drugs, biologicals, 

and therapeutic radiopharmaceuticals in the CY 2015 OPPS/ASC proposed rule may be 

different from the same drug HCPCS code’s packaging status determined based on the 
CMS-1613-FC 454 

data used for this CY 2015 OPPS/ASC final rule with comment period. Under such 

circumstances, we proposed to continue to follow the established policies initially 

adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably pay for those 

drugs whose cost fluctuates relative to the proposed CY 2015 OPPS drug packaging 

threshold and the drug’s payment status (packaged or separately payable) in CY 2014. 

Specifically, for CY 2015, consistent with our historical practice, we proposed to apply 

the following policies to these HCPCS codes for drugs, biologicals, and therapeutic 

radiopharmaceuticals whose relationship to the drug packaging threshold changes based 

on the updated drug packaging threshold and on the final updated data: 

● HCPCS codes for drugs and biologicals that were paid separately in CY 2014 

and that were proposed for separate payment in CY 2015, and that then have per day 

costs equal to or less than the CY 2015 final rule drug packaging threshold, based on the 

updated ASPs and hospital claims data used for the CY 2015 final rule, would continue to 

receive separate payment in CY 2015. 

● HCPCS codes for drugs and biologicals that were packaged in CY 2014 and 

that were proposed for separate payment in CY 2015, and that then have per day costs 

equal to or less than the CY 2015 final rule drug packaging threshold, based on the 

updated ASPs and hospital claims data used for the CY 2015 final rule, would remain 

packaged in CY 2015. 

● HCPCS codes for drugs and biologicals for which we proposed packaged 

payment in CY 2015 but then have per day costs greater than the CY 2015 final rule drug 

packaging threshold, based on the updated ASPs and hospital claims data used for the 

CY 2015 final rule, would receive separate payment in CY 2015. 
CMS-1613-FC 455 

 We did not receive any public comments on our proposal to apply the established 

policies initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more 

equitably pay for those drugs whose cost fluctuates relative to the CY 2015 OPPS drug 

packaging threshold and the drug’s payment status (packaged or separately payable) in 

CY 2013. Therefore, we are finalizing our proposal, without modification, for CY 2015. 

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

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74938), we 

unconditionally packaged skin substitute products into their associated surgical 

procedures as part of a broader policy to package all drugs and biologicals that function 

as supplies when used in a surgical procedure. The adoption of this policy, to package all 

drugs and biologicals that function as supplies when used in a surgical procedure, 

followed these packaging policies: (1) packaging of medical and surgical supplies into 

the related procedure under 42 CFR 419.2(b)(4) (68 FR 18543); (2) packaging of 

implantable devices (68 FR 18444); and (3) packaging of implantable biologicals 

(73 FR 68634). As noted in the CY 2014 OPPS/ASC final rule with comment period, we 

believe these policies represented an example of a broader category of drugs and 

biologicals that should be packaged in the OPPS, that is, drugs and biologicals that 

function as supplies in a surgical procedure (78 FR 74930). As part of the policy to 

finalize the packaging of skin substitutes, we also finalized a methodology that divides 

the skin substitutes into a high cost group and a low cost group, in order to ensure 

adequate resource homogeneity among APC assignments for the skin substitute 

application procedures (78 FR 74933). For the CY 2014 update, assignment to the high 

cost or low cost skin substitute group depended upon a comparison of the July 2013 
CMS-1613-FC 456 

ASP+6 percent payment amount for each skin substitute to the weighted average payment 

per unit for all skin substitutes. The weighted average was calculated using the skin 

substitute utilization from the CY 2012 claims data and the July 2013 ASP+6 percent 

payment amounts. The high cost/low cost skin substitute threshold for CY 2014 is $32 

per cm2

. Skin substitutes that had a July 2013 ASP+6 percent amount above $32 per cm2

were classified in the high cost group, and skin substitutes that had a July 2013 ASP+6 

percent amount at or below $32 per cm2

 were classified in the low cost group. Any new 

skin substitutes without pricing information are assigned to the low cost category until 

pricing information is available to compare to the $32 per cm2

 threshold for CY 2014. 

Skin substitutes with pass-through payment status are assigned to the high cost category, 

with an offset applied as described in section V.A.4.d. of the CY 2015 OPPS/ASC 

proposed rule (79 FR 40996). 

 As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 40998 through 

40999), after the effective date of the CY 2014 packaging policy, some skin substitute 

manufacturers brought the following issues to our attention regarding the CY 2014 

methodology for determining the high cost/low cost threshold: 

● Using ASP to determine a product’s placement in the high or low cost category 

may unfairly disadvantage the limited number of skin substitute products that are sold in 

large sizes (that is, above 150 cm2

). Large size skin substitute products are primarily 

used for burns that are treated on an inpatient basis. These manufacturers contend that 

nonlinear pricing for skin substitute products sold in both large and small sizes results in 

lower per cm2

 prices for large sizes. Therefore, the use of ASP data to categorize 

products into high and low cost categories can result in placement of products that have 
CMS-1613-FC 457 

significant inpatient use of the large, lower-priced (per cm2

) sizes into the low cost 

category, even though these large size products are not often used in the hospital 

outpatient department. 

● Using a weighted average ASP to establish the high/low cost categories, 

combined with the drug pass-through policy, will lead to unstable high/low cost skin 

substitute categories in the future. According to one manufacturer, under our CY 2014 

policy, manufacturers with products on pass-through payment status have an incentive to 

set a very high price because hospitals are price-insensitive to products paid with 

pass-through payments. As these new high priced pass-through skin substitutes capture 

more market share, the weighted average ASP high cost/low cost threshold could escalate 

rapidly, resulting in a shift in the assignment of many skin substitutes from the high cost 

category to the low cost category. 

 As stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40998), we agree with 

stakeholder concerns regarding the potential instability of the high/low cost categories 

associated with the drug pass-through policy, as well as stakeholder concerns about the 

inclusion of large-sized products that are primarily used for inpatients in the ASP 

calculation, when ASP is used to establish the high cost/low cost categories. As an 

alternative to using ASP data, we believe that establishing the high cost/low cost 

threshold using an alternative methodology (that is, the weighted average mean unit cost 

(MUC) for all skin substitute products from claims data) may provide more stable 

high/low cost categories and will resolve the issue associated with large sized products 

because the MUC will be derived from hospital outpatient claims only. The threshold 

would be based on costs from hospital outpatient claims data instead of manufacturer 
CMS-1613-FC 458 

reported sales prices that would not include larger sizes primarily used for inpatient burn 

cases. 

 Therefore, in the CY 2015 OPPS/ASC proposed rule (79 FR 40999), we proposed 

to maintain the high cost/low cost APC structure for skin substitute procedures in 

CY 2015. However, we proposed to revise the current methodology used to establish the 

high cost/low cost threshold, and to establish the high cost/low cost threshold based on 

the weighted average MUC for all skin substitutes using CY 2013 claims (which was 

proposed to be $27 per cm2). Skin substitutes with an MUC above $27 per cm2 using 

CY 2013 claims were proposed to be classified in the high cost group and those with an 

MUC at or below $27 per cm2 were proposed to be classified in the low cost group. 

Table 39 of the CY 2015 OPPS/ASC proposed rule (79 FR 40999) showed the CY 2014 

high cost/low cost status for each skin substitute product and the proposed CY 2015 high 

cost/low cost status based on the weighted average MUC threshold of $27. We proposed 

to continue the CY 2014 policy that skin substitutes with pass-through payment status 

would be assigned to the high cost category for CY 2015. Skin substitutes with pricing 

information but without claims data to calculate an MUC would be assigned to either the 

high or low cost category based on the product’s ASP+6 percent payment rate. If ASP is 

not available we would use WAC+6 percent or 95 percent of AWP to assign a product to 

either the high cost or low cost category. We also proposed that any new skin substitute 

without pricing information be assigned to the low cost category until pricing information 

is available to compare to the CY 2015 threshold. 

 Comment: Several commenters supported CMS’ proposal to revise the 

methodology used to establish the high cost/low cost threshold from an ASP-based 
CMS-1613-FC 459 

methodology to a methodology based on the weighted average MUC for all skin 

substitutes using CY 2013 claims data. The commenters agreed that the MUC 

methodology would promote stability of assignments to the high and low cost categories 

and not disadvantage certain skin substitutes that are sold in especially large sizes. 

 Response: We appreciate the commenters’ support. 

 Comment: Other commenters requested that CMS retain the ASP-based 

methodology for calculating the high cost/low cost threshold because, in their opinion, 

the ASP is a better metric for skin substitute costs than hospital outpatient claims data. 

 Response: We disagree with the assertion that ASP better represents the hospital 

costs for skin substitutes than hospital claims data. ASP is a blend of sales prices from a 

variety of purchasers, including various nonhospital entities. ASP also excludes a 

significant number of hospital sales, for example sales to 340B hospitals. Hospital claims 

data are specific to hospitals, and are used in assessing the costs of almost all other items 

and services in the OPPS, including other similar surgical supplies, such as implantable 

devices and implantable biologicals, which we package for payment purposes in the 

OPPS. Furthermore, as stated in the CY 2015 OPPS/ASC proposed rule (79 FR 40998), 

we believe that using MUC will better promote stability versus ASP for high and low 

cost category assignments for skin substitutes, because ASP can be set very high by skin 

substitute manufacturers and disproportionally impact the threshold calculation. 

 Comment: Two commenters recommended an alternative high cost/low cost 

threshold calculation methodology. Instead of basing the threshold on the unit cost the 

commenters urged CMS to calculate the high cost/low cost threshold based on the total 

skin substitute costs per patient, per day, which is currently the mechanism used to set the 
CMS-1613-FC 460 

general OPPS drug, biological, and radiopharmaceutical packaging threshold, which was 

proposed as $90 for CY 2015. These commenters believed that calculating the threshold 

cost per cm2 does not accurately reflect the true cost of products as they are used 

clinically, and could result in displacing larger single-size skin substitutes approved 

through a Premarket Approval (PMA) into the low-cost skin substitute group beginning 

in CY 2016. They believed that this is partly a consequence of CMS’ broad 

categorization of products as skin substitutes that, according to the commenters, includes 

510(k)-cleared wound dressings and human cell, tissue, and cellular and tissue-based 

products (HCT/Ps) under section 361 of the Public Health Service Act (PHSA) (for 

example, cadaver skin or placental tissue). According to these commenters, 

manufacturers of products regulated through these processes can market different sizes of 

their skin substitutes with greater ease than can manufacturers of skin substitutes 

approved through a PMA, who must reapply for an updated label through the FDA to 

change or add a different product size. The commenters are concerned that a unit cost 

threshold may result in large products with lower per cm2

 costs, but with higher total 

costs per case, being assigned to the low cost category in the future. One of these 

commenters, although generally supportive of the change from an ASP-based 

methodology to an MUC-based methodology, also submitted a hypothetical predictive 

model comparing per unit high cost/low cost calculations with per day threshold 

calculations for the various skin substitutes and requested that CMS adopt a per day high 

cost/low cost calculation methodology beginning in CY 2016 to prevent their skin 

substitutes from moving from the high cost to the low cost group in CY 2016. 
CMS-1613-FC 461 

 Response: As we explained in the CY 2014 OPPS/ASC final rule with comment 

period, the FDA treatment of the various skin substitutes does not affect how skin 

substitutes are treated under our policy of packaging drugs and biologicals that function 

as supplies in a surgical procedure (78 FR 74932 through 74933). The 61 skin substitutes 

listed in Table 34 below are available in many different sizes. Product sizing, product 

packaging, quantity per package, and other such individual product attributes are 

manufacturer business decisions that do not concern the agency. We also believe that the 

commenters’ analogy between the general drug, biological, and radiopharmaceutical 

packaging threshold and the high cost/low cost skin substitute threshold is imperfect. Per 

day costs are used for the general drug, biological, and radiopharmaceutical packaging 

threshold because this threshold applies to the entire spectrum of drugs, biologicals, and 

radiopharmaceuticals, which have a wide variety of dosing units and dose descriptors, 

among others, such that per unit comparisons are not possible and therefore a total per 

day dollar amount is calculated. On the contrary, skin substitutes divided into the high 

and low cost categories are all dosed per cm2

, which is also the standard measurement for 

sizing wounds. Therefore, notwithstanding the various sizes of the 61 skin substitutes 

listed in Table 34, meaningful unit cost comparisons can be made for skin substitutes. As 

discussed earlier, we believe that the MUC methodology will help mitigate or eliminate 

the effect of high skin substitute ASPs on the high cost/low cost threshold. However, 

using a per day cost methodology as suggested by the commenters could adversely affect 

the majority of products that are tailored to the wound size. We will evaluate the per day 

cost methodology and compare it to the MUC methodology next year once CY 2014 

claims data are available. 
CMS-1613-FC 462 

 After consideration of the public comments we received, we are finalizing our 

proposal to maintain the high cost/low cost APC structure for skin substitute procedures 

in CY 2015, and our proposal to revise the current methodology used to establish the 

high/low cost threshold with the alternative MUC methodology. We also are finalizing 

for CY 2015 the policy that skin substitutes with pass-through payment status would be 

assigned to the high cost category. Skin substitutes with pricing information but without 

claims data to calculate an MUC will be assigned to either the high cost or low cost 

category based on the product’s ASP+6 percent payment rate. If ASP is not available, we 

will use WAC+6 percent or 95 percent of AWP to assign a product to either the high cost 

or low cost category. We also are finalizing our proposal that any new skin substitutes 

without pricing information will be assigned to the low cost category until pricing 

information is available to compare to the CY 2015 threshold. New skin substitute 

manufacturers must submit pricing information to CMS no later than the 15th of the third 

month prior to the effective date of the next OPPS quarterly update. For example, for a 

new skin substitute with new pricing information to be included in the July 1 OPPS 

update and designated as included in the high cost group, verifiable pricing information 

must be provided to CMS no later than April 15. Table 34 below shows the CY 2014 

high cost/low cost status for each skin substitute product and the final CY 2015 high 

cost/low cost status based on the weighted average MUC threshold of $25, which 

decreased slightly from the proposed $27 threshold due to updated final rule claims data. 

Skin substitutes with an MUC above $25 are assigned to the high cost group for 

CY 2015. For 2014 there are 16 high cost skin substitutes and 27 low cost skin 

substitutes. For CY 2015, there are 62 skin substitute codes, which represent the 
CMS-1613-FC 463 

following products: 30 high cost skin substitutes; 24 low cost skin substitutes; 

7 powdered, liquid, or micronized skin substitutes; and 1 miscellaneous skin substitute 

code. 
CMS-1613-FC 464 

TABLE 34.—SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND 

LOW COST GROUPS 

CY 2015 

HCPCS 

Code 

CY 2015 Short Descriptor 

HCPCS 

Code 

Dosage 

CY 

2015 

SI 

CY 2014 

High/Low 

Status 

Based on 

Weighted 

ASP 

CY 2015 

High/Low 

Status 

Based on 

Weighted 

MUC 

C9358 SurgiMend, fetal 0.5 cm2 N Low Low 

C9360 SurgiMend, neonatal 0.5 cm2 N Low Low 

C9363 Integra Meshed Bil Wound Mat 1 cm2 N Low High 

Q4100 Skin substitute, NOS N/A N Low Low 

Q4101 Apligraf 1 cm2 N High High 

Q4102 Oasis wound matrix 1 cm2 N Low Low 

Q4103 Oasis burn matrix 1 cm2 N Low Low 

Q4104 Integra BMWD 1 cm2 N Low High 

Q4105 Integra DRT 1 cm2 N Low High 

Q4106 Dermagraft 1 cm2 N High High 

Q4107 Graftjacket 1 cm2 N High High 

Q4108 Integra Matrix 1 cm2 N Low High 

Q4110 Primatrix 1 cm2 N High High 

Q4111 Gammagraft 1 cm2 N Low Low 

Q4112 Cymetra injectable 1 cc N N/A N/A 

Q4113 GraftJacket Xpress 1 cc N N/A N/A 

Q4114 Integra Flowable Wound Matrix 1 cc N N/A N/A 

Q4115 Alloskin 1 cm2 N Low Low 

Q4116 Alloderm 1 cm2 N High High 

Q4117 Hyalomatrix 1 cm2 N Low Low 

Q4118 Matristem Micromatrix 1 mg N N/A N/A 

Q4119 Matristem Wound Matrix 1 cm2 N Low Low 

Q4120 Matristem Burn Matrix 1 cm2 N Low Low 

Q4121 Theraskin 1 cm2 G High High 

Q4122 Dermacell 1 cm2 G High High 

Q4123 Alloskin 1 cm2 N Low High 

Q4124 Oasis Tri-layer Wound Matrix 1 cm2 N Low Low 

Q4125 Arthroflex 1 cm2 N High High 

Q4126 Memoderm/derma/tranz/integup 1 cm2 N High High 

Q4127 Talymed 1 cm2 G High High 

Q4128 Flexhd/Allopatchhd/matrixhd 1 cm2 N Low High 

Q4129 Unite Biomatrix 1 cm2 N Low High 
CMS-1613-FC 465 

CY 2015 

HCPCS 

Code 

CY 2015 Short Descriptor 

HCPCS 

Code 

Dosage 

CY 

2015 

SI 

CY 2014 

High/Low 

Status 

Based on 

Weighted 

ASP 

CY 2015 

High/Low 

Status 

Based on 

Weighted 

MUC 

Q4131 Epifix 1 cm2 N High High 

Q4132 Grafix core 1 cm2 N High High 

Q4133 Grafix prime 1 cm2 N High High 

Q4134 HMatrix 1 cm2 N High High 

Q4135 Mediskin 1 cm2 N Low Low 

Q4136 EZderm 1 cm2 N Low Low 

Q4137 Amnioexcel or Biodexcel, 1cm 1 cm2 N Low High 

Q4138 BioDfence DryFlex, 1cm 1 cm2 N Low High 

Q4139 Amniomatrix or Biodmatrix, 1cc 1 cc N N/A N/A 

Q4140 Biodfence 1cm 1 cm2 N Low High 

Q4141 Alloskin ac, 1 cm 1 cm2 N Low Low 

Q4142 Xcm biologic tiss matrix 1cm 1 cm2 N Low Low 

Q4143 Repriza, 1cm 1 cm2 N Low Low 

Q4145 Epifix, 1mg 1 mg N N/A N/A 

Q4146 Tensix, 1cm 1 cm2 N Low Low 

Q4147 Architect ecm px fx 1 sq cm 1 cm2 N High High 

Q4148 Neox 1k, 1cm 1 cm2 N High High 

Q4149 Excellagen, 0.1 cc 0.1 cc N N/A N/A 

Q4150 Allowrap DS or Dry 1 sq cm 1 cm2 N N/A Low 

Q4151 AmnioBand, Guardian 1 sq cm 1 cm2 N N/A Low 

Q4152 Dermapure 1 square cm 1 cm2 N N/A Low 

Q4153 Dermavest 1 square cm 1 cm2 N N/A Low 

Q4154 Biovance 1 square cm 1 cm2 N N/A High 

Q4155 NeoxFlo or ClarixFlo 1 mg 1 mg N N/A N/A 

Q4156 Neox 100 1 square cm 1 cm2 N N/A High 

Q4157 Revitalon 1 square cm 1 cm2 N N/A Low 

Q4158 MariGen 1 square cm 1 cm2 N N/A Low 

Q4159 Affinity 1 square cm 1 cm2 N N/A Low 

Q4160 NuShield 1 square cm 1 cm2 N N/A High 

C9349 Fortaderm, fortaderm antimic 1 cm2 G N/A High 
CMS-1613-FC 466 

d. Pass-Through Evaluation Process for Skin Substitutes 

 At the beginning of the OPPS, skin substitutes were originally evaluated for 

pass-through status using the medical device pass-through process (65 FR 67839). Since 

mid-2001, skin substitutes have been evaluated for pass-through payment status through 

the drug, biological, and radiopharmaceutical pass-through payment process. In 2001, 

there were two distinct HCPCS codes describing skin substitutes. For the CY 2015 

update, there are 61 distinct HCPCS codes describing skin substitutes (not including the 

not otherwise classified HCPCS code, Q4100), and of these 61 products, 18 products that 

are listed in Table 35 below have had, currently have, or will have pass-through payment 

status. 

 
CMS-1613-FC 467 

TABLE 35.—SKIN SUBSTITUTES THAT HAVE HAD, CURRENTLY HAVE, 

OR WILL HAVE PASS-THROUGH PAYMENT STATUS 

CY 

2015 

HCPCS 

Code CY 2015 Short Descriptor 

PassThrough 

Expiration 

Date 

C9358 SurgiMend, fetal 12/31/2010 

C9360 SurgiMend, neonatal 12/31/2011 

C9363 Integra Meshed Bil Wound Mat 12/31/2011 

C9349 FortaDerm, FortaDerm Antimic 12/31/2017 

Q4101 Apligraf 12/31/2002 

Q4104 Integra BMWD 12/31/2006 

Q4105 Integra DRT 12/31/2006 

Q4106 Dermagraft 03/31/2005 

Q4107 Graftjacket 12/31/2006 

Q4108 Integra matrix 12/31/2010 

Q4110 Primatrix 12/31/2008 

Q4121 Theraskin 12/31/2016 

Q4122 Dermacell 12/31/2015 

Q4124 Oasis tri-layer wound matrix 12/31/2013 

Q4127 Talymed 12/31/2015 

Q4131 Epifix 12/31/2014 

Q4132 Grafix core 12/31/2014 

Q4133 Grafix prime 12/31/2014 

 As discussed earlier, and as we stated in the CY 2015 OPPS/ASC proposed rule 

(79 FR 40999 through 41001) and in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74938), we packaged all skin substitutes not on pass-through payment 

status under the policy that packages all drugs and biologicals that function as supplies 

when used in a surgical procedure (78 FR 74938), because we consider skin substitutes to 

be a type of surgical supply in the HOPD. The adoption of the policy to package all 

drugs and biologicals that function as supplies when used in a surgical procedure, 

followed the packaging policies for implantable biologicals, implantable devices, and 
CMS-1613-FC 468 

more broadly, the policy to package medical and surgical supplies into the related 

procedure under 42 CFR 419.2(b)(4). Further, as noted in the CY 2014 OPPS/ASC final 

rule with comment period, we believe these policies represented an example of a broader 

category of drugs and biologicals that should be packaged in the OPPS, that is, drugs and 

biologicals that function as supplies in a surgical procedure (78 FR 74930). 

 Separately, in the CY 2010 OPPS/ASC final rule with comment period, we 

finalized a policy to evaluate implantable biologicals that are surgically inserted or 

implanted (through a surgical incision or a natural orifice) for pass-through payment 

through the medical device pass-through evaluation process, because implantable 

biologicals function as implantable devices (74 FR 60473), which have historically been 

considered supplies in the OPPS (65 FR 18443), and have been evaluated for 

pass-through payment through the medical device pass-through evaluation process since 

CY 2010. As noted earlier, the finalized packaging policy in the CY 2014 OPPS/ASC 

final rule with comment period to package all drugs and biologicals that function as 

supplies when used in a surgical procedure included skin substitutes as a type of surgical 

supply, and, notably, the similarities between implantable biologicals and skin substitutes 

were a key factor in packaging (like we did beginning in 2009 with implantable 

biologicals) skin substitutes into the associated surgical procedure (78 FR 74932). We 

also note that many skin substitutes are FDA-approved or cleared as devices, even though 

skin substitutes have traditionally been treated as biologicals under the OPPS. The 

similarities between these classes of products (implantable devices, implantable 

biologicals, and skin substitutes) informed our proposal to similarly treat applications for 
CMS-1613-FC 469 

pass-through payment for skin substitutes using the OPPS device pass-through process, 

described below. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41000), we proposed that 

applications for pass-through payment for skin substitutes be evaluated using the medical 

device pass-through process and payment methodology. As a result of this proposal, we 

proposed that the last skin substitute pass-through applications evaluated using the drug 

and biological pass-through payment evaluation process would be those with an 

application deadline of the first business date in September 2014, and an effective date of 

January 1, 2015. In light of this proposal, we would change the December 1, 2014 

pass-through payment application deadline (for an effective date of April 1, 2015) for 

both drugs and biologicals and devices to January 15, 2015, in order to provide sufficient 

time for applicants to adjust to the new policies and procedures in effect as of 

January 1, 2015. Any applications submitted after the first business date in 

September 2014, through January 15, 2015, would be evaluated for the April 1, 2015 

cycle. We believe that requiring skin substitutes seeking pass-through payment to use the 

OPPS device pass-through evaluation process is more appropriate because, although skin 

substitutes have characteristics of both surgical supplies and biologicals, we believe skin 

substitutes are best characterized as surgical supplies or devices because of their required 

surgical application and because they share significant clinical similarity with other 

surgical devices and supplies, including implantable biologicals. Therefore, we stated in 

the proposed rule that if this proposal is finalized, beginning with applications seeking 

pass-through payment effective April 1, 2014, new skin substitutes would no longer be 

eligible to submit biological pass-through applications; rather, such applications for 
CMS-1613-FC 470 

pass-through payment would be evaluated using the medical device pass-through 

payment evaluation process, for which payment is based on charges reduced to cost from 

claims. We refer readers to the CMS Web site at: http://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/HospitalOutpatientPPS/ to view the device pass-through payment 

application requirements and review criteria that would apply to the evaluation of all skin 

substitute product applications for pass-through payment status beginning on or after 

January 1, 2015. Those skin substitutes that are approved for pass-through payment 

status as biologicals effective on or before January 1, 2015, would continue to be paid as 

pass-through biologicals for the duration of their period of pass-through payment. 

 We also proposed to revise our regulations at §§ 419.64 and 419.66 to reflect this 

proposed new policy. Specifically, we proposed to revise § 419.64 by deleting the 

existing paragraph (a)(4)(iv) text because it is currently outdated and adding new text at 

paragraph (a)(4)(iv) to exclude skin substitutes from consideration for drug and 

biological pass-through payment. We proposed to modify the regulation at 

§ 419.66(b)(3) to add that a pass-through device may be applied in or on a wound or 

other skin lesion, and we proposed to simplify the language that “whether or not it 

remains with the patient when the patient is released from the hospital” to read “either 

permanently or temporarily.” We also proposed to delete the current example in 

§ 419.66(b)(4)(iii) of the regulations regarding the exclusion of materials, for example, 

biological or synthetic materials, that may be used to replace human skin from device 

pass-through payment eligibility. We invited public comment on these proposals. 

 Comment: Several commenters supported CMS’ proposal to evaluate skin 

substitute pass-through applications through the medical device pass-through process and 
CMS-1613-FC 471 

pay for pass-through skin substitutes according to the medical device pass-through 

payment methodology beginning January 1, 2015. The commenters believed that this 

policy change will limit instability in the high cost/low cost groups from pass-through 

skin substitutes with very high ASPs. The commenter stated that instability could occur 

because manufacturers set ASP and hospitals are relatively insensitive to price for 

separately paid pass-through skin substitutes. Therefore, the commenter added, a new 

high priced pass-through skin substitute could gain significant sales and move the high 

cost/low cost threshold significantly higher from year to year. 

 Response: We agree with the commenters and appreciate their support. 

 Comment: Several commenters opposed CMS’ proposal to evaluate skin 

substitute pass-through applications through the medical device pass-through process. 

Some of these commenters argued that CMS lacks the authority to change the process for 

evaluating skin substitute pass-through applications. The commenters also believed that 

biologicals approved by the FDA under section 351 of the PHSA (those approved by the 

FDA under biologics license applications (BLAs)) cannot be treated as devices for passthrough payment evaluation purposes according to the Social Security Act and 

Congressional intent. The commenters also claimed that changing the pass-through 

payment process for skin substitutes will stifle innovation of new wound care products. 

 Response: We disagree with the commenters’ assertion that the agency lacks the 

authority to change the process for evaluating skin substitutes for pass-through and that 

biologicals approved by the FDA under section 351 of the PHSA (BLA process) cannot 

be treated as devices for pass-through payment evaluation purposes according to the 

Social Security Act and Congressional intent. As we stated in the 2010 OPPS final rule 
CMS-1613-FC 472 

in response to a similar comment on the proposal to change the pass-through evaluation 

process for implantable biologicals: “We do not agree with the commenters who asserted 

that Congress intended biologicals approved under BLAs to be paid under the specific 

OPPS statutory provisions that apply to SCODs, including the pass-through provisions” 

(74 FR 60476). Similarly, Congress did not specify that we must pay for skin substitutes 

as separately payable biologicals rather than devices or supplies, if they also meet our 

criteria for payment as a device. We believe that skin substitutes can satisfy the 

definitions applied under the OPPS of a device or supply and a biological and that, for 

OPPS payment purposes, it is appropriate for us to consider skin substitutes as devices or 

supplies under both pass-through and nonpass-through payment policies, and not as 

separately payable biologicals. For example, beginning in CY 2014, we package the 

costs of skin substitutes into the costs of the surgical procedures in which they are used, 

as we do for implantable biologicals and other implantable devices. Therefore, we do not 

believe that we must pay for skin substitutes under our OPPS payment methodologies for 

separately payable biologicals, rather than our device payment methodologies. 

 In addition, for the skin substitute packaging policy, in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 74933), we stated the following: “We do not 

believe that the FDA approval process should exempt products from this packaging 

proposal or factor into the level of Medicare payment.” Similarly, regarding our proposal 

to change the pass-through payment evaluation process and payment methodology for 

skin substitutes from the drug and biological process to the device process, we also 

believe that any particular FDA approval process should not exempt such products that 

appropriately fall under the category of skin substitutes under the OPPS from the 
CMS-1613-FC 473 

application of this pass-through payment proposal or direct which pass-through payment 

evaluation process must be used. 

 Notably, none of the current 61 skin substitute products described by distinct 

HCPCS codes and listed in Table 35 above have been approved by FDA under section 

351 of the PHSA. This fact is somewhat counterintuitive, as biologics or biologicals or 

biological products are most commonly understood to be products approved by the FDA 

under section 351 of the PHSA. Current skin substitute products’ FDA classifications 

include a variety of Class III medical devices, Class II medical devices, and HCT/Ps 

under section 361 of the PHSA, which are tissue bank materials not subject to FDA 

approval requirements. We also note that whether a future wound healing product is 

described by the OPPS packaged category of products described in 42 CFR 419.2(b)(16) 

as “skin substitutes and similar products that aid wound healing” will depend upon the 

particular characteristics of the future product. We do not intend for the category of 

products described as “skin substitutes and similar products that aid wound healing” to 

necessarily include all products with a wound healing indication. However, if a new 

wound healing product, regardless of FDA approval or clearance type, fits with the “skin 

substitutes and similar products that aid wound healing” category of products, all of the 

applicable OPPS policies that apply to “skin substitutes and similar products that aid 

wound healing” would also apply to the new wound healing product. 

 Finally, we do not believe that this policy will stifle innovation of new skin 

substitutes, as new skin substitutes that can demonstrate a substantial clinical 

improvement over current wound treatments could receive pass-through status as a 

device. In addition, there are currently 61 distinct HCPCS codes for various skin 
CMS-1613-FC 474 

substitutes. Of these 61 products, only 18 (30 percent) have had, currently have, or will 

have pass-through payment status granted through the drug and biological pass-through 

payment process. Therefore, pass-through payment does not appear to be necessary for 

the commercialization of these products, which have (in terms of distinct HCPCS codes 

describing them) expanded significantly from 2 skin substitutes in CY 2001 to 61 skin 

substitutes in CY 2015. Furthermore, we have not restricted access to the high cost skin 

substitute group, and we have only required manufacturers of new skin substitutes to 

submit pricing information for assignment to the high cost group of skin substitutes. For 

these reasons, we do not believe that any CMS OPPS payment policies will stifle 

innovation or impede the development of new skin substitutes. 

 Comment: One commenter was concerned that the substantial clinical 

improvement criterion for medical device pass-through places an unduly high burden on 

new skin substitute products. The commenter believed that this requirement is 

“incompatible with skin substitute products, which are not required to submit efficacy 

data to the Food and Drug Administration.” This commenter also disagreed with CMS’ 

proposal to not accept any skin substitute applications though the drug and biological 

pass-through payment process after September 1, 2014, and to move the final passthrough payment deadline for drug and biologicals and devices from December 1, 2014, 

to January 15, 2015. The commenter requested that additional guidance on substantial 

clinical improvement be provided specifically for application to skin substitute products, 

beyond that described in the November 2, 2001, interim final rule with comment period 

entitled “Medicare Program—Prospective Payment System for Hospital Outpatient 
CMS-1613-FC 475 

Services: Criteria for Establishing Additional Pass-Through Categories for Medical 

Devices” (66 FR 55850). 

 Response: The comment that FDA does not require submission of efficacy data 

for skin substitute products is overly simplified. The different skin substitute products 

that have been identified in Table 35 above are subject to different FDA regulatory 

requirements (that is, based on review by CBER versus CDRH, regulatory classification 

and claims). 

 FDA/CDRH draws a distinction between wound dressing devices intended only to 

serve as a wound covering versus products intended to promote wound healing. Those 

devices that are intended to promote wound healing are subject to Premarket Approval 

(PMA) and require clinical data to support safety and effectiveness of the device. Those 

devices that are intended to serve as a wound covering are subject to Premarket 

Notification (510(k)) and require demonstration of substantial equivalence (that is, the 

device demonstrates that it is as safe and effective as a legally marketed predicate 

device). Generally, substantial equivalence in safety and effectiveness is demonstrated 

through comparative bench and animal studies and leveraged with historical clinical 

effectiveness data for similar devices. The weakness of the evidence for many skin 

substitute products has been documented in two recent technology assessments by the 

Agency for Healthcare Research and Quality. However, different pre-market data 

requirements for skin substitute products regulated by FDA should not excuse these 

products from the substantial clinical improvement pass-through criterion for device 

pass-through payment. Pass-through payment status is not intended to be granted to 

every new product, but only to those that satisfy the pass-through payment requirements. 
CMS-1613-FC 476 

As stated in the CY 2001 OPPS interim final rule: “We believe it is important for 

hospitals to receive pass-through payments for devices that offer substantial clinical 

improvement in the treatment of Medicare beneficiaries to facilitate access by 

beneficiaries to the advantages of the new technology. Conversely, the need for 

additional payments for devices that offer little or no clinical improvement over a 

previously existing device is less apparent” (66 FR 55852). 

 Regarding the requirements for satisfying the substantial clinical improvement 

criterion, we believe that the list on page 55852 of the CY 2001 OPPS interim final rule 

suffices. For example, among the items listed is: “More rapid beneficial resolution of 

the disease process treated because of the use of the device.” If a new skin substitute 

demonstrated improved wound healing compared to existing wound treatments, it could 

potentially qualify for pass-through as a medical device, assuming that the skin substitute 

is not described by an expired pass-through payment device category. 

 Finally, we believe that sufficient notice was provided of this policy change in the 

CY 2015 OPPS/ASC proposed rule, and that accepting drug and biological applications 

through the first business date of September 2014 deadline for a January 1, 2015 

pass-through payment effective date is a fair application of a policy that takes effect on 

January 1, 2015. The regular December 1, 2014 application deadline, which is being 

extended to January 15, 2015 for this cycle, was for pass-through payment applications 

with an earliest effective date of April 1, 2015, which is well past the effective date of 

this new policy. 

 After consideration of the public comments we received, we are finalizing our 

proposal for applications seeking pass-through payment for skin substitute and similar 
CMS-1613-FC 477 

wound healing products effective beginning April 1, 2015, to apply using the medical 

device pass-through evaluation process. 

e. Packaging Determination for HCPCS Codes That Describe the Same Drug or 

Biological But Different Dosages 

 In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66776), we 

began recognizing, for OPPS payment purposes, multiple HCPCS codes reporting 

different dosages for the same covered Part B drugs or biologicals in order to reduce 

hospitals’ administrative burden by permitting them to report all HCPCS codes for drugs 

and biologicals. In general, prior to CY 2008, the OPPS recognized for payment only the 

HCPCS code that described the lowest dosage of a drug or biological. During CYs 2008 

and 2009, we applied a policy that assigned the status indicator of the previously 

recognized HCPCS code to the associated newly recognized code(s), reflecting the 

packaged or separately payable status of the new code(s). 

 In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 through 

60491), we finalized a policy to make a single packaging determination for a drug, rather 

than an individual HCPCS code, when a drug has multiple HCPCS codes describing 

different dosages because we believed that adopting the standard HCPCS code-specific 

packaging determinations for these codes could lead to inappropriate payment incentives 

for hospitals to report certain HCPCS codes instead of others. We continue to believe 

that making packaging determinations on a drug-specific basis eliminates payment 

incentives for hospitals to report certain HCPCS codes for drugs and allows hospitals 

flexibility in choosing to report all HCPCS codes for different dosages of the same drug 

or only the lowest dosage HCPCS code. Therefore, in the CY 2015 OPPS/ASC proposed 
CMS-1613-FC 478 

rule (79 FR 41001), we proposed to continue our policy to make packaging 

determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for 

those HCPCS codes that describe the same drug or biological but different dosages in 

CY 2015. 

 For CY 2015, in order to propose a packaging determination that is consistent 

across all HCPCS codes that describe different dosages of the same drug or biological, 

we aggregated both our CY 2013 claims data and our pricing information at ASP+6 

percent across all of the HCPCS codes that describe each distinct drug or biological in 

order to determine the mean units per day of the drug or biological in terms of the 

HCPCS code with the lowest dosage descriptor. The following drugs did not have 

pricing information available for the ASP methodology for this CY 2015 OPPS/ASC 

final rule with comment period and, as is our current policy for determining the 

packaging status of other drugs, we used the mean unit cost available from the fourth 

quarter CY 2013 claims data to make the packaging determinations for these drugs: 

HCPCS code J3471 (Injection, hyaluronidase, ovine, preservative free, per 1 usp unit (up 

to 999 usp units)) and HCPCS code J3472 (Injection, hyaluronidase, ovine, preservative 

free, per 1000 usp units). 

 For all other drugs and biologicals that have HCPCS codes describing different 

doses, we then multiplied the weighted average ASP+6 percent per unit payment amount 

across all dosage levels of a specific drug or biological by the estimated units per day for 

all HCPCS codes that describe each drug or biological from our claims data to determine 

the estimated per day cost of each drug or biological at less than or equal to $95 (so that 
CMS-1613-FC 479 

all HCPCS codes for the same drug or biological would be packaged) or greater than $95 

(so that all HCPCS codes for the same drug or biological would be separately payable). 

 The proposed packaging status of each drug and biological HCPCS code to which 

this methodology would apply was displayed in Table 41 of the CY 2015 OPPS/ASC 

proposed rule (79 FR 41001 through 41002). 

 We did not receive any public comments on this proposal. Therefore, we are 

finalizing our CY 2015 proposal, without modification, to continue to make packaging 

determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for 

those HCPCS codes that describe the same drug or biological but different dosages. 

Table 36 below displays the packaging status of each drug and biological HCPCS code to 

which the methodology applies for CY 2015. 

TABLE 36.—HCPCS CODES TO WHICH THE CY 2015 DRUG-SPECIFIC 

PACKAGING DETERMINATION METHODOLOGY APPLIES 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

CY 2015 

SI 

C9257 Injection, bevacizumab, 0.25 mg K 

J9035 Injection, bevacizumab, 10 mg K 

J1020 Injection, methylprednisolone acetate, 20 mg N 

J1030 Injection, methylprednisolone acetate, 40 mg N 

J1040 Injection, methylprednisolone acetate, 80 mg N 

J1070 Injection, testosterone cypionate, up to 100 mg N 

J1080 Injection, testosterone cypionate, 1 cc, 200 mg N 

J1440 Injection, filgrastim (g-csf), 300 mcg N 

J1441 Injection, filgrastim (g-csf), 480 mcg N 

J1460 Injection, gamma globulin, intramuscular, 1 cc N 

J1560 Injection, gamma globulin, intramuscular over 10 cc N 

J1642 Injection, heparin sodium, (heparin lock flush), per 10 units N 

J1644 Injection, heparin sodium, per 1000 units N 

J1850 Injection, kanamycin sulfate, up to 75 mg N 

J1840 Injection, kanamycin sulfate, up to 500 mg N 

J2270 Injection, morphine sulfate, up to 10 mg N 
CMS-1613-FC 480 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

CY 2015 

SI 

J2271 Injection, morphine sulfate, 100mg N 

J2788 Injection, rho d immune globulin, human, minidose, 50 

micrograms (250 i.u.) N 

J2790 Injection, rho d immune globulin, human, full dose, 300 

micrograms (1500 i.u.) N 

J2920 Injection, methylprednisolone sodium succinate, up to 40 mg N 

J2930 Injection, methylprednisolone sodium succinate, up to 125 mg N 

J3120 Injection, testosterone enanthate, up to 100 mg N 

J3130 Injection, testosterone enanthate, up to 200 mg N 

J3471 Injection, hyaluronidase, ovine, preservative free, per 1 usp 

unit (up to 999 usp units) N 

J3472 Injection, hyaluronidase, ovine, preservative free, per 1000 usp 

units N 

J7050 Infusion, normal saline solution , 250 cc N 

J7040 Infusion, normal saline solution, sterile (500 ml=1 unit) N 

J7030 Infusion, normal saline solution , 1000 cc N 

J7515 Cyclosporine, oral, 25 mg N 

J7502 Cyclosporine, oral, 100 mg N 

J8520 Capecitabine, oral, 150 mg K 

J8521 Capecitabine, oral, 500 mg K 

J9250 Methotrexate sodium, 5 mg N 

J9260 Methotrexate sodium, 50 mg N 

3. Payment for Drugs and Biologicals without Pass-Through Status That Are Not 

Packaged 

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

Payable and Packaged Drugs and Biologicals 

 Section 1833(t)(14) of the Act defines certain separately payable 

radiopharmaceuticals, drugs, and biologicals and mandates specific payments for these 

items. Under section 1833(t)(14)(B)(i) of the Act, a “specified covered outpatient drug” 

(known as a SCOD) is defined as a covered outpatient drug, as defined in 

section 1927(k)(2) of the Act, for which a separate APC has been established and that 
CMS-1613-FC 481 

either is a radiopharmaceutical agent or is a drug or biological for which payment was 

made on a pass-through basis on or before December 31, 2002. 

 Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and biologicals are 

designated as exceptions and are not included in the definition of SCODs. These 

exceptions are— 

● A drug or biological for which payment is first made on or after 

January 1, 2003, under the transitional pass-through payment provision in 

section 1833(t)(6) of the Act. 

● A drug or biological for which a temporary HCPCS code has not been 

assigned. 

● During CYs 2004 and 2005, an orphan drug (as designated by the Secretary). 

 Section 1833(t)(14)(A)(iii) of the Act requires that payment for SCODs in 

CY 2006 and subsequent years be equal to the average acquisition cost for the drug for 

that year as determined by the Secretary, subject to any adjustment for overhead costs 

and taking into account the hospital acquisition cost survey data collected by the 

Government Accountability Office (GAO) in CYs 2004 and 2005, and later periodic 

surveys conducted by the Secretary as set forth in the statute. If hospital acquisition cost 

data are not available, the law requires that payment be equal to payment rates 

established under the methodology described in section 1842(o), section 1847A, or 

section 1847B of the Act, as calculated and adjusted by the Secretary as necessary. Most 

physician Part B drugs are paid at ASP+6 percent pursuant to section 1842(o) and 

section 1847A of the Act. 
CMS-1613-FC 482 

 Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in OPPS payment 

rates for SCODs to take into account overhead and related expenses, such as pharmacy 

services and handling costs. Section 1833(t)(14)(E)(i) of the Act required MedPAC to 

study pharmacy overhead and related expenses and to make recommendations to the 

Secretary regarding whether, and if so how, a payment adjustment should be made to 

compensate hospitals for overhead and related expenses. Section 1833(t)(14)(E)(ii) of 

the Act authorizes the Secretary to adjust the weights for ambulatory procedure 

classifications for SCODs to take into account the findings of the MedPAC study. 

 It has been our longstanding policy to apply the same treatment to all separately 

payable drugs and biologicals, which include SCODs, and drugs and biologicals that are 

not SCODs. Therefore, we apply the payment methodology in section 1833(t)(14)(A)(iii) 

of the Act to SCODs, as required by statute, but we also apply it to separately payable 

drugs and biologicals that are not SCODs, which is a policy determination rather than a 

statutory requirement. In the CY 2015 OPPS/ASC proposed rule (79 FR 41002), we 

proposed to apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs 

and biologicals, including SCODs. Although we do not distinguish SCODs in this 

discussion, we note that we are required to apply section 1833(t)(14)(A)(iii)(II) of the Act 

to SCODs, but we also are applying this provision to other separately payable drugs and 

biologicals, consistent with our history of using the same payment methodology for all 

separately payable drugs and biologicals. 

 Since CY 2006, we have attempted to establish a drug payment methodology that 

reflects hospitals’ acquisition costs for drugs and biologicals while taking into account 

relevant pharmacy overhead and related handling expenses. We have attempted to 
CMS-1613-FC 483 

collect more data on hospital overhead charges for drugs and biologicals by making 

several proposals that would require hospitals to change the way they report the cost and 

charges for drugs. None of these proposals were adopted due to significant stakeholder 

concern, including that hospitals stated that it would be administratively burdensome to 

report hospital overhead charges. We established a payment policy for separately 

payable drugs and biologicals, authorized by section 1833(t)(14)(A)(iii)(I) of the Act, 

based on an ASP+X amount that is calculated by comparing the estimated aggregate cost 

of separately payable drugs and biologicals in our claims data to the estimated aggregate 

ASP dollars for separately payable drugs and biologicals, using the ASP as a proxy for 

average acquisition cost (70 FR 68642 through 68643). We referred to this methodology 

as our standard drug payment methodology. Taking into consideration comments made 

by the pharmacy stakeholders and acknowledging the limitations of the reported data due 

to charge compression and hospitals’ reporting practices, we added an “overhead 

adjustment” in CY 2010 (an internal adjustment of the data) by redistributing cost from 

coded and uncoded packaged drugs and biologicals to separately payable drugs in order 

to provide more appropriate payments for drugs and biologicals in the HOPD. We 

continued this methodology, and we further refined it in CY 2012 by finalizing a policy 

to update the redistribution amount for inflation and to keep the redistribution ratio 

constant between the proposed rule and the final rule. For a detailed discussion of our 

OPPS drug payment policies from CY 2006 to CY 2012, we refer readers to the CY 2013 

OPPS/ASC final rule with comment period (77 FR 68383 through 68385). 

 Because of continuing uncertainty about the full cost of pharmacy overhead and 

acquisition cost, based in large part on the limitations of the submitted hospital charge 
CMS-1613-FC 484 

and claims data for drugs, in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68386), we indicated our concern that the continued use of the standard drug 

payment methodology (including the overhead adjustment) still may not appropriately 

account for average acquisition and pharmacy overhead cost and, therefore, may result in 

payment rates that are not as predictable, accurate, or appropriate as they could be. 

Section 1833(t)(14)(A)(iii)(II) of the Act requires an alternative methodology for 

determining payment rates for SCODS wherein, if hospital acquisition cost data are not 

available, payment shall be equal (subject to any adjustment for overhead costs) to 

payment rates established under the methodology described in section 1842(o), 1847A, or 

1847B of the Act. We refer to this alternative methodology as the “statutory default.” In 

the CY 2013 OPPS/ASC final rule with comment period (77 FR 68386), we noted that 

section 1833(t)(14)(A)(iii)(II) of the Act authorizes the Secretary to calculate and adjust, 

as necessary, the average price for a drug in the year established under section 1842(o), 

1847A, or 1847B of the Act, as the case may be, in determining payment for SCODs. 

Pursuant to sections 1842(o) and 1847A of the Act, Part B drugs are paid at ASP+6 

percent when furnished in physicians’ offices. We indicated that we believe that 

establishing the payment rates based on the statutory default of ASP+6 percent is 

appropriate as it yields increased predictability in payment for separately payable drugs 

and biologicals under the OPPS and, therefore, we finalized our proposal for CY 2013 to 

pay for separately payable drugs and biologicals at ASP+6 percent based on 

section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We also finalized our 

proposal that the ASP+6 percent payment amount for separately payable drugs and 

biologicals requires no further adjustment and represents the combined acquisition and 
CMS-1613-FC 485 

pharmacy overhead payment for drugs and biologicals, that payments for separately 

payable drugs and biologicals are included in the budget neutrality adjustments under the 

requirements in section 1833(t)(9)(B) of the Act, and that the budget neutral weight scaler 

is not applied in determining payments for these separately paid drugs and biologicals for 

CY 2013 (77 FR 68389). 

b. CY 2015 Payment Policy 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), we proposed to 

continue our CY 2014 policy and pay for separately payable drugs and biologicals at 

ASP+6 percent pursuant to section 1833(t)(14)(A)(iii)(II) of the Act (the statutory 

default). We proposed that the ASP+6 percent payment amount for separately payable 

drugs and biologicals requires no further adjustment and represents the combined 

acquisition and pharmacy overhead payment for drugs and biologicals. We also 

proposed that payments for separately payable drugs and biologicals are included in the 

budget neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act, 

and that the budget neutral weight scaler is not applied in determining payments for these 

separately paid drugs and biologicals. 

 Comment: Commenters supported CMS’ proposal to pay for separately payable 

drugs and biologicals based on the statutory default rate of ASP+6 percent. A few 

commenters supported CMS’ proposal, but recommended that CMS examine ways to 

compensate hospitals for the unique, higher overhead and handling costs associated with 

therapeutic radiopharmaceuticals. 

 Response: We appreciate the commenters’ support of our proposal. We continue 

to believe that ASP+6 percent based on the statutory default is appropriate for hospitals 
CMS-1613-FC 486 

for CY 2015 and that this percentage amount includes payment for acquisition and 

overhead cost. We see no evidence that an additional overhead adjustment is required for 

separately payable drugs, biologicals, and therapeutic radiopharmaceuticals for CY 2015. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to pay for separately payable drugs and biologicals at 

ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). 

The ASP+6 percent payment amount for separately payable drugs and biologicals 

requires no further adjustment and represents the combined acquisition and pharmacy 

overhead payment for drugs and biologicals for CY 2015. In addition, we are finalizing 

our proposal which states that payment for separately payable drugs and biologicals be 

included in the budget neutrality adjustments, under the requirements of section 

1833(t)(9)(B) of the Act, and that the budget neutral weight scaler is not applied in 

determining payment of these separately paid drugs and biologicals. We note that 

separately payable drug and biological payment rates listed in Addenda A and B to this 

final rule with comment period (available via the Internet on the CMS Web site), which 

illustrate the final CY 2015 payment of ASP+6 percent for separately payable 

nonpass-through drugs and biologicals and ASP+6 percent for pass-through drugs and 

biologicals, reflect either ASP information that is the basis for calculating payment rates 

for drugs and biologicals in the physician’s office setting effective October 1, 2014, or 

WAC, AWP, or mean unit cost from CY 2013 claims data and updated cost report 

information available for this final rule with comment period. In general, these published 

payment rates are not reflective of actual January 2015 payment rates. This is because 

payment rates for drugs and biologicals with ASP information for January 2015 will be 
CMS-1613-FC 487 

determined through the standard quarterly process where ASP data submitted by 

manufacturers for the third quarter of 2014 (July 1, 2014 through September 30, 2014) 

are used to set the payment rates that are released for the quarter beginning in January 

2015 near the end of December 2014. In addition, payment rates for drugs and 

biologicals in Addenda A and B to this final rule with comment period for which there 

was no ASP information available for October 2014 are based on mean unit cost in the 

available CY 2013 claims data. If ASP information becomes available for payment for 

the quarter beginning in January 2015, we will price payment for these drugs and 

biologicals based on their newly available ASP information. Finally, there may be drugs 

and biologicals that have ASP information available for this final rule with comment 

period (reflecting October 2014 ASP data) that do not have ASP information available 

for the quarter beginning in January 2015. These drugs and biologicals will then be paid 

based on mean unit cost data derived from CY 2013 hospital claims. Therefore, the 

payment rates listed in Addenda A and B to this final rule with comment period are not 

for January 2015 payment purposes and are only illustrative of the CY 2015 OPPS 

payment methodology using the most recently available information at the time of 

issuance of this final rule with comment period. 

4. Payment Policy for Therapeutic Radiopharmaceuticals 

 Beginning in CY 2010 and continuing for CY 2014, we established a policy to 

pay for separately paid therapeutic radiopharmaceuticals under the ASP methodology 

adopted for separately payable drugs and biologicals. If ASP information is unavailable 

for a therapeutic radiopharmaceutical, we base therapeutic radiopharmaceutical payment 

on mean unit cost data derived from hospital claims. We believe that the rationale 
CMS-1613-FC 488 

outlined in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 

through 60525) for applying the principles of separately payable drug pricing to 

therapeutic radiopharmaceuticals continues to be appropriate for nonpass-through 

separately payable therapeutic radiopharmaceuticals in CY 2015. Therefore, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 41003), we proposed for CY 2015 to pay all 

nonpass-through, separately payable therapeutic radiopharmaceuticals at ASP+6 percent, 

based on the statutory default described in section 1833(t)(14)(A)(iii)(II) of the Act. For 

a full discussion of ASP-based payment for therapeutic radiopharmaceuticals, we refer 

readers to the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520 through 

60521). We also proposed to rely on CY 2013 mean unit cost data derived from hospital 

claims data for payment rates for therapeutic radiopharmaceuticals for which ASP data 

are unavailable and to update the payment rates for separately payable therapeutic 

radiopharmaceuticals according to our usual process for updating the payment rates for 

separately payable drugs and biologicals, on a quarterly basis if updated ASP information 

is available. For a complete history of the OPPS payment policy for therapeutic 

radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule with comment 

period (69 FR 65811), the CY 2006 OPPS final rule with comment period 

(70 FR 68655), and the CY 2010 OPPS/ASC final rule with comment period 

(74 FR 60524). 

 The proposed CY 2015 payment rates for nonpass-through separately payable 

therapeutic radiopharmaceuticals were included in Addenda A and B to the proposed rule 

(which are available via the Internet on the CMS Web site). 
CMS-1613-FC 489 

 Comment: Several commenters supported CMS’ proposal to pay for separately 

payable therapeutic radiopharmaceuticals under the statutory default payment rate of 

ASP+6 percent, if ASP data are submitted to CMS. 

 Response: We appreciate the commenters’ support. We continue to believe that 

providing payment for therapeutic radiopharmaceuticals based on ASP or mean unit cost 

if ASP information is not available would provide appropriate payment for these 

products. When ASP data are not available, we believe that paying for therapeutic 

radiopharmaceuticals using mean unit cost will appropriately pay for the average hospital 

acquisition and associated handling costs of nonpass-through separately payable 

therapeutic radiopharmaceuticals. As we stated in the CY 2010 OPPS/ASC final rule 

with comment period (74 FR 60523), although using mean unit cost for payment for 

therapeutic radiopharmaceuticals when ASP data are not available is not the usual OPPS 

process (the usual process relies on alternative data sources such as WAC or AWP when 

ASP information is temporarily unavailable, prior to defaulting to the mean unit cost 

from hospital claims data), we continue to believe that WAC or AWP is not an 

appropriate proxy to provide OPPS payment for average therapeutic radiopharmaceutical 

acquisition cost and associated handling costs when manufacturers are not required to 

submit ASP data. Payment based on WAC or AWP under the established OPPS 

methodology for payment of separately payable drugs and biologicals is usually 

temporary for a calendar quarter until a manufacturer is able to submit the required ASP 

data in accordance with the quarterly ASP submission timeframes for reporting under 

section 1847A of the Act. Because ASP reporting for OPPS payment of separately 

payable therapeutic radiopharmaceuticals is not required, a manufacturer’s choice to not 
CMS-1613-FC 490 

submit ASP could result in payment for a separately payable therapeutic 

radiopharmaceutical based on WAC or AWP for a full year, a result that believe would 

be inappropriate. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to continue to pay all nonpass-through, separately 

payable therapeutic radiopharmaceuticals at ASP+6 percent. We also are finalizing our 

proposal to continue to rely on CY 2013 mean unit cost data derived from hospital claims 

data for payment rates for therapeutic radiopharmaceuticals for which ASP data are 

unavailable. The CY 2015 final rule payment rates for nonpass-through separately 

payable therapeutic radiopharmaceuticals are included in Addenda A and B to this final 

rule with comment period (which are available via the Internet on the CMS Web site). 

5. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly Enriched 

Uranium Sources 

 Radioisotopes are widely used in modern medical imaging, particularly for 

cardiac imaging and predominantly for the Medicare population. Technetium-99 

(Tc-99m), the radioisotope used in the majority of such diagnostic imaging services, is 

currently produced in legacy reactors outside of the United States using highly enriched 

uranium (HEU). 

 The United States would like to eliminate domestic reliance on these reactors, and 

is promoting the conversion of all medical radioisotope production to non-HEU sources. 

Alternative methods for producing Tc-99m without HEU are technologically and 

economically viable, and conversion to such production has begun and is expected to be 

completed within a 3-year time period. We expect this change in the supply source for 
CMS-1613-FC 491 

the radioisotope used for modern medical imaging will introduce new costs into the 

payment system that are not accounted for in the historical claims data. 

 Therefore, for CY 2013, we finalized a policy to provide an additional payment of 

$10 for the marginal cost for radioisotopes produced by non-HEU sources 

(77 FR 68323). Under this policy, hospitals report HCPCS code Q9969 (Tc-99m from 

non-highly enriched uranium source, full cost recovery add-on per study dose) once per 

dose along with any diagnostic scan or scans furnished using Tc-99m as long as the 

Tc-99m doses used can be certified by the hospital to be at least 95 percent derived from 

non-HEU sources. The time period for this additional payment was not to exceed 5 years 

from January 1, 2013 (77 FR 68321). 

 Comment: A few commenters requested that CMS extend payment for HCPCS 

code Q9969 an additional 3 to 5 years to ensure adequate data are collected and provide a 

longer ramp up period for more widespread use of non-HEU materials since they are not 

yet widely available. One commenter believed that the $10 payment is not sufficient and 

requested that CMS increase the payment rate. This commenter also requested that CMS 

eliminate the copayment. 

 Response: We stated in our CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68316) that our expectation was that the transition to non-HEU sourced Mo-99 

would be completed within 4 to 5 years and that there might be a need to make 

differential payments for a period of 4 to 5 years. We further stated that we would 

reassess, and propose if necessary, on an annual basis whether such an adjustment 

continued to be necessary and whether any changes to the adjustment were warranted. 

We have reassessed this payment for CY 2015 and have not identified any new 
CMS-1613-FC 492 

information that would cause us to modify payment at this time. We do not agree with 

the commenter’s suggestion to eliminate the beneficiary’s copayment because section 

1833(t)(8) of the Act and §§ 419.41 through 419.45 of the regulations require a 

beneficiary copayment. We are continuing the policy of providing an additional $10 

payment for radioisotopes produced by non-HEU sources for CY 2015. Although we 

will reassess this policy annually, consistent with the original policy in the CY 2013 

OPPS/ASC final rule with comment period (77 FR 68321), we do not anticipate that this 

additional payment would extend beyond CY 2017. 

6. Payment for Blood Clotting Factors 

 For CY 2014, we provided payment for blood clotting factors under the same 

methodology as other nonpass-through separately payable drugs and biologicals under 

the OPPS and continued paying an updated furnishing fee. That is, for CY 2014, we 

provided payment for blood clotting factors under the OPPS at ASP+6 percent, plus an 

additional payment for the furnishing fee. We note that when blood clotting factors are 

provided in physicians’ offices under Medicare Part B and in other Medicare settings, a 

furnishing fee is also applied to the payment. The CY 2014 updated furnishing fee was 

$0.192 per unit. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41003), for CY 2015, we 

proposed to pay for blood clotting factors at ASP+6 percent, consistent with our proposed 

payment policy for other nonpass-through separately payable drugs and biologicals, and 

to continue our policy for payment of the furnishing fee using an updated amount. Our 

policy to pay for a furnishing fee for blood clotting factors under the OPPS is consistent 

with the methodology applied in the physician office and inpatient hospital setting, and 
CMS-1613-FC 493 

first articulated in the CY 2006 OPPS final rule with comment period (70 FR 68661) and 

later discussed in the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66765). The proposed furnishing fee update was based on the percentage 

increase in the Consumer Price Index (CPI) for medical care for the 12-month period 

ending with June of the previous year. Because the Bureau of Labor Statistics releases 

the applicable CPI data after the MPFS and OPPS/ASC proposed rules are published, we 

were not able to include the actual updated furnishing fee in the proposed rules. 

Therefore, in accordance with our policy, as finalized in the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66765), we proposed to announce the actual figure for 

the percent change in the applicable CPI and the updated furnishing fee calculated based 

on that figure through applicable program instructions and posting on the CMS Web site 

at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-BDrugs/McrPartBDrugAvgSalesPrice/index.html. 

 Comment: Commenters supported CMS’ proposal to continue to apply the 

furnishing fee for blood clotting factors provided in the OPD. The commenters also 

supported CMS’ proposal to pay for separately payable drugs at ASP+6 percent based on 

the statutory default for CY 2015. 

 Response: We appreciate the commenters’ support. 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to provide payment for blood clotting factors under the 

same methodology as other separately payable drugs and biologicals under the OPPS and 

to continue payment of an updated furnishing fee. We will announce the actual figure of 

the percent change in the applicable CPI and the updated furnishing fee calculation based 
CMS-1613-FC 494 

on that figure through the applicable program instructions and posting on the CMS Web 

site. 

7. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals with 

HCPCS Codes but without OPPS Hospital Claims Data 

 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

(Pub. L. 108-173) did not address the OPPS payment in CY 2005 and subsequent years 

for drugs, biologicals, and radiopharmaceuticals that have assigned HCPCS codes, but 

that do not have a reference AWP or approval for payment as pass-through drugs or 

biologicals. Because there was no statutory provision that dictated payment for such 

drugs, biologicals, and radiopharmaceuticals in CY 2005, and because we had no hospital 

claims data to use in establishing a payment rate for them, we investigated several 

payment options for CY 2005 and discussed them in detail in the CY 2005 OPPS final 

rule with comment period (69 FR 65797 through 65799). 

 For CYs 2005 to 2007, we implemented a policy to provide separate payment for 

new drugs, biologicals, and radiopharmaceuticals with HCPCS codes (specifically those 

new drug, biological, and radiopharmaceutical HCPCS codes in each of those calendar 

years that did not crosswalk to predecessor HCPCS codes) but which did not have 

pass-through status, at a rate that was equivalent to the payment they received in the 

physician’s office setting, established in accordance with the ASP methodology for drugs 

and biologicals, and based on charges adjusted to cost for radiopharmaceuticals. 

Beginning in CY 2008 and continuing through CY 2014, we implemented a policy to 

provide payment for new drugs and biologicals with HCPCS codes (except those that are 

policy-packaged), but which did not have pass-through status and were without OPPS 
CMS-1613-FC 495 

hospital claims data, at an amount consistent with the final OPPS payment methodology 

for other separately payable nonpass-through drugs and biologicals for the given year. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41004), for CY 2015, we 

proposed to continue this policy and provide payment for new drugs, biologicals, and 

therapeutic radiopharmaceuticals that do not have pass-through status at ASP+6 percent, 

consistent with the proposed CY 2015 payment methodology for other separately payable 

nonpass-through drugs, biologicals, and therapeutic radiopharmaceuticals, which was 

proposed to be ASP+6 percent. We believe this proposed policy would ensure that new 

nonpass-through drugs, biologicals, and therapeutic radiopharmaceuticals would be 

treated like other drugs, biologicals, and therapeutic radiopharmaceuticals under the 

OPPS. 

 For CY 2015, we are also continuing to package payment for all new 

nonpass-through policy-packaged products (diagnostic radiopharmaceuticals, contrast 

agents, anesthesia drugs, drugs, biologicals, and radiopharmaceuticals that function as 

supplies when used in a diagnostic test or procedure, and drugs and biologicals that 

function as supplies when used in a surgical procedure) with HCPCS codes but without 

claims data (those new CY 2015 HCPCS codes that do not crosswalk to predecessor 

HCPCS codes). This is consistent with the CY 2014 finalized policy packaging proposal 

of all existing nonpass-through diagnostic radiopharmaceuticals, contrast agents, 

anesthesia drugs, drugs, biologicals, and radiopharmaceuticals that function as supplies 

when used in a diagnostic test or procedure, and drugs and biologicals that function as 

supplies when used in a surgical procedure, as discussed in more detail in section II.A.3. 

of this final rule with comment period. 
CMS-1613-FC 496 

 In accordance with the OPPS ASP methodology, in the absence of ASP data, for 

CY 2015, we proposed to continue our policy of using the WAC for the product to 

establish the initial payment rate for new nonpass-through drugs and biologicals with 

HCPCS codes, but which are without OPPS claims data. However, we note that if the 

WAC is also unavailable, we would make payment at 95 percent of the product’s most 

recent AWP. We also proposed to assign status indicator “K” (Separately paid 

nonpass-through drugs and biologicals, including therapeutic radiopharmaceuticals) to 

HCPCS codes for new drugs and biologicals without OPPS claims data and for which we 

have not granted pass-through status. With respect to new nonpass-through drugs and 

biologicals for which we do not have ASP data, we proposed that once their ASP data 

become available in later quarterly submissions, their payment rates under the OPPS 

would be adjusted so that the rates would be based on the ASP methodology and set to 

the proposed ASP-based amount (proposed for CY 2015 at ASP+6 percent) for items that 

have not been granted pass-through status. This proposed policy, which utilizes the ASP 

methodology for new nonpass-through drugs and biologicals with an ASP, is consistent 

with prior years’ policies for these items and would ensure that new nonpass-through 

drugs and biologicals would be treated like other drugs and biologicals under the OPPS, 

unless they are granted pass-through status. 

 Similarly, we proposed to continue to base the initial payment for new therapeutic 

radiopharmaceuticals with HCPCS codes, but which do not have pass-through status and 

are without claims data, on the WACs for these products if ASP data for these therapeutic 

radiopharmaceuticals are not available. If the WACs also are unavailable, we proposed 

to make payment for new therapeutic radiopharmaceuticals at 95 percent of the products’ 
CMS-1613-FC 497 

most recent AWP because we would not have mean costs from hospital claims data upon 

which to base payment. As we proposed with new drugs and biologicals, we proposed to 

continue our policy of assigning status indicator “K” to HCPCS codes for new 

therapeutic radiopharmaceuticals without OPPS claims data for which we have not 

granted pass-through status. 

 Consistent with other ASP-based payment, for CY 2015, we proposed to 

announce any changes to the payment amounts for new drugs and biologicals in this 

CY 2015 OPPS/ASC final rule with comment period and also on a quarterly basis on the 

CMS Web site during CY 2015 if later quarter ASP submissions (or more recent WACs 

or AWPs) indicate that changes to the payment rates for these drugs and biologicals are 

necessary. The payment rates for new therapeutic radiopharmaceuticals also would be 

changed accordingly based on later quarter ASP submissions. We note that the new 

CY 2015 HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals were 

not available at the time of development of the proposed rule. However, these agents are 

included in Addendum B to this CY 2015 OPPS/ASC final rule with comment period 

(which is available via the Internet on the CMS Web site), where they are assigned 

comment indicator “NI.” This comment indicator reflects that their interim final OPPS 

treatment is open to public comment in this CY 2015 OPPS/ASC final rule with comment 

period. 

 There are several nonpass-through drugs and biologicals that were payable in 

CY 2013 and/or CY 2014 for which we did not have CY 2013 hospital claims data 

available for the proposed rule and for which there are no other HCPCS codes that 

describe different doses of the same drug, but which have pricing information available 
CMS-1613-FC 498 

for the ASP methodology. In order to determine the packaging status of these products 

for CY 2015, we proposed to continue our policy to calculate an estimate of the per day 

cost of each of these items by multiplying the payment rate of each product based on 

ASP+6 percent, similar to other nonpass-through drugs and biologicals paid separately 

under the OPPS, by an estimated average number of units of each product that would 

typically be furnished to a patient during one day in the hospital outpatient setting. This 

rationale was first adopted in the CY 2006 OPPS/ASC final rule with comment period 

(70 FR 68666 through 68667). 

 We proposed to package items for which we estimated the per day administration 

cost to be less than or equal to $90 (although, as mentioned in section V.B.2. of this final 

rule with comment period, we are finalizing a packaging threshold of $95 for CY 2015) 

and to pay separately for items for which we estimated the per day administration cost to 

be greater than $90 (with the exception of diagnostic radiopharmaceuticals, contrast 

agents, anesthesia drugs, drugs, biologicals, and radiopharmaceuticals that function as 

supplies when used in a diagnostic test or procedure, and drugs and biologicals that 

function as supplies when used in a surgical procedure, which we proposed to continue to 

package regardless of cost) in CY 2015. We also proposed that the CY 2015 payment for 

separately payable items without CY 2013 claims data would be ASP+6 percent, similar 

to payment for other separately payable nonpass-through drugs and biologicals under the 

OPPS. In accordance with the ASP methodology paid in the physician’s office setting, in 

the absence of ASP data, we proposed to use the WAC for the product to establish the 

initial payment rate and, if the WAC is also unavailable, we would make payment at 95 

percent of the most recent AWP available. The proposed estimated units per day and 
CMS-1613-FC 499 

status indicators for these items were displayed in Table 42 of the proposed rule 

(79 FR 41005). 

 Finally, there were 35 drugs and biologicals, shown in Table 43 of the proposed 

rule (79 FR 41005 through 41006), that were payable in CY 2013 but for which we 

lacked CY 2013 claims data and any other pricing information for the ASP methodology 

for the CY 2015 OPPS/ASC proposed rule. For CY 2010, we finalized a policy to assign 

status indicator “E” (Not paid by Medicare when submitted on outpatient claims [any 

outpatient bill type]) whenever we lacked claims data and pricing information and were 

unable to determine the per day cost of a drug or biological. In addition, we noted that 

we would provide separate payment for these drugs and biologicals if pricing information 

reflecting recent sales became available mid-year for the ASP methodology. 

 For CY 2015, as we finalized in CY 2014 (78 FR 75031), we proposed to 

continue to assign status indicator “E” to drugs and biologicals that lack CY 2013 claims 

data and pricing information for the ASP methodology. All drugs and biologicals 

without CY 2013 hospital claims data or data based on the ASP methodology that were 

assigned status indicator “E” on this basis at the time of the proposed rule for CY 2015 

were displayed in Table 43 of the proposed rule (79 FR 41005 through 41006). We also 

proposed to continue our policy to assign the products status indicator “K” and pay for 

them separately for the remainder of CY 2015 if pricing information becomes available. 

 We did not receive any specific public comments regarding our proposed 

payment for nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS 

codes, but without OPPS hospital claims data. Many commenters supported our proposal 

to pay for separately payable drugs at ASP+6 percent under the statutory default. 
CMS-1613-FC 500 

However, these comments were not specific to new drugs and biologicals with HCPCS 

codes but without OPPS claims data. 

 After consideration of the public comments we received, we are finalizing our 

CY 2015 proposal without modification, including our proposal to assign drug or 

biological products status indicator “K” and pay for them separately for the remainder of 

CY 2015 if pricing information becomes available. The final estimated units per day and 

status indicators for drugs and biologicals without CY 2013 claims data are displayed in 

Table 37 below. 

 We did not receive any public comments on our proposal to continue to assign 

status indicator “E” to drugs and biologicals that lack CY 2013 claims data and pricing 

information for the ASP methodology and, therefore, we are finalizing this proposal 

without modification. All drugs and biologicals without CY 2013 hospital claims data 

and without pricing information for the ASP methodology that are assigned status 

indicator “E” on this basis at the time of this final rule with comment period for CY 2015 

are displayed in Table 38 below. 

 
CMS-1613-FC 501 

TABLE 37.—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA 

CY 2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Estimated 

Average 

Number 

of Units 

Per Day 

CY 

2015 

SI 

CY 

2015 

APC 

90581 Anthrax vaccine, for subcutaneous or 

intramuscular use 1 K 1422 

J0215 Injection, alefacept, 0. 5 mg 29 K 1633 

J0365 Injection, aprotonin, 10,000 kiu 1 N 1439 

J0630 Injection, calcitonin salmon, up to 400 

units 2 K 1433 

J2670 Injection, tolazoline hcl, up to 25 mg 1 N 1457 

J3355 Injection, urofollitropin, 75 iu 2 K 1741 

J7196 Injection, antithrombin recombinant, 50 IU 268 K 1332 

J7505 Muromonab-cd3, parenteral, 5 mg 1 N 7038 

J7513 Daclizumab, parenteral, 25 mg 1 N 1612 

J8650 Nabilone, oral, 1 mg 4 K 1424 

J9151 Injection, daunorubicin citrate, liposomal 

formulation, 10 mg 10 K 0821 

J9215 Injection, interferon, alfa-n3, (human 

leukocyte derived), 250,000 iu 1 N 1473 

J9300 Injection, gemtuzumab ozogamicin, 5 mg 1 K 9004 

 

 

 
CMS-1613-FC 502 

TABLE 38.—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA 

AND WITHOUT PRICING INFORMATION FOR THE ASP METHODOLOGY 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

CY 2015 

SI 

90296 Diphtheria antitoxin, equine, any route E 

90393 Vaccina immune globulin, human, for intramuscular use E 

90477 Adenovirus vaccine, type 7, live, for oral use E 

90644 

Meningococcal conjugate vaccine, serogroups c & y and 

hemophilus influenza b vaccine (hib-mency), 4 dose 

schedule, when administered to children 2-15 months of 

age, for intramuscular use 

E 

90681 Rotavirus vaccine, human, attenuated, 2 dose schedule, 

live, for oral use E 

90727 Plague vaccine, for intramuscular use E 

J0190 Injection, biperiden lactate, per 5 mg E 

J0205 Injection, alglucerase, per 10 units E 

J0350 Injection, anistreplase, per 30 units E 

J0364 Injection, apomorphine hydrochloride, 1 mg E 

J0395 Injection, arbutamine hcl, 1 mg E 

J0710 Injection, cephapirin sodium, up to 1 gm E 

J1180 Injection, dyphylline, up to 500 mg E 

J1435 Injection estrone per 1 MG E

J1562 Injection, immune globulin (vivaglobin), 100 mg E 

J1620 Injection, gonadorelin hydrochloride, per 100 mcg E

J1655 Injection, tinzaparin sodium, 1000 iu E 

J1730 Injection, diazoxide, up to 300 mg E

J1835 Injection, itraconazole, 50 mg E

J2460 Injection, oxytetracycline hcl, up to 50 mg E 

J2513 Injection, pentastarch, 10% solution, 100 ml E 

J2725 Injection, protirelin, per 250 mcg E 

J2670 Injection, tolazoline hcl, up to 25 mg E 

J2725 Injection, protirelin, per 250 mcg E 

J2940 Injection, somatrem, 1 mg E 

J3305 Injection, trimetrexate glucuronate, per 25 mg E 

J3365 Injection, iv, urokinase, 250,000 i.u. vial E 

J3400 Injection, triflupromazine hcl, up to 20 mg E 

J8562 Fludarabine phosphate, oral, 10 mg E 

J9165 Injection, diethylstilbestrol diphosphate, 250 mg E 

J9212 Injection, interferon alfacon-1, recombinant, 1 microgram E 

J9219 Leuprolide acetate implant, 65 mg E 
CMS-1613-FC 503 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

CY 2015 

SI 

Q0174 

Thiethylperazine maleate, 10 mg, oral, fda approved 

prescription anti-emetic, for use as a complete therapeutic 

substitute for an iv anti-emetic at the time of chemotherapy 

treatment, not to exceed a 48 hour dosage regimen 

E 

Q0515 Injection, sermorelin acetate, 1 microgram E 

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

Radiopharmaceuticals, and Devices 

A. Background 

 Section 1833(t)(6)(E) of the Act limits the total projected amount of transitional 

pass-through payments for drugs, biologicals, radiopharmaceuticals, and categories of 

devices for a given year to an “applicable percentage,” currently not to exceed 2.0 percent 

of total program payments estimated to be made for all covered services under the OPPS 

furnished for that year. If we estimate before the beginning of the calendar year that the 

total amount of pass-through payments in that year would exceed the applicable 

percentage, section 1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 

in the amount of each of the transitional pass-through payments made in that year to 

ensure that the limit is not exceeded. We estimate the pass-through spending to 

determine whether payments exceed the applicable percentage and the appropriate 

prorata reduction to the conversion factor for the projected level of pass-through spending 

in the following year to ensure that total estimated pass-through spending for the 

prospective payment year is budget neutral, as required by section 1833(t)(6)(E) of the 

Act. 
CMS-1613-FC 504 

 For devices, developing an estimate of pass-through spending in CY 2015 entails 

estimating spending for two groups of items. The first group of items consists of device 

categories that are currently eligible for pass-through payment and that will continue to 

be eligible for pass-through payment in CY 2015. The CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66778) describes the methodology we have used in 

previous years to develop the pass-through spending estimate for known device 

categories continuing into the applicable update year. The second group of items consists 

of items that we know are newly eligible, or project may be newly eligible, for device 

pass-through payment beginning in CY 2015. The sum of the CY 2015 pass-through 

estimates for these two groups of device categories equals the total CY 2015 

pass-through spending estimate for device categories with pass-through status. We base 

the device pass-through estimated payments for each device category on the amount of 

payment as established in section 1833(t)(6)(D)(ii) of the Act, and as outlined in previous 

rules, including the CY 2014 OPPS/ASC final rule with comment period (78 FR 75034 

through 75036). We note that, beginning in CY 2010, the pass-through evaluation 

process and pass-through payment for implantable biologicals newly approved for 

pass-through payment beginning on or after January 1, 2010 that are surgically inserted 

or implanted (through a surgical incision or a natural orifice) is the device pass-through 

process and payment methodology (74 FR 60476). As has been our past practice 

(76 FR 74335), in the CY 2015 OPPS/ASC proposed rule (79 FR 41007), for CY 2015, 

we proposed to include an estimate of any implantable biologicals eligible for 

pass-through payment in our estimate of pass-through spending for devices. We also 

proposed that, beginning in CY 2015, applications for pass-through payment for skin 
CMS-1613-FC 505 

substitutes and similar products be evaluated using the medical device pass-through 

process and payment methodology. We proposed that the last skin substitute 

pass-through applications evaluated using the drugs and biologicals pass-through 

evaluation process would be those with an application deadline of September 1, 2014, 

and an earliest effective date of January 1, 2015. Therefore, in light of this proposal, we 

proposed to change the December 1, 2014 pass-through application deadline (for an 

earliest effective date of April 1, 2015) for both drugs and biologicals and devices to 

January 15, 2015, in order to provide sufficient time for applicants to adjust to the new 

policies and procedures that will be in effect as of January 1, 2015. We discuss our 

proposal to change the pass-through evaluation process for skin substitutes and address 

comments to this proposal and the proposal to change the April 1, 2015 pass-through 

effective date application deadline in section V.B.2.d. of this final rule with comment 

period, where we explain that we are finalizing this proposal. Therefore, beginning in 

CY 2015, we will include an estimate of any skin substitutes eligible for pass-through 

payment in our estimate of pass-through spending for devices. 

 We did not receive any public comments on our proposed methodology or 

proposed estimate for pass-through spending for devices. Therefore, we are finalizing 

our proposal to base the pass-through estimate for devices on our established 

methodology, as described above. Moreover, we are finalizing our proposal, beginning 

in CY 2015 and in future years, to include an estimate of any skin substitutes eligible for 

pass-through payment in our estimate of pass-through spending for devices. 

 For drugs and biologicals eligible for pass-through payment, section 

1833(t)(6)(D)(i) of the Act establishes the pass-through payment amount as the amount 
CMS-1613-FC 506 

by which the amount authorized under section 1842(o) of the Act (or, if the drug or 

biological is covered under a competitive acquisition contract under section 1847B of the 

Act, an amount determined by the Secretary equal to the average price for the drug or 

biological for all competitive acquisition areas and year established under such section as 

calculated and adjusted by the Secretary) exceeds the portion of the otherwise applicable 

fee schedule amount that the Secretary determines is associated with the drug or 

biological. We note that the Part B drug CAP program has been postponed since 

CY 2009, and such a program has not been reinstated for CY 2015. Because, as we 

proposed, we will pay for most nonpass-through separately payable drugs and biologicals 

under the CY 2015 OPPS at ASP+6 percent, as we discuss in section V.B.3. of the 

proposed rule and this final rule with comment period, which represents the otherwise 

applicable fee schedule amount associated with most pass-through drugs and biologicals, 

and because, as we proposed, we will pay for CY 2015 pass-through drugs and 

biologicals at ASP+6 percent, as we discuss in section V.A. of the proposed rule and this 

final rule with comment period, our estimate of drug and biological pass-through 

payment for CY 2015 for this group of items is $0, as discussed below. 

 Furthermore, payment for certain drugs, specifically diagnostic 

radiopharmaceuticals and contrast agents, without pass-through status will always be 

packaged into payment for the associated procedures and these products will not be 

separately paid. In addition, we policy-package all nonpass-through drugs, biologicals, 

and radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure and drugs and biologicals that function as supplies when used in a surgical 

procedure, as discussed in section II.A.3. of this final rule with comment period. In the 
CMS-1613-FC 507 

CY 2015 OPPS/ASC proposed rule (79 FR 41007), we proposed that all of these 

policy-packaged drugs and biologicals with pass-through status would be paid at ASP+6 

percent, like other pass-through drugs and biologicals, for CY 2015. Therefore, our 

estimate of pass-through payment for policy-packaged drugs and biologicals with 

pass-through status approved prior to CY 2015 is not $0. In section V.A.4. of this final 

rule with comment period, we discuss our proposed and finalized policy to determine if 

the costs of certain policy-packaged drugs or biologicals are already packaged into the 

existing APC structure. If we determine that a policy-packaged drug or biological 

approved for pass-through payment resembles predecessor drugs or biologicals already 

included in the costs of the APCs that are associated with the drug receiving pass-through 

payment, we proposed to offset the amount of pass-through payment for the 

policy-packaged drug or biological. For these drugs or biologicals, the APC offset 

amount is the portion of the APC payment for the specific procedure performed with the 

pass-through drug or biological, which we refer to as the policy-packaged drug APC 

offset amount. If we determine that an offset is appropriate for a specific 

policy-packaged drug or biological receiving pass-through payment, we reduce our 

estimate of pass-through payments for these drugs or biologicals by this amount. 

 Similar to pass-through estimates for devices, the first group of drugs and 

biologicals requiring a pass-through payment estimate consists of those products that 

were recently made eligible for pass-through payment and that will continue to be 

eligible for pass-through payment in CY 2015. The second group contains drugs and 

biologicals that we know are newly eligible, or project will be newly eligible, beginning 

in CY 2015. The sum of the CY 2015 pass-through estimates for these two groups of 
CMS-1613-FC 508 

drugs and biologicals equals the total CY 2015 pass-through spending estimate for drugs 

and biologicals with pass-through status. 

B. Estimate of Pass-Through Spending 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41007), we proposed to set the 

applicable pass-through payment percentage limit at 2.0 percent of the total projected 

OPPS payments for CY 2015, consistent with section 1833(t)(6)(E)(ii)(II) of the Act, and 

our OPPS policy from CY 2004 through CY 2014 (78 FR 75034 through 75036). 

 For the first group of devices for pass-through payment estimation purposes, there 

is one device category, HCPCS code C1841 (Retinal prosthesis, includes all internal and 

external components), eligible for pass-through payment as of October 1, 2013, 

continuing to be eligible for CY 2014, and that will continue to be eligible for 

pass-through payment for CY 2015. Based on the one device category, HCPCS code 

C1841, we are finalizing our proposed rule estimate for the first group of devices of 

$0.5 million. 

 In estimating our CY 2015 pass-through spending for device categories in the 

second group, we include: device categories that we knew at the time of the development 

of the final rule will be newly eligible for pass-through payment in CY 2015; additional 

device categories that we estimate could be approved for pass-through status subsequent 

to the development of the final rule and before January 1, 2015; and contingent 

projections for new device categories established in the second through fourth quarters of 

CY 2015. We proposed to use the general methodology described in the CY 2008 

OPPS/ASC final rule with comment period (72 FR 66778), while also taking into account 

recent OPPS experience in approving new pass-through device categories. For the 
CMS-1613-FC 509 

proposed rule, the estimate of CY 2015 pass-through spending for this second group of 

device categories was $10.0 million. We did not receive any public comments regarding 

our proposed pass-through estimate for devices. We are establishing one new device 

category subsequent to the publication of the proposed rule, HCPCS code C2624 

(Implantable wireless pulmonary artery pressure sensor with delivery catheter, including 

all system components), that will be effective January 1, 2015. We estimate that HCPCS 

code C2624 will cost $50.5 million in pass-through expenditures in CY 2015 Therefore, 

for this CY 2015 OPPS/ASC final rule with comment period, the estimate of CY 2015 

pass-through spending for this second group of device categories is $60.5 million. 

 To estimate CY 2015 pass-through spending for drugs and biologicals in the first 

group, specifically those drugs and biologicals recently made eligible for pass-through 

payment and continuing on pass-through payment status for CY 2015, we proposed to 

utilize the most recent Medicare physician claims data regarding their utilization, 

information provided in the respective pass-through applications, historical hospital 

claims data, pharmaceutical industry information, and clinical information regarding 

those drugs or biologicals to project the CY 2015 OPPS utilization of the products. 

 For the known drugs and biologicals (excluding policy-packaged diagnostic 

radiopharmaceuticals, contrast agents, drugs, biologicals, and radiopharmaceuticals that 

function as supplies when used in a diagnostic test or procedure, and drugs and 

biologicals that function as supplies when used in a surgical procedure) that will be 

continuing on pass-through payment status in CY 2015, we estimate the pass-through 

payment amount as the difference between ASP+6 percent and the payment rate for 

nonpass-through drugs and biologicals that will be separately paid at ASP+6 percent, 
CMS-1613-FC 510 

which is zero for this group of drugs. Because payment for policy-packaged drugs and 

biologicals is packaged if the product was not paid separately due to its pass-through 

status, we proposed to include in the CY 2015 pass-through estimate the difference 

between payment for the policy-packaged drug or biological at ASP+6 percent (or 

WAC+6 percent, or 95 percent of AWP, if ASP or WAC information is not available) 

and the policy-packaged drug APC offset amount, if we determine that the 

policy-packaged drug or biological approved for pass-through payment resembles a 

predecessor drug or biological already included in the costs of the APCs that are 

associated with the drug receiving pass-through payment. For the proposed rule, using 

the methodology described above, we calculated a CY 2015 proposed spending estimate 

for this first group of drugs and biologicals of approximately $2.8 million. 

 We did not receive any public comments on our proposed methodology for 

calculating for calculating the spending estimate for the first group of drugs and 

biologicals. 

 For this final rule with comment period, using the methodology described above, 

we calculated a final CY 2015 spending estimate for this first group of drugs and 

biologicals of approximately $11.7 million. 

 To estimate proposed CY 2015 pass-through spending for drugs and biologicals 

in the second group (that is, drugs and biologicals that we know are newly eligible, or 

project will be newly eligible, beginning in CY 2015), in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41008), we proposed to use utilization estimates from pass-through 

applicants, pharmaceutical industry data, clinical information, recent trends in the per unit 

ASPs of hospital outpatient drugs, and projected annual changes in service volume and 
CMS-1613-FC 511 

intensity as our basis for making the CY 2015 pass-through payment estimate. We also 

proposed to consider the most recent OPPS experience in approving new pass-through 

drugs and biologicals. Using our proposed methodology for estimating CY 2015 

pass-through payments for this second group of drugs, we calculated a proposed spending 

estimate for this second group of drugs and biologicals of approximately $2.2 million. 

 We did not receive any public comments on our proposed methodology for 

calculating for calculating the spending estimate for the second group of drugs and 

nonimplantable biologicals. 

 For this final rule with comment period, using our finalized methodology for 

estimating CY 2015 pass-through payments for this second group of drugs, we calculated 

a spending estimate for this second group of drugs and biologicals of approximately 

$10.1 million. Our CY 2015 estimate for total pass-through spending for drugs and 

biologicals (spending for the first group of drugs and biologicals ($11.7 million) plus 

spending for the second group of drugs and biologicals ($10.1 million)) equals $21.8 

million. 

 In summary, in accordance with the methodology described above in this section, 

for this final rule with comment period, we estimate that total pass-through spending for 

the device categories and the drugs and biologicals that are continuing to receive 

pass-through payment in CY 2015 and those device categories, drugs, and biologicals 

that first become eligible for pass-through payment during CY 2015 will be 

approximately $82.8 million (approximately $61.0 million for device categories and 

approximately $21.8 million for drugs and biologicals), which represents 0.15 percent of 

total projected OPPS payments for CY 2015. Therefore, we estimate that pass-through 
CMS-1613-FC 512 

spending in CY 2015 will not amount to 2.0 percent of total projected OPPS CY 2015 

program spending. 

VII. OPPS Payment for Hospital Outpatient Visits 

A. Payment for Hospital Outpatient Clinic and Emergency Department Visits 

 Since April 7, 2000, we have instructed hospitals to report facility resources for 

clinic and ED hospital outpatient visits using the CPT E/M codes and to develop internal 

hospital guidelines for reporting the appropriate visit level (65 FR 18451). Because a 

national set of hospital-specific codes and guidelines do not currently exist, we have 

advised hospitals that each hospital’s internal guidelines that determine the levels of 

clinic and ED visits to be reported should follow the intent of the CPT code descriptors, 

in that the guidelines should be designed to reasonably relate the intensity of hospital 

resources to the different levels of effort represented by the codes. 

 While many hospitals have advocated for hospital-specific national guidelines for 

visit billing since the OPPS started in 2000, and we have signaled in past rulemaking our 

intent to develop guidelines, this complex undertaking has proven challenging. Our work 

with interested stakeholders, such as hospital associations, along with a contractor, has 

confirmed that no single approach could consistently and accurately capture hospitals’ 

relative costs. Public comments received on this issue, as well as our own knowledge of 

how clinics operate, have led us to conclude that it is not feasible to adopt a set of 

national guidelines for reporting hospital clinic visits that can accommodate the 

enormous variety of patient populations and service-mix provided by hospitals of all 

types and sizes throughout the country. Moreover, no single approach has been broadly 

endorsed by the stakeholder community. 
CMS-1613-FC 513 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 through 

75045), we finalized a new policy which created an alphanumeric HCPCS code, G0463 

(Hospital outpatient clinic visit for assessment and management of a patient), for hospital 

use only representing any and all clinic visits under the OPPS and assigned HCPCS code 

G0463 to new APC 0634. We also finalized a policy to use CY 2012 claims data to 

develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on the total 

geometric mean cost of the levels one through five CPT E/M codes for clinic visits 

previously recognized under the OPPS (CPT codes 99201 through 99205 and 99211 

through 99215). In addition, we finalized a policy to no longer recognize a distinction 

between new and established patient clinic visits. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 through 

75043), we also stated our policy that we would continue to use our existing 

methodology to recognize the existing CPT codes for Type A ED visits as well as the five 

HCPCS codes that apply to Type B ED visits, and to establish the OPPS payment under 

our established standard process. We refer readers to the CY 2014 OPPS/ASC final rule 

with comment period for a detailed discussion of the public comments and our rationale 

for the CY 2014 policies. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41008 through 41009), for 

CY 2015, we proposed to continue the current policy, adopted in CY 2014, for clinic and 

ED visits. HCPCS code G0463 (for hospital use only) will represent any and all clinic 

visits under the OPPS. We proposed to continue to assign HCPCS code G0463 to APC 

0634. We proposed to use CY 2013 claims data to develop the CY 2015 OPPS payment 

rates for HCPCS code G0463 based on the total geometric mean cost of the levels one 
CMS-1613-FC 514 

through five CPT E/M codes for clinic visits currently recognized under the OPPS (CPT 

codes 99201 through 99205 and 99211 through 99215). Finally, as we established in the 

CY 2014 OPPS/ASC final rule with comment period, there is no longer a policy to 

recognize a distinction between new and established patient clinic visits. 

 Comment: Commenters requested that CMS discontinue the single HCPCS 

G-code for reporting clinic visits and return to a reporting structure that recognizes 

differences in clinical acuity and resource utilization. The commenters expressed 

concern that CMS’ clinic visit coding proposal creates a payment bias that unfairly 

penalizes certain providers, such as trauma centers, cancer hospitals, and major teaching 

hospitals, which provide care for more severely ill Medicare beneficiaries. One 

commenter urged CMS to carefully review its ratesetting process for HCPCS code G0463 

to ensure that claims containing packaged services that are intended to be part of the 

hospital clinic rates are not being excluded from the payment computations, thereby 

creating artificially low rates. Another commenter recommended that CMS work with 

the American Medical Association (AMA) to develop facility-specific CPT codes for 

E/M clinic visits (with no distinction between new and established patients) and seek 

input from industry stakeholders to develop descriptions for these new codes that allow 

for their consistent application by hospital outpatient clinics/facilities. 

 Response: We believe that the spectrum of hospital resources provided during an 

outpatient hospital clinic visit is appropriately captured and reflected in the single level 

payment for clinic visits. We also believe that the single visit code is consistent with a 

prospective payment system, where payment is based on an average estimated relative 

cost for the service, although the cost of individual cases may be more or less costly than 
CMS-1613-FC 515 

the average. We believe the proposed payment rate for APC 0634 represents an 

appropriate payment for clinic visits, as it is based on the geometric mean costs of all 

visits. Although the cost for any given clinic visit may be higher or lower than the 

geometric mean cost of APC 0634, the payment remains appropriate to the hospital 

delivering a variety of clinic visits. The high volume of claims from every level of clinic 

CPT code that we used for ratesetting for HCPCS code G0463 allows us to have accurate 

data upon which to develop appropriate payment rates. 

 With regard to specific concerns for hospitals that treat patients with a more 

complex case-mix, we note that the relatively low estimated cost of clinic visits overall 

would result in much less underpayment or overpayment for hospitals that may serve a 

population with a more complex case-mix. As we stated in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41008), we proposed to use CY 2013 claims data to develop the 

CY 2015 OPPS payment rates for HCPCS code G0463 based on the total geometric mean 

cost of the levels one through five CPT E/M codes for clinic visits currently recognized 

under the OPPS (CPT codes 99201 through 99205 and 99211 through 99215). We note 

that claims containing packaged services that are intended to be part of the hospital clinic 

rates are not excluded from payment computations for HCPCS code G0463, consistent 

with our application of our line-item trim as described in section II.A.2.a. of this final 

rule with comment period. The line-item trim described in section II.A.2.a. of this final 

rule with comment period requires the lines to be eligible for payment in both the claims 

year and the prospective years. Therefore, the lines that would be packaged when 

modeling clinic visits would not be subject to this trim. For a more detailed discussion of 
CMS-1613-FC 516 

the OPPS data process, we refer readers to section II.A. of this final rule with comment 

period. 

 With regard to the potential for facility-specific CPT codes, as we have stated in 

the past (76 FR 74346), if the AMA were to create facility-specific CPT codes for 

reporting visits provided in HOPDs (based on internally developed guidelines), we would 

consider such codes for OPPS use. 

 After consideration of the public comments we received, we are finalizing our 

CY 2015 proposal, without modification, to continue to use HCPCS code G0463 (for 

hospital use only) to represent any and all clinic visits under the OPPS for CY 2015. In 

addition, for CY 2015 we are finalizing our proposals, without modification, to continue 

to assign HCPCS code G0463 to APC 0634 and to use CY 2013 claims data to develop 

the CY 2015 OPPS payment rates for HCPCS code G0463 based on the total geometric 

mean cost of the levels one through five CPT E/M codes for clinic visits currently 

recognized under the OPPS (CPT codes 99201 through 99205 and 99211 through 99215). 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75040), we 

stated that additional study was needed to fully assess the most suitable payment structure 

for ED visits, including the particular number of visit levels that would not 

underrepresent resources required to treat the most complex patients, such as trauma 

patients and that we believed it was best to delay any change in ED visit coding while we 

reevaluate the most appropriate payment structure for Type A and Type B ED visits. At 

this time, we continue to believe that additional study is needed to assess the most 

suitable payment structure for ED visits. In the CY 2015 OPPS/ASC proposed rule, we 

did not propose any change in ED visit coding. Rather, for CY 2015, we proposed to 
CMS-1613-FC 517 

continue to use our existing methodology to recognize the existing CPT codes for Type A 

ED visits as well as the five HCPCS codes that apply to Type B ED visits, and to 

establish the CY 2015 proposed OPPS payment rates using our established standard 

process. We stated that we intend to further explore the issues described above related to 

ED visits, including concerns about excessively costly patients, such as trauma patients. 

We also stated that we may propose changes to the coding and APC assignments for ED 

visits in future rulemaking. 

 Comment: Commenters supported CMS’ proposal to continue its current 

methodology to recognize the existing five CPT codes for Type A ED visits, as well as 

the five HCPCS codes for Type B ED visits, and to establish the associated CY 2015 

OPPS payment rates using its standard process. Commenters commended CMS for 

proceeding with caution and agreed that additional study is needed on the appropriate 

payment structure for ED visits. Commenters also expressed their desire to work with 

CMS on a future policy proposal to create an appropriate payment structure for ED visits. 

Some commenters stated that one level of hospital ED payment is not appropriate for the 

various levels of resources required in ED visits, especially at major teaching hospitals, 

and expressed concern that a single level of ED visit payment would create a payment 

bias that would unfairly penalize certain providers, such as trauma centers and major 

teaching hospitals, which provide care for more severely ill Medicare beneficiaries. One 

commenter requested that CMS continue with its current ED visit payment policy for the 

foreseeable future and no longer attempt to make future changes to the policy in the 

coming years. Another commenter recommended that CMS work with the AMA to 

develop facility-specific CPT codes for Type A ED visits and Type B ED visits and seek 
CMS-1613-FC 518 

input from industry stakeholders to develop descriptions for these new codes that allow 

for their consistent application by hospital outpatient clinics/facilities. 

 Response: We appreciate the commenters’ support of our proposal to continue 

the current coding structure for ED visits while we continue to study the most appropriate 

payment structure for Type A and Type B ED visits. As discussed above, we received 

multiple comments that a single payment for an ED visit might underrepresent resources 

required to treat the most complex patients, such as trauma patients. As we have stated 

before (78 FR 75040), considering this issue requires additional study. As we continue to 

give additional study to this issue, we continue to welcome stakeholder input on the 

particular number of visit levels that would not underrepresent resources required to treat 

the most complex patients, such as trauma patients. 

 With regard to the potential for facility-specific CPT codes, as we have also stated 

in the past (76 FR 74346), if the AMA were to create facility-specific CPT codes for 

reporting visits provided in HOPDs (based on internally developed guidelines), we would 

consider such codes for OPPS use. 

 Comment: One commenter recommended, on a short-term basis, that CMS 

develop a set of three trauma-specific HCPCS codes for all trauma patients, for whom a 

trauma team is activated. 

 Response: We appreciate the alternative presented by the commenter. We will 

take this recommendation into consideration as we continue to study and fully consider 

the most appropriate payment structure for Type A and Type B ED visits. 

 After consideration of the public comments we received, we are finalizing our 

proposals, without modification, to continue to use our existing methodology to 
CMS-1613-FC 519 

recognize the existing CPT codes for Type A ED visits as well as the five HCPCS codes 

that apply to Type B ED visits, and to establish the CY 2015 OPPS payment rates using 

our established standard process. We intend to further explore the issues described above 

related to ED visits, including concerns about excessively costly patients, such as trauma 

patients. We note that we may propose changes to the coding and APC assignments for 

ED visits in the future rulemaking. 

B. Payment for Critical Care Services 

 For the history of the payment policy for critical care services, we refer readers to 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75043). In the CY 2014 

OPPS/ASC final rule with comment period, we continued to use the methodology 

established in the CY 2011 OPPS/ASC final rule with comment period for calculating a 

payment rate for critical care services that includes packaged payment of ancillary 

services, for example electrocardiograms, chest X-rays, and pulse oximetry. Critical care 

services are described by CPT codes 99291 (Critical care, evaluation and management of 

the critically ill or critically injured patient; first 30-74 minutes) and 99292 (Critical care, 

evaluation and management of the critically ill or critically injured patient; each 

additional 30 minutes (List separately in addition to code for primary service)). 

 As we discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 41009), 

compared to the CY 2012 hospital claims data used for the CY 2014 OPPS ratesetting, 

the CY 2013 hospital claims data used for the CY 2015 OPPS ratesetting again show 

increases in the geometric mean line item costs as well as the geometric mean line item 

charges for CPT code 99291, which continue to suggest that hospitals’ billing practices 

for CPT code 99291 have remained the same. Because the CY 2013 claims data do not 
CMS-1613-FC 520 

support any significant change in hospital billing practices for critical care services, we 

stated in the proposed rule that we continue to believe that it would be inappropriate to 

pay separately for the ancillary services that hospitals typically report in addition to CPT 

codes for critical care services. Therefore, for CY 2015, we proposed to continue our 

policy (that has been in place since CY 2011) to recognize the existing CPT codes for 

critical care services and establish a payment rate based on historical claims data. We 

also proposed to continue to implement claims processing edits that conditionally 

package payment for the ancillary services that are reported on the same date of service 

as critical care services in order to avoid overpayment. We stated that we will continue 

to monitor the hospital claims data for CPT code 99291 in order to determine whether 

revisions to this policy are warranted based on changes in hospitals’ billing practices. 

 We did not receive any public comments on this issue. Accordingly, we are 

finalizing our proposals, without modification, to continue our policy to recognize the 

existing CPT codes for critical care services and establish a payment rate based on 

historical claims data, and to continue to implement claims processing edits that 

conditionally package payment for the ancillary services that are reported on the same 

date of service as critical care services in order to avoid overpayment. 

VIII. Payment for Partial Hospitalization Services 

A. Background 

 Partial hospitalization is an intensive outpatient program of psychiatric services 

provided to patients as an alternative to inpatient psychiatric care for individuals who 

have an acute mental illness. Section 1861(ff)(1) of the Act defines partial 

hospitalization services as “the items and services described in paragraph (2) prescribed 
CMS-1613-FC 521 

by a physician and provided under a program described in paragraph (3) under the 

supervision of a physician pursuant to an individualized, written plan of treatment 

established and periodically reviewed by a physician (in consultation with appropriate 

staff participating in such program), which sets forth the physician’s diagnosis, the type, 

amount, frequency, and duration of the items and services provided under the plan, and 

the goals for treatment under the plan.” Section 1861(ff)(2) of the Act describes the 

items and services included in partial hospitalization services. Section 1861(ff)(3)(A) of 

the Act specifies that a partial hospitalization program (PHP) is a program furnished by a 

hospital to its outpatients or by a community mental health center (CMHC) (as defined in 

subparagraph (B)), and “which is a distinct and organized intensive ambulatory treatment 

service offering less than 24-hour-daily care other than in an individual’s home or in an 

inpatient or residential setting.” Section 1861(ff)(3)(B) of the Act defines a community 

mental health center for purposes of this benefit. 

 Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the authority to 

designate the OPD services to be covered under the OPPS. The Medicare regulations 

that implement this provision specify, under 42 CFR 419.21, that payments under the 

OPPS will be made for partial hospitalization services furnished by CMHCs as well as 

Medicare Part B services furnished to hospital outpatients designated by the Secretary, 

which include partial hospitalization services (65 FR 18444 through 18445). 

 Section 1833(t)(2)(C) of the Act, in pertinent part, requires the Secretary to 

“establish relative payment weights for covered OPD services (and any groups of such 

services described in subparagraph (B)) based on median (or, at the election of the 

Secretary, mean) hospital costs” using data on claims from 1996 and data from the most 
CMS-1613-FC 522 

recent available cost reports. In pertinent part, subparagraph (B) provides that the 

Secretary may establish groups of covered OPD services, within a classification system 

developed by the Secretary for covered OPD services, so that services classified within 

each group are comparable clinically and with respect to the use of resources. In 

accordance with these provisions, we have developed the PHP APCs. Section 

1833(t)(9)(A) of the Act requires the Secretary to “review not less often than annually 

and revise the groups, the relative payment weights, and the wage and other adjustments 

described in paragraph (2) to take into account changes in medical practice, changes in 

technology, the addition of new services, new cost data, and other relevant information 

and factors.” 

 Because a day of care is the unit that defines the structure and scheduling of 

partial hospitalization services, we established a per diem payment methodology for the 

PHP APCs, effective for services furnished on or after July 1, 2000 (65 FR 18452 

through 18455). Under this methodology, the median per diem costs have been used to 

calculate the relative payment weights for PHP APCs. 

 From CY 2003 through CY 2006, the median per diem costs for CMHCs 

fluctuated significantly from year to year, while the median per diem costs for 

hospital-based PHPs remained relatively constant. We were concerned that CMHCs may 

have increased and decreased their charges in response to Medicare payment policies. 

Therefore, we began efforts to strengthen the PHP benefit through extensive data analysis 

and policy and payment changes finalized in the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66670 through 66676). We made two refinements to the 

methodology for computing the PHP median: the first remapped 10 revenue codes that 
CMS-1613-FC 523 

are common among hospital-based PHP claims to the most appropriate cost centers; and 

the second refined our methodology for computing the PHP median per diem cost by 

computing a separate per diem cost for each day rather than for each bill. We refer 

readers to a complete discussion of these refinements in the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66670 through 66676). 

 In CY 2009, we implemented several regulatory, policy, and payment changes, 

including a two-tiered payment approach for PHP services under which we paid one 

amount for days with 3 services (APC 0172 Level I Partial Hospitalization) and a higher 

amount for days with 4 or more services (APC 0173 Level II Partial Hospitalization). 

We refer readers to section X.B. of the CY 2009 OPPS/ASC final rule with comment 

period (73 FR 68688 through 68693) for a full discussion of the two-tiered payment 

system. In addition, for CY 2009, we finalized our policy to deny payment for any PHP 

claims submitted for days when fewer than 3 units of therapeutic services are provided 

(73 FR 68694). 

 Furthermore, for CY 2009, we revised the regulations at 42 CFR 410.43 to codify 

existing basic PHP patient eligibility criteria and to add a reference to current physician 

certification requirements under 42 CFR 424.24 to conform our regulations to our 

longstanding policy (73 FR 68694 through 68695). These changes have helped to 

strengthen the PHP benefit. We also revised the partial hospitalization benefit to include 

several coding updates. We refer readers to section X.C.3. of the CY 2009 OPPS/ASC 

final rule with comment period (73 FR 68695 through 68697) for a full discussion of 

these requirements. 
CMS-1613-FC 524 

 For CY 2010, we retained the two-tiered payment approach for PHP services and 

used only hospital-based PHP data in computing the APC per diem payment rates. We 

used only hospital-based PHP data because we were concerned about further reducing 

both PHP APC per diem payment rates without knowing the impact of the policy and 

payment changes we made in CY 2009. Because of the 2-year lag between data 

collection and rulemaking, the changes we made in CY 2009 were reflected for the first 

time in the claims data that we used to determine payment rates for the CY 2011 

rulemaking (74 FR 60556 through 60559). 

 In CY 2011, in accordance with section 1301(b) of the Health Care and Education 

Reconciliation Act of 2010 (HCERA 2010), we amended the description of a PHP in our 

regulations to specify that a PHP must be a distinct and organized intensive ambulatory 

treatment program offering less than 24-hour daily care “other than in an individual’s 

home or in an inpatient or residential setting.” In addition, in accordance with section 

1301(a) of HCERA 2010, we revised the definition of a CMHC in the regulations to 

conform to the revised definition now set forth under section 1861(ff)(3)(B) of the Act. 

We discussed our finalized policies for these two provisions of HCERA 2010 in section 

X.C. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 71990). 

 In the CY 2011 OPPS/ASC final rule with comment period (75 FR 71994), we 

also established four separate PHP APC per diem payment rates, two for CMHCs (for 

Level I and Level II services) and two for hospital-based PHPs (for Level I and Level II 

services), based on each provider’s own unique data. As stated in the CY 2011 

OPPS/ASC proposed rule (75 FR 46300) and the final rule with comment period 

(75 FR 71991), for CY 2011, using CY 2009 claims data, CMHC costs had significantly 
CMS-1613-FC 525 

decreased again. We attributed the decrease to the lower cost structure of CMHCs 

compared to hospital-based PHP providers, and not the impact of the CY 2009 policies. 

CMHCs have a lower cost structure than hospital-based PHP providers, in part, because 

the data showed that CMHCs generally provide fewer PHP services in a day and use less 

costly staff than hospital-based PHPs. Therefore, it was inappropriate to continue to treat 

CMHCs and hospital-based providers in the same manner regarding payment, 

particularly in light of such disparate differences in costs. We also were concerned that 

paying hospital-based PHPs at a lower rate than their cost structure reflects could lead to 

hospital-based PHP closures and possible access problems for Medicare beneficiaries 

because hospital-based PHPs are located throughout the country and, therefore, offer the 

widest access to PHP services. Creating the four payment rates (two for CMHCs and two 

for hospital-based PHPs) based on each provider’s data supported continued access to the 

PHP benefit, while also providing appropriate payment based on the unique cost 

structures of CMHCs and hospital-based PHPs. In addition, separation of data by 

provider type was supported by several hospital-based PHP commenters who responded 

to the CY 2011 OPPS/ASC proposed rule (75 FR 71992). 

 For CY 2011, we instituted a 2-year transition period for CMHCs to the CMHC 

APC per diem payment rates based solely on CMHC data. For CY 2011, under the 

transition methodology, CMHC PHP APCs Level I and Level II per diem costs were 

calculated by taking 50 percent of the difference between the CY 2010 final 

hospital-based PHP median costs and the CY 2011 final CMHC median costs and then 

adding that number to the CY 2011 final CMHC median costs. A 2-year transition under 

this methodology moved us in the direction of our goal, which is to pay appropriately for 
CMS-1613-FC 526 

PHP services based on each provider type’s data, while at the same time allowing 

providers time to adjust their business operations and protect access to care for 

beneficiaries. We also stated that we would review and analyze the data during the 

CY 2012 rulemaking cycle and, based on these analyses, we might further refine the 

payment mechanism. We refer readers to section X.B. of the CY 2011 OPPS/ASC final 

rule with comment period (75 FR 71991 through 71994) for a full discussion. 

 After publication of the CY 2011 OPPS/ASC final rule with comment period, a 

CMHC and one of its patients filed an application for a preliminary injunction, 

challenging the OPPS payment rates for PHP services provided by CMHCs in CY 2011 

as adopted in the CY 2011 OPPS/ASC final rule with comment period (75 FR 71995). 

We refer readers to the court case, Paladin Cmty. Mental Health Ctr. v. Sebelius, 2011 

WL 3102049 (W.D.Tex. 2011), aff’d, 684 F.3d 527 (5th Cir. 2012) (Paladin). The 

plaintiffs in the Paladin case challenged the agency’s use of cost data derived from both 

hospitals and CMHCs in determining the relative payment weights for the OPPS payment 

rates for PHP services furnished by CMHCs, alleging that section 1833(t)(2)(C) of the 

Act requires that such relative payment weights be based on cost data derived solely from 

hospitals. As discussed above, section 1833(t)(2)(C) of the Act requires CMS to 

“establish relative payment weights for covered OPD services (and any groups of such 

services . . .) . . . based on . . . hospital costs.” Numerous courts have held that “based 

on” does not mean “based exclusively on.” On July 25, 2011, the District Court 

dismissed the plaintiffs’ complaint and application for a preliminary injunction for lack of 

subject-matter jurisdiction, which the plaintiffs appealed to the United States Court of 

Appeals for the Fifth Circuit. On June 15, 2012, the Court of Appeals affirmed the 
CMS-1613-FC 527 

District Court’s dismissal for lack of subject-matter jurisdiction and found that the 

Secretary’s payment rate determinations for PHP services are not a facial violation of a 

clear statutory mandate (Paladin, 684 F.3d at 533). 

 For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74348 through 74352), we determined the relative payment weights for 

PHP services provided by CMHCs based on data derived solely from CMHCs and the 

relative payment weights for hospital-based PHP services based exclusively on hospital 

data. The statute is reasonably interpreted to allow the relative payment weights for the 

OPPS payment rates for PHP services provided by CMHCs to be based solely on CMHC 

data and relative payment weights for hospital-based PHP services to be based 

exclusively on hospital data. Section 1833(t)(2)(C) of the Act requires the Secretary to 

“establish relative payment weights for covered OPD services (and any groups of such 

services described in subparagraph (B)) based on . . . hospital costs.” In pertinent part, 

subparagraph (B) provides that “the Secretary may establish groups of covered OPD 

services . . . so that services classified within each group are comparable clinically and 

with respect to the use of resources.” In accordance with subparagraph (B), we 

developed the PHP APCs, as set forth in § 419.31 of the regulations (65 FR 18446 and 

18447; 63 FR 47559 through 47562 and 47567 through 47569). As discussed above, 

PHP services are grouped into APCs. 

 Based on section 1833(t)(2)(C) of the Act, we believe that the word “establish” 

can be interpreted as applying to APCs at the inception of the OPPS in 2000 or whenever 

a new APC is added to the OPPS. In creating the original APC for PHP services 

(APC 0033), we did “establish” the initial relative payment weight for PHP services, 
CMS-1613-FC 528 

provided in both hospital-based and CMHC-based settings, only on the basis of hospital 

data. Subsequently, from CY 2003 through CY 2008, the relative payment weights for 

PHP services were based on a combination of hospital and CMHC data. For CY 2009, 

we established new APCs for PHP services based exclusively on hospital data. 

Specifically, we adopted a two-tiered APC methodology (in lieu of the original APC 

0033) under which CMS paid one rate for days with 3 services (APC 0172) and a 

different payment rate for days with 4 or more services (APC 0173). These two new 

APCs were established using only hospital data. For CY 2011, we added two new APCs 

(APCs 0175 and 0176) for PHP services provided by hospitals and based the relative 

payment weights for these APCs solely on hospital data. APCs 0172 and 0173 were 

designated for PHP services provided by CMHCs and were based on a mixture of 

hospital and CMHC data. As the Secretary argued in the Paladin case, the courts have 

consistently held that the phrase “based on” does not mean “based exclusively on.” Thus, 

the relative payment weights for the two APCs for PHP services provided by CMHCs in 

CY 2011 were “based on” hospital data, no less than the relative payment weights for the 

two APCs for hospital-based PHP services. 

 Although we used hospital data to establish the relative payment weights for 

APCs 0033, 0172, 0173, 0175, and 0176 for PHP services, we believe that we have the 

authority to discontinue the use of hospital data in determining the OPPS relative 

payment weights for PHP services provided by CMHCs. Other parts of section 

1833(t)(2)(C) of the Act make plain that the data source for the relative payment weights 

is subject to change from one period to another. Section 1833(t)(2)(C) of the Act 

provides that, in establishing the relative payment weights, “the Secretary shall . . . us[e] 
CMS-1613-FC 529 

data on claims from 1996 and us[e] data from the most recent available cost reports.” We 

used 1996 data (in addition to 1997 data) in determining only the original relative 

payment weights for 2000. In the ensuing calendar year updates, we continually used 

more recent cost report data. 

 Moreover, section 1833(t)(9)(A) of the Act requires the Secretary to “review not 

less often than annually and revise the groups, the relative payment weights, and the 

wage and other adjustments described in paragraph (2) to take into account changes in 

medical practice, changes in technology, the addition of new services, new cost data, and 

other relevant information and factors.” For purposes of the CY 2012 update, we 

exercised our authority under section 1833(t)(9)(A) of the Act to change the data source 

for the relative payment weights for PHP services provided by CMHCs based on “new 

cost data, and other relevant information and factors.” 

 In the CY 2014 OPPS/ASC final rule with comment period, we finalized our 

proposal to base the relative payment weights that underpin the OPPS APCs, including 

the four PHP APCs, on geometric mean costs rather than on the median costs. For 

CY 2014, we established the four PHP APC per diem payment rates based on geometric 

mean cost levels calculated using the most recent claims and cost data for each provider 

type. We refer readers to the CY 2014 OPPS/ASC final rule with comment period for a 

more detailed discussion (78 FR 75047 through 75050). 

B. PHP APC Update for CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41009 through 41012), for 

CY 2015, we proposed to continue to apply our established policies to calculate the four 

PHP APC per diem payment rates based on geometric mean per diem costs using the 
CMS-1613-FC 530 

most recent claims and cost data for each provider type. We computed proposed CMHC 

PHP APC geometric mean per diem costs for Level I (3 services per day) and Level II (4 

or more services per day) PHP services using only CY 2013 CMHC claims data and the 

most recent cost data, and proposed hospital-based PHP APC geometric mean per diem 

costs for Level I and Level II PHP services using only CY 2013 hospital-based PHP 

claims data and the most recent cost report data. These proposed geometric mean per 

diem costs were shown in Table 44 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41011). To prevent confusion, we will refer to the per diem information listed in 

Table 44 of the proposed rule and Tables 39 and 40 of this final rule with comment 

period as the PHP APC per diem costs or the PHP APC geometric mean per diem costs, 

and the per diem information listed in Addendum A as the PHP APC per diem payment 

rates or the PHP APC geometric mean per diem rates. The PHP APC per diem costs are 

the provider-specific costs derived from the most recent claims and cost data. The PHP 

APC per diem payment rates are the national unadjusted payment rates calculated after 

applying the OPPS budget neutrality adjustments described in sections II.A.4. and II.B of 

this final rule with comment period.

 For CY 2015, the proposed geometric mean per diem costs for days with 

3 services (Level I) were approximately $97 for CMHCs and approximately $177 for 

hospital-based PHPs. The proposed geometric mean per diem costs for days with 4 or 

more services (Level II) were approximately $115 for CMHCs and approximately $190 

for hospital-based PHPs. 

 The CY 2015 proposed geometric mean per diem costs for CMHCs calculated 

under the proposed CY 2015 methodology using CY 2013 claims data and the most 
CMS-1613-FC 531 

recent cost data remained relatively constant when compared to the CY 2014 final 

geometric mean per diem costs for CMHCs established in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75050), with geometric mean per diem costs for Level I 

CMHC PHP services decreasing from approximately $99 to approximately $97 for 

CY 2015, and geometric mean per diem costs for Level II CMHC PHP services 

increasing from approximately $112 to approximately $115 for CY 2015. 

 The CY 2015 proposed geometric mean per diem costs for hospital-based PHPs 

calculated under the proposed CY 2015 methodology using CY 2013 claims data and the 

most recent cost report data showed more variation when compared to the CY 2014 final 

geometric mean per diem costs for hospital-based PHPs, with geometric mean per diem 

costs for Level I hospital-based PHP services decreasing from approximately $191 to 

approximately $177 for CY 2015, and geometric mean per diem costs for Level II 

hospital-based PHP services decreasing from approximately $214 to approximately $190 

for CY 2015. 

 We understand that having little variation in the PHP per diem payment rates 

from one year to the next allows providers to more easily plan their fiscal needs. 

However, we believe that it is important to base the PHP payment rates on the claims and 

cost reports submitted by each provider type so these rates accurately reflect the cost 

information for these providers. We recognize that several factors may cause a 

fluctuation in the per diem payment rates, including direct changes to the PHP APC per 

diem costs (for example, establishing separate APCs and associated per diem payment 

rates for CMHCs and hospital-based providers based on the provider type’s costs), 

changes to the OPPS (for example, basing the relative payment weights on geometric 
CMS-1613-FC 532 

mean costs), and provider-driven changes (for example, a provider’s decision to change 

its mix of services or to change its charges and clinical practice for some services). We 

refer readers to a more complete discussion of this issue in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75049). We invited public comments on what causes 

PHP costs to fluctuate from year to year and on these proposals. 

 The proposed CY 2015 geometric mean per diem costs for the CMHC and 

hospital-based PHP APCs were shown in Table 44 of the proposed rule. We invited 

public comments on these proposals. 

 Comment: Several commenters opposed the proposed CY 2015 PHP APC per 

diem payment rates and raised concerns about a continued decline in payments for these 

services. Commenters stated that the proposed per diem payment rates were inadequate 

to pay providers for furnishing these services, and were below most program costs for 

providing PHP services. Other commenters suggested that CMS continue to use the 

CY 2014 payment rates for CY 2015. A few commenters expressed concerns that the 

15-percent reduction in payment rates for Level II services in hospitals dropped the 

payment rates too far below providers’ costs. Another commenter asked that CMS 

provide documentation to support the proposed payment rates for PHP services. 

 Response: We acknowledge the concerns raised by the commenters who believe 

that reduced payment rates for CY 2015 will not adequately pay their costs to provide 

PHP services. However, the per diem payment rates reflect the cost of what each 

provider type expends to maintain such programs. Therefore, we do not believe that the 

final payment rates would be inadequate to cover the costs of providing these services. 
CMS-1613-FC 533 

 Based on the final geometric mean per diem costs derived from CY 2013 claims 

data and the most recent cost data, CMHCs’ geometric mean per diem costs increased 

from CY 2014 to CY 2015 for APC 0172 Level I (3 services per day) from 

approximately $99 to approximately $100, and for APC 0173 Level II (4 or more 

services per day) from approximately $112 to approximately $119. These per diem cost 

increases for CMHC APCs 0172 and 0173 are 0.76 percent and 5.7 percent, respectively. 

Final hospital-based PHP per diem costs decreased by significantly smaller amounts than 

the per diem costs that were proposed, but still declined when compared to CY 2014 

geometric mean per diem costs. The PHP APC geometric mean per diem costs decreased 

for hospital-based PHPs from CY 2014 to CY 2015 for APC 0175 Level I (3 services per 

day) from approximately $191 to approximately $186, and for APC 0176 Level II (4 or 

more service per day) from approximately $214 to approximately $203. These final 

hospital-based PHP APC geometric mean per diem cost decreases are 2.6 percent for 

APC 0175 (instead of the proposed decrease of 7.1 percent) and 5.3 percent for APC 

0176 (instead of the proposed decrease of 11.3 percent). We believe that the PHP APC 

per diem payment rates for both providers accurately reflect the claims and cost data of 

each provider type. Again, the resulting PHP APC per diem payment rates and the APC 

payment structures reflect the cost of what providers expend to maintain such programs. 

At this time, we cannot establish payment rates that do not accurately reflect the current 

claims and cost data. For these reasons, we are not suspending implementation of the 

CY 2015 PHP APC per diem payment rates for CMHCs and hospital-based PHPs. 

 The PHP APC per diem payment rates are directly related to the accuracy of the 

claims and cost data submitted by providers. Therefore, it is imperative that providers 
CMS-1613-FC 534 

submit accurate claims and cost data in order for the payment rates to accurately reflect 

the providers’ costs. 

 Regarding the documentation supporting the proposed PHP per diem payment 

rates, for each calendar year update, we explain how the PHP APC per diem payment 

rates are calculated in a proposed rule and a final rule. The industry is welcome to 

comment during the rulemaking process. We also make available to the public the OPPS 

PHP limited data set (LDS) and the OPPS LDS, which we discussed in the CY 2015 

OPPS/ASC proposed rule (79 FR 40931). The OPPS PHP LDS can be used to recreate 

the PHP cost estimates and, when used in conjunction with the OPPS LDS, can be used 

to recreate the PHP APC payment rates. Both of these files are available twice a year, 

once for the proposed rule and again for the final rule. The LDSs are available for 

purchase under a CMS data use agreement through the CMS Web sites at: 

http://www.cms.gov/research-statistics-data-and-systems/files-fororder/limiteddatasets/HospitalOPPSPHPLDS.html and http://www.cms.gov/researchstatistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPS.html. 

 Comment: A number of commenters noted the difficulty in planning and 

budgeting when payment rates for these services fluctuate and asked that CMS establish 

consistent and stable payments. Several commenters stated that they are committed to 

working with CMS to better understand and stabilize the payment rates for the PHP 

benefit, and to determine the factors driving the fluctuation in rates. One commenter 

asserted that the wide variability in PHP APC payment rates from year-to-year does not 

allow quality providers to plan for and to maintain services in a predictable way. Another 

commenter believed that the erratic payment rate structure could diminish access to care 
CMS-1613-FC 535 

because providers may be unable to forecast statistical and financial parameters based on 

the proposed PHP APC payment rates. 

 In response to our solicitation for public comments in the proposed rule on what 

the industry believed was causing the fluctuation in payment rates, a few commenters 

stated that other types of hospitals (rehabilitation, long-term acute care, and inpatient 

psychiatric facilities) are now providing PHP-like services, and questioned whether the 

cost structure of these facilities could be distorting PHP APC payment rates. Another 

commenter stated that as providers move away from PHPs and toward other mental 

health care options, the sample size used in calculating payment rates is smaller. The 

commenter further stated that volumes of services in a few areas could take on greater 

influence in the calculations and affect costs, creating instability in the PHP APC 

payment rates and difficulty in planning. 

 A few commenters mentioned that their PHPs had not experienced significant 

operational or clinical protocol changes, and no changes in the personnel delivering the 

mix of services that would support a reduction in the geometric mean per diem costs. 

Several commenters stated that almost one-third of the proposed PHP APC payment rate 

reduction could be explained by the budget neutrality adjustment, which 

disproportionately affects PHPs, and which, for CY 2015, may have led to payment rates 

that are less than the geometric mean per diem costs. 

 A few commenters cited a study that they had a contractor conduct to investigate 

the fluctuations. The commenters stated that the study results did not suggest that the 

tiered payments, the use of a geometric mean versus a median methodology, the different 

payments by site of service, or provider-driver factors, such as service-mix or 
CMS-1613-FC 536 

patient-mix, were the source of the problem. The commenters noted that the study found 

a dramatic decrease in the total volume of PHP services provided, but an increase in 

hospital-based PHP days, particularly for Level II services. The commenters believed 

that this shift to providing more hospital-based PHP services has partially offset the 

decline in CMHC PHP days and may have caused PHP costs to fluctuate. The 

commenters suggested several areas for potential future study, including the shift of 

services from CMHCs to hospital-based PHPs, a different of mix of providers within the 

hospital category, other types of hospitals newly offering PHP services, volume, and the 

size of hospitals and of PHPs. 

 Response: We acknowledge the difficulties in planning and budgeting that can 

occur when payments fluctuate, or when payment rates decline. However, we are 

continuing to pay for PHP services based on provider data. We also believe that changes 

in payment rates from one year to the next are appropriate in a payment system that is 

annually updated to more accurately estimate the cost of a service upon which the relative 

payment weights are based. We continue to believe that payment rates for PHP services 

have fluctuated from year to year based on a variety of factors, including direct changes 

to the PHP APC per diem payment rate, and changes to the OPPS. Over the past several 

years, we have made changes to the OPPS methodology for calculating PHP APC per 

diem payment rates to more accurately align the payments with costs. The changes have 

included establishing two PHP APC payment tiers, establishing separate APCs and 

associated per diem payment rates for CMHCs and hospital-based providers based on 

each provider’s costs, and basing payments on the geometric mean costs rather than on 

median costs. 
CMS-1613-FC 537 

 In addition, the OPPS is a budget neutral payment system and, as a result, changes 

in the relative payment weights associated with certain services may affect those of other 

services in the payment system. Furthermore, provider-driven changes, such as a 

provider’s decision to change its mix of services or to change its charges and clinical 

practice for some services, may cause fluctuations in the per diem payment rates. We 

provided a detailed discussion of possible reasons for the fluctuation in the rates in the 

CY 2015 OPPS/ASC proposed rule (79 FR 41012) and in section VIII.B. of this final rule 

with comment period. 

 We appreciate the commenters’ providing possible reasons for fluctuations or 

declines in the payment rates. While several providers noted that their operations have 

not changed to support a decline in payments, we reiterate that our payment rates are 

based upon claims and cost data submitted to us by providers and, therefore, reflect the 

cost of what providers expend to maintain such programs. We also acknowledge the 

variables raised by the commenters that could cause the payment rate fluctuations and the 

study that several commenters had commissioned to look into PHP payments. We are 

unable to comment directly on the study results because we are not certain of the detailed 

methods used for this study. However, we appreciate the areas of potential future study 

suggested by commenters, and will take them into consideration in future analyses. 

Comment: Many commenters stated that the methodology for calculating 

payment rates was “flawed and illogical” and asked CMS to reexamine the methodology 

to determine why payment rates are declining. The commenters suggested that CMS 

consider other methods for paying for PHP services, such as removing PHP services from 

APC group assignments and creating PHPs under an independent payment status, such as 
CMS-1613-FC 538 

is done under the home health benefit. The commenters suggested that CMS establish a 

base payment rate for PHP services at a higher level than the current mean cost, and 

annually adjust the base rate by an inflation factor. 

 A few commenters supported the two-tiered payment methodology. However, the 

commenters suggested using only hospital-based data, which was implemented in 

CY 2009. Some commenters disagreed with CMS paying PHPs differently by site of 

service. One commenter disputed CMS’ assertion that CMHCs generally provide fewer 

PHP services in a day. The commenter stated that claims information indicates that 

CMHCs submit a greater percentage of their claims for 4 or more services per day. The 

commenter added that CMS does not collect wage data on CMHCs in its costs reports. 

Several commenters did not support continued use of the CY 2014 policy, which uses the 

geometric mean per diem costs to calculate PHP payment rates. 

 Many commenters suggested other alternatives to the current payment system, 

such as developing oversight strategies for poorly performing CMHCs if their 

performance suggests a high risk of fraud, and allowing top performing CMHCs to admit 

patients into intensive outpatient programs similarly structured as PHPs. One commenter 

noted that some hospital-based providers are moving away from PHPs and providing 

programs that are structured similarly to a PHP, but are not Medicare-certified PHPs (that 

is, providing several individual mental health services in a day that would be similar to a 

PHP, but providers are not enrolled as a PHP). The commenter stated that the programs 

similar to PHPs would require fewer services and be subject to fewer regulatory 

requirements (for example, no certification or recertification, no physical examination 

requirement, and no minimum attendance mandate), and yet have similar payment rates 
CMS-1613-FC 539 

as those established for PHPs. The commenter suggested that CMS require that these 

programs bill for furnishing these services under the mental health services composite 

APC under the OPPS, with payment aligned with how commercial insurers pay for these 

services. The commenter also suggested that CMS consider policy levers to ease 

regulatory requirements for administering PHPs. 

 Response: The OPPS successfully pays for outpatient services provided, such as 

and including partial hospitalization services, and we disagree that the system is flawed 

and illogical. This system bases payment on the geometric mean costs of providing the 

service or services using provider data from claims and cost reports. As discussed above, 

we believe this system provides appropriate payment for partial hospitalization services 

based on provider costs. 

 Sections 1833(t)(2) and 1833(t)(9) of the Act set forth the requirements for 

establishing and adjusting the OPPS payment rates, including the PHP payment rates. As 

such, we are directed to pay for these services under the OPPS (which uses APCs) and 

may not remove these PHP services from the OPPS and pay for them separately (such as 

by establishing a base rate and annually adjusting it for inflation). The estimated costs of 

the PHP APCs are based on the most updated cost and claims data. The OPPS 

conversion factor used to calculate payments for those PHP APCs is updated by a market 

basket each year. While we continuously examine ways in which the data process could 

be improved, we also welcome and appreciate public comment with regard to potential 

improvements. Similarly, we appreciate the meaningful comments that stakeholders 

provided regarding ways that the cost modeling process could be more accurate or 

methods to extract more appropriate data from the claims available for OPPS cost 
CMS-1613-FC 540 

modeling. For a more detailed discussion of the OPPS ratesetting process, including PHP 

payments, we refer readers to the CY 2015 OPPS Final Rule Claims Accounting 

document, available on the CMS Web site at: http://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the link for 

“Hospital Outpatient Regulations and Notices”, then on the link to the CY 2015 OPPS 

final rule, and then on the CY2015 OPPS Claims Accounting document. 

 With respect to the commenters’ request to return to the two-tiered payment 

methodology calculated using only hospital-based data that was implemented in the 

CY 2009 OPPS/ASC final rule with comment period (73 FR 68688 through 68693), we 

refer commenters to the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 71991 through 71994). Because the cost of providing PHP services differs 

significantly by site of service, in CY 2011, we implemented differing PHP payment 

rates for hospital-based PHPs and CMHCs. We added two new APCs (APCs 0175 and 

0176) for PHP services provided by hospitals, and based the relative payment weights for 

these APCs solely on hospital data. APCs 0172 and 0173 were designated for PHP 

services provided by CMHCs and were based on a blend of CMHC and hospital data. 

We calculate the PHP APC per diem payment rates based on the data provided for each 

type of provider in order to pay for services. The resulting PHP APC per diem payment 

rates reflect the cost of what providers expend to maintain such programs based on data 

provided by these types of providers, which we believe is an improvement over the 

two-tiered payment methodology calculated using only hospital-based data. 

 In regard to the commenters’ concerns regarding the use of geometric mean rather 

than the median, in the CY 2013 OPPS/ASC final rule with comment period, we 
CMS-1613-FC 541 

established the geometric mean rather than the median as the measure upon which to base 

the relative payment weights that underpin the OPPS APCs, including the four PHP 

APCs (77 FR 68406 to 68412). The CY 2015 PHP APC per diem payment rates are 

based on geometric mean costs. While a few commenters disagreed with our use of 

geometric mean costs, we believe that the use of geometric mean costs rather than 

median costs represents an improvement to our cost estimation process. As we stated in 

the CY 2013 OPPS/ASC final rule with comment period (77 FR 68409), we believe that 

including outlier observations in developing the relative payment weights and capturing 

the full range of service costs lead to more accurate relative payment weights. In addition 

to better incorporating those cost values that surround the median and, therefore, 

describing a broader range of cost patterns, basing the relative payment weight on 

geometric mean costs also may promote better stability in the payment system by making 

OPPS payments more reflective of the range of costs associated with providing services. 

Further, applying the geometric mean to the PHP APCs helps ensure that the relativity of 

the OPPS payment weights is properly aligned. We do not believe that paying for some 

services based on median costs, while using geometric mean costs for other services is 

appropriate or equitable. 

 We believe that paying providers using the four PHP APC per diem payment rates 

based on the methodologies described above supports continued access to the PHP 

benefit, while also providing appropriate payment based on the unique cost structures of 

CMHCs and hospital-based PHPs. We also believe that each of these policies enables us 

to continue our responsible stewardship of the Medicare Trust Fund by more accurately 

matching payments with costs. For a full discussion of each of these policies 
CMS-1613-FC 542 

implemented in prior rulemaking, including details on the rationales, we refer readers to 

the above-mentioned final rules with comment period, which are available on the CMS 

OPPS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html. 

 In response to the commenters’ concerns regarding CMS’ statement that CMHCs 

provide fewer services in a day, as stated in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75047 through 75050), we are calculating the payment rates for 

PHP services based on the claims and cost data submitted by providers. The updated data 

used for calculating payments for this CY 2015 OPPS/ASC final rule with comment 

period indicate that CMHCs do indeed have a greater percentage of PHP days with 4 or 

more services, compared to hospital-based PHPs (94.6 percent of days compared to 88.3 

percent of days, respectively). However, in spite of their providing a greater percentage 

of days with 4 or more services, our updated cost data continue to show that CMHC costs 

per day are lower than those of hospital-based PHPs. 

 In response to the question about wage data, CMHCs are required to include wage 

data for their staff on their cost reports, with certain exceptions. We direct readers to 

Medicare’s cost reporting instructions for CMHCs that are available online in the 

Provider Reimbursement Manual, Part 2, Chapter 18 on the CMS Web site at: 

http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-BasedManuals-Items/CMS021935.html?DLPage=1&DLSort=0&DLSortDir=ascending.

 With respect to the suggestion that CMS develop oversight strategies for poor 

performing CMHCs with conduct that suggests potential fraud, we already have oversight 

strategies in place for providers that operate in a questionable manner. For example, 
CMS-1613-FC 543 

MACs perform medical reviews of certain PHP claims, and PHP providers with claims 

that present ongoing concerns may have their claims placed on prepayment review. In 

some cases, CMHC and hospital-based PHP payments may be suspended or a CMHC’s 

or hospital’s billing privileges may be revoked. Our Office of Financial Management 

(OFM) has Recovery Audit Contractors (RACs), which regularly identify and collect 

overpayments from Medicare providers. Additionally, the Center for Program Integrity 

(CPI) and Zone Program Integrity Contractors (ZPICs) investigate potential fraud, waste, 

and abuse across the Medicare program, including potential concerns within CMHCs. 

Finally, the Office of Inspector General (OIG) and other law enforcement agencies 

continue in their efforts to address fraud and abuse throughout the Medicare program, 

including questionable billing for partial hospitalization services. 

 With respect to the commenters’ request to allow top performing CMHCs to 

admit beneficiaries who require partial hospitalization services into outpatient programs 

that are structured similarly to PHPs, Medicare covers and pays for reasonable and 

necessary PHP services provided by hospitals and CMHCs under the OPPS. While some 

private insurers and some State Medicaid programs recognize other types of intensive 

outpatient mental health programs as a distinct benefit like PHP services, the Medicare 

program does not. However, hospitals may provide and bill for individual services that 

make up various other mental health programs. 

 Because all Medicare outpatient mental health services are capped at the 

hospital-based Level II PHP per diem payment rate, from a payment standpoint, it does 

not matter how many of these individual services are billed to Medicare because payment 
CMS-1613-FC 544 

will never exceed the hospital-based Level II PHP per diem payment rate. However, 

CMHCs may only be paid for partial hospitalization services under the OPPS. 

 We are constantly monitoring the OPPS in search of potential refinements that 

would improve the accuracy and stability of the payment system. We are unclear about 

the policy changes that the commenters suggested that we make regarding easing the 

regulatory requirements for administering PHPs. Some of the PHP requirements are set 

forth in the statute. For example, physician certification and recertification requirements 

for PHP services are set forth in section 1835(a)(2)(F) of the Act and would require 

Congressional legislation to change. However, if providers have suggestions for specific 

policy changes to improve PHP operations while safeguarding access to PHP services 

and paying accurately for these services, we welcome those suggestions during 

rulemaking or through other dialogue with the industry. 

 Comment: Many commenters described the key role that PHPs play in the 

continuum of care for patients with mental health issues. A number of commenters stated 

that if CMS moved forward with the proposed payment rates, much-needed PHP 

programs would struggle to remain financially viable. Multiple commenters believed that 

additional reductions in payments for CY 2015 would limit the ability of hospitals and 

CMHCs to provide these vital psychiatric services, reducing capacity or leading to 

closures, especially in rural areas, and thereby reducing access to care for Medicare 

patients. Several commenters noted that, as access to PHP services decreases, the 

decreases could lead to patients not receiving any services or to patients receiving 

services that are not appropriate for their needs; to use of more expensive inpatient 

psychiatric services; or to use of already stressed emergency departments. One 
CMS-1613-FC 545 

commenter believed that CMS was concerned about the potential for hospital-based PHP 

closures, but not about CMHC closures. 

 Response: In response to commenters’ concern about reduced PHP payment rates 

leading to decreased capacity and PHP closures, thereby reducing access to care and 

further eroding the viability of the safety net system, we emphasize again that the 

resulting PHP APC per diem payment rates for CY 2015 reflect the costs of what 

providers expend to maintain PHP programs. Therefore, it continues to be unclear to us 

why reduced PHP payment rates would lead to reduced capacity or program or business 

closures. As noted previously, the final CY 2015 per diem costs increased for CMHCs 

compared to CY 2014, and decreased less than proposed for hospital-based PHPs. As we 

stated in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74350), the 

closure of PHPs may be due to any number of reasons, such as poor business 

management or marketing decisions, competition, oversaturation of certain geographic 

areas, and Federal and State fraud and abuse efforts, among others. It does not directly 

follow that closure could be due to reduced per diem payment rates alone, especially 

when these per diem payment rates reflect the costs of PHP providers as stated in claims 

and cost data. 

 In response to the commenters’ concerns that further reduction in the CMHC and 

hospital-based PHP APC per diem payment amounts could further erode the viability of 

the safety net system and make it more difficult for patients to receive needed mental 

health services, we take such concerns seriously for both CMHCs and hospital-based 

PHPs. We will continue to monitor facility closings and openings for both rural and 

urban areas to make sure that access issues do not exist. We also remain steadfast in our 
CMS-1613-FC 546 

concern regarding access to care for all beneficiaries, while also providing appropriate 

payments for such care. 

 A PHP is not the only program in which a Medicare beneficiary is able to receive 

needed mental health care. Access to other forms of mental health services is also 

available. Although not equivalent to a PHP, Medicare provides payment for outpatient 

mental health services in addition to PHP services. Many beneficiaries in need of mental 

health treatment receive other outpatient services generally from hospital programs that 

are available nationwide. 

 Comment: Many commenters suggested that future payment rates be tied to 

quality criteria. One commenter recommended a payment system that rewards individual 

providers for outstanding quality and outcomes while keeping costs under control, and 

suggested that CMS use value-based purchasing rather than “antiquated cost 

reimbursement-based purchasing.” One commenter suggested that CMS conduct an 

analysis to determine what quality PHP care entails in terms of costs and staffing, rather 

than basing payment rates on reported costs. 

 Response: We responded to a similar public comment in the CY 2013 

OPPS/ASC final rule with comment period (77 FR 68410 through 68411) and refer 

readers to a summary of that comment and our response. Sections 1833(t)(2) and 

1833(t)(9) of the Act set forth the requirements for establishing and adjusting OPPS rates, 

which include PHP rates. Section 1833(t)(17) of the Act authorizes the Hospital OQR 

Program, which applies a payment reduction to subsection (d) hospitals that fail to meet 

program requirements. In the CY 2015 OPPS/ASC proposed rule (79 FR 41040), we 

considered future inclusion of, and requested comments on, the following quality 
CMS-1613-FC 547 

measures addressing PHP issues that would apply in the hospital outpatient setting: 

(1) 30-Day Readmissions; (2) Group Therapy; and (3) No Individual Therapy. We refer 

readers to section XIII. of this final rule with comment period for a more detailed 

discussion of PHP measures considered for inclusion in the Hospital OQR Program in 

future years. The Hospital OQR Program does not apply to CMHCs. Further, currently, 

there is no statutory language explicitly authorizing a value-based purchasing program 

for PHPs. With respect to the suggestion of conducting an analysis to determine what 

quality PHP care entails in terms of costs and staffing, we will take the suggestion into 

consideration in future analyses. 

 We do not consider the OPPS, the system under which PHPs are paid, to be 

“antiquated.” Rather, we find the OPPS to be a robust system, which aligns payments 

with provider costs. As noted previously, we regularly monitor the OPPS and, in recent 

years, have made changes to further improve the system’s ability to pay accurately for 

services provided. 

 Comment: Many commenters noted that they provide services to Medicare 

beneficiaries which they cannot bill for on their claims. The services cited by the 

commenters included, for example: assisting patients in finding appropriate housing; 

accessing other health care services; obtaining medications; working through issues with 

family members; accessing transportation to medical and other appointments; assisting 

with information and appointments with Social Security; answering Medicare questions; 

accessing food banks and food stamps; obtaining eye and dental services; and integrating 

highly volatile and anxious patients into the milieu without upsetting the environment. 

Commenters stated that, currently, there is no way to show through the billing process 
CMS-1613-FC 548 

that these events take place because there are no billing codes that capture these 

activities. 

 Response: Section 1861(ff) of the Act and 42 CFR 410.43 describe the items and 

services included in partial hospitalization services. As set forth in these sections, partial 

hospitalization services generally consist of a variety of group, individual, and family 

psychotherapy sessions, supplemented with occupational therapy, the services of social 

workers, trained psychiatric nurses, and other staff trained to work with psychiatric 

patients, drugs and biologicals furnished for therapeutic purposes that cannot be 

self-administered, diagnostic services, education and training, and certain activity 

therapies designed to stabilize an acute episode of mental illness. Section 1861(ff)(2)(I) 

of the Act explicitly excludes meals and transportation from the items and services 

included in partial hospitalization services. The PHP APC per diem payment rate is the 

bundled payment for partial hospitalization services. Only the items and services 

specifically identified in the statute and regulations are considered partial hospitalization 

services. All other items and services are not paid as part of partial hospitalization 

services. 

 Comment: A number of commenters asked that CMS have a dialogue with the 

PHP industry, and that the public comments on the proposed rule be directly addressed 

by CMS in an open forum where ideas could be cooperatively shared. 

 Response: We maintain positive working relationships with various industry 

leaders representing both CMHCs and hospital-based PHP providers with whom we have 

consistently met over the years to discuss industry concerns and ideas. These 

relationships have provided significant and valuable input regarding PHP ratesetting. We 
CMS-1613-FC 549 

also hold Hospital Outpatient Open Door Forum calls monthly, in which all individuals 

are welcome to participate and/or submit questions regarding specific issues, including 

questions related to PHPs. Furthermore, we initiate rulemaking annually, through which 

we receive public comments on proposals set forth in a proposed rule, and we respond to 

those comments in a final rule. All individuals are provided an opportunity to comment, 

and we give consideration to each comment that we receive. Given the relationships that 

we have established with various industry leaders and the various means for us to receive 

comments and recommendations, we believe that we receive adequate input regarding 

PHP ratesetting and take that input into consideration when establishing the PHP per 

diem payment amounts. We continue to welcome any input and information that the 

industry is willing to provide. 

 Comment: Several commenters requested a better understanding of the Program 

for Evaluating Payment Patterns Electronic Report (PEPPER), the areas of risk it has 

identified, how the PEPPER fits into fraud and abuse efforts, and how the PEPPER fits 

into the benefit in general, and indicated that this information might be helpful to 

providers. The commenters expressed concern regarding various areas of risk cited by 

the PEPPER, including “No individual therapy.” The commenter stated that although 

most providers furnish individual therapy, it is often not documented or billed as it is not 

included in the local coverage determinations (LCDs). 

 Response: The PEPPER is a data report that contains statistics for each PHP area 

identified nationally to be at risk for improper payment (referred to in the report as 

“target areas”). Each PEPPER contains a single PHP provider’s claims data statistics, 

obtained from claims submitted to the MAC for these target areas. PEPPER does not 
CMS-1613-FC 550 

identify the presence of improper payments, but it can be used by the provider as a guide 

for auditing and monitoring efforts. A provider can use the PEPPER to compare its 

claims data over time to identify areas of potential concern and to identify changes in 

billing practices. When a provider is sent a PEPPER, the report includes a user’s guide, 

which describes the PEPPER and the target areas, among other things, and provides 

contact information for additional questions or information. Additional information on 

the PEPPER, including training and resources, is available at the PEPPER Web site at: 

http://pepperresources.org/. 

 Regarding “individual therapy,” which is one area of risk that the PEPPER is 

assessing, individual therapy is a partial hospitalization service. For a review of the 

partial hospitalization services, we refer readers to section 1861(ff)(2)(A) of the Act and 

our regulations at 42 CFR 410.43(a)(4)(i). We expect that providers would furnish 

individual therapy services as one of the services provided within a PHP. 

 Comment: One commenter noted that new Medicare conditions of participation 

(CoPs) are about to become effective for CMHCs, and stated that most CMHCs are 

unaware of them. One commenter noted that complying with the new CoPs would 

increase its costs. The commenter also stated that, under a provision of the Affordable 

Care Act that became effective October 1, 2014, providers need to be aware that a 

CMHC must provide at least 40 percent of its items and services to individuals who are 

not eligible for benefits under Medicare. 

 Response: The Conditions of Participation for Community Mental Health Centers 

final rule (78 FR 64604, October 29, 2013) established, for the first time, CoPs that 

CMHCs must meet in order to participate in the Medicare program. The CMHC CoPs 
CMS-1613-FC 551 

are codified in 42 CFR Part 485, Subpart J, and became effective on October 29, 2014. 

Prior to the issuance of this final rule, on June 17, 2011, CMS issued a proposed rule 

(76 FR 35684) outlining the CoPs for Medicare-certified CMHCs. The proposed rule 

was open to public comment until August 16, 2011. Also, CMS issued press releases and 

fact sheets on the CoPs. CMS also has been working with trade organizations and the 

States to inform providers about the CoPs and the implementation date. Therefore, we 

believe that all CMHCs should be aware of these new requirements. More information 

on the CoPs for CMHCs can be found at 42 CFR Part 485, and through the link to the 

final rule at: http://www.gpo.gov/fdsys/pkg/FR-2013-10-29/pdf/2013-24056.pdf. The 

proposed rule can be accessed through the following link on the Web site found at: 

http://www.gpo.gov/fdsys/pkg/FR-2011-06-17/pdf/2011-14673.pdf. The final rule fact 

sheets can be accessed through the following link to the Web site found at: 

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2013-Fact-sheetsitems/2013-10-28.html. The proposed rule press release can be accessed through the 

following link to the Web site found at: 

http://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2011-Pressreleases-items/2011-06-16.html. We believe that the cost associated with the CoPs is a 

reasonable and necessary business expense to ensure the health and safety of all CMHC 

clients. In addition, effective October 29, 2014, under 42 CFR 485.918(b)(1)(v), 

pursuant to section 1861(ff)(3)(B) of the Act, a CMHC must provide at least 40 percent 

of its items and services to individuals who are not eligible for benefits under title XVIII 

of the Social Security Act, as measured by the total number of CMHC clients treated by 

the CMHC for whom services are not paid by Medicare, divided by the total number of 
CMS-1613-FC 552 

clients treated by the CMHC in the applicable timeframe. Under this requirement, a 

newly enrolling or revalidating CMHC must submit to CMS a certification statement 

provided by an independent entity (such as an accounting technician). The document 

must indicate that (1) the entity has reviewed the CMHC’s client care data, and (2) the 

CMHC meets the applicable 40 percent requirement. (We refer readers to 78 FR 64620). 

CMS has issued a change request that instructs MACs on the processing of such CMHC 

certifications. This requirement implements the provision of the Affordable Care Act 

noted by the commenter. For more detailed information, we refer readers to the 

Conditions of Participation for Community Mental Health Centers final rule 

(78 FR 64604). 

 Comment: A number of commenters noted the complexities of abiding by the 

LCDs on PHPs and believed that such LCDs are making it difficult for hospital-based 

PHP providers to continue to provide PHP services. Some commenters questioned 

whether the LCDs should be clarified or updated. 

 Response: LCDs issued by MACs specify under what clinical circumstances an 

item or service is considered to be reasonable and necessary. They are administrative and 

educational tools to assist providers in submitting correct claims for payment. The 

MACs publish LCDs to provide guidance to the public and medical community within 

their jurisdictions. The MACs develop LCDs by considering medical literature, the 

advice of local medical societies and medical consultants, public comments, and 

comments from the provider community. LCDs must be consistent with the statutory 

requirements for the Medicare program and with Medicare regulations and guidance. 

More information about LCDs can be found in the CMS Program Integrity Manual 
CMS-1613-FC 553 

(Internet only manual) 100-08, Chapter 13, available at: 

http://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/pim83c13.pdf. 

 Providers with questions about LCDs should contact their MAC for clarification 

or assistance. Inquiries of a clinical nature, such as the rationale behind coverage or 

noncoverage of certain items or services, are handled within the Medical Review (MR) 

department under the MAC responsible for the development of the LCD. 

 Comment: One commenter recommended that the annual payment update for 

PHP APCs reflect the market basket update that is applied to all other OPPS APCs. 

 Response: The PHP APC payment rates are based on the OPPS conversion 

factor, to which the market basket update is applied. Therefore, the market basket update 

is applied to the PHP APC payment rates. The OPPS conversion factor is discussed in 

further detail in section II.B. of this final rule with comment period. 

 Comment: One commenter stated that physicians are billing inpatient codes 

rather than PHP codes. The commenter believed that the change in physician reporting 

may have altered what facilities reported, which would have reduced the number of 

facility fees reported, and skewed the APC data downward. The commenter 

recommended that CMS conduct an analysis of the frequency and type of CPT codes that 

have been submitted for PHP over the last 3 years. 

 Response: As stated in section 1861(ff) of the Act and 42 CFR 410.43, payment 

for partial hospitalization services generally represents the provider’s overhead costs, 

support staff, some drugs and the services of some nurses, clinical social workers, and 

occupational therapists, whose professional services are considered to be partial 
CMS-1613-FC 554 

hospitalization services for which payment is made to the provider. Physician services 

that meet the requirements of 42 CFR 415.102(a) are separately covered and not paid as 

part of partial hospitalization services. Therefore, we do not use physician claims in 

developing the PHP APC geometric mean per diem costs and it is unclear to us how 

physician billing would impact PHP APC payment rates. 

 Regarding the recommendation that CMS conduct an analysis of the frequency 

and type of CPT codes that have been submitted for PHP services over the last 3 years, 

we will take the suggestion under consideration for future rulemaking, as we strengthen 

the PHP payment structure. 

 In summary, after consideration of the public comments we received, we are 

finalizing our CY 2015 proposal, without modification, to update the four PHP APC per 

diem costs based on geometric mean cost levels calculated using the most recent claims 

and cost data for each provider type. The updated PHP APCs geometric mean per diem 

costs for PHP services that we are finalizing for CY 2015 are shown in Table 39 and 40 

below. As noted earlier in this section, we refer readers to Addendum A to this final rule 

with comment for the final PHP APC payment rates.

TABLE 39.—CY 2015 GEOMETRIC MEAN PER DIEM COSTS FOR CMHC 

PHP SERVICES 

APC Group Title 

Geometric 

Mean Per Diem 

Costs 

0172 Level I Partial Hospitalization (3 services) for 

CMHCs 

$100.15

0173 Level II Partial Hospitalization (4 or more 

services) for CMHCs 

$118.54
CMS-1613-FC 555 

TABLE 40.—CY 2015 GEOMETRIC MEAN PER DIEM COSTS FOR 

HOSPITAL-BASED PHP SERVICES 

APC Group Title 

 Geometric 

Mean Per Diem 

Costs 

0175 Level I Partial Hospitalization (3 services) for 

hospital-based PHPs 

$185.87

0176 Level II Partial Hospitalization (4 or more 

services) for hospital-based PHPs 

$203.01

C. Separate Threshold for Outlier Payments to CMHCs 

 As discussed in the CY 2004 OPPS final rule with comment period (68 FR 63469 

through 63470), after examining the costs, charges, and outlier payments for CMHCs, we 

believed that establishing a separate OPPS outlier policy for CMHCs would be 

appropriate. A CMHC-specific outlier policy would direct OPPS outlier payments 

towards genuine cost of outlier cases, and address situations where charges were being 

artificially increased to enhance outlier payments. We created a separate outlier policy 

that would be specific to the estimated costs and OPPS payments provided to CMHCs. 

We note that, in the CY 2009 OPPS/ASC final rule with comment period, we established 

an outlier reconciliation policy to comprehensively address charging aberrations related 

to OPPS outlier payments (73 FR 68594 through 68599). Therefore, beginning in 

CY 2004, we designated a portion of the estimated OPPS outlier target amount 

specifically for CMHCs, consistent with the percentage of projected payments to CMHCs 

under the OPPS each year, excluding outlier payments, and established a separate outlier 

threshold for CMHCs. 

 The separate outlier threshold for CMHCs resulted in $1.8 million in outlier 

payments to CMHCs in CY 2004, and $0.5 million in outlier payments to CMHCs in 
CMS-1613-FC 556 

CY 2005. In contrast, in CY 2003, more than $30 million was paid to CMHCs in outlier 

payments. We believe that this difference in outlier payments indicates that the separate 

outlier threshold for CMHCs has been successful in keeping outlier payments to CMHCs 

in line with the percentage of OPPS payments made to CMHCs. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41012), we proposed to 

continue designating a portion of the estimated 1.0 percent outlier target amount 

specifically for CMHCs, consistent with the percentage of projected payments to CMHCs 

under the OPPS in CY 2015, excluding outlier payments. CMHCs are projected to 

receive 0.03 percent of total OPPS payments in CY 2015, excluding outlier payments. 

Therefore, we proposed to designate 0.47 percent of the estimated 1.0 percent outlier 

target amount for CMHCs, and establish a threshold to achieve that level of outlier 

payments. Based on our simulations of CMHC payments for CY 2015, in the CY 2015 

OPPS/ASC proposed rule, we proposed to continue to set the threshold for CY 2015 at 

3.40 times the highest CMHC PHP APC payment rate (that is, APC 0173 (Level II 

Partial Hospitalization)) (79 FR 41012). We stated that we continue to believe that this 

approach would neutralize the impact of inflated CMHC charges on outlier payments and 

better target outlier payments to those truly exceptionally high-cost cases that might 

otherwise limit beneficiary access. In addition, we proposed to continue to apply the 

same outlier payment percentage that applies to hospitals. Therefore, for CY 2015, we 

proposed to continue to pay 50 percent of CMHC per diem costs over the threshold. In 

section II.G. of the CY 2015 OPPS/ASC proposed rule (79 FR 41012), for the hospital 

outpatient outlier payment policy, we proposed to set a dollar threshold in addition to an 

APC multiplier threshold. Because the PHP APCs are the only APCs for which CMHCs 
CMS-1613-FC 557 

may receive payment under the OPPS, we would not expect to redirect outlier payments 

by imposing a dollar threshold. Therefore, we did not propose to set a dollar threshold 

for CMHC outlier payments. 

 In summary, in the CY 2015 OPPS/ASC proposed rule, we proposed to establish 

that if a CMHC’s cost for partial hospitalization services, paid under either APC 0172 or 

APC 0173, exceeds 3.40 times the payment rate for APC 0173, the outlier payment 

would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the 

APC 0173 payment rate. We invited public comments on these proposals. 

 We did not receive any public comments regarding our proposed outlier policy. 

Therefore, we are finalizing our CY 2015 proposal to set a separate outlier threshold for 

CMHCs. As discussed in section II.G. of this final rule with comment period, using more 

recent data for this final rule with comment period, we set the target for hospital 

outpatient outlier payments at 1.00 percent of total estimated OPPS payments. We 

allocated a portion of the 1.00 percent, an amount equal to 0.65 percent of outlier 

payments, or 0.0065 percent of total estimated OPPS payments, to CMHCs for PHP 

outlier payments. For CY 2015, as proposed, we are setting the CMHC outlier threshold 

at 3.40 multiplied by the APC 0173 payment rate and the CY 2015 outlier percentage 

applicable to costs in excess of the threshold at 50 percent. In other words, if a CMHC’s 

cost for partial hospitalization services paid under either APC 0172 or APC 0173 exceeds 

3.40 times the payment rate for APC 0173, the outlier payment will be calculated as 

50 percent of the amount by which the cost exceeds 3.40 times the APC 0173 payment 

rate. 

IX. Procedures That Will Be Paid Only as Inpatient Procedures
CMS-1613-FC 558 

A. Background 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74352 through 74353) for a full historical discussion of our longstanding policies 

on how we identify procedures that are typically provided only in an inpatient setting 

(referred to as the inpatient list) and, therefore, will not be paid by Medicare under the 

OPPS; and on the criteria that we use to review the inpatient list each year to determine 

whether or not any procedures should be removed from the list. 

B. Changes to the Inpatient List 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41012 through 41013), for the 

CY 2015 OPPS, we proposed to use the same methodology (described in the 

November 15, 2004 final rule with comment period (69 FR 65835)) of reviewing the 

current list of procedures on the inpatient list to identify any procedures that may be 

removed from the list. The established criteria upon which we make such a 

determination are as follows: 

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

Medicare population. 

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

outpatient departments. 

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

inpatient-only list. 

 4. A determination is made that the procedure is being performed in numerous 

hospitals on an outpatient basis. 
CMS-1613-FC 559 

 5. A determination is made that the procedure can be appropriately and safely 

performed in an ASC, and is on the list of approved ASC procedures or has been 

proposed by us for addition to the ASC list. 

 Using this methodology, we did not identify any procedures that potentially could 

be removed from the inpatient list for CY 2015. Therefore, we proposed to not remove 

any procedures from the inpatient list for CY 2015. 

 After our annual review of APCs and code assignments as required by section 

1833(t)(9) of the Act and further clinical review performed by CMS medical officers, we 

proposed to add CPT code 22222 (Osteotomy of spine, including discectomy, anterior 

approach, single vertebral segment; thoracic) to the CY 2015 inpatient list. 

 The complete list of codes that we proposed to be paid by Medicare in CY 2015 

only as inpatient procedures was included as Addendum E to the proposed rule (which is 

available via the Internet on the CMS Web site). 

 Comment: Several commenters supported CMS’ proposal to add CPT code 

22222 to the inpatient list. 

 Response: We appreciate the commenters’ support. 

 Comment: Several commenters requested that CMS remove CPT codes 0312T 

(Vagus nerve blocking therapy (morbid obesity); laparoscopic implantation of 

neurostimulator electrode array, anterior and posterior vagal trunks adjacent to 

esophagogastric junction (EGJ), with implantation of pulse generator, includes 

programming); 43771 (Laparoscopy, surgical, gastric restrictive procedure; revision of 

adjustable gastric restrictive device component only); 43772 (Laparoscopy, surgical, 

gastric restrictive procedure; removal of adjustable gastric restrictive device component 
CMS-1613-FC 560 

only); 43773 (Laparoscopy, surgical, gastric restrictive procedure; removal and revision 

of adjustable gastric restrictive device component only); 43774 (Laparoscopy, surgical, 

gastric restrictive procedure; removal of adjustable gastric restrictive device and 

subcutaneous port components); 54411 (Removal and replacement of a multi-component 

inflatable penile prosthesis through an infected field at the same operative session); and 

54417 (Removal and replacement of a non-inflatable (semi-rigid) or inflatable 

(self-contained) penile prosthesis through an infected field at the same operative session) 

from the CY 2015 inpatient list based on their own experience, specialty society 

recommendation, or designation of a procedure as safe in the outpatient setting under one 

of the many clinical guidelines available. 

 Response: We reevaluated data on CPT codes 0312T, 43771, 43772, 43773, 

43774, 54411, and 54417 using recent utilization data and further clinical review 

performed by CMS’ medical advisors. As a result of the reevaluation, we have 

determined that these procedures can be safely performed only in the inpatient setting. 

We are not removing them from the inpatient list for CY 2015. 

 Comment: Some commenters requested that CPT code 63044 (Laminotomy 

(hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc, reexploration, single 

interspace; each additional lumbar interspace) be removed from the inpatient list. 

 Response: We reevaluated data on CPT code 63044 using recent utilization data 

and further clinical review performed by CMS medical advisors. As a result of the 

reevaluation, we agree with the commenters that this procedure can be safely performed 

in the outpatient setting. In addition, as a result of our reevaluation, we believe that CPT 
CMS-1613-FC 561 

code 63043 (Laminotomy (hemilaminectomy), with decompression of nerve root(s), 

including partial facetectomy, foraminotomy and/or excision of herniated intervertebral 

disc, reexploration, single interspace; each additional cervical interspace) can be safely 

performed in the outpatient setting. Therefore, we are removing CPT codes 63043 and 

63044 from the inpatient list. Because CPT codes 63043 and 63044 are add-on codes, 

they are being assigned status indicator “N” for CY 2015. 

 Comment: Other commenters urged CMS to continue reviewing its inpatient only 

policy in light of ongoing changes in delivery systems and procedural safety and 

technological advances. 

 Response: We agree with the commenters and will continue to review the 

inpatient only policy. 

 After consideration of the public comments we received, we are finalizing our 

proposals for the inpatient only list, with modifications. We are removing CPT codes 

63043 and 63044 from the inpatient list and adding CPT code 22222 (Osteotomy of 

spine, including discectomy, anterior approach, single vertebral segment; thoracic) to the 

CY 2015 inpatient list. 

 The complete list of codes that will be paid by Medicare in CY 2015 only as 

inpatient procedures is included as Addendum E to this final rule with comment period 

(which is available via the Internet on the CMS Web site. 

X. Nonrecurring Policy Changes: Collecting Data on Services Furnished in 

Off-Campus Provider-Based Departments of Hospitals 

 As we discussed in the CY 2014 OPPS/ASC proposed rule and final rule with 

comment period (78 FR 43626 and 78 FR 75061) and in the CY 2014 Medicare 
CMS-1613-FC 562 

Physician Fee Schedule (MPFS) proposed rule and final rule with comment period 

(78 FR 43301 and 78 FR 74427), in recent years, the research literature and popular 

press have documented the increased trend toward hospital acquisition of physician 

practices, integration of those practices as a department of the hospital, and the 

resultant increase in the delivery of physicians’ services in a hospital setting. When 

a Medicare beneficiary receives outpatient services in a hospital, the total payment 

amount for outpatient services made by Medicare is generally higher than the total 

payment amount made by Medicare when a physician furnishes those same services 

in a freestanding clinic or in a physicians’ office. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we stated that we 

continue to seek a better understanding of how the growing trend toward hospital 

acquisition of physicians’ offices and subsequent treatment of those locations as 

off-campus provider-based departments (PBDs) of hospitals affects payments under the 

MPFS and the OPPS, as well as beneficiary cost-sharing obligations. We also noted that 

MedPAC continues to question the appropriateness of increased Medicare payment and 

beneficiary cost-sharing when physicians’ offices become hospital outpatient departments 

and to recommend that Medicare pay selected hospital outpatient services at MPFS rates 

(MedPAC March 2012 and June 2013 Report to Congress). In order to understand how 

this trend is affecting Medicare, we need information on the extent to which this shift is 

occurring. To that end, during the CY 2014 OPPS/ASC rulemaking cycle, we sought 

public comment regarding the best method for collecting information and data that would 

allow us to analyze the frequency, type, and payment for physicians’ and outpatient 

hospital services furnished in off-campus PBDs of hospitals (78 FR 75061 through 75062 
CMS-1613-FC 563 

and 78 FR 74427 through 74428). In response to our solicitation, we received many 

detailed public comments. However, the commenters did not present a consensus 

opinion regarding whether this data collection was advisable or which data collection 

method would be preferable. Based on our analysis of the public comments we received, 

we proposed for the CY 2015 OPPS/ASC proposed rule that the most efficient and 

equitable means of gathering this important information across two different payment 

systems would be to create a HCPCS modifier to be reported with every code for 

physicians’ services and outpatient hospital services furnished in an off-campus PBD of a 

hospital on both the CMS-1500 claim form for physicians’ services and the UB-04 form 

(CMS Form 1450) for hospital outpatient services. We noted that a main provider may 

treat an off-campus facility as provider-based if certain requirements in 42 CFR 413.65 

are satisfied, and we define a “campus” at 42 CFR 413.65(a)(2) to be the physical area 

immediately adjacent to the provider’s main buildings, other areas and structures that are 

not strictly contiguous to the main buildings but are located within 250 yards of the main 

buildings, and any other areas determined on an individual case basis, by the CMS 

regional office, to be part of the provider’s campus. 

 Section 220(a)(1) of the Protecting Access to Medicare Act of 2014 (Pub. L. 

113-93) added a new subparagraph (M) under section 1848(c)(2) of the Act that granted 

CMS the authority to engage in data collection to support valuation of services paid under 

the MPFS. In the CY 2015 OPPS/ASC proposed rule, we indicated that we are seeking 

more information on the frequency and type of services furnished in PBDs under this 

authority to improve the accuracy of MPFS practice expense payments for services 

furnished in off-campus PBDs. We discussed this issue in more detail in the CY 2015 
CMS-1613-FC 564 

MPFS proposed rule (79 FR 40333). In that discussion, we noted our concerns that our 

current MPFS practice expense methodology primarily distinguishes between the 

resources involved in furnishing services in two sites of service: the nonfacility setting 

and the facility setting. As more physician practices become hospital-based and are 

treated as off-campus PBDs, we believe it is important to develop an understanding of 

which practice expense costs typically are incurred by the physicians and practitioners in 

the setting, which are incurred by the hospital, and whether the facility and nonfacility 

site-of-service differentials adequately account for the typical resource costs, given these 

new ownership arrangements. 

 To understand how this trend is affecting Medicare, including the accuracy of 

payments made through the MPFS, we stated in the proposed rule that we need to 

develop data to assess the extent to which this shift toward hospital-based physician 

practices is occurring. Therefore, in the CY 2015 OPPS/ASC proposed rule 

(79 FR 41013), we proposed to collect information on the type and frequency of 

physicians’ services and outpatient hospital services furnished in off-campus PBDs 

beginning January 1, 2015, in accordance with our authority under section 1848(c)(2)(M) 

of the Act (as added by section 220(a) of Pub. L. 113-93). As noted above, we proposed 

to create a HCPCS modifier that is to be reported with every code for physicians’ 

services and outpatient hospital services furnished in an off-campus PBD of a hospital. 

Under the proposal, the modifier would be reported on both the CMS-1500 claim form 

for physicians’ services and the UB-04 form (CMS Form 1450) for hospital outpatient 

services. In the proposed rule (79 FR 41013), we sought additional public comments on 
CMS-1613-FC 565 

whether or not the use of a modifier code is the best mechanism for collecting this 

service-level data in the hospital outpatient department. 

 Comment: Many commenters agreed on the need to collect information on the 

frequency, type, and payment of services furnished in off-campus PBDs of hospitals. 

However, several commenters expressed concern that the HCPCS modifier would create 

additional administrative burden for providers. Many of these commenters stated that the 

new modifier would require significant changes to hospitals’ billing systems, including a 

separate chargemaster for outpatient off-campus PBDs and training for staff on how to 

use the new modifier. Many of these commenters suggested that CMS should re-propose 

a detailed data collection methodology, test it with providers, make adjustments, and 

allow additional time for implementation. One commenter suggested that CMS withdraw 

the current proposal and ask the Advisory Panel on Hospital Outpatient Payment (HOP 

Panel) to develop a proposal for data collection. 

 Response: While we understand the commenters’ concerns about the additional 

administrative burden of reporting a new HCPCS modifier, we have weighed the burden 

of reporting the modifier for each service against the benefit of having data that will 

allow us to obtain and assess accurate information on the type and frequency of 

physicians’ services and outpatient hospital services furnished in off-campus PBDs. We 

do not believe that the modifier is excessively burdensome for providers to report. This 

is especially the case because, under current rules, when billing for services, providers 

must know where services are performed in order to accurately complete value code 78 

of an outpatient claim or the service location portion of a professional claim. However, 

as discussed later in this section, we agree that a place of service (POS) code on the 
CMS-1613-FC 566 

professional claim allows for the same type of data collection as a modifier on the 

hospital claim and would be less burdensome than the modifier for practitioner billing. 

We discuss the timeframe for implementation later in this section. With respect to 

bringing this proposal to the HOP Panel, we note that such a proposal is outside the scope 

of the HOP Panel, which is generally charged with advising Medicare on the clinical 

integrity of APCs and their associate relative payment weights. The proposed modifier is 

for collecting data and, as structured, does not affect APCs and their associated relative 

payment weights. Therefore, it would not be appropriate to solicit HOP Panel discussion 

or recommendations on this proposal on data collection. 

 Comment: Some commenters who were concerned about the administrative 

burden of the new HCPCS modifier suggested several alternative methods for CMS to 

collect data on services furnished in off-campus PBDs. Several of these commenters 

recommended that CMS consider the establishment of a new POS code for professional 

claims, or for both professional claims and hospital claims, because they believed this 

approach would be less administratively burdensome than attaching a modifier to each 

service reported on the claim that was furnished in an off-campus PBD. Some 

commenters preferred identifying services furnished in off-campus PBDs on the 

Medicare cost report (CMS-2552-10). Some commenters suggested using provider 

numbers and addresses to identify off-campus PBDs, or changing the provider enrollment 

process to be able to track these data. Other commenters suggested creating a new bill 

type to track outpatient hospital services furnished in off-campus PBDs. 

 Commenters generally recommended that CMS choose the least administratively 

burdensome approach that would ensure accurate data collection, but did not necessarily 
CMS-1613-FC 567 

agree on what approach would optimally achieve that result. Some commenters believed 

that a HCPCS modifier would more clearly identify specific services furnished at 

off-campus PBDs, and would provide better information about the type and level of care 

furnished. Some commenters believed that a HCPCS modifier would be the least 

administratively burdensome approach because hospitals and physicians already report a 

number of claims-based modifiers. Other commenters argued that additional modifiers 

would increase administrative burden because this approach would increase the modifiers 

that would need to be considered when billing. 

 Response: With respect to creating a new POS code to obtain data on services 

furnished in off-campus PBDs of a hospital, we note that POS codes are only reported on 

professional claims and are not included on hospital claims. Therefore, a POS code could 

not be easily implemented for hospital claims. However, POS codes are already required 

to be reported on every professional claim and POS 22 is currently used to report when 

physicians’ services are furnished in an outpatient hospital department. (More 

information on existing POS codes is available on the CMS Web site at: 

http://www.cms.gov/Medicare/Coding/place-of-servicecodes/Place_of_Service_Code_Set.html.) 

 Although we considered proposing a new POS code for professional claims to 

collect data on services furnished in the off-campus PBD setting, we ultimately did not 

do so, in part because we were aware that previous Government Accountability Office 

and Office of the Inspector General reports (October 2004, A-05-04-0025; January 2005, 

A-06-04-00046; July 2010, A-01-09-00503; September 2011, A-01-10-00516) have 

noted frequent inaccuracies in the reporting of POS codes. In addition, at the time the 
CMS-1613-FC 568 

proposed rule was developed, we had concerns that using a POS code to report this 

information might not give us the reliable data we are looking to collect, especially if 

such data were to be crosswalked with hospital claims for the same service, because the 

hospital claim would have a modifier, not a POS code. However, we have been 

persuaded by public comments suggesting that use of a POS code would be less 

administratively burdensome on professional claims than use of a modifier. Specifically, 

because a POS code is already required on every professional claim, we believe that 

creating a new POS code to distinguish outpatient hospital services that are furnished oncampus versus off-campus would require less staff training and education than would use 

of a modifier on the professional claim. In addition, professional claims only have space 

for four modifiers. While a very small percentage of professional claims have four 

modifiers, required use of an additional modifier for every professional claim could lead 

to more occurrences where there would not be space for all applicable modifiers. Unlike 

hospital claims, we note that a new professional claim is required whenever the place of 

service changes. That is, even if the same practitioner treats the same patient on the same 

day in the office and hospital, the services furnished in the office setting must be 

submitted on one claim with the POS 11 (Office) code, while those furnished in the 

outpatient hospital department would be submitted on a separate claim with the POS 22 

(Outpatient Hospital) code (we note that the POS 22 code will be changing under the 

final policy). Likewise, if a new POS code were to be created for an off-campus PBD 

setting, a separate claim for services furnished in that setting would be required relative 

to a claim for services furnished on the main campus by the same practitioner to the same 

patient on the same day. Based on public comments and after further consultation with 
CMS-1613-FC 569 

Medicare billing experts, we believe that the use of the POS code on professional claims 

would be no less accurate than the use of a modifier on professional claims in identifying 

services furnished in off-campus PBDs. In addition, we believe that the POS code would 

be less administratively burdensome for practitioners billing using the professional claim 

because a POS code is already required for every professional claim. 

 With respect to adding new fields to existing claim forms or creating a new bill 

type, we do not believe that this data collection warrants these measures. We believe that 

those changes would create greater administrative burden than a HCPCS modifier or POS 

code, especially because providers are already accustomed to using modifiers and POS 

codes. Revisions to the claim form to add new fields or an additional bill type would 

create significant administrative burden to revise claims processing systems and educate 

providers, which we believe is not necessary, given the availability of a modifier and 

POS codes. Although providers may not be familiar with this new modifier or any new 

POS code; because these types of codes already exist generally for hospital and 

professional claims, providers and suppliers should already have an understanding of 

these types of codes and how to apply them. Finally, we do not believe that expansions 

to the claim form or use of a new bill type would provide us with detailed information on 

exactly which services were furnished in an off-campus PBD versus those furnished on 

the main campus when those services are furnished on the same day. 

 We also do not believe that we could accurately determine which services are 

furnished at off-campus PBDs using currently available national provider identifier (NPI) 

and facility address data. Hospitals are required to report the 9-digit zip code indicating 

where a service was furnished for purposes of paying properly for physician and 
CMS-1613-FC 570 

anesthesia services paid under the MPFS when that zip code differs from the master 

address for the hospital on file in CMS claims systems (Pub. 100-04, Transmittal 1681, 

February 13, 2009). However, the billing zip code for the hospital main campus could be 

broad enough to incorporate on and off-campus PBDs. Further, a zip code reported in 

value code 78 does not allow CMS to distinguish between services furnished in different 

locations on the same date. Therefore, we do not believe that a comparison of the zip 

code captured in value code 78 and the main campus zip code is sufficiently precise. 

 Finally, while we considered the suggestion that CMS use currently reported 

Medicare hospital cost report (CMS-2552-10) data to identify services furnished at 

off-campus PBDs, we note that although aggregate data on services furnished in different 

settings must be reported through the appropriate cost center, we would not be able to 

obtain the service-specific level of detail that we would be able to obtain from claims 

data. 

 We will take under consideration the suggestion that CMS create a way for 

hospitals to report their acquisition of off-campus PBDs through the enrollment process, 

although this information, as currently reported, like many of the suggestions above, 

would not allow us to know exactly which services are furnished in off-campus PBDs 

and which services are furnished on the hospital’s main campus when a hospital provides 

both on the same day. 

 Comment: Commenters noted that the proposed modifier would not allow CMS 

to know the precise location of the off-campus PBDs for billed services or when services 

are furnished at different off-campus PBD locations in the same day. 
CMS-1613-FC 571 

 Response: We agree that neither the proposed modifier nor a POS code provides 

precise information on the specific location of each off-campus PBD for each furnished 

service. However, we believe having information on the type and frequency of services 

furnished at all off-campus locations will assist CMS in better understanding the 

distribution of services between on-campus locations and off-campus locations. 

 Comment: MedPAC believed there may be some value in collecting data on 

services furnished in off-campus PBDs to validate the accuracy of site-of-service 

reporting when the physician’s office is off-campus but bills as an outpatient department. 

MedPAC indicated that any data collection effort should not prevent the development of 

policies to align payment rates across settings. MedPAC encouraged CMS to seek 

legislative authority to set equal payment rates across settings for evaluation and 

management office visits and other select services. 

 Response: We thank MedPAC for its support of our data collection efforts to 

better inform the frequency and types of services that are being furnished in off-campus 

PBDs. 

 Comment: Many commenters suggested that providers would not be able to 

accurately apply the new modifier by the January 1, 2015 implementation timeline and 

recommended a 1-year delay before providers would be required to apply the modifier to 

services furnished at off-campus PBDs. Some commenters requested only a 6-month 

delay in implementation. Commenters indicated that significant revisions to internal 

billing processes would require additional time to implement. 

 Response: Although we believe that the customary January 1st effective date that 

applies to most policies adopted in the final rules with comment period for both the 
CMS-1613-FC 572 

MPFS and the OPPS would provide sufficient lead time, we understand the commenters’ 

concerns with the proposed timeline for implementation, given that the new reporting 

requirements may require changes to billing systems as well as education and training for 

staff. Accordingly, although we are finalizing our proposal to create a HCPCS modifier 

for hospital services furnished in an off-campus PBD setting, we are adopting a voluntary 

reporting period of the new HCPCS modifier for 1 year. That is, reporting the new 

HCPCS modifier for services furnished at an off-campus PBD will not be mandatory 

until January 1, 2016, in order to allow providers time to make systems changes, test 

these changes, and train staff on use of the new modifier before reporting is required. We 

welcome early reporting of the modifier and believe a full year of preparation should 

provide hospitals with sufficient time to modify their systems for accurate reporting. 

With respect to the POS code for professional claims, we will request two new POS 

codes to replace POS code 22 (Hospital Outpatient) through the POS Workgroup and 

expect that it will take some time for these new codes to be established. Once the new 

POS codes are ready and integrated into CMS claims systems, practitioners would be 

required to use them, as applicable. More information on the availability of the new POS 

codes will be forthcoming in subregulatory guidance. However, we do not expect the 

new POS codes to be available prior to July 1, 2015. There will be no voluntary 

reporting period of the POS codes for applicable professional claims because each 

professional claim requires a POS code in order to be accepted by Medicare. However, 

we do not view this to be problematic because we intend to give prior notice on the POS 

coding changes and, as many of the commenters noted, because practitioners are already 

accustomed to using a POS code on every claim they submit. 
CMS-1613-FC 573 

 Comment: Many commenters expressed concern that this data collection would 

eventually lead to equalizing payment for similar services furnished in the nonfacility 

setting and the off-campus PBD setting. Several commenters noted that the trend of 

hospitals acquiring physician practices is due to efforts to better integrate care delivery 

and suggested that CMS weigh the benefits of care integration when deciding payment 

changes. Some commenters suggested that CMS use these data to equalize payment for 

similar services between these two settings. These commenters suggested that there is 

little difference in costs and care between the two settings that would warrant the 

difference in payment. Several of these commenters highlighted beneficiary cost-sharing 

as one reason for site-neutral payment, noting that the total payment amount for 

outpatient services is generally higher than the total payment amount for those 

same services when furnished in a physician’s office. 

Response: We appreciate these comments. At this time, we are only finalizing a 

data collection in this final rule with comment period. We did not propose and, therefore, 

are not finalizing any adjustment to payments furnished in the off-campus PBD setting. 

 Comment: One commenter noted that the CMS proposal would not provide 

additional information on how a physician practice billed prior to becoming an 

off-campus PBD, which would be important for analyzing the impact of this trend. 

 Response: We agree that understanding physician billing patterns prior to 

becoming an off-campus PBD is important in analyzing the impact of this trend, and we 

will continue to evaluate ways to analyze claims data to gather this information. We 

believe that collecting data using the additional modifier and POS code finalized in this 

final rule with comment period will be an important tool in furthering this analysis. 
CMS-1613-FC 574 

 Comment: Some commenters suggested that the term “off-campus” be better 

defined. Commenters asked how billing would occur for hospitals with multiple 

campuses because the CMS definition of campus references main buildings and does not 

include remote locations. The commenters maintained that remote locations are not the 

same as off-campus departments and that remote campuses furnish both inpatient and 

outpatient hospital services, in contrast to individual hospital departments. The 

commenters argued that these types of locations are not ones that were formerly a 

physician office practice, and furnish completely different types of services than a 

physician office. One commenter also asked whether the modifier is intended to cover 

services furnished in freestanding emergency departments. 

 Response: For purposes of the modifier and the POS codes we are finalizing in 

this final rule with comment period, we define “campus” using the definition at 

42 CFR 413.65(a)(2) to be the physical area immediately adjacent to the provider’s main 

buildings, other areas and structures that are not strictly contiguous to the main buildings 

but are located within 250 yards of the main buildings, and any other areas determined on 

an individual case basis, by the CMS regional office, to be part of the provider’s campus. 

Our intent is to capture outpatient services furnished off of the hospital’s main campus 

and off of any other hospital campuses. The term “remote location of a hospital” is 

defined at 42 CFR 413.65(a)(2). Under these regulations, a “remote location” includes a 

hospital campus other than the main hospital campus. Specifically, a remote location is 

“a facility or an organization that is either created by, or acquired by, a hospital that is a 

main provider for the purpose of furnishing inpatient hospital services under the name, 

ownership, and financial and administrative control of the main provider . . . .” 
CMS-1613-FC 575 

Therefore, we agree with the commenter that remote locations of the hospital should not 

be required to report the modifier nor should practitioners be required to report the 

off-campus POS code in these settings. This term “remote location” does not include 

“satellite” locations of a hospital, but because a satellite facility is one that provides 

inpatient services in a building also used by another hospital, or in one or more entire 

buildings located on the same campus as buildings used by another hospital, we also are 

not requiring satellite facilities to report the modifier or the POS codes. Satellite facilities 

are described in the regulations at 42 CFR 412.22(h). Accordingly, reporting of the 

modifier and POS codes would be required for outpatient services furnished in PBDs 

beyond 250 yards from the main campus of the hospital, excluding services furnished in a 

remote location or satellite facility of the hospital. 

 We also appreciate the comment on emergency departments. We do not intend 

for hospitals to report the new modifier for services furnished in an emergency 

department that is provider-based to a hospital. We note that there is already a POS code 

for the emergency department, POS 23 (emergency room-hospital), and this code would 

continue to be used for emergency department services. That is, the new off-campus 

PBD code that will be created for purposes of this data collection would not apply to 

hospital emergency department services. Hospitals that have questions about which 

departments are considered to be “off-campus PBDs” should review additional guidance 

that CMS releases on this policy and work with the appropriate CMS regional office if 

individual, specific questions remain. 

 Comment: Several commenters asked for clarification on when to report the 

modifier for services furnished both on-campus and off-campus on the same day. The 
CMS-1613-FC 576 

commenters provided several scenarios of visits and diagnostic services furnished on the 

same day. 

 Response: The location where the service is actually furnished would dictate the 

use of the modifier, regardless of where the order for services initiated. We expect the 

modifier and the POS code for off-campus PBDs to be reported in locations in which the 

hospital expends resources to furnish the service in an off-campus PBD setting. For 

example, hospitals would not report the modifier for a diagnostic test that is ordered by a 

practitioner who is located in an off-campus PBD when the service is actually furnished 

on the main campus of the hospital. This issue does not impact use of the POS codes 

because practitioners submit a different claim for each POS where they furnish services 

for a specific beneficiary. 

 Comment: A few commenters asked for clarification on whether their entity 

constitutes a PBD. 

 Response: PBDs are departments of the hospital that meet the criteria specified in 

regulations at 42 CFR 413.65. Questions about PBDs may be directed to the appropriate 

CMS regional office. 

 Comment: One commenter recommended that CMS publish the data it acquires 

through adoption of this modifier. 

 Response: Data collected through the new HCPCS modifier would be part of the 

Medicare Limited Data Set and would be available to the public for purchase along with 

the remainder of the Limited Data Set. Similarly, professional claims data with revised 

POS coding would be available as a standard analytic file for purchase. 
CMS-1613-FC 577 

 In summary, after consideration of the public comments received, we are 

finalizing our proposal with modifications. For hospital claims, we are creating a 

HCPCS modifier that is to be reported with every code for outpatient hospital services 

furnished in an off-campus PBD of a hospital. This code will not be required to be 

reported for remote locations of a hospital defined at 42 CFR 412.65, satellite facilities of 

a hospital defined at 42 CFR 412.22(h), or for services furnished in an emergency 

department. This 2-digit modifier will be added to the HCPCS annual file as of 

January 1, 2015, with the label “PO,” the short descriptor “Serv/proc off-campus pbd,” 

and the long descriptor “Services, procedures and/or surgeries furnished at off-campus 

provider-based outpatient departments.” Reporting of this new modifier will be 

voluntary for 1 year (CY 2015), with reporting required beginning on January 1, 2016. 

Additional instruction and provider education will be forthcoming in subregulatory 

guidance. 

 For professional claims, instead of finalizing a HCPCS modifier, in response to 

public comments, we will be deleting current POS code 22 (outpatient hospital 

department) and establishing two new POS codes--one to identify outpatient services 

furnished in on-campus, remote, or satellite locations of a hospital, and one to identify 

services furnished in an off-campus PBD hospital setting. We will maintain the separate 

POS code 23 (Emergency room-hospital) to identify services furnished in an emergency 

department of the hospital. These new POS codes will be required to be reported as soon 

as they become available. However, advanced notice of the availability of these codes 

will be shared publicly as soon as practicable.
CMS-1613-FC 578 

XI. CY 2015 OPPS Payment Status and Comment Indicators 

A. CY 2015 OPPS Payment Status Indicator Definitions 

 Payment status indicators (SIs) that we assign to HCPCS codes and APCs serve 

an important role in determining payment for services under the OPPS. They indicate 

whether a service represented by a HCPCS code is payable under the OPPS or another 

payment system and also whether particular OPPS policies apply to the code. The 

complete list of the CY 2015 payment status indicators and their definitions is displayed 

in Addendum D1 to this final rule with comment period, which is available on the CMS 

Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The CY 2015 payment status indicator 

assignments for APCs and HCPCS codes are shown in Addendum A and Addendum B, 

respectively, to this final rule with comment period, which are available on the CMS Web 

site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The changes to CY 2015 payment status 

indicators and their definitions are discussed in detail below. 

 We note that, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74869 through 74888), for CY 2014, we created a new status indicator “J1” to 

identify HCPCS codes that are paid under a comprehensive APC. However, because we 

delayed implementation of the new comprehensive APC policy until CY 2015, we also 

delayed the effective date of payment status indicator “J1” to CY 2015. A claim with 

payment status indicator “J1” will trigger a comprehensive APC payment for the claim. 

We refer readers to section II.A.2.e. of this final rule with comment period for a 

discussion of implementation of the new comprehensive APC policy. 
CMS-1613-FC 579 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41014), for CY 2015, we 

proposed to delete payment status indicator “X” and to assign ancillary services that are 

currently assigned payment status indicator “X” to either payment status indicator “Q1” 

or “S.” We also proposed to revise the definition of payment status indicator “Q1” by 

removing payment status indicator “X” from the packaging criteria, so that codes 

assigned payment status indicator “Q1” would be designated as STV-packaged, rather 

than STVX-packaged, because payment status indicator “X” was proposed for deletion. 

These proposed changes, the public comments we received and our responses, and our 

finalized policies are discussed in section II.A.3.c.(1) of this final rule with comment 

period. Section II.A.3.c.(1) of this final rule with comment period discusses the ancillary 

services packaging policy. The ancillary services packaging policy is the policy that 

makes maintaining status indicator “X” no longer necessary. After consideration of the 

public comments that we received and that are discussed in section II.A.3.c.(1) of this 

final rule with comment period, we are finalizing, without modification, our CY 2015 

proposal to delete payment status indicator “X” and to assign ancillary services that are 

currently assigned payment status indicator “X” to either payment status indicator “Q1” 

or “S.” 

 In addition, for CY 2015, we proposed to clarify the definition of payment status 

indicator “E” to state that payment status indicator “E” applies to items, codes, and 

services in any of the following cases: 

● For which pricing is not available; 

● Not covered by any Medicare outpatient benefit category; 

● Statutorily excluded by Medicare; or 
CMS-1613-FC 580 

● Not reasonable and necessary. 

 Regarding items “for which pricing is not available,” this applies to drugs and 

biologicals assigned a HCPCS code but with no available pricing information (for 

example, WAC). 

 In reviewing the OPPS status indicators and Addendum D1 for CY 2015, we 

noticed that there are a few drugs or biologicals that are currently assigned payment 

status indicator “A,” indicating payment under a non-OPPS fee schedule. These drugs or 

biologicals are administered infrequently in conjunction with emergency dialysis for 

patients with ESRD, but when administered in the HOPD, they are paid under the 

standard OPPS drug payment methodology for drugs and biologicals, that is, at ASP+6 

percent unless they are packaged. (We refer readers to section V. of this final rule with 

comment period for additional discussion of these drugs and their status indicators.) We 

proposed to change the status indicators for these drugs or biologicals for CY 2015 by 

removing the phrase “EPO for ESRD Patients” from the list of examples for status 

indicator “A.” In addition, we proposed to clarify the definition of payment status 

indicator “A” by adding the phrase “separately payable” to nonimplantable prosthetic and 

orthotic devices. 

 We did not receive any public comments regarding our proposed change and 

clarifications of the definitions of payment status indicators “E” and “A.” Therefore, we 

are finalizing our clarification and proposed policies, without modifications, for 

CY 2015. 

B. CY 2015 Comment Indicator Definitions 
CMS-1613-FC 581 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41014), for the CY 2015 OPPS, 

we proposed to use the same two comment indicators that are in effect for the CY 2014 

OPPS. 

● “CH”—Active HCPCS code in current and next calendar year; status indicator 

and/or APC assignment have changed or active HCPCS code that will be discontinued at 

the end of the current calendar year. 

● “NI”—New code for the next calendar year or existing code with substantial 

revision to its code descriptor in the next calendar year as compared to current calendar 

year, interim APC assignment; comments will be accepted on the interim APC 

assignment for the new code. 

 We proposed to use the “CH” comment indicator in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41014) to indicate HCPCS codes for which the status indicator or 

APC assignment, or both, are proposed for change in CY 2015 compared to their 

assignment as of June 30, 2014. We believed that using the “CH” indicator in the 

proposed rule would facilitate the public’s review of the changes that we proposed for 

CY 2015. We proposed to use the “CH” comment indicator in the CY 2015 OPPS/ASC 

final rule with comment period to indicate HCPCS codes for which the status indicator or 

APC assignment, or both, would change in CY 2015 compared to their assignment as of 

December 31, 2014. Use of the comment indicator “CH” in association with a composite 

APC indicates that the configuration of the composite APC would be changed in the 

CY 2015 OPPS/ASC final rule with comment period. 

 In addition, we proposed that any existing HCPCS codes with substantial 

revisions to the code descriptors for CY 2015 compared to the CY 2014 descriptors 
CMS-1613-FC 582 

would be labeled with comment indicator “NI” in Addendum B to the CY 2015 

OPPS/ASC final rule with comment period. However, in order to receive the comment 

indicator “NI,” the CY 2015 revision to the code descriptor (compared to the CY 2014 

descriptor) must be significant such that the new code descriptor describes a new service 

or procedure for which the OPPS treatment may change. We use comment indicator 

“NI” to indicate that these HCPCS codes will be open for comment as part of the 

CY 2015 OPPS/ASC final rule with comment period. In the CY 2015 OPPS/ASC 

proposed rule, we stated that, like all codes labeled with comment indicator “NI,” we 

would respond to public comments and finalize their OPPS treatment in the CY 2016 

OPPS/ASC final rule with comment period. 

 In accordance with our usual practice, we proposed that CPT and Level II HCPCS 

codes that are new for CY 2015 also would be labeled with comment indicator “NI” in 

Addendum B to the CY 2015 OPPS/ASC final rule with comment period. 

 We did not receive any public comments on the proposed use of comment 

indicators for CY 2015. 

 We believe that the CY 2014 definitions of the OPPS comment indicators 

continue to be appropriate for CY 2015. Therefore, we are continuing to use those 

definitions without modification for CY 2015. Only HCPCS codes with comment 

indicator “NI” in this CY 2015 OPPS/ASC final rule with comment period are subject to 

comment. HCPCS codes that do not appear with comment indicator “NI” in this 

CY 2015 OPPS/ASC final rule with comment period will not be open to public comment, 

unless we specifically request additional comments elsewhere in this final rule with 

comment period. 
CMS-1613-FC 583 

 The definitions of the OPPS comment indicators for CY 2015 are listed in 

Addendum D2 to this final rule with comment period, which is available on the CMS 

Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html.

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

A. Background 

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

System 

 For a detailed discussion of the legislative history and statutory authority related 

to payments to ASCs under Medicare, we refer readers to the CY 2012 OPPS/ASC final 

rule with comment period (76 FR 74377 through 74378) and the June 12, 1998 proposed 

rule (63 FR 32291 through 32292). For a discussion of prior rulemaking on the ASC 

payment system, we refer readers to the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74378 through 74379), the CY 2013 OPPS/ASC final rule with comment 

period (77 FR 68434 through 68467), and the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75064 through 75090). 

2. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC 

Covered Surgical Procedures and Covered Ancillary Services 

 Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject to certain 

exclusions, covered surgical procedures in an ASC are surgical procedures that are 

separately paid under the OPPS, that would not be expected to pose a significant risk to 

beneficiary safety when performed in an ASC, and for which standard medical practice 

dictates that the beneficiary would not typically be expected to require active medical 
CMS-1613-FC 584 

monitoring and care at midnight following the procedure (“overnight stay”). We adopted 

this standard for defining which surgical procedures are covered under the ASC payment 

system as an indicator of the complexity of the procedure and its appropriateness for 

Medicare payment in ASCs. We use this standard only for purposes of evaluating 

procedures to determine whether or not they are appropriate to be furnished to Medicare 

beneficiaries in ASCs. We define surgical procedures as those described by Category I 

CPT codes in the surgical range from 10000 through 69999, as well as those Category III 

CPT codes and Level II HCPCS codes that directly crosswalk or are clinically similar to 

ASC covered surgical procedures (72 FR 42478). 

 In the August 2, 2007 final rule, we also established our policy to make separate 

ASC payments for the following ancillary items and services when they are provided 

integral to ASC covered surgical procedures: (1) brachytherapy sources; (2) certain 

implantable items that have pass-through payment status under the OPPS; (3) certain 

items and services that we designate as contractor-priced, including, but not limited to, 

procurement of corneal tissue; (4) certain drugs and biologicals for which separate 

payment is allowed under the OPPS; and (5) certain radiology services for which separate 

payment is allowed under the OPPS. These covered ancillary services are specified in 

§ 416.164(b) and, as stated previously, are eligible for separate ASC payment 

(72 FR 42495). Payment for ancillary items and services that are not paid separately 

under the ASC payment system is packaged into the ASC payment for the covered 

surgical procedure. 

 We update the lists of, and payment rates for, covered surgical procedures and 

covered ancillary services in ASCs in conjunction with the annual proposed and final 
CMS-1613-FC 585 

rulemaking process to update the OPPS and the ASC payment system (§ 416.173; 

72 FR 42535). In addition, as discussed in detail in section XII.B. of this final rule with 

comment period, because we base ASC payment policies for covered surgical 

procedures, drugs, biologicals, and certain other covered ancillary services on the OPPS 

payment policies, and we use quarterly change requests to update services covered under 

the OPPS, we also provide quarterly update change requests (CRs) for ASC covered 

surgical procedures and covered ancillary services throughout the year (January, April, 

July, and October). CMS releases new Level II codes to the public or recognizes the 

release of new CPT codes by the AMA and makes these codes effective (that is, the 

codes are recognized on Medicare claims) via these ASC quarterly update CRs. Thus, 

these quarterly updates are to implement newly created Level II HCPCS and Category III 

CPT codes for ASC payment and to update the payment rates for separately paid drugs 

and biologicals based on the most recently submitted ASP data. New Category I CPT 

codes, except vaccine codes, are released only once a year and, therefore, are 

implemented only through the January quarterly update. New Category I CPT vaccine 

codes are released twice a year and are implemented through the January and July 

quarterly updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC proposed 

rule for the process used to update the HCPCS and CPT codes (76 FR 42291). 

 In our annual updates to the ASC list of, and payment rates for, covered surgical 

procedures and covered ancillary services, we undertake a review of excluded surgical 

procedures (including all procedures newly proposed for removal from the OPPS 

inpatient list), new procedures, and procedures for which there is revised coding, to 

identify any that we believe meet the criteria for designation as ASC covered surgical 
CMS-1613-FC 586 

procedures or covered ancillary services. Updating the lists of ASC covered surgical 

procedures and covered ancillary services, as well as their payment rates, in association 

with the annual OPPS rulemaking cycle is particularly important because the OPPS 

relative payment weights and, in some cases, payment rates, are used as the basis for the 

payment of covered surgical procedures and covered ancillary services under the revised 

ASC payment system. This joint update process ensures that the ASC updates occur in a 

regular, predictable, and timely manner. 

B. Treatment of New Codes 

1. Process for Recognizing New Category I and Category III CPT Codes and Level II 

HCPCS Codes 

 Category I CPT, Category III CPT, and Level II HCPCS codes are used to report 

procedures, services, items, and supplies under the ASC payment system. Specifically, 

we recognize the following codes on ASC claims: (1) Category I CPT codes, which 

describe surgical procedures and vaccine codes; (2) Category III CPT codes, which 

describe new and emerging technologies, services, and procedures; and (3) Level II 

HCPCS codes, which are used primarily to identify products, supplies, temporary 

procedures, and services not described by CPT codes. 

 We finalized a policy in the August 2, 2007 final rule to evaluate each year all 

new Category I and Category III CPT codes and Level II HCPCS codes that describe 

surgical procedures, and to make preliminary determinations during the annual 

OPPS/ASC rulemaking process regarding whether or not they meet the criteria for 

payment in the ASC setting as covered surgical procedures and, if so, whether or not they 

are office-based procedures (72 FR 42533 through 42535). In addition, we identify new 
CMS-1613-FC 587 

codes as ASC covered ancillary services based upon the final payment policies of the 

revised ASC payment system. 

 We have separated our discussion below into two sections based on whether we 

proposed to solicit public comments in the CY 2015 OPPS/ASC proposed rule (and 

respond to those comments in this CY 2015 OPPS/ASC final rule with comment period) 

or whether we are soliciting public comments in this CY 2015 OPPS/ASC final rule with 

comment period (and responding to those comments in the CY 2016 OPPS/ASC final 

rule with comment period). 

 We note that we sought public comment in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75067) on the new Category I and Category III CPT and 

Level II HCPCS codes that were effective January 1, 2014. We also sought public 

comment in the CY 2014 OPPS/ASC final rule with comment period on the new Level II 

HCPCS codes effective October 1, 2013. These new codes, with an effective date of 

October 1, 2013, or January 1, 2014, were flagged with comment indicator “NI” in 

Addenda AA and BB to the CY 2014 OPPS/ASC final rule with comment period to 

indicate that we were assigning them an interim payment status and payment rate, if 

applicable, which were subject to public comment following publication of the CY 2014 

OPPS/ASC final rule with comment period. In the proposed rule, we stated that we will 

respond to public comments and finalize the treatment of these codes under the ASC 

payment system in this CY 2015 OPPS/ASC final rule with comment period. 
CMS-1613-FC 588 

2. Treatment of New Level II HCPCS Codes and Category III CPT Codes Implemented 

in April 2014 and July 2014 for Which We Solicited Public Comments in the CY 2015 

OPPS/ASC Proposed Rule 

 In the April 2014 and July 2014 CRs, we made effective for April 1, 2014 and 

July 1, 2014, respectively, a total of seven new Level II HCPCS codes and four new 

Category III CPT codes that describe ASC covered surgical procedures and covered 

ancillary services that were not addressed in the CY 2014 OPPS/ASC final rule with 

comment period. 

 In the April 2014 ASC quarterly update (Transmittal 2927, CR 8675, dated 

April 10, 2014), we added two new surgical Level II HCPCS codes and one new drug 

and biological Level II HCPCS code to the list of covered surgical procedures and 

covered ancillary services, respectively. Table 45 of the CY 2015 OPPS/ASC proposed 

rule (79 FR 41016) listed the new Level II HCPCS codes that were implemented 

April 1, 2014, along with their proposed payment indicators for CY 2015. 

 In the July 2014 quarterly update (Transmittal 2970, CR 8786, dated 

May 23, 2014), we added one new brachytherapy Level II HCPCS code and three new 

drug and biological Level II HCPCS codes to the list of covered ancillary services. 

Table 46 of the CY 2015 OPPS/ASC proposed rule (79 FR 41016 through 41017) listed 

the new Level II HCPCS codes that were implemented July 1, 2014 along with their 

proposed payment indicators and proposed ASC payment rates for CY 2015. 

 Through the July 2014 quarterly update CR, we also implemented ASC payment 

for four new Category III CPT codes as one ASC covered surgical procedure and three 

covered ancillary services, effective July 1, 2014. These codes were listed in Table 47 of 
CMS-1613-FC 589 

the CY 2015 OPPS/ASC proposed rule (79 FR 41017), along with their proposed 

payment indicators and proposed payment rates for CY 2015. 

 The HCPCS codes listed in Table 45 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41016) were included in Addenda AA or BB to the proposed rule (which are 

available via the Internet on the CMS Web site). Because the payment rates associated 

with the new Level II HCPCS codes and Category III CPT codes that became effective 

July 1, 2014 (listed in Table 46 and Table 47 of the proposed rule (79 FR 41016 through 

41017)) were not available to us in time for incorporation into the Addenda to the 

OPPS/ASC proposed rule, our policy is to include these HCPCS codes and their proposed 

payment indicators and payment rates in the preamble to the proposed rule but not in the 

Addenda to the proposed rule. These codes and their final payment indicators and rates 

are included in the appropriate Addendum to this CY 2015 OPPS/ASC final rule with 

comment period. Therefore, the codes implemented by the July 2014 ASC quarterly 

update CR and their proposed CY 2015 payment indicators and rates that were displayed 

in Table 46 and Table 47 of the proposed rule were not included in Addenda AA or BB to 

the proposed rule (which are available via the Internet on the CMS Web site). The final 

list of ASC covered surgical procedures and covered ancillary services and the associated 

payment weights and payment indicators are included in Addenda AA or BB to this 

CY 2015 OPPS/ASC final rule with comment period, consistent with our annual update 

policy. 

 We invited public comment on these proposed payment indicators and the 

proposed payment rates for the new Category III CPT code and Level II HCPCS codes 

that were newly recognized as ASC covered surgical procedures or covered ancillary 
CMS-1613-FC 590 

services in April 2014 and July 2014 through the quarterly update CRs, as listed in 

Tables 45, 46, and 47 of the CY 2015 OPPS/ASC proposed rule (79 FR 41016 through 

41017). We proposed to finalize their payment indicators and their payment rates in this 

CY 2015 OPPS/ASC final rule with comment period. 

 We did not receive any public comments regarding these proposed ASC payment 

indicators. Therefore, we are adopting as final for CY 2015 the ASC payment indicators 

for the ASC covered surgical procedures and covered ancillary services described by the 

new Level II HCPCS codes implemented in April 2014 and July 2014 through the 

quarterly update CRs as shown below, in Tables 41 and 42, respectively. 

 For the new Category III CPT codes implemented in July 2014 through the 

quarterly update CR, as shown below in Table 43, we are not finalizing the “Z2” payment 

indicator that we proposed for CPT codes 0348T, 0349T, and 0350T. For CY 2015, 

these codes will be conditionally packaged under the OPPS when provided with a 

significant procedure (status indicator “Q1”). With the exception of device removal 

procedures (as discussed in section XII.D.1.b. of this final rule with comment period), 

HCPCS codes that are conditionally packaged under the OPPS are always packaged 

(payment indicator “N1”) under the ASC payment system. Therefore, we are changing 

the final CY 2015 ASC payment indicator for CPT codes 0348T, 0349T, and 350T from 

“Z2” to “N1.” We are adopting as final the payment indicator proposed for CPT code 

0356T. 

 These new HCPCS and CPT codes also are displayed in Addenda AA and BB to 

this final rule with comment period (which are available via the Internet on the CMS 

Web site). We note that after publication of the CY 2015 OPPS/ASC proposed rule, the 
CMS-1613-FC 591 

CMS HCPCS Workgroup created permanent HCPCS J-codes for CY 2015 to replace 

certain temporary HCPCS C-codes and Q-codes made effective for CY 2014. These 

permanent CY 2015 HCPCS J-codes are listed alongside the temporary CY 2014 HCPCS 

C-codes and Q-codes in Tables 41 and 42 below. We also note that the CMS HCPCS 

Workgroup created a long descriptor for J1781 that is slightly different from the long 

descriptor listed for HCPCS code C9134 in the CY 2015 OPPS/ASC proposed rule. 

 
CMS-1613-FC 592 

TABLE 41.—NEW LEVEL II HCPCS CODES FOR COVERED SURGICAL 

PROCEDURES OR COVERED ANCILLARY SERVICES IMPLEMENTED IN 

APRIL 2014

CY 2014 

HCPCS 

Code 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

Final 

CY 2015 

Payment 

Indicator

C9739 C9739 Cystourethroscopy, with insertion of transprostatic 

implant; 1 to 3 implants G2 

C9740 C9740 Cystourethroscopy, with insertion of transprostatic 

implant; 4 or more implants G2 

C9021 J9301 Injection, obinutuzumab, 10 mg K2 

G2 = Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative 

payment weight. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS rate. 

TABLE 42.—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY 

SERVICES IMPLEMENTED IN JULY 2014

CY 2014 

HCPCS Code 

CY 2015

HCPCS 

Code CY 2015 Long Descriptor 

Final 

CY 2015 

Payment 

Indicator

C2644 C2644 Brachytherapy source, cesium-131 

chloride solution, per millicurie H2 

C9022 J1322 Injection, elosulfase alfa, 1mg K2 

C9134 J7181 Injection, Factor XIII A-subunit, 

(recombinant), per iu K2 

Q9970* J1439 Injection, ferric carboxymaltose, 1 

mg 

K2 

*HCPCS code Q9970 replaced HCPCS code C9441 effective July 1, 2014. 

H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS rate. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS rate. 
CMS-1613-FC 593 

TABLE 43.—NEW CATEGORY III CPT CODES FOR COVERED SURGICAL 

PROCEDURES OR COVERED ANCILLARY SERVICES IMPLEMENTED IN 

JULY 2014

CY 2014 

CPT 

Code

CY 

2015 

CPT 

Code CY 2015 Long Descriptor

Final 

CY 2015 

Payment 

Indicator 

0348T 

 Radiologic examination, 

radiostereometric analysis (RSA); 

spine, (includes, cervical, thoracic and 

lumbosacral, when performed) 

N1 

0349T 

 Radiologic examination, 

radiostereometric analysis (RSA); 

upper extremity(ies), (includes 

shoulder, elbow and wrist, when 

performed) 

N1 

0350T 

 Radiologic examination, 

radiostereometric analysis (RSA); 

lower extremity(ies), (includes hip, 

proximal femur, knee and ankle, when 

performed) 

N1 

0356T 

 Insertion of drug-eluting implant 

(including punctal dilation and 

implant removal when performed) into 

lacrimal canaliculus, each 

R2 

N1 = Packaged service/item; no separate payment made. 

R2 = Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE 

RVUs; payment based on OPPS relative payment weight. 

3. Process for New Level II HCPCS Codes and Category I and Category III CPT Codes 

for Which We Are Soliciting Public Comments in this CY 2015 OPPS/ASC Final Rule 

With Comment Period 

 As has been our practice in the past, we incorporate those new Category I and 

Category III CPT codes and new Level II HCPCS codes that are effective January 1 in 

the final rule with comment period updating the ASC payment system for the following 

calendar year. These codes are released to the public via the CMS HCPCS (for Level II 

HCPCS codes) and AMA Web sites (for CPT codes), and also through the January ASC 
CMS-1613-FC 594 

quarterly update CRs. In the past, we also have released new Level II HCPCS codes that 

are effective October 1 through the October ASC quarterly update CRs and incorporated 

these new codes in the final rule with comment period updating the ASC payment system 

for the following calendar year. All of these codes are flagged with comment indicator 

“NI” in Addenda AA and BB to the OPPS/ASC final rule with comment period to 

indicate that we are assigning them an interim payment status which is subject to public 

comment. The payment indicator and payment rate, if applicable, for all such codes 

flagged with comment indicator “NI” are open to public comment in the OPPS/ASC final 

rule with comment period, and we respond to these comments in the final rule with 

comment period for the next calendar year’s OPPS/ASC update. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41017), we proposed to 

continue this process for CY 2015. Specifically, for CY 2015, we proposed to include in 

Addenda AA and BB to the CY 2015 OPPS/ASC final rule with comment period any 

new Category I and III CPT codes effective January 1, 2015, that would be incorporated 

in the January 2015 ASC quarterly update CR and any new Level II HCPCS codes, 

effective October 1, 2014 or January 1, 2015, that would be released by CMS in its 

October 2014 and January 2015 ASC quarterly update CRs. We stated that these codes 

would be flagged with comment indicator “NI” in Addenda AA and BB to this CY 2015 

OPPS/ASC final rule with comment period to indicate that we have assigned them an 

interim payment status. We also stated that their payment indicators and payment rates, 

if applicable, would be open to public comment in this CY 2015 OPPS/ASC final rule 

with comment period and would be finalized in the CY 2016 OPPS/ASC final rule with 

comment period. 
CMS-1613-FC 595 

 We did not receive any public comments regarding this proposed process. 

Therefore, for CY 2015, we are finalizing our proposal, without modification, to continue 

our established process for recognizing and soliciting public comments on new Level II 

HCPCS codes and Category I and III CPT codes that become effective on 

October 1, 2014, or January 1, 2015, as described above. 

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

Services 

1. Covered Surgical Procedures 

a. Additions to the List of ASC Covered Surgical Procedures 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41017 through 41018), we 

proposed to update the list of ASC covered surgical procedures by adding 10 procedures 

to the list for CY 2015. These 10 procedures were among those excluded from the ASC 

list for CY 2014 because we believed they did not meet the definition of a covered 

surgical procedure based on our expectation that they would be expected to pose a 

significant risk to beneficiary safety when performed in an ASC, or would be expected to 

require active medical monitoring and care of the beneficiary at midnight following the 

procedure. We conducted a review of all HCPCS codes that currently are paid under the 

OPPS, but not included on the ASC list of covered surgical procedures, to determine if 

changes in technology and/or medical practice affected the clinical appropriateness of 

these procedures for the ASC setting. We determined that these 10 procedures would not 

be expected to pose a significant risk to beneficiary safety when performed in an ASC, 

and would not be expected to require active medical monitoring and care of the 
CMS-1613-FC 596 

beneficiary at midnight following the procedure and, therefore, we proposed to include 

them on the list of ASC covered surgical procedures for CY 2015. 

 The 10 procedures that we proposed to add to the ASC list of covered surgical 

procedures, including their HCPCS code long descriptors and proposed CY 2015 

payment indicators, were displayed in Table 48 of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41018). 

 Comment: Several commenters supported adding the 10 procedures to the 

CY 2015 covered surgical procedures list for ASCs. 

 Response: We thank the commenters for their support. As indicated later in this 

section, we are finalizing our proposal to add these procedure codes to the ASC list, in 

addition to two other procedure codes recommended by commenters. 

 Comment: Some commenters stated that the APC relative weight for APC 0208 

is too low for the cervical and lumbar fusion procedures (as described by HCPCS codes 

22551, 22554, and 22612) proposed to be added to the list of ASC covered surgical 

procedures, and they urged CMS to reassign these three procedures codes to another APC 

with a higher relative weight. 

 Response: As discussed in detail in section II.A.2.e. of this final rule with 

comment period, we agree with the commenters, and we are reassigning CPT codes 

22551, 22554, and 22612 to APC 0425 for CY 2015 because the geometric mean costs of 

these codes are more similar to the geometric mean cost of APC 0425, which has a higher 

geometric mean cost than APC 0208. 

 Comment: Some commenters stated that, in order to perform the procedures 

proposed to be added to the ASC list of covered surgical procedures, additional procedure 
CMS-1613-FC 597 

codes needed to be added to the list because some of the proposed additions to the list 

could not be furnished without procedures described by additional codes. Other codes 

were requested to be added because they represent procedures that are commonly 

furnished in conjunction with procedures described by the codes that were proposed to be 

added. Commenters stated that without adding the additional codes for procedures that 

must be performed in conjunction with or are often performed along with the proposed 

added procedures, these types of cases will continue to not be furnished in the ASC 

setting. Commenters stated that some of the procedures described by these codes were 

covered by other carriers and could be safely performed in the ASC setting for Medicare 

patients. Some commenters believed that, because Medicare makes facility payments for 

unlisted CPT codes under the OPPS, CMS should provide ASCs with the same flexibility 

to use unlisted CPT codes to report procedures. The list of codes that commenters 

requested to be added in addition to those that were proposed to be added is shown in 

Table 44 below. 

 
CMS-1613-FC 598 

TABLE 44.—PROCEDURES REQUESTED FOR ADDITION TO THE CY 2015 

LIST OF ASC COVERED SURGICAL PROCEDURES 

CY 2015 

CPT/HCPCS 

Codes 

CY 2015 Short Descriptor 

19307 Mast mod rad 

20930*** Sp bone algrft morsel add-on 

20931*** Sp bone algrft struct add-on 

20936* Sp bone agrft local add-on 

20937* Sp bone agrft morsel add-on 

20938* Sp bone agrft struct add-on 

22526 Idet single level 

22527 Idet 1 or more levels 

22532* Lat thorax spine fusion 

22533* Lat lumbar spine fusion 

22534* Lat thor/lumb addl seg 

22552* Addl neck spine fusion 

22558* Lumbar spine fusion 

22585* Additional spinal fusion 

22610* Thorax spine fusion 

22633* Lumbar spine fusion combined 

22830* Exploration of spinal fusion 

22840* Insert spine fixation device 

22842* Insert spine fixation device 

22845* Insert spine fixation device 

22846* Insert spine fixation device 

22849* Reinsert spinal fixation 

22850* Remove spine fixation device 

22851 Apply spine prosth device 

22855* Remove spine fixation device 

22856 Cerv artific diskectomy 

23470 Reconstruct shoulder joint 

28805 Amputation thru metatarsal 

31600 Incision of windpipe 

32551 Insertion of chest tube 

33244 Remove eltrd transven 

35471 Repair arterial blockage 

35903 Excision graft extremity 

37191 Ins endovas vena cava filtr 

37193 Rem endovas vena cava filter 

39400 Mediastinoscopy incl biopsy 

43280 Laparoscopy fundoplasty 

43281 Lap paraesophag hern repair 
CMS-1613-FC 599 

CY 2015 

CPT/HCPCS 

Codes 

CY 2015 Short Descriptor 

43770 Lap place gastr adj device 

44180 Lap enterolysis 

44970 Laparoscopy appendectomy 

54332 Revise penis/urethra 

54336 Revise penis/urethra 

54535 Extensive testis surgery 

54650 Orchiopexy (fowler-stephens) 

57120 Closure of vagina 

57282 Colpopexy extraperitoneal 

57283 Colpopexy intraperitoneal 

57310 Repair urethrovaginal lesion 

57425 Laparoscopy surg colpopexy 

58260 Vaginal hysterectomy 

58262 Vag hyst including t/o 

58543 Lsh uterus above 250 g 

58544 Lsh w/t/o uterus above 250 g 

58553 Laparo-vag hyst complex 

58554 Laparo-vag hyst w/t/o compl 

58573 Tlh w/t/o uterus over 250 g 

60252 Removal of thyroid 

60260 Repeat thyroid surgery 

60271 Removal of thyroid 

63011 Remove spine lamina 1/2 scrl 

63012 Remove lamina/facets lumbar 

63015 Remove spine lamina >2 crvcl 

63016 Remove spine lamina >2 thrc 

63017 Remove spine lamina >2 lmbr 

63035 Spinal disk surgery add-on 

63040 Laminotomy single cervical 

63046 Remove spine lamina 1 thrc 

63048 Remove spinal lamina add-on 

63057 Decompress spine cord add-on 

63064 Decompress spinal cord thrc 

63075 Neck spine disk surgery 

63076 Neck spine disk surgery 

77002**** Needle localization by xray 

L-codes** (L codes for implants - plates and screws, peek or bone, putty - HCPCS 

not specified) 

*CPT codes on the OPPS inpatient list for CY 2015. 

**HCPCS codes for prosthetics or prosthetic supplies. 

***CPT codes already on the ASC list of covered surgical procedures. 

**** CPT code already on the ASC list of covered ancillary services 
CMS-1613-FC 600 

 Response: We examined all of the codes that commenters requested for addition 

to the ASC list of covered surgical procedures. Of the 75 codes requested for addition to 

the ASC list, we did not review the 19 procedures that are reported by CPT codes that are 

on the OPPS inpatient list (identified with one asterisk in Table 44), or the unspecified 

non-surgical HCPCS L-codes (identified with two asterisks in Table 44) because these 

codes are not eligible for addition to the ASC list of covered surgical procedures, 

consistent with our final policy which is discussed in detail in the August 2, 2007 final 

rule (72 FR 42476 through 42486; 42 CFR 416.166). In addition, we did not review the 

2 procedures reported by CPT codes that are already on the ASC list of covered surgical 

procedures (identified with three asterisks in Table 44), or the 1 procedure reported by a 

CPT code that is on the ASC list of covered ancillary services (identified with four 

asterisks in Table 44). 

 With respect to the remaining procedures described by the 52 codes in Table 44 

that commenters requested be added to the list of ASC covered surgical procedures, we 

do not agree that any of the procedures described by these codes should be added to the 

list because they do not meet our criteria for inclusion on this list. Under 42 CFR 416.2 

and 416.166, subject to certain exclusions, covered surgical procedures in an ASC are 

surgical procedures that are separately paid under the OPPS, that would not be expected 

to pose a significant risk to beneficiary safety when performed in an ASC, and would not 

be expected to require active medical monitoring and care of the beneficiary at midnight 

following the procedure. The criteria used under the revised ASC payment system to 

identify procedures that would be expected to pose a significant safety risk when 

performed in an ASC include, but are not limited to, those procedures that: generally 
CMS-1613-FC 601 

result in extensive blood loss; require major or prolonged invasion of body cavities; 

directly involve major blood vessels; are generally emergent or life threatening in nature; 

commonly require systemic thrombolytic therapy; are designated as requiring inpatient 

care under § 419.22(n); can only be reported using a CPT unlisted surgical procedure 

code; or are otherwise excluded under § 411.15 (we refer readers to § 416.166). 

Procedures that do not meet the criteria set forth in 42 CFR 416.166 would not be added 

to the list of ASC covered surgical procedures. 

 Although the commenters asserted that some of the procedures they were 

requesting for addition to the list are as safe as procedures already on the list, based on 

our review of the procedures listed in Table 44, we found that all of the remaining 

procedures described by the 52 codes either would be expected to pose a threat to 

beneficiary safety or would require active medical monitoring and care of the beneficiary 

at midnight following the procedure. Specifically, we found that prevailing medical 

practice called for inpatient hospital stays for beneficiaries undergoing many of the 

procedures and that some of the procedures directly involve major blood vessels and/or 

may result in extensive blood loss. Therefore, we are not including any of the procedures 

suggested by commenters on the list of ASC covered surgical procedures for CY 2015. 

 Regarding the comment about unlisted codes being noncovered in the ASC, we 

have a longstanding ASC policy that all unlisted codes are noncovered in the ASC 

because we are unable to determine (due to the nondescript nature of unlisted codes) if a 

procedure that would be reported with an unlisted code would not be expected to pose a 

significant risk to beneficiary safety when performed in an ASC, and would not be 

expected to require active medical monitoring and care of the beneficiary at midnight 
CMS-1613-FC 602 

following the procedure. We continue to believe it would not be appropriate to provide 

ASC payment for unlisted CPT codes in the surgical range, even if payment may be 

provided under the OPPS. ASCs do not possess the breadth and intensity of services that 

hospitals must maintain to care for patients of higher acuity, and we would have no way 

of knowing what specific procedures reported by unlisted CPT codes were provided to 

patients in order to ensure that they are safe for ASC performance. 

 After consideration of the public comments we received, we are finalizing the 

addition of the 10 HCPCS codes that we proposed to the list of ASC covered surgical 

procedures for CY 2015. As addressed in section XII.C.1.e. of this final rule with 

comment period, we also are adding CPT code 63044 (Laminotomy (hemilaminectomy), 

with decompression of nerve root(s), including partial facetectomy, foraminotomy and/or 

excision of herniated intervertebral disc, reexploration, single interspace; each additional 

lumbar interspace) to the ASC list of covered surgical procedures for CY 2015. This 

code was removed from the OPPS inpatient-only list in response to comments and, after 

review of the procedure described by this code, we believe that the procedure could be 

safely performed in an ASC and would not require active medical monitoring and care of 

the beneficiary at midnight following the procedure. The procedure codes, descriptors, 

and payment indicators for these 11 new covered surgical procedures for CY 2015 are 

displayed in Table 45 below. 
CMS-1613-FC 603 

TABLE 45.—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL 

PROCEDURES FOR CY 2015 

CY 

2015 

HCPCS 

Code CY 2015 Long Descriptor 

Final 

CY 2015 

ASC 

Payment 

Indicato

r 

22551 

Arthrodesis, anterior interbody, including disc space 

preparation, discectomy, osteophytectomy and 

decompression of spinal cord and/or nerve roots; 

cervical below c2 

J8 

22554 

Arthrodesis, anterior interbody technique, including 

minimal discectomy to prepare interspace (other than 

for decompression); cervical below c2 

J8 

22612 

Arthrodesis, posterior or posterolateral technique, 

single level; lumbar (with lateral transverse 

technique, when performed) 

J8 

22614 

Arthrodesis, posterior or posterolateral technique, 

single level; each additional vertebral segment (list 

separately in addition to code for primary procedure) 

N1 

63020 

Laminotomy (hemilaminectomy), with 

decompression of nerve root(s), including partial 

facetectomy, foraminotomy and/or excision of 

herniated intervertebral disc; 1 interspace, cervical 

G2 

63030 

Laminotomy (hemilaminectomy), with 

decompression of nerve root(s), including partial 

facetectomy, foraminotomy and/or excision of 

herniated intervertebral disc; 1 interspace, lumbar 

G2 

63042 

Laminotomy (hemilaminectomy), with 

decompression of nerve root(s), including partial 

facetectomy, foraminotomy and/or excision of 

herniated intervertebral disc, reexploration, single 

interspace; lumbar 

G2 

63044 

Laminotomy (hemilaminectomy), with 

decompression of nerve root(s), including partial 

facetectomy, foraminotomy and/or excision of 

herniated intervertebral disc, reexploration, single 

interspace; each additional lumbar interspace (list 

separately in addition to code for primary procedure) 

N1 

63045 

Laminectomy, facetectomy and foraminotomy 

(unilateral or bilateral with decompression of spinal 

cord, cauda equina and/or nerve root[s], [eg, spinal or 

lateral recess stenosis]), single vertebral segment; 

cervical 

G2 
CMS-1613-FC 604 

CY 

2015 

HCPCS 

Code CY 2015 Long Descriptor 

Final 

CY 2015 

ASC 

Payment 

Indicato

r 

63047 

Laminectomy, facetectomy and foraminotomy 

(unilateral or bilateral with decompression of spinal 

cord, cauda equina and/or nerve root[s], [eg, spinal or 

lateral recess stenosis]), single vertebral segment; 

lumbar 

G2 

63056 

Transpedicular approach with decompression of 

spinal cord, equina and/or nerve root(s) (eg, herniated 

intervertebral disc), single segment; lumbar 

(including transfacet, or lateral extraforaminal 

approach) (eg, far lateral herniated intervertebral 

disc) 

G2 

b. Covered Surgical Procedures Designated as Office-Based 

(1) Background 

 In the August 2, 2007 ASC final rule, we finalized our policy to designate as 

“office-based” those procedures that are added to the ASC list of covered surgical 

procedures in CY 2008 or later years that we determine are performed predominantly 

(more than 50 percent of the time) in physicians’ offices based on consideration of the 

most recent available volume and utilization data for each individual procedure code 

and/or, if appropriate, the clinical characteristics, utilization, and volume of related codes. 

In that rule, we also finalized our policy to exempt all procedures on the CY 2007 ASC 

list from application of the office-based classification (72 FR 42512). The procedures 

that were added to the ASC list of covered surgical procedures beginning in CY 2008 that 

we determined were office-based were identified in Addendum AA to that rule by 

payment indicator “P2” (Office-based surgical procedure added to ASC list in CY 2008 

or later with MPFS nonfacility PE RVUs; payment based on OPPS relative payment 
CMS-1613-FC 605 

weight); “P3” (Office-based surgical procedures added to ASC list in CY 2008 or later 

with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs); or 

“R2” (Office-based surgical procedure added to ASC list in CY 2008 or later without 

MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight), 

depending on whether we estimated the procedure would be paid according to the 

standard ASC payment methodology based on its OPPS relative payment weight or at the 

MPFS nonfacility PE RVU-based amount. 

 Consistent with our final policy to annually review and update the list of surgical 

procedures eligible for payment in ASCs, each year we identify surgical procedures as 

either temporarily office-based (these are new procedure codes with little or no utilization 

data that our medical advisors have determined are clinically similar to other procedures 

that are permanently office-based), permanently office-based, or nonoffice-based, after 

taking into account updated volume and utilization data. 

(2) Changes for CY 2015 to Covered Surgical Procedures Designated as Office-Based 

 In developing the CY 2015 OPPS/ASC proposed rule, we followed our policy to 

annually review and update the surgical procedures for which ASC payment is made and 

to identify new procedures that may be appropriate for ASC payment, including their 

potential designation as office-based. We reviewed CY 2013 volume and utilization data 

and the clinical characteristics for all surgical procedures that are assigned payment 

indicator “G2” (Non-office-based surgical procedure added in CY 2008 or later; payment 

based on OPPS relative payment weight) in CY 2014, as well as for those procedures 

assigned one of the temporary office-based payment indicators, specifically “P2,” “P3,” 
CMS-1613-FC 606 

or “R2” in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75071 

through 75075). 

 Our review of the CY 2013 volume and utilization data resulted in our 

identification of two covered surgical procedures, CPT codes 10022 and 19296 that we 

believe meet the criteria for designation as office-based. The data indicate these 

procedures are performed more than 50 percent of the time in physicians’ offices and our 

medical advisors believe the services are of a level of complexity consistent with other 

procedures performed routinely in physicians’ offices. The two CPT codes we proposed 

to permanently designate as office-based were listed in Table 49 of the CY 2015 

OPPS/ASC proposed rule (79 FR 41019). 

 We invited public comment on this proposal. 

 Comment: One commenter stated that CPT code 10022 was performed only 

51 percent of the time in the office setting and recommended that it temporarily be 

designated as office-based rather than permanently. 

 Response: As stated in the proposed rule and above, we designate new procedure 

codes as temporarily office-based in situations where we have little to no utilization data 

on these procedures and our Medical Officers have determined these procedures are 

clinically similar to other procedures that are permanently office-based. For CPT code 

10022, we have enough volume and utilization data from CY 2013 to indicate that CPT 

code 10022 is performed more than 50 percent of the time in physicians’ offices and our 

medical advisors believe this service is of a level of complexity consistent with other 

procedures performed routinely in physicians’ offices. Therefore, we believe that this 

code should be designated as permanently office-based. 
CMS-1613-FC 607 

 After consideration of the public comments we received, we are finalizing our 

proposal, without modification, to designate the procedures described by CPT codes 

10022 and 19296 as permanently office-based for CY 2015, as set forth in Table 46 

below. 

 
CMS-1613-FC 608 

TABLE 46.—ASC COVERED SURGICAL PROCEDURES NEWLY 

DESIGNATED AS PERMANENTLY OFFICE-BASED FOR CY 2015 

* Final payment indicators are based on a comparison of the final rates according to the ASC standard 

ratesetting methodology and the MPFS final rates effective January 1, 2015. We note that these payment 

indicators do not include the effect of the negative update to the MPFS payment rates effective 

April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April l, 2015 

will be included in the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion 

of the MPFS rates, we refer readers to the CY 2015 MPFS final rule with comment period.

 We also reviewed CY 2013 volume and utilization data and other information for 

the 8 procedures finalized for temporary office-based status in Tables 52 and 53 in the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75074 through 75075). 

Among these eight procedures, there were very few claims data or no claims data for six 

procedures: CPT code 0099T (Implantation of intrastromal corneal ring segments); CPT 

code 0299T (Extracorporeal shock wave for integumentary wound healing, high energy, 

including topical application and dressing care; initial wound); CPT code C9800 (Dermal 

injection procedure(s) for facial lipodystrophy syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, including all items and supplies); CPT code 10030 

(Image-guided fluid collection drainage by catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, extremity, abdominal wall, neck), percutaneous); CPT 

CY 2015 

CPT 

Code CY 2015 Long Descriptor 

CY 2014 

ASC 

Payment 

Indicator

Proposed 

CY 2015 

ASC 

Payment 

Indicator* 

Final 

CY 2015 

ASC 

Payment 

Indicator*

10022 Fine needle aspiration; with imaging 

guidance G2 P3 P3 

19296 

Placement of radiotherapy afterloading 

expandable catheter (single or 

multichannel) into the breast for 

interstitial radioelement application 

following partial mastectomy, includes 

imaging guidance; on date separate 

from partial mastectomy 

G2 P2 P2 
CMS-1613-FC 609 

code 64617 (Chemodenervation of muscle(s); larynx, unilateral, percutaneous (eg, for 

spasmodic dysphonia), includes guidance by needle electromyography, when performed); 

and CPT code 67229 (Treatment of extensive or progressive retinopathy, one or more 

sessions; preterm infant (less than 37 weeks gestation at birth), performed from birth up 

to 1 year of age (eg, retinopathy of prematurity), photocoagulation or cryotherapy). 

Consequently, we proposed to maintain their temporary office-based designations for 

CY 2015. 

 We proposed that one procedure that has a temporary office-based designation for 

CY 2014, CPT code 0226T (Anoscopy, high resolution (HRA) (with magnification and 

chemical agent enhancement); diagnostic, including collection of specimen(s) by 

brushing or washing when performed), be packaged under the OPPS for CY 2015. Our 

policy is to package covered surgical procedures under the ASC payment system if these 

procedures are packaged under the OPPS. Consequently, we proposed to package, and 

assign payment indicator “N1” to, this covered surgical procedure code in CY 2015. 

 HCPCS code 0124T (Conjunctival incision with posterior extrascleral placement 

of pharmacological agent (does not include supply of medication)) was finalized for 

temporary office-based status in the CY 2014 OPPS/ASC final rule with comment 

period. However, this code was deleted effective December 31, 2013. 

 The proposed CY 2015 payment indicator designations for the 7 remaining 

procedures that were temporarily designated as office-based in CY 2014 were displayed 

in Table 50 of the CY 2015 OPPS/ASC proposed rule (79 FR 41019). The procedures 

for which the proposed office-based designations for CY 2015 are temporary also were 
CMS-1613-FC 610 

indicated by asterisks in Addendum AA to the proposed rule (which is available via the 

Internet on the CMS Web site). 

 We invited public comment on these proposals. 

 Comment: One commenter stated that because CPT code 10030 is new for 

CY 2014, it should not be designated as temporarily office-based at this time. 

 Response: As stated in the 2014 OPPS/ASC final rule with comment period 

(78 FR 75074 through 75075), after reviewing the clinical characteristics, utilization, and 

volume of related codes, we determined that the procedures described by CPT code 

10030 would be predominantly performed in physicians’ offices. However, because we 

had no utilization data for CPT code 10030, we made the office-based designation 

temporary rather than permanent for CY 2014. As discussed above, we continue to have 

no claims data for this procedure so we are continuing to designate the procedures 

described by CPT code 10030 as temporarily office-based. We will reevaluate CPT code 

10030 in next year’s rulemaking. 

 After consideration of the public comment we received, for CY 2015 we are 

finalizing our proposal without modification to designate six procedures listed in 

Table 47 below as temporarily office-based. HCPCS code 0226T (Anoscopy, high 

resolution (HRA) (with magnification and chemical agent enhancement); diagnostic, 

including collection of specimen(s) by brushing or washing when performed) was 

included in our proposal for CY 2015. However, this code will be deleted effective 

December 31, 2014. 
CMS-1613-FC 611 

TABLE 47.— CY 2015 PAYMENT INDICATORS FOR ASC COVERED 

SURGICAL PROCEDURES DESIGNATED AS TEMPORARILY 

OFFICE-BASED IN THE CY 2014 OPPS/ASC FINAL RULE WITH COMMENT 

PERIOD 

CY 2015 

CPT 

Code CY 2015 Long Descriptor 

CY 2014 

ASC 

Payment 

Indicator 

CY 2015 

ASC 

Payment 

Indicator**

0099T Implantation of intrastromal corneal ring 

segments 

R2* R2* 

0226T 

Anoscopy, high resolution (HRA) (with 

magnification and chemical agent enhancement); 

diagnostic, including collection of specimen(s) 

by brushing or washing when performed 

R2* D5 

0299T 

Extracorporeal shock wave for integumentary 

wound healing, high energy, including topical 

application and dressing care; initial wound 

R2* R2* 

C9800 

Dermal injection procedure(s) for facial 

lipodystrophy syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, including all 

items and supplies 

R2* R2* 

10030 

Image-guided fluid collection drainage by 

catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, extremity 

abdominal wall, neck), percutaneous 

P2* P2* 

64617 

Chemodenervation of muscle(s); larynx, 

unilateral, percutaneous (eg, for spasmodic 

dysphonia), includes guidance by needle 

electromyography, when performed 

P3* P3* 

67229 

Treatment of extensive or progressive 

retinopathy, one or more sessions; preterm infant 

(less than 37 weeks gestation at birth), 

performed from birth up to 1 year of age (eg, 

retinopathy of prematurity), photocoagulation or 

cryotherapy 

R2* R2* 

* If designation is temporary. 

** Final payment indicators are based on a comparison of the final rates according to the ASC standard 

ratesetting methodology and the MPFS final rates effective January 1, 2015. We note that these payment 

indicators do not include the effect of the negative update to the MPFS payment rates effective 

April 1, 2015 under current law. Updates to the ASC rates and payment indicators effective April l, 2015 

will be included in the April 2015 quarterly ASC addenda posted on the CMS Web site. For a discussion 

of the MPFS rates, we refer readers to the CY 2015 MPFS final rule with comment period.
CMS-1613-FC 612 

c. ASC Covered Surgical Procedures to be Designated as Device-Intensive 

(1) Background 

 As discussed in the August 2, 2007 final rule (72 FR 42503 through 42508), we 

adopted a modified payment methodology for calculating the ASC payment rates for 

covered surgical procedures that are assigned to the subset of OPPS device-dependent 

APCs with a device offset percentage greater than 50 percent of the APC cost under the 

OPPS, in order to ensure that payment for the procedure is adequate to provide packaged 

payment for the high-cost implantable devices used in those procedures. 

(2) Changes to List of ASC Covered Surgical Procedures Designated as 

Device-Intensive for CY 2015 

 As we discuss in section II.A.2.e of the CY 2015 OPPS/ASC proposed rule 

(79 FR 40940 through 40953), for CY 2015, we proposed to implement 

28 comprehensive APCs created to replace the current device-dependent APCs and a few 

nondevice-dependent APCs under the OPPS, which would eliminate all device-dependent 

APCs for CY 2015. We proposed to define a comprehensive APC as a classification for 

the provision of a primary service and all adjunctive services provided to support the 

delivery of the primary service. Because a comprehensive APC would treat all 

individually reported codes as representing components of the comprehensive service, 

our OPPS proposal is to make a single prospective payment based on the cost of all 

individually reported codes that represent the provision of a primary service and all 

adjunctive services provided to support the delivery of the primary service. 

 Unlike the OPPS claims processing system that can be configured to make a 

single payment for the encounter-based comprehensive service whenever a HCPCS code 
CMS-1613-FC 613 

that is assigned to a comprehensive APC appears on the claim, the ASC claims 

processing system does not allow for this type of conditional packaging. Therefore, we 

proposed that all separately paid covered ancillary services that are provided integral to 

covered surgical procedures that would map to comprehensive APCs would continue to 

be separately paid under the ASC payment system instead of being packaged into the 

payment for the comprehensive APC as under the OPPS. The OPPS relative payment 

weights for the comprehensive APCs would include costs for ancillary services; 

therefore, we could duplicate payment if we based the ASC payment rate on the OPPS 

relative payment weights for the comprehensive APCs. Therefore, to avoid this issue, we 

proposed that the ASC payment rates for these comprehensive APCs would be based on 

the CY 2015 OPPS relative payments weights that have been calculated using the 

standard APC ratesetting methodology for the primary service instead of the relative 

payment weights that are based on the comprehensive bundled service. For the same 

reason, under the ASC payment system, we also proposed to use the standard OPPS APC 

ratesetting methodology instead of the comprehensive methodology to calculate the 

device offset percentage for comprehensive APCs for purposes of identifying 

device-intensive procedures and to calculate payment rates for device-intensive 

procedures assigned to comprehensive APCs. 

 Payment rates for ASC device-intensive procedures are based on a modified 

payment methodology to ensure that payment for the procedure is adequate to provide 

packaged payment for the high-cost implantable devices used in those procedures. 

Device-intensive procedures are currently defined as those procedures that are assigned 

to device-dependent APCs with a device offset percentage greater than 50 percent of the 
CMS-1613-FC 614 

APC cost under the OPPS. Because we proposed to implement the comprehensive APC 

policy and, therefore, eliminate device-dependent APCs under the OPPS in CY 2015, we 

need to define ASC device-intensive procedures for CY 2015. We proposed to define 

ASC device-intensive procedures as those procedures that are assigned to any APC (not 

only an APC formerly designated device-dependent) with a device offset percentage 

greater than 40 percent based on the standard OPPS APC ratesetting methodology. We 

believe that our proposal to lower the offset threshold from greater than 50 percent to 

greater than 40 percent better aligns with the OPPS device credit policy finalized for 

CY 2014 (78 FR 75006 and 75007) that applies to procedures with a significant device 

offset amount, which is defined as exceeding 40 percent of the APC cost. Because the 

ASC device-intensive methodology is applied to procedures with significant device costs, 

we believe that the definition of “significant” with regard to device-intensive procedures 

should match that used under the OPPS to determine “significant” device costs for the 

device credit policy. We proposed changes to § 416.171(b)(2) to reflect this proposal. 

 We also proposed to update the ASC list of covered surgical procedures that are 

eligible for payment according to our device-intensive procedure payment methodology, 

consistent with our proposed modified definition of device-intensive procedures, 

reflecting the proposed APC assignments of procedures and APC device offset 

percentages based on the CY 2013 OPPS claims and cost report data available for the 

final rule with comment period. 

 The ASC covered surgical procedures that we proposed to designate as 

device-intensive and that would be subject to the device-intensive procedure payment 

methodology for CY 2015 were listed in Table 51 of the proposed rule (79 FR 41021 
CMS-1613-FC 615 

through 41023). The CPT code, the CPT code short descriptor, the proposed CY 2015 

ASC payment indicator (PI), the proposed CY 2015 OPPS APC assignment, the proposed 

CY 2015 OPPS APC device offset percentage, and an indication if the full credit/partial 

credit (FB/FC) device adjustment policy would apply also were listed in Table 51. All of 

these procedures were included in Addendum AA to the proposed rule (which is 

available via the Internet on the CMS Web site). 

 We invited public comment on these proposals. 

 Comment: Some commenters supported the proposal to change the device offset 

threshold from 50 percent to 40 percent, citing that the proposal allowed for greater 

flexibility in allowing clinical considerations to determine site-of-care decisions and 

would likely lead to a migration of services from HOPDs to ASCs. However, some 

commenters urged CMS to monitor volume and to explore the implications of the 

expansion of this policy. Other commenters requested that CMS adopt additional 

changes to the device-intensive policy to encourage migration of services to ASCs from 

other settings. Some commenters recommended that the device offset percentage be 

lowered to 30 percent. Some commenters expressed the same views as CMS received in 

prior rulemaking – that the ASC device offset percentages should be based on a 

percentage of the total unadjusted ASC cost for a service rather than a percentage of the 

HOPD, or that the device offset be applied to all procedures for which CMS can establish 

a device cost regardless of the percentage of the total cost that the device represents. 

These commenters suggested that these alternatives would result in savings to the 

Medicare program. Some commenters also expressed the same views as CMS received 
CMS-1613-FC 616 

in prior rulemakings--that CMS should not adjust the device portion of the ASC payment 

for device-intensive procedures by the wage index. 

 Response: In the August 2, 2007 final rule (72 FR 42503 through 42508), we 

established a modified payment methodology for calculating ASC payment rates for 

device-intensive procedures under the ASC payment system. We defined 

device-intensive procedures as those procedures that are assigned to device-dependent 

APCs under the OPPS with device costs of greater than 50 percent of the APC cost under 

the OPPS (that is, the device offset percentage is greater than 50 percent). In the 

CY 2015 OPPS/ASC proposed rule (79 FR 41020), we proposed to define ASC 

device-intensive procedures as those procedures that are assigned to any APC with a 

device offset percentage greater than 40 percent based on the standard OPPS APC 

ratesetting methodology. In that proposed rule, we stated that we believe that lowering 

the offset threshold from greater than 50 percent to greater than 40 percent better aligns 

with the OPPS device credit policy finalized for CY 2014 (78 FR 75006 through 75007) 

that applies to procedures with a significant device offset amount, which is defined as 

exceeding 40 percent of the APC cost. Because the ASC device-intensive methodology 

is applied to procedures with significant device costs, we believe that the definition of 

“significant” with regard to device-intensive procedures should match that used under the 

OPPS to determine “significant” device costs for the device credit policy. We do not 

believe that it should be lowered to 30 percent, because the intent of the policy change is 

to align significant device cost percentage in the OPPS with the device-intensive 

procedures in the ASC payment system. 
CMS-1613-FC 617 

 We do not agree with the commenters that the device-intensive methodology 

should be applied to all procedures where a device offset could be established. Nor do 

we agree with the commenters who suggested using a threshold to determine 

device-intensive procedures that is based on the ASC payment rate instead of the OPPS 

payment rate. Under 42 CFR 416.167 and 416.171, most ASC payment rates are based 

on the OPPS relative payment weights, and our ASC policy is to be consistent with the 

OPPS. “Device intensive” identifies those procedures assigned to APCs with significant 

device costs and applies to services that are performed both in the HOPD and ASC. 

Procedures are not device intensive in one setting and not in another – they either have 

significant associated device costs or they do not, based on the purpose of the surgical 

procedure. Accordingly, we believe that the device-intensive methodology for ASCs 

should align with the device-intensive policies for OPPS. 

 We also continue to believe it would not be appropriate to vary the portion of 

the national payment that is wage-adjusted for different services, such as applying 

the wage index only to the service portion of the ASC payment for device-intensive 

procedures, as the commenters requested. As indicated above, our ASC policy is to 

be consistent with the OPPS because ASC payment rates are based on the OPPS 

relative payment weights. Therefore, we apply the ASC geographic wage 

adjustment to the entire ASC payment rate for device-intensive procedures. We also 

refer readers to our responses to similar comments in the CY 2009, CY 2010, CY 

2011, CY 2012, CY 2013, and CY 2014 OPPS/ASC final rules with comment period 

(73 FR 68735; 74 FR 60608 through 60609; 75 FR 72039; 76 FR 74409; 77 FR 
CMS-1613-FC 618 

68449; and 78 FR 75076, respectively). We respond to the commenters’ request to 

monitor volume and to explore the implications of this policy in the next response. 

 Comment: Some commenters supported the lowering of the device offset 

percentage to 40 percent, but stated that this policy, if finalized, would make 

device-intensive procedures more attractive to ASCs. Commenters suggested that 

CMS monitor its data to determine whether the policy results in significant 

increases in volume of these services and that CMS explore the implications of 

further expanding the list of device-intensive procedures. 

 Response: We will continue to monitor our data to ensure that our payment 

policies do not have the unintended consequence of inappropriately encouraging 

shifts in site of service.

 Comment: One commenter expressed appreciation that CMS designated HCPCS 

code 0334T (Sacroiliac joint stabilization for arthrodesis, percutaneous or minimally 

invasive (indirect visualization), includes obtaining and applying autograft or allograft 

(structural or morselized), when performed, includes image guidance when performed 

(eg, CT or fluoroscopic)) as device-intensive, but expressed concern that the device offset 

percentage was too low, thereby resulting in an undervalued ASC payment. The 

commenter stated that Medicare patients otherwise eligible for this treatment in the ASC 

would be denied access due to the low ASC payment. The commenter suggested that 

CMS consider HCPCS-specific device offsets rather than at the APC level. 

Alternatively, the commenter suggested that CMS add “device offset similarity” (that is, 

identifying and grouping procedure codes based on the similarity of their respective 

device offsets) as an additional criterion (in addition to clinical and cost similarity) in 
CMS-1613-FC 619 

APC assignment. Another commenter stated that ASC payment for transprostatic 

implant procedures (as described by HCPCS codes C9739 and C9740) was too low 

because these procedures were not designated as device-intensive in the ASC setting, and 

it is unlikely that any transprostatic implant procedures would be conducted in the ASC 

setting for a Medicare patient. 

 Response: In the August 2, 2007 ASC final rule (72 FR 42504), we finalized our 

policy to apply the OPPS device offset percentage to the OPPS national unadjusted 

payment to acquire the device cost included in the OPPS payment rate for a 

device-intensive ASC covered surgical procedure, which we then set as equal to the 

device portion of the national unadjusted ASC payment rate for the procedure. The 

device offset percentage represents a weighted average for all of the procedures assigned 

to the APC. It is not uncommon that, within an APC, there will be a range of device 

costs associated with the various procedures assigned to the APC. The device offset for 

the APC represents a weighted average for all of the procedures assigned to the APC, and 

the device offset percentage is our best estimate of the amount of device cost included in 

an APC payment under the OPPS. 

 We did not propose calculating offsets at the HCPCS level or introducing a new 

criterion for APC code assignments. These would be significant changes to our 

longstanding policy of calculating offsets at the APC level, discussed above, and we 

believe our current policy allows for appropriate payment. Moreover, under 

42 CFR 416.167 and 416.171, ASC covered surgical procedures are classified using 

OPPS APC groups described in 42 CFR 419.31. Under our policy, we cannot assign a 

CPT code to a different APC for the ASC setting. 
CMS-1613-FC 620 

 We believe that APC 0425 is an appropriate APC assignment for CPT 

code 0334T based on clinical and resource similarity to other procedures assigned to 

APC 0425 and have calculated the device offset for this procedure according to our 

longstanding policy discussed above. We believe that payment for this code is 

appropriate. 

 With respect to the comment about ASC payment for transprostatic implant 

procedures being too low because the procedures do not currently qualify for a 

device-intensive offset adjustment, as addressed in section III.C.3.e. of this final rule with 

comment period, for CY 2015, we are maintaining our APC assignments for HCPCS 

codes C9739 and C9740 to APCs 0162 and 1564, respectively. As discussed in section 

III.C.3.e. of this final rule with comment period, the APC assignments for HCPCS codes 

C9739 and C9740 are initial APC assignments until we obtain claims data for these two 

codes for the CY 2016 OPPS update. We will reevaluate whether these codes qualify for 

a device-intensive adjustment based on their APC assignments for CY 2016 in next 

year’s rulemaking cycle. 

As indicated in section II.A.2.e. of this final rule with comment period, after 

consideration of the public comments we received regarding the proposed OPPS 

comprehensive APC policy, we are finalizing our proposal to implement the 

comprehensive APC policy for CY 2015, with some minor modifications. With 

respect to modifications to the comprehensive APC policy that affect the ASC payment 

policy, we note that the finalized comprehensive APC policy includes all devicedependent APCs, except for APCs 0427, 0622, and 0652, which will become standard 

APCs because we are discontinuing the device-dependent APC policy. This modification 
CMS-1613-FC 621 

does not affect any of our proposals with respect to the finalized comprehensive APCs or 

the definition of device-intensive. 

 Given the final OPPS comprehensive APC policy and after consideration of the 

public comments we received, we are finalizing our proposal that all separately paid 

covered ancillary services that are provided integral to covered surgical procedures that 

would map to comprehensive APCs will continue to be separately paid under the ASC 

payment system instead of being packaged into the payment for the comprehensive APC 

as under the OPPS. Further, the ASC payment rates for these comprehensive APCs will 

be based on the CY 2015 OPPS relative payments weights that have been calculated 

using the standard APC ratesetting methodology for the primary service (instead of the 

relative payment weights that are based on the comprehensive bundled service) and use 

the standard OPPS APC ratesetting methodology instead of the comprehensive 

methodology to calculate the device offset percentage for comprehensive APCs for 

purposes of identifying device-intensive procedures and to calculate payment rates for 

device-intensive procedures assigned to comprehensive APCs. We also will define ASC 

device-intensive procedures as those procedures that are assigned to any APC with a 

device offset percentage greater than 40 percent based on the standard OPPS APC 

ratesetting methodology and codify this policy in the regulations at 

42 CFR 416.171(b)(2). Finally, we will update the ASC list of covered surgical 

procedures that are eligible for payment according to our device-intensive procedure 

payment methodology, consistent with our final modified definition of device-intensive 

procedures, reflecting the final APC assignments of procedures and APC device offset 
CMS-1613-FC 622 

percentages based on the CY 2013 OPPS claims and cost report data available for this 

final rule with comment period. 

 We are designating the ASC covered surgical procedures displayed in Table 

48 below as device-intensive and subject to the device-intensive procedure payment 

methodology for CY 2015. The CPT code, the CPT code short descriptor, the final 

CY 2015 ASC payment indicator (PI), the final CY 2014 OPPS APC assignment, the 

final CY 2015 OPPS APC device offset percentage, and an indication if the full 

credit/partial credit (FB/FC) device adjustment policy will apply, also are listed in 

Table 48 below. All of these procedures are included in Addendum AA to this final 

rule with comment period (which is available via the Internet on the CMS Web site).

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

 Our ASC policy with regard to payment for costly devices implanted in ASCs at 

no cost/full credit or partial credit as set forth in § 416.179 is consistent with the OPPS 

policy that was in effect until CY 2014. The established ASC policy reduces payment to 

ASCs when a specified device is furnished without cost or with full credit or partial credit 

for the cost of the device for those ASC covered surgical procedures that are assigned to 

APCs under the OPPS to which this policy applies. We refer readers to the CY 2009 

OPPS/ASC final rule with comment period for a full discussion of the ASC payment 

adjustment policy for no cost/full credit and partial credit devices (73 FR 68742 through 

68744). 

 As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75005 through 75006), we finalized our proposal to modify our former 

policy of reducing OPPS payment for specified APCs when a hospital furnishes a 
CMS-1613-FC 623 

specified device without cost or with a full or partial credit. Formerly, under the OPPS, 

our policy was to reduce OPPS payment by 100 percent of the device offset amount when 

a hospital furnishes a specified device without cost or with a full credit and by 50 percent 

of the device offset amount when the hospital receives partial credit in the amount of 

50 percent or more (but less than 100 percent)of the cost for the specified device. For 

CY 2014, we finalized our proposal to reduce OPPS payment for applicable APCs by the 

full or partial credit a provider receives for a replaced device, capped at the device offset 

amount. 

 Although we finalized our proposal to modify the policy of reducing payments 

when a hospital furnishes a specified device without cost or with full or partial credit 

under the OPPS, in that final rule with comment period (78 FR 75076 through 75080), 

we finalized our proposal for CY 2014 to maintain our ASC policy for reducing 

payments to ASCs for specified device-intensive procedures when the ASC furnishes a 

device without cost or with full or partial credit. Unlike the OPPS, there is currently no 

mechanism within the ASC claims processing system for ASCs to submit to CMS the 

actual amount received when furnishing a specified device at full or partial credit. 

Therefore, under the ASC payment system, we finalized our proposal for CY 2014 to 

continue to reduce ASC payments by 100 percent or 50 percent of the device offset 

amount when an ASC furnishes a device without cost or with full or partial credit, 

respectively. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41021 through 41023), we 

proposed to update the list of ASC covered device-intensive procedures, based on the 

revised device-intensive definition proposed above, that would be subject to the no 
CMS-1613-FC 624 

cost/full credit and partial credit device adjustment policy for CY 2015. Table 51 of the 

proposed rule (79 FR 41021 through 41023) displays the ASC covered device-intensive 

procedures that we proposed would be subject to the no cost/full credit or partial credit 

device adjustment policy for CY 2015. Specifically, when a procedure that is listed in 

Table 51 is subject to the no cost/full credit or partial credit device adjustment policy and 

is performed to implant a device that is furnished at no cost or with full credit from the 

manufacturer, the ASC would append the HCPCS “FB” modifier on the line with the 

procedure to implant the device. The contractor would reduce payment to the ASC by 

the device offset amount that we estimate represents the cost of the device when the 

necessary device is furnished without cost to the ASC or with full credit. We continue to 

believe that the reduction of ASC payment in these circumstances is necessary to pay 

appropriately for the covered surgical procedure being furnished by the ASC. 

 For partial credit, we proposed to reduce the payment for implantation procedures 

listed in Table 51 of the CY 2015 OPPS/ASC proposed rule (79 FR 41021 through 

41023) that are subject to the no cost/full credit or partial credit device adjustment policy 

by one-half of the device offset amount that would be applied if a device was provided at 

no cost or with full credit, if the credit to the ASC is 50 percent or more (but less than 

100 percent) of the cost of the new device. The ASC would append the HCPCS “FC” 

modifier to the HCPCS code for a surgical procedure listed in Table 51 that is subject to 

the no cost/full credit or partial credit device adjustment policy, when the facility receives 

a partial credit of 50 percent or more (but less than 100 percent) of the cost of a device. 

In order to report that they received a partial credit of 50 percent or more (but less than 

100 percent) of the cost of a new device, ASCs would have the option of either: 
CMS-1613-FC 625 

(1) submitting the claim for the device replacement procedure to their Medicare 

contractor after the procedure’s performance but prior to manufacturer acknowledgment 

of credit for the device, and subsequently contacting the contractor regarding a 

claim adjustment once the credit determination is made; or (2) holding the claim for the 

device implantation procedure until a determination is made by the manufacturer on the 

partial credit and submitting the claim with the “FC” modifier appended to the 

implantation procedure HCPCS code if the partial credit is 50 percent or more (but less 

than 100 percent) of the cost of the replacement device. Beneficiary coinsurance would 

continue to be based on the reduced payment amount. 

 We currently apply the “FB/FC” modifier policy to device-intensive procedures 

that involve devices that would be amenable to removal and replacement in a device 

recall or warranty situation. We proposed to apply the “FB/FC” modifier policy to all 

device-intensive procedures beginning in CY 2015 because, in addition to receiving 

devices at no cost/full credit or partial credit due to a device recall or warranty situation, 

ASCs also may receive devices at no cost/full credit or partial credit due to being part of 

an investigational device trial. In order to ensure that our policy covers any situation 

involving a device-intensive procedure where an ASC may receive a device at no 

cost/full credit or partial credit, we proposed to apply our FB/FC policy to all deviceintensive procedures. 

 We invited public comment on these proposals. 

 We did not receive any comments on this proposal. Therefore, we are finalizing 

our proposals without modification. Specifically, we will apply our FB/FC policy to all 

device-intensive procedures beginning in CY 2015. The device-intensive procedures for 
CMS-1613-FC 626 

CY 2015 are listed in Table 48 below. For CY 2015, we will reduce the payment for the 

procedures listed in Table 48 below by the full device offset amount if a device is 

furnished without cost or with full credit. ASCs must append the HCPCS modifier “FB” 

to the HCPCS code for a surgical procedure listed in Table 48 below when the device is 

furnished without cost or with full credit. In addition, for CY 2015, we will reduce the 

payment for the procedures listed in Table 48 below by one-half of the device offset 

amount if a device is provided with partial credit, if the credit to the ASC is 50 percent or 

more (but less than 100 percent) of the device cost. The ASC must append the HCPCS 

“FC” modifier to the HCPCS code for a surgical procedure listed in Table 48 below 

when the facility receives a partial credit of 50 percent or more (but less than 

100 percent) of the cost of a device. 

TABLE 48.—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS 

DEVICE-INTENSIVE FOR CY 2015, INCLUDING ASC COVERED SURGICAL 

PROCEDURES FOR WHICH THE NO COST/FULL CREDIT OR PARTIAL 

CREDIT DEVICE ADJUSTMENT POLICY WILL APPLY

HCPCS 

Code Short Descriptor 

Final 

CY 2015 

ASC PI 

Final 

CY 2015 

OPPS 

APC 

Final 

CY 2015 

Device 

Offset 

Percentage

Final 

FB/FC 

Policy 

Will 

Apply 

19298 Place breast rad tube/caths J8 0648 0.4408 Yes 

19325 Enlarge breast with implant J8 0648 0.4408 Yes 

19342 Delayed breast prosthesis J8 0648 0.4408 Yes 

19357 Breast reconstruction J8 0648 0.4408 Yes 

22551 

Neck spine fuse&remov bel 

c2 J8 0425 0.5565 Yes 

22554 Neck spine fusion J8 0425 0.5565 Yes 

22612 Lumbar spine fusion J8 0425 0.5565 Yes 

23515 Treat clavicle fracture J8 0064 0.4319 Yes 

23585 Treat scapula fracture J8 0064 0.4319 Yes 

23615 Treat humerus fracture J8 0064 0.4319 Yes 
CMS-1613-FC 627 

HCPCS 

Code Short Descriptor 

Final 

CY 2015 

ASC PI 

Final 

CY 2015 

OPPS 

APC 

Final 

CY 2015 

Device 

Offset 

Percentage

Final 

FB/FC 

Policy 

Will 

Apply 

23616 Treat humerus fracture J8 0064 0.4319 Yes 

23630 Treat humerus fracture J8 0064 0.4319 Yes 

23670 Treat dislocation/fracture J8 0064 0.4319 Yes 

24361 Reconstruct elbow joint J8 0425 0.5565 Yes 

24363 Replace elbow joint J8 0425 0.5565 Yes 

24365 Reconstruct head of radius J8 0425 0.5565 Yes 

24366 Reconstruct head of radius J8 0425 0.5565 Yes 

24370 Revise reconst elbow joint J8 0425 0.5565 Yes 

24371 Revise reconst elbow joint J8 0425 0.5565 Yes 

24435 Repair humerus with graft J8 0425 0.5565 Yes 

24498 Reinforce humerus J8 0425 0.5565 Yes 

24515 Treat humerus fracture J8 0064 0.4319 Yes 

24516 Treat humerus fracture J8 0064 0.4319 Yes 

24545 Treat humerus fracture J8 0064 0.4319 Yes 

24546 Treat humerus fracture J8 0064 0.4319 Yes 

24575 Treat humerus fracture J8 0064 0.4319 Yes 

24579 Treat humerus fracture J8 0064 0.4319 Yes 

24586 Treat elbow fracture J8 0064 0.4319 Yes 

24587 Treat elbow fracture J8 0064 0.4319 Yes 

24615 Treat elbow dislocation J8 0064 0.4319 Yes 

24635 Treat elbow fracture J8 0064 0.4319 Yes 

24666 Treat radius fracture J8 0064 0.4319 Yes 

25441 Reconstruct wrist joint J8 0425 0.5565 Yes 

25442 Reconstruct wrist joint J8 0425 0.5565 Yes 

25444 Reconstruct wrist joint J8 0425 0.5565 Yes 

25446 Wrist replacement J8 0425 0.5565 Yes 

25574 Treat fracture radius & ulna J8 0064 0.4319 Yes 

25575 Treat fracture radius/ulna J8 0064 0.4319 Yes 

25607 Treat fx rad extra-articul J8 0064 0.4319 Yes 

25608 Treat fx rad intra-articul J8 0064 0.4319 Yes 

25609 Treat fx radial 3+ frag J8 0064 0.4319 Yes 

26686 Treat hand dislocation J8 0064 0.4319 Yes 

27279 Arthrodesis sacroiliac joint J8 0425 0.5565 Yes 

27415 

Osteochondral knee 

allograft J8 0425 0.5565 Yes 

27428 Reconstruction knee J8 0425 0.5565 Yes 
CMS-1613-FC 628 

HCPCS 

Code Short Descriptor 

Final 

CY 2015 

ASC PI 

Final 

CY 2015 

OPPS 

APC 

Final 

CY 2015 

Device 

Offset 

Percentage

Final 

FB/FC 

Policy 

Will 

Apply 

27438 

Revise kneecap with 

implant J8 0425 0.5565 Yes 

27440 Revision of knee joint J8 0425 0.5565 Yes 

27442 Revision of knee joint J8 0425 0.5565 Yes 

27443 Revision of knee joint J8 0425 0.5565 Yes 

27446 Revision of knee joint J8 0425 0.5565 Yes 

27745 Reinforce tibia J8 0425 0.5565 Yes 

27759 Treatment of tibia fracture J8 0064 0.4319 Yes 

27823 Treatment of ankle fracture J8 0064 0.4319 Yes 

27827 Treat lower leg fracture J8 0064 0.4319 Yes 

27828 Treat lower leg fracture J8 0064 0.4319 Yes 

28415 Treat heel fracture J8 0064 0.4319 Yes 

28715 Fusion of foot bones J8 0425 0.5565 Yes 

33206 Insert heart pm atrial J8 0089 0.6972 Yes 

33207 Insert heart pm ventricular J8 0089 0.6972 Yes 

33208 Insrt heart pm atrial & vent J8 0089 0.6972 Yes 

33210 Insert electrd/pm cath sngl J8 0090 0.6858 Yes 

33211 Insert card electrodes dual J8 0090 0.6858 Yes 

33212 Insert pulse gen sngl lead J8 0090 0.6858 Yes 

33213 Insert pulse gen dual leads J8 0089 0.6972 Yes 

33214 

Upgrade of pacemaker 

system J8 0089 0.6972 Yes 

33216 Insert 1 electrode pm-defib J8 0090 0.6858 Yes 

33217 Insert 2 electrode pm-defib J8 0090 0.6858 Yes 

33221 Insert pulse gen mult leads J8 0655 0.7495 Yes 

33224 

Insert pacing lead & 

connect J8 0089 0.6972 Yes 

33227 

Remove&replace pm gen 

singl J8 0090 0.6858 Yes 

33228 

Remv&replc pm gen dual 

lead J8 0089 0.6972 Yes 

33229 

Remv&replc pm gen mult 

leads J8 0655 0.7495 Yes 

33230 Insrt pulse gen w/dual leads J8 0107 0.7851 Yes 

33231 Insrt pulse gen w/mult leads J8 0108 0.8114 Yes 

33233 Removal of pm generator J8 0090 0.6858 Yes 

33240 Insrt pulse gen w/singl lead J8 0107 0.7851 Yes 

33249 Nsert pace-defib w/lead J8 0108 0.8114 Yes 
CMS-1613-FC 629 

HCPCS 

Code Short Descriptor 

Final 

CY 2015 

ASC PI 

Final 

CY 2015 

OPPS 

APC 

Final 

CY 2015 

Device 

Offset 

Percentage

Final 

FB/FC 

Policy 

Will 

Apply 

33262 

Remv&replc cvd gen sing 

lead J8 0107 0.7851 Yes 

33263 

Remv&replc cvd gen dual 

lead J8 0107 0.7851 Yes 

33264 

Remv&replc cvd gen mult 

lead J8 0108 0.8114 Yes 

33270 Ins/rep subq defibrillator J8 0108 0.8114 Yes 

33271 Insj subq impltbl dfb elctrd J8 0090 0.6858 Yes 

33282 Implant pat-active ht record J8 0090 0.6858 Yes 

37221 Iliac revasc w/stent J8 0229 0.5036 Yes 

37225 Fem/popl revas w/ather J8 0229 0.5036 Yes 

37226 Fem/popl revasc w/stent J8 0229 0.5036 Yes 

37227 

Fem/popl revasc stnt & 

ather J8 0319 0.5911 Yes 

37228 Tib/per revasc w/tla J8 0229 0.5036 Yes 

37229 Tib/per revasc w/ather J8 0319 0.5911 Yes 

37230 Tib/per revasc w/stent J8 0319 0.5911 Yes 

37231 Tib/per revasc stent & ather J8 0319 0.5911 Yes 

37236 Open/perq place stent 1st J8 0229 0.5036 Yes 

37238 Open/perq place stent same J8 0229 0.5036 Yes 

53440 Male sling procedure J8 0385 0.5902 Yes 

53444 Insert tandem cuff J8 0385 0.5902 Yes 

53445 Insert uro/ves nck sphincter J8 0386 0.6988 Yes 

53447 

Remove/replace ur 

sphincter J8 0386 0.6988 Yes 

54400 Insert semi-rigid prosthesis J8 0385 0.5902 Yes 

54401 Insert self-contd prosthesis J8 0386 0.6988 Yes 

54405 

Insert multi-comp penis 

pros J8 0386 0.6988 Yes 

54410 

Remove/replace penis 

prosth J8 0386 0.6988 Yes 

54416 

Remv/repl penis contain 

pros J8 0386 0.6988 Yes 

55873 Cryoablate prostate J8 0385 0.5902 Yes 

61885 Insrt/redo neurostim 1 array J8 0039 0.8616 Yes 

61886 Implant neurostim arrays J8 0318 0.8688 Yes 

61888 

Revise/remove 

neuroreceiver J8 0061 0.5625 Yes 
CMS-1613-FC 630 

HCPCS 

Code Short Descriptor 

Final 

CY 2015 

ASC PI 

Final 

CY 2015 

OPPS 

APC 

Final 

CY 2015 

Device 

Offset 

Percentage

Final 

FB/FC 

Policy 

Will 

Apply 

62361 

Implant spine infusion 

pump J8 0227 0.8062 Yes 

62362 

Implant spine infusion 

pump J8 0227 0.8062 Yes 

63650 Implant neuroelectrodes J8 0061 0.5625 Yes 

63655 Implant neuroelectrodes J8 0039 0.8616 Yes 

63663 Revise spine eltrd perq aray J8 0061 0.5625 Yes 

63664 Revise spine eltrd plate J8 0061 0.5625 Yes 

63685 Insrt/redo spine n generator J8 0318 0.8688 Yes 

64553 Implant neuroelectrodes J8 0061 0.5625 Yes 

64555 Implant neuroelectrodes J8 0061 0.5625 Yes 

64561 Implant neuroelectrodes J8 0061 0.5625 Yes 

64565 Implant neuroelectrodes J8 0061 0.5625 Yes 

64568 Inc for vagus n elect impl J8 0318 0.8688 Yes 

64569 Revise/repl vagus n eltrd J8 0061 0.5625 Yes 

64575 Implant neuroelectrodes J8 0061 0.5625 Yes 

64580 Implant neuroelectrodes J8 0039 0.8616 Yes 

64581 Implant neuroelectrodes J8 0061 0.5625 Yes 

64590 Insrt/redo pn/gastr stimul J8 0039 0.8616 Yes 

65770 Revise cornea with implant J8 0293 0.6611 Yes 

69714 

Implant temple bone 

w/stimul J8 0425 0.5565 Yes 

69715 

Temple bne implnt 

w/stimulat J8 0425 0.5565 Yes 

69718 Revise temple bone implant J8 0425 0.5565 Yes 

69930 Implant cochlear device J8 0259 0.8283 Yes 

0238T Trluml perip athrc iliac art J8 0319 0.5911 Yes 

0282T Periph field stimul trial J8 0061 0.5625 Yes 

0283T Periph field stimul perm J8 0318 0.8688 Yes 

0302T 

Icar ischm mntrng sys 

compl J8 0089 0.6972 Yes 

0303T Icar ischm mntrng sys eltrd J8 0090 0.6858 Yes 

0304T 

Icar ischm mntrng sys 

device J8 0090 0.6858 Yes 

0308T Insj ocular telescope prosth J8 0351 0.9066 Yes 

0316T Replc vagus nerve pls gen J8 0039 0.8616 Yes 

0387T Leadless c pm ins/rpl ventr J8 0319 0.5911 Yes 
CMS-1613-FC 631 

e. ASC Treatment of Surgical Procedures Removed from the OPPS Inpatient List for 

CY 2015 

 As we discussed in the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68724), we adopted a policy to include in our annual evaluation of the ASC list of 

covered surgical procedures, a review of the procedures that are being proposed for 

removal from the OPPS inpatient list for possible inclusion on the ASC list of covered 

surgical procedures. In the CY 2015 OPPS/ASC proposed rule (79 FR 41023), we stated 

there are no procedures proposed for removal from the OPPS inpatient list for CY 2015, 

so we did not propose any procedures for possible inclusion on the ASC list of covered 

surgical procedures. 

 Comment: Some commenters recommended that, if a surgical procedure was 

removed from the inpatient list, it be made eligible for payment in the ASC setting. 

 Response: As discussed in the CY 2009 OPPS/ASC final rule with comment 

period (73 FR 68724), we adopted a policy to include in our annual evaluation of the 

ASC list of covered surgical procedures a review of the procedures that are being 

proposed for removal from the OPPS inpatient-only list for possible inclusion on the 

ASC list of covered surgical procedures. We review these procedures and include them 

on the ASC list of covered surgical procedures only if the surgical procedure would not 

be expected to pose a significant risk to beneficiary safety when performed in an ASC, 

and would not be expected to require active medical monitoring and care of the 

beneficiary at midnight following the procedure. 

 Although there were no procedures proposed for removal from the OPPS 

inpatient list for CY 2015, we are removing CPT code 63043 (Laminotomy 
CMS-1613-FC 632 

(hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc, reexploration, single 

interspace; each additional cervical interspace) and CPT code 63044 (Laminotomy 

(hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc, reexploration, single 

interspace; each additional lumbar interspace) from the inpatient-only list in response to a 

public comment. We refer readers to section IX.B. of this final rule with comment period 

for our discussion of the CY 2015 inpatient-only list. As discussed previously, because 

these procedures were removed from the OPPS inpatient-only list, we review them to 

determine whether they should be included on the list of ASC covered surgical 

procedures. We believe that the procedure described by CPT code 63044 would not be 

expected to pose a significant risk to beneficiary safety when performed in an ASC, and 

would not be expected to require active medical monitoring and care of the beneficiary at 

midnight following the procedure. Therefore, we are including the procedure described 

by CPT code 63044 on the list of ASC covered surgical procedures and list the procedure 

code, descriptor, and payment indicator for this new covered surgical procedure in 

Table 45 of section XII.C.1.a. of this final rule with comment period. However, we do 

not believe that the procedure described by CPT code 63043 should be added to the ASC 

list because we believe that the beneficiary would generally require active medical 

monitoring and care at midnight following the procedure, so we are not adding it to the 

list of ASC covered surgical procedures. 
CMS-1613-FC 633 

2. Covered Ancillary Services 

 Consistent with the established ASC payment system policy, we proposed to 

update the ASC list of covered ancillary services to reflect the proposed payment status 

for the services under the CY 2015 OPPS. Maintaining consistency with the OPPS may 

result in proposed changes to ASC payment indicators for some covered ancillary 

services because of changes that are being proposed under the OPPS for CY 2015. For 

example, a covered ancillary service that was separately paid under the revised ASC 

payment system in CY 2014 may be proposed for packaged status under the CY 2015 

OPPS and, therefore, also under the ASC payment system for CY 2015. 

 To maintain consistency with the OPPS, we proposed that these services also 

would be packaged under the ASC payment system for CY 2015. Comment indicator 

“CH,” discussed in section XII.F. of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41028), is used in Addendum BB to the proposed rule (which is available via the 

Internet on the CMS Web site) to indicate covered ancillary services for which we 

proposed a change in the ASC payment indicator to reflect a proposed change in the 

OPPS treatment of the service for CY 2015. 

 Except for the Level II HCPCS codes and Level III CPT codes listed in Table 46 

and Table 47 of the proposed rule (79 FR 41016 through 41017), all ASC covered 

ancillary services and their proposed payment indicators for CY 2015 were included in 

Addendum BB to the proposed rule (which is available via the Internet on the CMS Web 

site). 

 We invited public comment on this proposal. 
CMS-1613-FC 634 

 Comment: Commenters were concerned that, because ASC payment rates are 

already substantially lower than HOPD rates, packaging these ancillary services codes 

would not provide adequate payment for all of the procedures being performed, and 

would result in cases shifting from the ASC to the more expensive HOPD setting. The 

commenters noted that this was particularly problematic because there are 244 ancillary 

and surgical codes that are separately payable as procedures in CY 2014 under the OPPS 

but are proposed to be packaged and no longer separately payable in CY 2015 under the 

OPPS. The commenters noted that Medicare currently pay ASCs approximately 

55 percent of the hospital rate for the same service and expressed concern that packaging 

the payment for the secondary services will lower the ASC payment even further and 

discourage the movement of volume to ASCs. Commenters recommended that CMS 

work to ensure that any packaging policies are not structured to disproportionately impact 

the already lower cost provider. 

 Response: We discuss the OPPS ancillary services packaging policy for CY 2015 

in section II.A.3.c.(1) of this final rule with comment period. Of the 21 APCs proposed 

for conditional packaging under this policy, 17 of the 21 contain services that are not 

ASC services. Therefore, for the most part, this packaging policy does not apply to the 

ASC. The four remaining APCs contain primarily minor imaging services, such as a 

chest X-ray. Most of these diagnostic tests are not typically performed in the ASC; 

instead, they are performed pre-operatively before the patient has surgery at the ASC. 

Therefore, we do not believe that ASCs will be adversely impacted by the OPPS ancillary 

services packaging policy in CY 2015. In addition, to the extent that any of the packaged 

covered ancillary services are performed with covered surgical procedures, the relative 
CMS-1613-FC 635 

weights of the surgical procedures will reflect the additional cost of the packaged 

ancillary service. We typically consider the potential effect of OPPS payment policy 

changes, including new packaging policies, on ASC payments, and we will continue to 

do so in the future. 

 After consideration of the public comments we received, we are finalizing, 

without modification, our proposal to update the ASC list of covered ancillary services to 

reflect the payment status for the services under the OPPS. All CY 2015 ASC covered 

ancillary services and their final payment indicators are included in Addendum BB to this 

final rule with comment period (which is available via the Internet on the CMS Web site). 

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

1. ASC Payment for Covered Surgical Procedures 

a. Background 

 Our ASC payment policies for covered surgical procedures under the revised 

ASC payment system are fully described in the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66828 through 66831). Under our established policy for the 

revised ASC payment system, the ASC standard ratesetting methodology of multiplying 

the ASC relative payment weight for the procedure by the ASC conversion factor for that 

same year is used to calculate the national unadjusted payment rates for procedures with 

payment indicators “G2” and “A2.” Payment indicator “A2” was developed to identify 

procedures that were included on the list of ASC covered surgical procedures in CY 2007 

and, therefore, were subject to transitional payment prior to CY 2011. Although the 

4-year transitional period has ended and payment indicator “A2” is no longer required to 

identify surgical procedures subject to transitional payment, we retained payment 
CMS-1613-FC 636 

indicator “A2” because it is used to identify procedures that are exempted from 

application of the office-based designation. 

 The rate calculation established for device-intensive procedures (payment 

indicator “J8”) is structured so that the packaged device payment amount is the same as 

under the OPPS, and only the service portion of the rate is subject to the ASC standard 

ratesetting methodology. In the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75064 through 75090), we updated the CY 2013 ASC payment rates for ASC 

covered surgical procedures with payment indicators of “A2,” “G2,” and “J8” using 

CY 2012 data, consistent with the CY 2014 OPPS update. We also updated payment 

rates for device-intensive procedures to incorporate the CY 2014 OPPS device offset 

percentages. 

 Payment rates for office-based procedures (payment indicators “P2,” “P3,” and 

“R2”) are the lower of the MPFS nonfacility PE RVU-based amount (we refer readers to 

the CY 2015 MPFS proposed rule) or the amount calculated using the ASC standard 

ratesetting methodology for the procedure. In the CY 2014 OPPS/ASC final rule with 

comment period, we updated the payment amounts for office-based procedures (payment 

indicators “P2,” “P3,” and “R2”) using the most recent available MPFS and OPPS data. 

We compared the estimated CY 2014 rate for each of the office-based procedures, 

calculated according to the ASC standard ratesetting methodology, to the MPFS 

nonfacility PE RVU-based amount to determine which was lower and, therefore, would 

be the CY 2014 payment rate for the procedure according to the final policy of the 

revised ASC payment system (§ 416.171(d)). 
CMS-1613-FC 637 

b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41024), we proposed to update 

ASC payment rates for CY 2015 using the established rate calculation methodologies 

under § 416.171 and using our proposed modified definition of device-intensive 

procedures, as discussed above. Because the proposed OPPS relative payment weights 

were based on geometric mean costs for CY 2015, the ASC system used geometric 

means to determine proposed relative payment weights under the ASC standard 

methodology. We proposed to continue to use the amount calculated under the ASC 

standard ratesetting methodology for procedures assigned payment indicators “A2” and 

“G2.” 

 We proposed that payment rates for office-based procedures (payment indicators 

“P2,” “P3,” and “R2”) and device-intensive procedures (payment indicator “J8”) be 

calculated according to our established policies and, for device-intensive procedures, 

using our proposed modified definition of device-intensive procedures, as discussed 

above. Therefore, we proposed to update the payment amount for the service portion of 

the device-intensive procedures using the ASC standard ratesetting methodology and the 

payment amount for the device portion based on the proposed CY 2015 OPPS device 

offset percentages that have been calculated using the standard OPPS APC ratesetting 

methodology. Payment for office-based procedures is at the lesser of the proposed 

CY 2015 MPFS nonfacility PE RVU-based amount or the proposed CY 2015 ASC 

payment amount calculated according to the ASC standard ratesetting methodology. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75081), we 

finalized our proposal to calculate the CY 2014 payment rates for ASC covered surgical 
CMS-1613-FC 638 

procedures according to our established methodologies, with the exception of device 

removal procedures. For CY 2014, we finalized a policy to conditionally package device 

removal codes under the OPPS. Under the OPPS, a conditionally packaged code (status 

indicators “Q1” and “Q2”) describes a HCPCS code where the payment is packaged 

when it is provided with a significant procedure but is separately paid when the service 

appears on the claim without a significant procedure. Because ASC services always 

include a covered surgical procedure, HCPCS codes that are conditionally packaged 

under the OPPS are always packaged (payment indicator “N1”) under the ASC payment 

system. Therefore, no Medicare payment would be made when a device removal 

procedure is performed in an ASC without another surgical procedure included on the 

claim; therefore, no Medicare payment would be made if a device was removed but not 

replaced. To address this concern, for the device removal procedures that are 

conditionally packaged in the OPPS (status indicator “Q2”), we assigned the current ASC 

payment indicators associated with these procedures and continued to provide separate 

payment in CY 2014. For CY 2015, we proposed to continue this policy for the device 

removal procedures for these same reasons. 

 We invited public comment on these proposals. We did not receive any public 

comments on these proposals. Therefore, we are finalizing our proposed policies without 

modification to calculate the CY 2015 payment rates for ASC covered surgical 

procedures according to our established methodologies using the modified definition of 

device-intensive procedures. For those covered surgical procedures where the payment 

rate is the lower of the final rates under the ASC standard ratesetting methodology and 

the MPFS final rates, the final payment indicators and rates set forth in this rule are based 
CMS-1613-FC 639 

on a comparison using the MPFS rates effective January 1, 2015. These payment rates 

and indicators do not include the effect of the negative update to the MPFS payment rates 

effective April 1, 2015 under current law. Updates to these rates and payment indicators 

effective April l, 2015 will be included in the April 2015 quarterly ASC addenda posted 

on the CMS Web site. For a discussion of the MPFS rates, we refer readers to the CY 

2015 MPFS final rule with comment period. 

c. Waiver of Coinsurance and Deductible for Certain Preventive Services 

 Section 1833(a)(1) and section 1833(b)(1) of the Act waive the coinsurance and 

the Part B deductible for those preventive services under section 1861(ddd)(3)(A) of the 

Act as described in section 1861(ww)(2) of the Act (excluding electrocardiograms) that 

are recommended by the United States Preventive Services Task Force (USPSTF) with a 

grade of A or B for any indication or population and that are appropriate for the 

individual. Section 1833(b) of the Act also waives the Part B deductible for colorectal 

cancer screening tests that become diagnostic. In the CY 2011 OPPS/ASC final rule with 

comment period, we finalized our policies with respect to these provisions and identified 

categories of services and the ASC covered surgical procedures and covered ancillary 

services that are preventive services that are recommended by the USPSTF with a grade 

of A or B for which the coinsurance and the deductible are waived. For a complete 

discussion of our policies and categories of services, we refer readers to the CY 2011 

OPPS/ASC final rule with comment period (75 FR 72047 through 72049). We did not 

propose any changes to our policies or the categories of services for CY 2015. We 

identify the specific services with a double asterisk in Addenda AA and BB to this final 

rule with comment period (which are available via the Internet on the CMS Web site). 
CMS-1613-FC 640 

d. Payment for Cardiac Resynchronization Therapy Services 

 Cardiac resynchronization therapy (CRT) uses electronic devices to sequentially 

pace both sides of the heart to improve its output. CRT utilizes a pacing electrode 

implanted in combination with either a pacemaker or an implantable cardioverter 

defibrillator (ICD). CRT performed by the implantation of an ICD along with a pacing 

electrode is referred to as “CRT–D.” In the CY 2012 OPPS/ASC final rule with 

comment period, we finalized our proposal to establish the CY 2012 ASC payment rate 

for CRT-D services based on the OPPS payment rate applicable to APC 0108 when 

procedures described by CPT codes 33225 (Insertion of pacing electrode, cardiac venous 

system, for left ventricular pacing, at time of insertion of pacing cardioverter-defibrillator 

or pacemaker pulse generator (eg, for upgrade to dual chamber system) (list separately in 

addition to code for primary procedure)) and 33249 (Insertion or replacement of 

permanent pacing cardioverter-defibrillator system with transvenous lead(s), single or 

dual chamber) are performed on the same date of service in an ASC. ASCs use the 

corresponding HCPCS Level II G-code (G0448) for proper reporting when the 

procedures described by CPT codes 33225 and 33249 are performed on the same date of 

service. When not performed on the same day as the service described by CPT code 

33225, ASC payment for the service described by CPT code 33249 is based on 

APC 0108 using the device-intensive methodology. When not performed on the same 

day as the service described by CPT code 33249, ASC payment for the service described 

by CPT code 33225 is based on APC 0655 using the device-intensive methodology. For 

a complete discussion of our policy regarding payment for CRT-D services in ASCs, we 
CMS-1613-FC 641 

refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74427 

through 74428). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41025), for CY 2015, we 

proposed that CPT code 33249, the primary code for CRT-D services, continue to be 

assigned to APC 0108, and that payment for CPT code 33225 be packaged under the 

OPPS. Consequently, we also proposed that CPT code 33249 would continue to be 

assigned to APC 0108 and payment for CPT code 33225 would be packaged into the 

payment for the primary covered surgical procedure (for example, CPT code 33249) 

under the ASC payment system for CY 2015. Because we proposed to package 

CPT code 33225 packaged under the ASC payment system and, therefore, it would not 

receive separate payment, it would no longer be necessary that ASCs use the HCPCS 

Level II G-code (G0448) for proper reporting when the procedures described by CPT 

codes 33225 and 33249 are performed on the same date of service. 

 We invited public comment on these proposals. 

 We did not receive any public comments on these proposals. Further, we are 

finalizing our proposals under the OPPS that CPT code 33249, the primary code for 

CRT-D services, continue to be assigned to APC 0108, and that payment for CPT code 

33225 be packaged under the OPPS. Therefore, we are finalizing our proposals under the 

ASC payment system without modification. Specifically, CPT code 33249, the primary 

code for CRT-D services, will continue to be assigned to APC 0108, and payment for 

CPT code 33225 will be packaged into the payment for the primary covered surgical 

procedure (for example, CPT code 33249). 
CMS-1613-FC 642 

e. Payment for Low Dose Rate (LDR) Prostate Brachytherapy Composite 

 LDR prostate brachytherapy is a treatment for prostate cancer in which hollow 

needles or catheters are inserted into the prostate, followed by permanent implantation of 

radioactive sources into the prostate through the needles/catheters. At least two CPT 

codes are used to report the treatment service because there are separate codes that 

describe placement of the needles/catheters and the application of the brachytherapy 

sources: CPT code 55875 (Transperineal placement of needles or catheters into prostate 

for interstitial radioelement application, with or without cystoscopy); and CPT 

code 77778 (Interstitial radiation source application; complex). Generally, the 

component services represented by both codes are provided in the same operative session 

on the same date of service to the Medicare beneficiary being treated with LDR 

brachytherapy for prostate cancer. 

 In the CY 2013 OPPS/ASC final rule with comment period, we finalized our 

proposal to establish the CY 2013 ASC payment rate for LDR prostate brachytherapy 

services based on the OPPS relative payment weight applicable to APC 8001 when CPT 

codes 55875 and 77778 are performed on the same date of service in an ASC. ASCs use 

the corresponding HCPCS Level II G-code (G0458) for proper reporting when the 

procedures described by CPT codes 55875 and 77778 are performed on the same date of 

service, and therefore receive the appropriate LDR prostate brachytherapy composite 

payment. When not performed on the same day as the service described by CPT code 

55875, the service described by CPT code 77778 will be assigned to APC 0651. When 

not performed on the same day as the service described by CPT code 77778, the service 

described by CPT code 55875 will be assigned to APC 0162. For a complete discussion 
CMS-1613-FC 643 

of our policy regarding payment for LDR prostate brachytherapy services in ASCs, we 

refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68457). 

In the CY 2015 OPPS/ASC proposed rule (79 FR 41025), we did not propose any 

changes to our current policy regarding ASC payment for LDR prostate brachytherapy 

services for CY 2015. 

2. Payment for Covered Ancillary Services 

a. Background 

 Our final payment policies under the revised ASC payment system for covered 

ancillary services vary according to the particular type of service and its payment policy 

under the OPPS. Our overall policy provides separate ASC payment for certain ancillary 

items and services integrally related to the provision of ASC covered surgical procedures 

that are paid separately under the OPPS and provides packaged ASC payment for other 

ancillary items and services that are packaged or conditionally packaged (status 

indicators “N,” “Q1,” and “Q2”) under the OPPS. In the CY 2013 OPPS/ASC 

rulemaking (77 FR 45169; 77 FR 68457 through 68458), we further clarified our policy 

regarding the payment indicator assignment of codes that are conditionally packaged in 

the OPPS (status indicators “Q1” and “Q2”). Under the OPPS, a conditionally packaged 

code describes a HCPCS code where the payment is packaged when it is provided with a 

significant procedure but is separately paid when the service appears on the claim without 

a significant procedure. Because ASC services always include a surgical procedure, 

HCPCS codes that are conditionally packaged under the OPPS are always packaged 

(payment indictor “N1”) under the ASC payment system. Thus, our final policy 

generally aligns ASC payment bundles with those under the OPPS (72 FR 42495). In all 
CMS-1613-FC 644 

cases, in order for those ancillary services also to be paid, ancillary items and services 

must be provided integral to the performance of ASC covered surgical procedures for 

which the ASC bills Medicare. 

 Our ASC payment policies provide separate payment for drugs and biologicals 

that are separately paid under the OPPS at the OPPS rates. We generally pay for 

separately payable radiology services at the lower of the MPFS nonfacility 

PE RVU-based (or technical component) amount or the rate calculated according to the 

ASC standard ratesetting methodology (72 FR 42497). However, as finalized in the 

CY 2011 OPPS/ASC final rule with comment period (75 FR 72050), payment indicators 

for all nuclear medicine procedures (defined as CPT codes in the range of 78000 through 

78999) that are designated as radiology services that are paid separately when provided 

integral to a surgical procedure on the ASC list are set to “Z2” so that payment is made 

based on the ASC standard ratesetting methodology rather than the MPFS nonfacility 

PE RVU amount, regardless of which is lower. This modification to the ASC payment 

methodology for ancillary services was finalized in response to a comment on the 

CY 2011 OPPS/ASC proposed rule that suggested it is inappropriate to use the 

MPFS-based payment methodology for nuclear medicine procedures because the 

associated diagnostic radiopharmaceutical, although packaged under the ASC payment 

system, is separately paid under the MPFS (42 CFR 416.171(d)(1)). We set the payment 

indicator to “Z2” for these nuclear medicine procedures in the ASC setting so that 

payment for these procedures would be based on the OPPS relative payment weight 

rather than the MPFS nonfacility PE RVU-based amount to ensure that the ASC will be 

compensated for the cost associated with the diagnostic radiopharmaceuticals. 
CMS-1613-FC 645 

 In addition, because the same issue exists for radiology procedures that use 

contrast agents (the contrast agent is packaged under the ASC payment system but is 

separately paid under the MPFS), we finalized in the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74429 through 74430) to set the payment indicator to “Z2” for 

radiology services that use contrast agents so that payment for these procedures will be 

based on the OPPS relative payment weight and, therefore, will include the cost for the 

contrast agent (42 CFR 416.171(d)(2)). 

 ASC payment policy for brachytherapy sources mirrors the payment policy under 

the OPPS. ASCs are paid for brachytherapy sources provided integral to ASC covered 

surgical procedures at prospective rates adopted under the OPPS or, if OPPS rates are 

unavailable, at contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs 

have been paid for brachytherapy sources provided integral to ASC covered surgical 

procedures at prospective rates adopted under the OPPS. 

 Our ASC policies also provide separate payment for: (1) certain items and 

services that CMS designates as contractor-priced, including, but not limited to, the 

procurement of corneal tissue; and (2) certain implantable items that have pass-through 

payment status under the OPPS. These categories do not have prospectively established 

ASC payment rates according to the final policies for the revised ASC payment system 

(72 FR 42502 and 42508 through 42509; 42 CFR 416.164(b)). Under the revised ASC 

payment system, we have designated corneal tissue acquisition and hepatitis B vaccines 

as contractor-priced. Corneal tissue acquisition is contractor-priced based on the 

invoiced costs for acquiring the corneal tissue for transplantation. Hepatitis B vaccines 

are contractor-priced based on invoiced costs for the vaccine. 
CMS-1613-FC 646 

 Devices that are eligible for pass-through payment under the OPPS are separately 

paid under the ASC payment system and are contractor-priced. Currently, the one device 

that is eligible for pass-through payment in the OPPS is described by HCPCS code 

C1841 (Retinal prosthesis, includes all internal and external components). The payment 

amount for HCPCS code C1841 under the ASC payment system is contractor-priced. 

Under the revised ASC payment system (72 FR 42502), payment for the surgical 

procedure associated with the pass-through device is made according to our standard 

methodology for the ASC payment system, based on only the service (nondevice) portion 

of the procedure’s OPPS relative payment weight if the APC weight for the procedure 

includes other packaged device costs. (We note that the cost for the new pass-through 

device would not be included in the APC weight because historical claims are used to 

establish the OPPS relative weights). We also refer to this methodology as applying a 

“device offset” to the ASC payment for the associated surgical procedure. This ensures 

that duplicate payment is not provided for any portion of an implanted device with OPPS 

pass-through payment status. There are no other device costs included in the APC for the 

surgical procedure associated with HCPCS code C1841. Therefore, payment for the 

associated surgical procedure is made according to the standard methodology and no 

device offset is applied. HCPCS code C1841 was approved for pass-through payment 

effective October 1, 2013, and will continue to be eligible for pass-through payment in 

CY 2015. 

b. Payment for Covered Ancillary Services for CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41026 through 41027), for 

CY 2015, we proposed to update the ASC payment rates and to make changes to ASC 
CMS-1613-FC 647 

payment indicators as necessary to maintain consistency between the OPPS and ASC 

payment system regarding the packaged or separately payable status of services and the 

proposed CY 2015 OPPS and ASC payment rates. We also proposed to continue to set 

the CY 2015 ASC payment rates for brachytherapy sources and separately payable drugs 

and biologicals equal to the proposed OPPS payment rates for CY 2015. 

 Consistent with established ASC payment policy (72 FR 42497), we proposed 

that the proposed CY 2015 payment for separately payable covered radiology services be 

based on a comparison of the proposed CY 2015 MPFS nonfacility PE RVU-based 

amounts (we refer readers to the CY 2015 MPFS proposed rule) and the proposed 

CY 2015 ASC payment rates calculated according to the ASC standard ratesetting 

methodology and then set at the lower of the two amounts (except as discussed below for 

nuclear medicine procedures and radiology services that use contrast agents). We 

proposed that payment for a radiology service would be packaged into the payment for 

the ASC covered surgical procedure if the radiology service is packaged or conditionally 

packaged under the OPPS. The payment indicators in Addendum BB to the proposed 

rule indicate whether the proposed payment rates for radiology services are based on the 

MPFS nonfacility PE RVU-based amount or the ASC standard ratesetting methodology, 

or whether payment for a radiology service is packaged into the payment for the covered 

surgical procedure (payment indicator “N1”). Radiology services that we proposed to 

pay based on the ASC standard ratesetting methodology are assigned payment indicator 

“Z2” (proposed revised definition, as discussed below: Radiology or diagnostic service 

paid separately when provided integral to a surgical procedure on ASC list; payment 

based on OPPS relative payment weight), and those for which the proposed payment is 
CMS-1613-FC 648 

based on the MPFS nonfacility PE RVU-based amount be assigned payment indicator 

“Z3” (proposed revised definition, as discussed below: Radiology or diagnostic service 

paid separately when provided integral to a surgical procedure on ASC list; payment 

based on MPFS nonfacility PE RVUs). 

 As finalized in the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72050), payment indicators for all nuclear medicine procedures (defined as CPT 

codes in the range of 78000 through 78999) that are designated as radiology services that 

are paid separately when provided integral to a surgical procedure on the ASC list are set 

to “Z2” so that payment for these procedures will be based on the OPPS relative payment 

weight (rather than the MPFS nonfacility PE RVU-based amount, regardless of which is 

lower) and, therefore, will include the cost for the diagnostic radiopharmaceutical. We 

proposed to continue this modification to the payment methodology in CY 2015 and, 

therefore, set the payment indicator to “Z2” for nuclear medicine procedures. 

 As finalized in the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74429 through 74430), payment indicators for radiology services that use contrast 

agents are set to “Z2” so that payment for these procedures will be based on the OPPS 

relative payment weight and, therefore, will include the cost for the contrast agent. We 

proposed to continue this modification to the payment methodology in CY 2015 and, 

therefore, proposed to assign the payment indicator “Z2” to radiology services that use 

contrast agents. 

 Covered ancillary services are items and services that are integral to a covered 

surgical procedure performed in an ASC for which separate payment may be made under 

the ASC payment system (42 CFR 416.2). Covered ancillary services include, among 
CMS-1613-FC 649 

other categories of items and services, certain radiology services, including diagnostic 

imaging services, for which separate payment is allowed under the OPPS when these 

services are necessary for the successful completion of a surgical procedure and are 

performed in the ASC immediately preceding, during, or immediately following the 

covered surgical procedure, as evidenced by the service being provided on the same day 

as a covered surgical procedure (42 CFR 416.164(b)(5)). Currently, there are certain 

nonimaging diagnostic tests for which payment is not made under Medicare Part B when 

provided in an ASC setting although these tests are paid under the OPPS. Therefore, we 

believe that certain nonimaging diagnostic tests for which separate payment is allowed 

under the OPPS should be considered covered ancillary services and separately paid 

when these tests are required for the successful performance of the surgery and are 

performed in the ASC on the same day as a covered surgical procedure. 

 Therefore, we proposed that, beginning in CY 2015, certain diagnostic tests 

within the medicine range of CPT codes for which separate payment is allowed under the 

OPPS be covered ancillary services when the they are integral to an ASC covered 

surgical procedure. We believe that adopting such a payment policy is reasonable and 

appropriate to ensure access to these tests in ASCs and is consistent with the OPPS. We 

proposed that diagnostic tests within the medicine range of CPT codes include all 

Category I CPT codes in the medicine range established by CPT, from 90000 to 99999, 

and Category III CPT codes and Level II HCPCS codes that describe diagnostic tests that 

crosswalk or are clinically similar to procedures in the medicine range established by 

CPT. 
CMS-1613-FC 650 

 We proposed to pay for these tests at the lower of the MPFS nonfacility PE 

RVU-based (or technical component) amount or the rate calculated according to the ASC 

standard ratesetting methodology because this would ensure appropriate and equitable 

payment for these diagnostic tests provided integral to covered surgical procedures and 

not provide a payment incentive for migration of the tests from physician offices to 

ASCs. Further, we believe these diagnostic tests are similar to the covered ancillary 

services that are radiology services, and this is the payment methodology we use for 

those services. We proposed that the diagnostic tests for which the proposed payment is 

based on the ASC standard ratesetting methodology be assigned to payment indicator 

“Z2” (proposed revised definition: Radiology or diagnostic service paid separately when 

provided integral to a surgical procedure on ASC list; payment based on OPPS relative 

payment weight), and those for which the proposed payment is based on the MPFS 

nonfacility PE RVU-based amount be assigned payment indicator “Z3” (proposed revised 

definition: Radiology or diagnostic service paid separately when provided integral to a 

surgical procedure on ASC list; payment based on MPFS nonfacility PE RVUs). We 

proposed changes to the definitions for payment indicators “Z2” and “Z3,” as detailed in 

section XII.F.2. of this final rule with comment period, and proposed changes to 

§ 416.164(a)(11) and (b)(5) as well as § 416.171(b)(1) to reflect these proposals. 

 We have identified one diagnostic test that is within the medicine range of CPT 

codes and for which separate payment is allowed under the OPPS: CPT code 91035 

(Esophagus, gastroesophageal reflux test; with mucosal attached telemetry pH electrode 

placement, recording, analysis and interpretation). We proposed to add this code to the 

list of ASC covered ancillary services and proposed separate ASC payment as a covered 
CMS-1613-FC 651 

ancillary service for this code beginning in CY 2015 when the test is integral to an ASC 

covered surgical procedure. We would expect the procedure described by CPT code 

91035 to be integral to the endoscopic attachment of the electrode to the esophageal 

mucosa. 

 Most covered ancillary services and their proposed payment indicators were listed 

in Addendum BB to the proposed rule (which is available via the Internet on the CMS 

Web site). 

 We invited public comment on these proposals. 

 Comment: Several commenters supported CMS’ proposals to expand the scope 

of ASC covered ancillary services to include certain diagnostic tests and to add CPT 

code 91035 to the list of ASC covered ancillary services and allow separate payment for 

this code when the test is integral to an ASC covered surgical procedure. However, these 

commenters expressed concern regarding the proposed ASC payment for CPT code 

91035 and requested that CMS reassign the code to a higher-paying APC. 

 Response: We thank the commenters for their support for our proposal. Payment 

for CPT 91035 is addressed in section III.C.2. of this final rule with comment period. 

Briefly, the ASC payment is dependent upon the APC assignment for this service. Based 

on our analysis of the latest hospital outpatient claims data used for this final rule with 

comment period, we believe that CPT code 91035 is appropriately assigned to APC 0361. 

Our claims data show a geometric mean cost of approximately $466 for CPT code 91035 

based on 1,272 single claims (out of 5,099 total claims), and a geometric mean cost of 

approximately $341 for APC 0361. Further, the geometric mean cost of APC 0142 is 

approximately $884, which is almost twice the geometric mean cost of CPT code 91035. 
CMS-1613-FC 652 

Also, assignment of 91035 to APC 0142 would create a 2 times violation in APC 0142, 

because the geometric mean cost of the highest cost significant procedure in APC 0142 

(CPT code 44361, with a geometric mean cost of $1,019) is 2.2 times the geometric mean 

cost of 91035. Therefore, APC 0142 would not be appropriate for 91035 and we are 

finalizing our CY 2015 proposal to continue to assign CPT code 91035 to APC 0361. 

 After consideration of the public comments we received, we are finalizing these 

proposals without modification: to expand the scope of ASC-covered ancillary services 

to include certain diagnostic tests for which separate payment is allowed under the OPPS 

when provided integral to covered ASC surgical procedures; to pay for these diagnostic 

tests at the lower of the MPFS nonfacility PE RVU based (or technical component) 

amount or the rate calculated according to the ASC standard ratesetting methodology; 

and to revise §§ 416.164(a)(11) and (b)(5) as well as § 416.171(b)(1) to reflect these 

finalized policies. We also are revising the regulation text at § 416.171(d) to reflect that 

payment for these tests will be at the lower of the MPFS nonfacility PE RVU-based 

amount or the rate calculated according to the ASC standard ratesetting methodology, as 

discussed above and in the CY 2015 OPPS/ASC proposed rule (79 FR 41027). For those 

covered ancillary services where the payment rate is the lower of the final rates under the 

ASC standard ratesetting methodology and the MPFS final rates, the final payment 

indicators and rates set forth in this rule are based on a comparison using the MPFS rates 

effective January 1, 2015. These payment rates and indicators do not include the effect 

of the negative update to the MPFS payment rates effective April 1, 2015 under current 

law. Updates to these rates and payment indicators effective April l, 2015 will be 

included in the April 2015 quarterly ASC addenda posted on the CMS Web site. For a 
CMS-1613-FC 653 

discussion of the MPFS rates, we refer readers to the CY 2015 MPFS final rule with 

comment period. 

E. New Technology Intraocular Lenses (NTIOLs) 

1. NTIOL Application Cycle 

 Our process for reviewing applications to establish new classes of new technology 

intraocular lenses (NTIOLs) is as follows: 

● Applicants submit their NTIOL requests for review to CMS by the annual 

deadline. For a request to be considered complete, we require submission of the 

information that is found in the guidance document entitled “Application Process and 

Information Requirements for Requests for a New Class of New Technology Intraocular 

Lenses (NTIOLs) or Inclusion of an IOL in an existing NTIOL Class” posted on the 

CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/NTIOLs.html.

● We announce annually in the proposed rule updating the ASC and OPPS 

payment rates for the following calendar year, a list of all requests to establish new 

NTIOL classes accepted for review during the calendar year in which the proposal is 

published. In accordance with section 141(b)(3) of Pub. L. 103-432 and our regulations 

at § 416.185(b), the deadline for receipt of public comments is 30 days following 

publication of the list of requests in the proposed rule. 

● In the final rule updating the ASC and OPPS payment rates for the following 

calendar year, we — 

○ Provide a list of determinations made as a result of our review of all new 

NTIOL class requests and public comments; 
CMS-1613-FC 654 

○ When a new NTIOL class is created, we identify the predominant characteristic 

of NTIOLs in that class that sets them apart from other IOLs (including those previously 

approved as members of other expired or active NTIOL classes) and that is associated 

with an improved clinical outcome. 

○ The date of implementation of a payment adjustment in the case of approval of 

an IOL as a member of a new NTIOL class would be set prospectively as of 30 days after 

publication of the ASC payment update final rule, consistent with the statutory 

requirement. 

○ Announce the deadline for submitting requests for review of an application for 

a new NTIOL class for the following calendar year. 

2. Requests to Establish New NTIOL Classes for CY 2015 

 We did not receive any requests for review to establish a new NTIOL class for 

CY 2015 by March 3, 2014, the due date published in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75085). 

3. Payment Adjustment 

 The current payment adjustment for a 5-year period from the implementation date 

of a new NTIOL class is $50 per lens. Since implementation of the process for 

adjustment of payment amounts for NTIOLs in 1999, we have not revised the payment 

adjustment amount, and we did not propose to revise the payment adjustment amount for 

CY 2015. 
CMS-1613-FC 655 

4. Announcement of CY 2015 Deadline for Submitting Requests for CMS Review of 

Applications for a New Class of NTIOLs 

 In accordance with 42 CFR 416.185(a) of our regulations, CMS announces that in 

order to be considered for payment effective beginning in CY 2016, requests for review 

of applications for a new class of new technology IOLs must be received at CMS by 

5 p.m. EST, on March 2, 2015. Send requests to ASC/NTIOL, Division of Outpatient 

Care, Mailstop C4–05–17, Centers for Medicare and Medicaid Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. To be considered, requests for NTIOL reviews 

must include the information requested on the CMS Web site at: 

http://www.cms.gov/ASCPayment/downloads/NTIOLprocess.pdf. 

F. ASC Payment and Comment Indicators 

1. Background 

 In addition to the payment indicators that we introduced in the August 2, 2007 

final rule, we also created final comment indicators for the ASC payment system in the 

CY 2008 OPPS/ASC final rule with comment period (72 FR 66855). We created 

Addendum DD1 to define ASC payment indicators that we use in Addenda AA and BB 

to provide payment information regarding covered surgical procedures and covered 

ancillary services, respectively, under the revised ASC payment system. The ASC 

payment indicators in Addendum DD1 are intended to capture policy relevant 

characteristics of HCPCS codes that may receive packaged or separate payment in ASCs, 

such as whether they were on the ASC list of covered services prior to CY 2008; payment 

designation, such as device-intensive or office-based, and the corresponding ASC 

payment methodology; and their classification as separately payable ancillary services 
CMS-1613-FC 656 

including radiology services, brachytherapy sources, OPPS pass-through devices, corneal 

tissue acquisition services, drugs or biologicals, or NTIOLs. 

 We also created Addendum DD2 that lists the ASC comment indicators. The 

ASC comment indicators used in Addenda AA and BB to the proposed rules and final 

rules with comment period serve to identify, for the revised ASC payment system, the 

status of a specific HCPCS code and its payment indicator with respect to the timeframe 

when comments will be accepted. The comment indicator “NI” is used in the OPPS/ASC 

final rule with comment period to indicate new codes for the next calendar year for which 

the interim payment indicator assigned is subject to comment. The comment indicator 

“NI” also is assigned to existing codes with substantial revisions to their descriptors such 

that we consider them to be describing new services, as discussed in the CY 2010 

OPPS/ASC final rule with comment period (74 FR 60622). We indicated that in the 

CY 2015 OPPS/ASC final rule with comment period, we will respond to public 

comments and finalize the ASC treatment of all codes that are labeled with comment 

indicator “NI” in Addenda AA and BB to the CY 2014 OPPS/ASC final rule with 

comment period. 

 The “CH” comment indicator was used in Addenda AA and BB to the proposed 

rule (which are available via the Internet on the CMS Web site) to indicate that the 

payment indicator assignment has changed for an active HCPCS code in the current year 

and next calendar year; an active HCPCS code is newly recognized as payable in ASCs; 

or an active HCPCS code is discontinued at the end of the current calendar year. The 

“CH” comment indicators that are published in the final rule with comment period are 
CMS-1613-FC 657 

provided to alert readers that a change has been made from one calendar year to the next, 

but do not indicate that the change is subject to comment. 

2. ASC Payment and Comment Indicators 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41028), we did not propose any 

changes to the definitions of the ASC comment indicators for CY 2015. In order to 

incorporate changes associated with our proposal for CY 2015, as detailed in 

section XII.D.2.b. of the proposed rule, that certain diagnostic tests qualify as covered 

ancillary services when provided integral to an ASC covered surgical procedure, we 

proposed to revise the definitions for payment indicators “Z2” and “Z3” to add the words 

“or diagnostic” after “Radiology” so that the proposed definition for payment indicator 

“Z2” would be “Radiology or diagnostic service paid separately when provided integral 

to a surgical procedure on ASC list; payment based on OPPS relative payment weight,” 

and the proposed definition for payment indicator “Z3” would be “Radiology or 

diagnostic service paid separately when provided integral to a surgical procedure on ASC 

list; payment based on MPFS nonfacility PE RVUs.” We refer readers to Addenda DD1 

and DD2 to the proposed rule (which are available via the Internet on the CMS Web site) 

for the complete list of ASC payment and comment indicators for the CY 2015 update. 

 We did not receive any public comments regarding our proposals to change the 

definitions of “Z2” and “Z3”. Therefore, we are finalizing our proposal to revise the 

definitions for payment indicators “Z2” and “Z3” to add the words “or diagnostic” after 

“Radiology” so that the revised definition for payment indicator “Z2” will be “Radiology 

or diagnostic service paid separately when provided integral to a surgical procedure on 

ASC list; payment based on OPPS relative payment weight,” and the revised definition 
CMS-1613-FC 658 

for payment indicator “Z3” will be “Radiology or diagnostic service paid separately 

when provided integral to a surgical procedure on ASC list; payment based on MPFS 

nonfacility PE RVUs.” 

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

1. Background 

 In the August 2, 2007 final rule (72 FR 42493), we established our policy to base 

ASC relative payment weights and payment rates under the revised ASC payment system 

on APC groups and the OPPS relative payment weights. Consistent with that policy and 

the requirement at section 1833(i)(2)(D)(ii) of the Act that the revised payment system be 

implemented so that it would be budget neutral, the initial ASC conversion factor 

(CY 2008) was calculated so that estimated total Medicare payments under the revised 

ASC payment system in the first year would be budget neutral to estimated total 

Medicare payments under the prior (CY 2007) ASC payment system (the ASC 

conversion factor is multiplied by the relative payment weights calculated for many ASC 

services in order to establish payment rates). That is, application of the ASC conversion 

factor was designed to result in aggregate Medicare expenditures under the revised ASC 

payment system in CY 2008 being equal to aggregate Medicare expenditures that would 

have occurred in CY 2008 in the absence of the revised system, taking into consideration 

the cap on ASC payments in CY 2007 as required under section 1833(i)(2)(E) of the Act 

(72 FR 42522). We adopted a policy to make the system budget neutral in subsequent 

calendar years (72 FR 42532 through 42533; 42 CFR 416.171(e)). 

 We note that we consider the term “expenditures” in the context of the budget 

neutrality requirement under section 1833(i)(2)(D)(ii) of the Act to mean expenditures 
CMS-1613-FC 659 

from the Medicare Part B Trust Fund. We do not consider expenditures to include 

beneficiary coinsurance and copayments. This distinction was important for the CY 2008 

ASC budget neutrality model that considered payments across the OPPS, ASC, and 

MPFS payment systems. However, because coinsurance is almost always 20 percent for 

ASC services, this interpretation of expenditures has minimal impact for subsequent 

budget neutrality adjustments calculated within the revised ASC payment system. 

 In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 through 

66858), we set out a step-by-step illustration of the final budget neutrality adjustment 

calculation based on the methodology finalized in the August 2, 2007 final rule 

(72 FR 42521 through 42531) and as applied to updated data available for the CY 2008 

OPPS/ASC final rule with comment period. The application of that methodology to the 

data available for the CY 2008 OPPS/ASC final rule with comment period resulted in a 

budget neutrality adjustment of 0.65. 

 For CY 2008, we adopted the OPPS relative payment weights as the ASC relative 

payment weights for most services and, consistent with the final policy, we calculated the 

CY 2008 ASC payment rates by multiplying the ASC relative payment weights by the 

final CY 2008 ASC conversion factor of $41.401. For covered office-based surgical 

procedures and covered ancillary radiology services (excluding covered ancillary 

radiology services involving certain nuclear medicine procedures or involving the use of 

contrast agents, as discussed in section XII.D.2.b. of the proposed rule), the established 

policy is to set the payment rate at the lower of the MPFS unadjusted nonfacility 

PE RVU-based amount or the amount calculated using the ASC standard ratesetting 

methodology. Further, as discussed in the CY 2008 OPPS/ASC final rule with comment 
CMS-1613-FC 660 

period (72 FR 66841 through 66843), we also adopted alternative ratesetting 

methodologies for specific types of services (for example, device-intensive procedures). 

 As discussed in the August 2, 2007 final rule (72 FR 42517 through 42518) and as 

codified at § 416.172(c) of the regulations, the revised ASC payment system accounts for 

geographic wage variation when calculating individual ASC payments by applying the 

pre-floor and pre-reclassified IPPS hospital wage indexes to the labor-related share, 

which is 50 percent of the ASC payment amount based on a GAO report of ASC costs 

using 2004 survey data. Beginning in CY 2008, CMS accounted for geographic wage 

variation in labor cost when calculating individual ASC payments by applying the 

pre-floor and pre-reclassified hospital wage index values that CMS calculates for 

payment under the IPPS, using updated Core Based Statistical Areas (CBSAs) issued by 

OMB in June 2003. In other words, the wage index for an ASC is the pre-floor and 

pre-reclassified hospital wage index under the IPPS of the CBSA that maps to the CBSA 

where the ASC is located. 

 The reclassification provision in section 1886(d)(10) of the Act is specific to 

hospitals. We believe that using the most recently available pre-floor and pre-reclassified 

IPPS hospital wage indexes results in the most appropriate adjustment to the labor 

portion of ASC costs. We continue to believe that the unadjusted hospital wage indexes, 

which are updated yearly and are used by many other Medicare payment systems, 

appropriately account for geographic variation in labor costs for ASCs. 

 On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which provides the 

delineations of all Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan 

Statistical Areas, Combined Statistical Areas, and New England City and Town Areas in 
CMS-1613-FC 661 

the United States and Puerto Rico based on the standards published on June 28, 2010 in 

the Federal Register (75 FR 37246 through 37252) and 2010 Census Bureau data. (A 

copy of this bulletin may be obtained at: 

http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.) The pre-floor 

and pre-reclassified IPPS hospital wage indexes for FY 2014 do not reflect OMB’s new 

area delineations and, because the ASC wage indexes are the pre-floor and prereclassified IPPS hospital wage indexes, the CY 2014 ASC wage indexes do not reflect 

the OMB changes. As discussed in the FY 2015 IPPS/LTCH PPS proposed rule 

(79 FR 28054 through 28068), we proposed to use the new CBSAs delineations issued by 

OMB in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY 2015. 

Therefore, because the ASC wage indexes are the pre-floor and pre-reclassified IPPS 

hospital wage indexes, the proposed CY 2015 ASC wage indexes reflected the new OMB 

delineations. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49957), 

we finalized our proposal to use these new OMB delineations for the IPPS hospital wage 

index. Therefore, the final ASC wage indexes, which are the pre-floor and 

pre-reclassified IPPS hospital wage indexes, will reflect the new OMB delineations. As 

discussed in section XII.G.2.b. of the CY 2015 OPPS/ASC proposed rule (79 FR 41030), 

we proposed a transition to these new OMB delineations for ASCs in certain situations 

for CY 2015. 

 We note that, in certain instances, there might be urban or rural areas for which 

there is no IPPS hospital whose wage index data would be used to set the wage index for 

that area. For these areas, our policy has been to use the average of the wage indexes for 

CBSAs (or metropolitan divisions as applicable) that are contiguous to the area that has 
CMS-1613-FC 662 

no wage index (where “contiguous” is defined as sharing a border). For example, for 

CY 2014, we applied a proxy wage index based on this methodology to ASCs located in 

CBSA 25980 (Hinesville-Fort Stewart, GA) and CBSA 08 (Rural Delaware). 

 When all of the areas contiguous to the urban CBSA of interest are rural and there 

is no IPPS hospital that has wage index data that could be used to set the wage index for 

that area, we determine the ASC wage index by calculating the average of all wage 

indexes for urban areas in the State (75 FR 72058 through 72059). In other situations, 

where there are no IPPS hospitals located in a relevant labor market area, we will 

continue our current policy of calculating an urban or rural area’s wage index by 

calculating the average of the wage indexes for CBSAs (or metropolitan divisions where 

applicable) that are contiguous to the area with no wage index. 

2. Calculation of the ASC Payment Rates 

a. Updating the ASC Relative Payment Weights for CY 2015 and Future Years 

 We update the ASC relative payment weights each year using the national OPPS 

relative payment weights (and MPFS nonfacility PE RVU-based amounts, as applicable) 

for that same calendar year and uniformly scale the ASC relative payment weights for 

each update year to make them budget neutral (72 FR 42533). In the CY 2015 

OPPS/ASC proposed rule (79 FR 41029 through 41030), consistent with our established 

policy, we proposed to scale the CY 2015 relative payment weights for ASCs according 

to the following method. Holding ASC utilization and the mix of services constant from 

CY 2013, we proposed to compare the total payment using the CY 2014 ASC relative 

payment weights with the total payment using the CY 2015 relative payment weights to 

take into account the changes in the OPPS relative payment weights between CY 2014 
CMS-1613-FC 663 

and CY 2015. We proposed to use the ratio of CY 2014 to CY 2015 total payment (the 

weight scaler) to scale the ASC relative payment weights for CY 2015. The proposed 

CY 2015 ASC scaler was 0.9142 and scaling would apply to the ASC relative payment 

weights of the covered surgical procedures and covered ancillary radiology services for 

which the ASC payment rates are based on OPPS relative payment weights. 

 Scaling would not apply in the case of ASC payment for separately payable 

covered ancillary services that have a predetermined national payment amount (that is, 

their national ASC payment amounts are not based on OPPS relative payment weights), 

such as drugs and biologicals that are separately paid or services that are 

contractor-priced or paid at reasonable cost in ASCs. Any service with a predetermined 

national payment amount would be included in the ASC budget neutrality comparison, 

but scaling of the ASC relative payment weights would not apply to those services. The 

ASC payment weights for those services without predetermined national payment 

amounts (that is, those services with national payment amounts that would be based on 

OPPS relative payment weights) would be scaled to eliminate any difference in the total 

payment between the current year and the update year. 

 For any given year’s ratesetting, we typically use the most recent full calendar 

year of claims data to model budget neutrality adjustments. For this final rule with 

comment period, we used CY 2013 ASC claims data. 

 To create an analytic file to support calculation of the weight scaler and budget 

neutrality adjustment for the wage index (discussed below), we summarized available 

CY 2013 ASC claims by ASC and by HCPCS code. We used the National Provider 

Identifier for the purpose of identifying unique ASCs within the CY 2013 claims data. 
CMS-1613-FC 664 

We used the supplier zip code reported on the claim to associate State, county, and CBSA 

with each ASC. This file, available to the public as a supporting data file for the 

proposed rule, is posted on the CMS Web site at: http://www.cms.gov/ResearchStatistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html. 

b. Transition Period to New OMB Delineations for ASC Wage Index 

 As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054 

through 28055), we proposed to use the new CBSA delineations issued by OMB in OMB 

Bulletin 13-01 dated February 28, 2013 for the IPPS hospital wage index. Therefore, 

because the ASC wage indexes are the pre-floor and pre-reclassified IPPS hospital wage 

indexes, the proposed CY 2015 ASC wage indexes reflected the new OMB delineations. 

While we believe that instituting the latest OMB labor market area delineations would 

create a more accurate and up-to-date wage index system, we also recognize that 

implementing the new OMB delineations may cause some short-term instability in ASC 

payments. Therefore, we proposed a transition to the new OMB delineations similar to 

what we proposed for the IPPS for FY 2015 (79 FR 28062) and the OPPS as described in 

section II.C of the proposed rule. Specifically, for ASCs, we proposed a 1-year blended 

wage index for all ASCs that would experience any decrease in their actual wage index 

exclusively due to the implementation of the new OMB delineations. For ASCs where 

the CY 2015 ASC wage index with the CY 2015 CBSAs would be lower than with the 

CY 2014 CBSAs, we proposed that the CY 2015 ASC wage index would be 50 percent 

of the ASC wage index based on the CY 2014 CBSA and 50 percent of the ASC wage 

index based on the new CY 2015 CBSA. We believe a 1-year 50/50 blended wage index 

would mitigate the short-term instability and negative payment impacts due to the 
CMS-1613-FC 665 

proposed implementation of the new OMB delineations, providing ASCs that would be 

negatively impacted by the new OMB delineations with a transition period during which 

they may adjust to their new geographic CBSA. We believe that a longer transition 

period would reduce the accuracy of the overall labor market area wage index system. 

 Comment: Some commenters objected to CMS continuing to use the pre-floor 

and pre-reclassified IPPS hospital wage indexes for the labor portion of ASC costs. 

These commenters stated that ASCs and hospitals compete in the same local markets and 

provide many of the same services and require similar staff. Commenters stated that the 

different wage index for hospitals than for ASCs increases the gap between the OPPS and 

ASC payment rates. 

 Response: As discussed in the August 2, 2007 final rule (72 FR 42517 through 

42518) and as codified at § 416.172(c) of the regulations, the revised ASC payment 

system accounts for geographic wage variation when calculating individual ASC 

payments by applying the pre-floor and pre-reclassified IPPS hospital wage indexes to 

the labor-related share, which is 50 percent of the ASC payment amount. We have 

responded to similar comments in the past and believe our prior rationale for using 

unadjusted wage indexes is still a sound one. We continue to believe that the unadjusted 

hospital wage indexes, which are updated yearly and are used by many other Medicare 

payment systems, appropriately account for geographic variation in labor costs for ASCs. 

We did not propose to change our use of the pre-floor, pre-reclassified IPPS wage 

indexes for the ASC wage index. Therefore, in addition to the reasons stated above, we 

will continue to apply the pre-floor, pre-reclassified IPPS hospital wage indexes for the 

labor portion of ASC costs. We refer readers to our responses to similar comments in the 
CMS-1613-FC 666 

CY 2010, CY 2011, CY 2012, CY 2013, and CY 2014 OPPS/ASC final rules with 

comment period (74 FR 60625; 75 FR 72059; 76 FR 74446; 77 FR 68463; and 

78 FR 75086, respectively). 

 Comment: Commenters supported CMS’ proposal to phase in reductions to the 

ASC wage indexes that occur as a result of the new OMB labor market delineations. 

 Response: We appreciate the commenters’ support and, as stated below, we are 

finalizing this policy as proposed. 

 After consideration of the public comments we received, we are finalizing our 

proposal to apply a 1-year blended wage index for all ASCs that would experience any 

decrease in their actual wage index exclusively due to the implementation of the new 

OMB delineations. Specifically, for ASCs where the CY 2015 ASC wage index with the 

CY 2015 CBSAs is lower than with the CY 2014 CBSAs, we will calculate the CY 2015 

ASC wage index such that it will be 50 percent of the ASC wage index based on the 

CY 2014 CBSA and 50 percent of the ASC wage index based on the new CY 2015 

CBSA. 

c. Updating the ASC Conversion Factor 

 Under the OPPS, we typically apply a budget neutrality adjustment for provider 

level changes, most notably a change in the wage index values for the upcoming year, to 

the conversion factor. In the CY 2015 OPPS/ASC proposed rule (79 FR 41030 through 

41031), consistent with our final ASC payment policy, for the CY 2015 ASC payment 

system, we proposed to calculate and apply a budget neutrality adjustment to the ASC 

conversion factor for supplier level changes in wage index values for the upcoming year, 

just as the OPPS wage index budget neutrality adjustment is calculated and applied to the 
CMS-1613-FC 667 

OPPS conversion factor. For CY 2015, we calculated this proposed adjustment for the 

ASC payment system by using the most recent CY 2013 claims data available and 

estimating the difference in total payment that would be created by introducing the 

proposed CY 2015 ASC wage indexes. Specifically, holding CY 2013 ASC utilization 

and service-mix and the proposed CY 2015 national payment rates after application of 

the weight scaler constant, we calculated the total adjusted payment using the CY 2014 

ASC wage indexes and the total adjusted payment using the proposed CY 2015 ASC 

wage indexes (which reflect the new OMB delineations and would include any applicable 

transition period). We used the 50-percent labor-related share for both total adjusted 

payment calculations. We then compared the total adjusted payment calculated with the 

CY 2014 ASC wage indexes to the total adjusted payment calculated with the proposed 

CY 2015 ASC wage indexes and applied the resulting ratio of 0.9983 (the proposed 

CY 2015 ASC wage index budget neutrality adjustment) to the CY 2014 ASC conversion 

factor to calculate the proposed CY 2015 ASC conversion factor. 

 Section 1833(i)(2)(C)(i) of the Act requires that, “if the Secretary has not updated 

amounts established” under the revised ASC payment system in a calendar year, the 

payment amounts “shall be increased by the percentage increase in the Consumer Price 

Index for all urban consumers (U.S. city average) as estimated by the Secretary for the 

12-month period ending with the midpoint of the year involved.” The statute, therefore, 

does not mandate the adoption of any particular update mechanism, but it requires the 

payment amounts to be increased by the CPI-U in the absence of any update. Because 

the Secretary updates the ASC payment amounts annually, we adopted a policy, which 

we codified at 42 CFR 416.171(a)(2)(ii), to update the ASC conversion factor using the 
CMS-1613-FC 668 

CPI-U for CY 2010 and subsequent calendar years. Therefore, the annual update to the 

ASC payment system is the CPI-U (referred to as the CPI-U update factor). 

 Section 3401(k) of the Affordable Care Act amended section 1833(i)(2)(D) of the 

Act by adding a new clause (v) which requires that “any annual update under [the ASC 

payment] system for the year, after application of clause (iv), shall be reduced by the 

productivity adjustment described in section 1886(b)(3)(B)(xi)(II)” of the Act effective 

with the calendar year beginning January 1, 2011. The statute defines the productivity 

adjustment to be equal to the 10-year moving average of changes in annual 

economy-wide private nonfarm business multifactor productivity (MFP) (as projected by 

the Secretary for the 10-year period ending with the applicable fiscal year, year, cost 

reporting period, or other annual period) (the “MFP adjustment”). Clause (iv) of section 

1833(i)(2)(D) of the Act authorizes the Secretary to provide for a reduction in any annual 

update for failure to report on quality measures. Clause (v) of section 1833(i)(2)(D) of 

the Act states that application of the MFP adjustment to the ASC payment system may 

result in the update to the ASC payment system being less than zero for a year and may 

result in payment rates under the ASC payment system for a year being less than such 

payment rates for the preceding year. 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74516), we 

finalized a policy that ASCs begin submitting data on quality measures for services 

beginning on October 1, 2012 for the CY 2014 payment determination under the ASCQR 

Program. In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 

through 68500), we finalized a methodology to calculate reduced national unadjusted 

payment rates using the ASCQR Program reduced update conversion factor that would 
CMS-1613-FC 669 

apply to ASCs that fail to meet their quality reporting requirements for the CY 2014 

payment determination and subsequent years. The application of the 2.0 percentage point 

reduction to the annual update factor, which currently is the CPI-U, may result in the 

update to the ASC payment system being less than zero for a year for ASCs that fail to 

meet the ASCQR Program requirements. We amended §§ 416.160(a)(1) and 416.171 to 

reflect these policies. 

 In accordance with section 1833(i)(2)(C)(i) of the Act, before applying the MFP 

adjustment, the Secretary first determines the “percentage increase” in the CPI-U, which 

we interpret cannot be a negative percentage. Thus, in the instance where the percentage 

change in the CPI-U for a year is negative, we would hold the CPI-U update factor for the 

ASC payment system to zero. For the CY 2014 payment determination and subsequent 

years, under section 1833(i)(2)(D)(iv) of the Act, we would reduce the annual update by 

2.0 percentage points for an ASC that fails to submit quality information under the rules 

established by the Secretary in accordance with section 1833(i)(7) of the Act. 

Section 1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of the Affordable Care 

Act, requires that the Secretary reduce the annual update factor, after application of any 

quality reporting reduction, by the MFP adjustment, and states that application of the 

MFP adjustment to the annual update factor after application of any quality reporting 

reduction may result in the update being less than zero for a year. If the application of 

the MFP adjustment to the annual update factor after application of any quality reporting 

reduction would result in an MFP-adjusted update factor that is less than zero, the 

resulting update to the ASC payment rates would be negative and payments would 

decrease relative to the prior year. We refer readers to the CY 2011 OPPS/ASC final rule 
CMS-1613-FC 670 

with comment period (75 FR 72062 through 72064) for illustrative examples of how the 

MFP adjustment is applied to the ASC payment system. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41031), based on IHS Global 

Insight’s (IGI’s) 2014 first quarter forecast with historical data through 2013 fourth 

quarter, for the 12-month period ending with the midpoint of CY 2015, the CPI-U update 

was projected to be 1.7 percent. Also, based on IGI’s 2014 first quarter forecast, the 

MFP adjustment for the period ending with the midpoint of CY 2015 was projected to be 

0.5 percent. IGI is a nationally recognized economic and financial forecasting firm that 

contracts with CMS to forecast the components of CMS’ market baskets as well as the 

CPI-U and MFP. We finalized the methodology for calculating the MFP adjustment in 

the CY 2011 MPFS final rule with comment period (75 FR 73394 through 73396) as 

revised in the CY 2012 MPFS final rule with comment period (76 FR 73300 through 

73301). The ASCQR Program affected payment rates beginning in CY 2014 and, under 

this program, there is a 2.0 percentage point reduction to the CPI-U for ASCs that fail to 

meet the ASCQR Program requirements. 

 We proposed to reduce the CPI-U update of 1.7 percent by the MFP adjustment of 

0.5 percentage point, resulting in an MFP-adjusted CPI-U update factor of 1.2 percent for 

ASCs meeting the quality reporting requirements. Therefore, we proposed to apply a 

1.2 percent MFP-adjusted CPI-U update factor to the CY 2014 ASC conversion factor for 

ASCs meeting the quality reporting requirements. We proposed to reduce the CPI-U 

update of 1.7 percent by 2.0 percentage points for ASCs that do not meet the quality 

reporting requirements and then apply the 0.5 percentage point MFP reduction. 

Therefore, we proposed to apply a -0.8 percent quality reporting/MFP-adjusted CPI-U 
CMS-1613-FC 671 

update factor to the CY 2014 ASC conversion factor for ASCs not meeting the quality 

reporting requirements. We also proposed that if more recent data are subsequently 

available (for example, a more recent estimate of the CY 2015 CPI-U update and MFP 

adjustment), we would use such data, if appropriate, to determine the CY 2015 ASC 

update for the final rule with comment period. 

 For CY 2015, we also proposed to adjust the CY 2014 ASC conversion factor 

($43.471) by the proposed wage index budget neutrality factor of 0.9983 in addition to 

the MFP-adjusted update factor of 1.2 percent discussed above, which results in a 

proposed CY 2015 ASC conversion factor of $43.918 for ASCs meeting the quality 

reporting requirements. For ASCs not meeting the quality reporting requirements, we 

proposed to adjust the CY 2014 ASC conversion factor ($43.471) by the proposed wage 

index budget neutrality factor of 0.9983 in addition to the quality reporting/MFP-adjusted 

update factor of -0.8 percent discussed above, which results in a proposed CY 2015 ASC 

conversion factor of $43.050. 

 We invited public comment on these proposals. 

 Comment: Some commenters stated that CMS should replace the CPI-U as the 

update mechanism for ASC payments with the hospital market basket. Commenters 

stated that the CPI-U measures inflation in a basket of consumer goods atypical of what 

ASCs purchase. In addition, the commenters stated that the Affordable Care Act requires 

CMS to reduce the update by a measure of productivity gains, which inappropriately 

subjects ASCs to two productivity adjustments: improvements reflected in the price of 

consumer purchased goods and the additional statutorily required reduction. While the 

commenters maintained that the hospital market basket would be the most appropriate 
CMS-1613-FC 672 

update for ASCs, they suggested that there are various alternatives within the CPI-U that 

CMS could explore that more accurately reflect the economic climate in the ASC 

environment. For instance, CMS could use subsets of the CPI-U (medical care, medical 

care services, and outpatient services) that are consistent with the services being provided 

in the ASC setting. 

 MedPAC commented that, in the CY 2013 rulemaking, CMS requested public 

comment on the feasibility of ASC cost information to determine whether CPI-U or 

another type of update factor would be more appropriate, but that CMS did not propose to 

begin collecting ASC cost data. MedPAC acknowledged that there may be a burden 

associated with requiring ASCs to submit cost reports, but recommended that CMS 

collect some sort of ASC cost data, such as through surveys. 

 Response: As we have stated in response to similar comments in the past (for 

example, 77 FR 68465; 78 FR 75088 through 75089), we continue to believe that, while 

commenters argue that the items included in the CPI–U index may not adequately 

measure inflation for the goods and services provided by ASCs, the hospital market 

basket does not align with the cost structures of ASCs. Hospitals provide a much wider 

range of services, such as room and board and emergency services, and the costs 

associated with providing these services are not part of the ASC cost structure. 

Therefore, at this time, we do not believe that it is appropriate to use the hospital market 

basket for the ASC annual update. 

 We recognize that the CPI-U is an output price index that accounts for 

productivity. However, section 1833(i)(2)(D)(v) of the Act requires the agency to reduce 

the annual update factor by the MFP adjustment. For the reasons stated above, we do not 
CMS-1613-FC 673 

believe that the hospital market basket appropriately reflects the cost structures of ASCs, 

and because we do not have cost data on ASCs, we are continuing to use the CPI-U 

which we believe provides a reasonable approximation of the price increases facing 

ASCs. We will continue to explore the feasibility of collecting ASC cost data. However, 

based on our past experience, we do not believe that collecting such data through surveys 

would be productive. We appreciate the commenter’s suggestion to adjust the CPI-U, 

such as by using subsets of services within the CPI-U, for productivity and will take this 

suggestion into consideration if we propose changes to the ASC update factor in the 

future. 

 After consideration of the public comments we received, we are applying our 

established methodology for determining the final CY 2015 ASC conversion factor. 

Using more complete CY 2013 data for this final rule with comment period than were 

available for the proposed rule, we calculated a wage index budget neutrality adjustment 

of 0.9998. Based on IGI’s 2014 third quarter forecast, the CPI–U for the 12-month 

period ending with the midpoint of CY 2015 is now projected to be 1.9 percent, while the 

MFP adjustment (as discussed and finalized in the CY 2012 MPFS final rule with 

comment period (76 FR 73300 through 73301)) is 0.5 percent, resulting in an 

MFP-adjusted CPI–U update factor of 1.4 percent for ASCs that meet the quality 

reporting requirements. The final ASC conversion factor of $44.071, for ASCs that meet 

the quality reporting requirements, is the product of the CY 2014 conversion factor of 

$43.471 multiplied by the wage index budget neutrality adjustment of 0.9998 and the 

MFP-adjusted CPI–U payment update of 1.4 percent. For ASCs that do not meet the 

quality reporting requirements, we are reducing the CPI–U update of 1.9 percent by 
CMS-1613-FC 674 

2.0 percentage points and then we are applying the 0.5 percentage point MFP reduction, 

resulting in a -0.6 percent quality reporting/MFP-adjusted CPI–U update factor. The 

final ASC conversion factor of $43.202 for ASCs that do not meet the quality reporting 

requirements is the product of the CY 2014 conversion factor of $43.471 multiplied by 

the wage index budget neutrality adjustment of 0.9998 and the quality 

reporting/MFP-adjusted CPI–U payment update of -0.6 percent. 

3. Display of CY 2015 ASC Payment Rates 

 Addenda AA and BB to this CY 2015 OPPS/ASC final rule with comment period 

(which are available via the Internet on the CMS Web site) display the final updated ASC 

payment rates for CY 2015 for covered surgical procedures and covered ancillary 

services, respectively. For those covered surgical procedures and covered ancillary 

services where the payment rate is the lower of the final rates under the ASC standard 

ratesetting methodology and the MPFS final rates, the final payment indicators and rates 

set forth in this rule are based on a comparison using the MPFS rates effective January 1, 

2015. These payment rates and indicators do not include the effect of the negative update 

to the MPFS payment rates effective April 1, 2015 under current law. Updates to these 

rates and payment indicators effective April l, 2015 will be included in the April 2015 

quarterly ASC addenda posted on the CMS Web site. For a discussion of the MPFS 

rates, we refer readers to the CY 2015 MPFS final rule with comment period. The 

payment rates included in these addenda reflect the full ASC payment update and not the 

reduced payment update used to calculate payment rates for ASCs not meeting the 

quality reporting requirements under the ASCQR Program. These addenda contain 

several types of information related to the CY 2015 payment rates. Specifically, in 
CMS-1613-FC 675 

Addendum AA, a “Y” in the column titled “Subject to Multiple Procedure Discounting” 

indicates that the surgical procedure will be subject to the multiple procedure payment 

reduction policy. As discussed in the CY 2008 OPPS/ASC final rule with comment 

period (72 FR 66829 through 66830), most covered surgical procedures are subject to a 

50-percent reduction in the ASC payment for the lower-paying procedure when more 

than one procedure is performed in a single operative session. Display of the comment 

indicator “CH” in the column titled “Comment Indicator” indicates a change in payment 

policy for the item or service, including identifying discontinued HCPCS codes, 

designating items or services newly payable under the ASC payment system, and 

identifying items or services with changes in the ASC payment indicator for CY 2015. 

Display of the comment indicator “NI” in the column titled “Comment Indicator” 

indicates that the code is new (or substantially revised) and that the payment indicator 

assignment is an interim assignment that is open to comment in the final rule with 

comment period. 

 The values displayed in the column titled “CY 2015 Payment Weight” are the 

relative payment weights for each of the listed services for CY 2015. The payment 

weights for all covered surgical procedures and covered ancillary services whose ASC 

payment rates are based on OPPS relative payment weights were scaled for budget 

neutrality. Therefore, scaling was not applied to the device portion of the 

device-intensive procedures, services that are paid at the MPFS nonfacility 

PE RVU-based amount, separately payable covered ancillary services that have a 

predetermined national payment amount, such as drugs and biologicals and 
CMS-1613-FC 676 

brachytherapy sources that are separately paid under the OPPS, or services that are 

contractor-priced or paid at reasonable cost in ASCs. 

 To derive the CY 2015 payment rate displayed in the “CY 2015 Payment Rate” 

column, each ASC payment weight in the “CY 2015 Payment Weight” column was 

multiplied by the CY 2015 conversion factor of $44.071. The conversion factor includes 

a budget neutrality adjustment for changes in the wage index values and the annual 

update factor as reduced by the productivity adjustment (as discussed in 

section XII.H.2.b. of this final rule with comment period). 

 In Addendum BB, there are no relative payment weights displayed in the 

“CY 2015 Payment Weight” column for items and services with predetermined national 

payment amounts, such as separately payable drugs and biologicals. The “CY 2015 

Payment” column displays the CY 2015 national unadjusted ASC payment rates for all 

items and services. The CY 2015 ASC payment rates listed in Addendum BB for 

separately payable drugs and biologicals are based on ASP data used for payment in 

physicians’ offices in October 2014. 

 Addendum E provides the HCPCS codes and short descriptors for surgical 

procedures that are to be excluded from payment in ASCs for FY 2015. 

 We did not receive any public comments regarding the continuation of our policy 

to provide CY 2015 ASC payment information as detailed in Addenda AA and BB. 

Therefore, Addenda AA and BB to this final rule with comment period (which are 

available via the Internet on the CMS Web site) display the updated ASC payment rates 

for CY 2015 for covered surgical procedures and covered ancillary services, respectively, 

and provide additional information related to the CY 2015 rates.
CMS-1613-FC 677 

XIII. Hospital Outpatient Quality Reporting Program Updates 

A. Background 

1. Overview 

CMS seeks to promote higher quality and more efficient health care for Medicare 

beneficiaries. In pursuit of these goals, CMS has implemented quality reporting 

programs for multiple care settings including the quality reporting program for hospital 

outpatient care, known as the Hospital Outpatient Quality Reporting (OQR) Program, 

formerly known as the Hospital Outpatient Quality Data Reporting Program 

(HOP QDRP). The Hospital OQR Program has generally been modeled after the quality 

reporting program for hospital inpatient services known as the Hospital Inpatient Quality 

Reporting (IQR) Program (formerly known as the Reporting Hospital Quality Data for 

Annual Payment Update (RHQDAPU) Program).

 In addition to the Hospital IQR and Hospital OQR Programs, CMS has 

implemented quality reporting programs for other care settings that provide financial 

incentives for the reporting of quality data to CMS. These additional programs include 

reporting for care furnished by: 

● Physicians and other eligible professionals, under the Physician Quality 

Reporting System (PQRS, formerly referred to as the Physician Quality Reporting 

Program Initiative (PQRI)); 

● Inpatient rehabilitation facilities, under the Inpatient Rehabilitation Facility 

Quality Reporting Program (IRF QRP); 

● Long-term care hospitals, under the Long-Term Care Hospital Quality 

Reporting (LTCHQR) Program; 
CMS-1613-FC 678 

● PPS-exempt cancer hospitals, under the PPS-Exempt Cancer Hospital Quality 

Reporting (PCHQR) Program; 

● Ambulatory surgical centers, under the Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program; 

● Inpatient psychiatric facilities, under the Inpatient Psychiatric Facility Quality 

Reporting (IPFQR) Program; 

● Home health agencies, under the Home Health Quality Reporting Program 

(HH QRP); and 

● Hospices, under the Hospice Quality Reporting Program. 

 In addition, CMS has implemented two value-based purchasing programs, the 

Hospital Value-Based Purchasing (Hospital VBP) Program and the End-Stage Renal 

Disease (ESRD) Quality Incentive Program (QIP), that link payment to performance. 

 In implementing the Hospital OQR Program and other quality reporting 

programs, we have focused on measures that have high impact and support national 

priorities for improved quality and efficiency of care for Medicare beneficiaries as 

reflected in the National Quality Strategy (NQS) and CMS Quality Strategy, as well as 

conditions for which wide cost and treatment variations have been reported, despite 

established clinical guidelines. To the extent possible under various authorizing statutes, 

our ultimate goal is to align the clinical quality measure requirements of our various 

quality reporting programs. As appropriate, we will consider the adoption of measures 

with electronic specifications to enable the collection of this information as part of care 

delivery. 
CMS-1613-FC 679 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68467 through 68469) for a discussion on the principles underlying consideration 

for future measures that we intend to use in implementing this and other quality reporting 

programs. 

2. Statutory History of the Hospital OQR Program 

 We refer readers to the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72064 through 72065) for a detailed discussion of the statutory history of the 

Hospital OQR Program. 

3. Measure Updates and Data Publication 

a. Maintenance of Technical Specifications for Quality Measures 

 CMS maintains technical specifications for previously adopted Hospital OQR 

Program measures. These specifications are updated as we continue to develop the 

Hospital OQR Program. The manuals that contain specifications for the previously 

adopted measures can be found on the QualityNet Web site at: 

https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQne

tTier2&cid=1196289981244. 

 Many of the quality measures used in Medicare and Medicaid reporting programs 

are endorsed by the National Quality Forum (NQF). We note that not all of the measures 

adopted by the Hospital OQR Program are NQF-endorsed, nor is NQF endorsement a 

program requirement (section 1833(t)(17)(C)(i) of the Act). As part of its regular 

maintenance process for endorsed performance measures, the NQF requires measure 

stewards (owners/developers) to submit annual measure maintenance updates and 

undergo maintenance of endorsement review every 3 years. In the measure maintenance 

process, the measure steward is responsible for updating and maintaining the currency 
CMS-1613-FC 680 

and relevance of the measure and will confirm existing or minor specification changes 

with the NQF on an annual basis. The NQF solicits information from measure stewards 

for annual reviews, and it reviews measures for continued endorsement in a specific 

3-year cycle. 

 We note that the NQF’s annual or triennial maintenance processes for endorsed 

measures may result in the NQF requiring updates to measures in order to maintain 

endorsement status. Other non-NQF measures may undergo maintenance changes as 

well. We believe that it is important to have in place a subregulatory process to 

incorporate nonsubstantive updates into the measure specifications for measures that we 

have adopted for the Hospital OQR Program so that these measure specifications remain 

current. We also recognize that some changes to measures are substantive in nature and 

might not be appropriate for adoption using a subregulatory process. 

 Therefore, in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68469 through 68470), we finalized our proposal to follow the same process for 

updating Hospital OQR Program measures that we adopted for the Hospital IQR Program 

measures, including the subregulatory process for making updates to the adopted 

measures (77 FR 53504 through 53505). This process expanded upon the subregulatory 

process for updating measures that we finalized in the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68766 through 68767). 

b. Public Display of Quality Measures 

 We refer readers to the CY 2014 OPPS/ASC proposed rule (78 FR 43645) for a 

discussion of our policy for the publication of Hospital OQR Program data on the 

Hospital Compare Web site and noninteractive CMS Web sites. 
CMS-1613-FC 681 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41033), we did not propose any 

changes to our policies on the public display of quality measures. 

 Comment: One commenter urged CMS to continue to keep stakeholders such as 

physicians, hospitals, measure developers, and patient groups engaged in public reporting 

to ensure that accurate and beneficial reporting is performed. This commenter 

encouraged CMS to establish streamlined policies and procedures for partnering with 

nongovernmental entities that have an interest in posting data through ongoing 

communication with these stakeholders, including the rulemaking process. 

 Response: We interpret the commenter’s suggestion to “...establish streamlined 

policies and procedures for partnering with nongovernmental entities that have an interest 

in posting data...” to mean that we should establish streamlined policies and procedures 

to partner with physicians, hospitals, measure developers, and patient groups that wish to 

be involved in our quality data reporting efforts. To the extent feasible and practical, we 

work with as many stakeholders as possible to ensure data are accurately reported and 

displayed on Hospital Compare and other CMS Web sites. In the future, we will 

continue working with stakeholders to consolidate and streamline reporting. 

B. Process for Retention of Hospital OQR Program Measures Adopted in Previous 

Payment Determinations 

 In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68471), we 

finalized a policy that once a quality measure is adopted for the Hospital OQR Program, 

it is retained for use in subsequent years unless otherwise specified. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41033), we did not propose any 

changes to the process for retaining measures previously adopted. 
CMS-1613-FC 682 

C. Removal of Quality Measures from the Hospital OQR Program Measure Set 

1. Considerations in Removing Quality Measures from the Hospital OQR Program 

 In the FY 2010 IPPS/LTCH PPS final rule, we finalized a process for immediate 

retirement, which we later termed “removal” (74 FR 43863), of Hospital IQR Program 

measures based on evidence that the continued use of the measure as specified raised 

patient safety concerns. We adopted the same immediate measure retirement policy for 

the Hospital OQR Program in the CY 2010 OPPS/ASC final rule with comment period 

(74 FR 60634 through 60635). We refer readers to the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68472 through 68473) for a discussion of our reasons for 

changing the term “retirement” to “removal” in the Hospital OQR Program. 

 In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185), we finalized a set of 

criteria for determining whether to remove measures from the Hospital IQR Program. 

These criteria are: (1) measure performance among hospitals is so high and unvarying 

that meaningful distinctions and improvements in performance can no longer be made 

(“topped-out” measures); (2) performance or improvement on a measure does not result 

in better patient outcomes; (3) a measure does not align with current clinical guidelines or 

practice; (4) the availability of a more broadly applicable (across settings, populations, or 

conditions) measure for the topic; (5) the availability of a measure that is more proximal 

in time to desired patient outcomes for the particular topic; (6) the availability of a 

measure that is more strongly associated with desired patient outcomes for the particular 

topic; and (7) collection or public reporting of a measure leads to negative unintended 

consequences such as patient harm. These criteria were suggested through public 

comment on proposals for the Hospital IQR Program, and we determined that these 
CMS-1613-FC 683 

criteria are also applicable in evaluating the Hospital OQR Program quality measures for 

removal. 

 In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68472 through 

68473), we finalized our proposal to apply these measure removal criteria in the Hospital 

OQR Program as well. In addition to the Hospital IQR Program’s criteria, we consider 

eliminating measure redundancy and incorporating the views of the Measure 

Applications Partnership (MAP) when evaluating measures for removal. 

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

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41033 through 41034), we 

proposed to refine the criteria for determining when a measure is “topped-out.” We had 

previously finalized that a measure is “topped-out” when measure performance among 

hospitals is so high and unvarying that meaningful distinctions and improvements in 

performance can no longer be made (“topped-out” measures) (77 FR 68472). We do not 

believe that measuring hospital performance on “topped-out” measures provides 

meaningful information on the quality of care provided by hospitals. We further believe 

that quality measures, once “topped-out,” represent care standards that have been widely 

adopted by hospitals. We believe such measures should be considered for removal from 

the Hospital OQR Program because their associated reporting burden may outweigh the 

value of the quality information they provide. 

 In order to determine “topped-out” status, we proposed to apply the following two 

criteria, the first of which was previously adopted by the Hospital VBP Program for 

certain measures in the Hospital Inpatient VBP Program final rule (76 FR 26510). The 

second criterion is a modified version of what was previously adopted by the Hospital 
CMS-1613-FC 684 

VBP Program in the above mentioned final rule (76 FR 26510), with the change from the 

“less than” operator (<) to the “less than or equal to” operator (≤). Specifically, we 

proposed that a measure under the Hospital OQR Program is “topped-out” when it meets 

both of the following criteria: 

● Statistically indistinguishable performance at the 75th and 90th percentiles; and 

● A truncated coefficient of variation less than or equal to 0.10. 

 To identify if a measure has statistically indistinguishable performance at the 75th 

and 90th percentiles, we would determine whether the difference between the 75th and 

90th percentiles for a measure is within two times the standard error of the full dataset. 

The coefficient of variation (CV) is a descriptive statistic that expresses the standard 

deviation as a percentage of the sample mean; this provides a statistic that is independent 

of the units of observation. Applied to this analysis, a large CV would indicate a broad 

distribution of individual hospital scores, with large and presumably meaningful 

differences between hospitals in relative performance. A small CV would indicate that 

the distribution of individual hospital scores is clustered tightly around the mean value, 

suggesting that it is not useful to draw distinctions among individual hospitals’ measure 

performance. The truncated CV excludes observations with rates below the 5th percentile 

and above the 95th percentile. We adopted the second of these “topped-out” criteria for 

the Hospital VBP Program (79 FR 50055). Both criteria were adopted for the Hospital 

IQR Program (79 FR 50204) and are being adopted for the ASCQR Program 

(section XIV.A.3. of this final rule with comment period). 

 We invited public comment on this proposal. 
CMS-1613-FC 685 

 Comment: Many commenters supported CMS’ proposed criteria for identifying 

“topped-out” measures. Some commenters recommended that CMS proceed cautiously, 

expressing concern that removal of measures could disrupt hospitals’ quality 

improvement efforts. Some commenters believed there is value in collecting data on 

some topped-out measures, regardless of national performance scores. Other commenters 

urged CMS to assess the topped-out measures individually and in a broader context 

before removing them. 

 Response: We agree that, in some cases, measures that are quantitatively 

“topped-out” may still be appropriate if, for example, the specified care topic is important 

to providers and/or beneficiaries or if some classes or some hospitals may still have room 

for improvement with the measure. We recognize that some measures may not be 

appropriate for the topped-out analysis, including measures of outcomes for which small 

numbers are desired (for example, hospital-acquired infection and patient safety oriented 

measures). We note that “topped-out” status is only one of many factors we consider in 

removing measures. We consider the removal of each topped-out measure on a 

case-by-case basis, as appropriate, and determine whether a clinical or other quality 

improvement need for the measure justifies the retention of a topped-out measure that 

otherwise meets our criteria. We refer readers to III.C.1.of this final rule with comment 

period, “Considerations in Removing Quality Measures from the Hospital OQR 

Program,” for a discussion of the different factors we consider in removing measures. 

 Comment: Many commenters urged CMS to continue monitoring performance 

on “topped-out” measures to ensure that high performance continues and that quality 

gains are sustained. 
CMS-1613-FC 686 

 Response: We expect hospitals to always follow appropriate standards-of-care 

and clinical guidelines regardless of whether a quality measure exists. We believe that 

HOPDs are committed to providing quality care to patients and we do not have any 

indication that HOPDs will stop doing so when measures are removed. We currently 

monitor the performance of removed measures to ensure that performance does not 

decline significantly and will continue to do so. However, we must balance the costs of 

continued monitoring of a successful measure with high levels of performance with the 

adoption of other measures where there are opportunities for improvement in clinical 

quality. 

 At this time, we believe the two finalized topped-out criteria will ensure the 

detection of potential topped-out measures that have high performance with little 

variability. However, we will consider the need for refinement and, if we determine 

changes may be necessary, we will propose such changes in future rulemaking. 

 After consideration of the public comments we received, we are finalizing the 

“topped-out” criteria as proposed. Specifically, we are finalizing a policy that a measure 

under the Hospital OQR Program is “topped-out” when it meets both of the following 

criteria: (1) statistically indistinguishable performance at the 75th and 90th percentiles; 

and (2) a truncated coefficient of variation less than or equal to 0.10. To identify if a 

measure has statistically indistinguishable performance at the 75th and 90th percentiles, 

we will determine whether the difference between the 75th and 90th percentiles for a 

measure is within two times the standard error of the full dataset. However, consistent 

with our discussion above at XIII.C.1.of this final rule with comment period, 

“Considerations in Removing Quality Measures from the Hospital OQR Program,” we 
CMS-1613-FC 687 

evaluate different factors in considering the removal of measures. We will assess the 

benefits of retaining a measure on a case-by-case basis before proposing to remove a 

measure from the Hospital OQR Program. 

3. Removal of Measures from the Hospital OQR Program for the CY 2017 Payment 

Determination and Subsequent Years 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41034), we proposed to remove 

three measures for the CY 2017 payment determination and subsequent years: OP-4, 

OP-6, and OP-7. Based on our analysis of Hospital OQR Program chart-abstracted 

measure data for January 1, 2013 – June 30, 2013 (Q1-Q2) encounters, the following 

measures met both: (1) the previously finalized criteria for being “topped-out”; that is, 

measure performance among hospitals is so high and unvarying that meaningful 

distinctions and improvements in performance can no longer be made (77 FR 68472); 

and (2) the two criteria we finalized in section XIII.C.2. of this final rule with comment 

period for determining “topped-out” status. These measures are: 

● OP-4: Aspirin at Arrival (NQF # 0286); 

● OP-6: Timing of Antibiotic Prophylaxis; and 

● OP-7: Prophylactic Antibiotic Selection for Surgical Patients (NQF # 0528). 

 Therefore, we proposed to remove these three measures from the Hospital OQR 

Program beginning with the CY 2017 payment determination. 

 We believed that removal was appropriate as there appeared little room for 

improvement for these measures, all of which address standards of clinical care. In 

addition, by removing these measures, we hoped to alleviate the maintenance costs 

and administrative burden to hospitals associated with retaining them. Should we 
CMS-1613-FC 688 

determine that hospital adherence to these practices has unacceptably declined, we 

stated that we would re-propose these measures in future rulemaking. In addition, 

we would comply with any requirements imposed by the Paperwork Reduction Act 

before reinstituting these measures. We noted that we removed three measures 

under the Hospital IQR Program similar to these measures; the similar measures were 

AMI-1, SCIP-Inf-1, and SCIP-Inf-2, respectively. We note that we retained SCIP-Inf-1 

and SCIP-Inf-2 as voluntarily reported electronic clinical quality measures in the Hospital 

IQR Program (79 FR 50208). 

 We invited public comment on these proposals. 

 Comment: Many commenters supported the proposal to remove OP-4, OP-6, and 

OP-7, noting that the removal would reduce administrative burden on hospitals. Some 

commenters specifically supported the removal of these measures to align with the 

Hospital IQR Program. One commenter recommended the removal of the three proposed 

topped-out measures effective January 2015, to reduce administrative burden for 

hospitals. 

 Response: We thank the commenters for their support. We continue to look for 

ways to minimize burden as we pursue the quality objectives of the Hospital OQR 

Program. We agree that quality of care measures should be aligned across our quality 

reporting and value-based purchasing programs to the extent possible. The patient 

encounter period for the CY 2017 payment determination is January 1, 2015 through 

December 31, 2015. Thus, for patient encounters beginning January 1, 2015, hospitals 

would not be required to submit data on any measures that we are finalizing for removal 

as discussed below. 
CMS-1613-FC 689 

 Comment: Some commenters inquired about the criteria for resuming data 

collection for measures that are removed from the Hospital OQR Program. One 

commenter recommended that CMS establish a process, similar to the one used by NQF, 

to place a measure in “reserve status” for some time after the measure is determined to be 

“topped-out” to ensure no “backsliding” has occurred. Another commenter suggested 

that CMS consider sampling hospitals on their performance on these removed measures 

to ensure continued high performance on these measures. 

 Response: We thank the commenters for their suggestions to monitor topped-out 

measures for continued high performance and we understand their concerns of 

backsliding. Should we determine that hospital adherence to these practices has 

unacceptably declined; we would propose to reinstate the measure in future rulemaking to 

resume data collection. We expect hospitals to always follow appropriate standards-ofcare and clinical guidelines in exercising positive interventions, regardless of whether a 

measure is removed. 

 Comment: Some commenters urged CMS to retain OP-4 for voluntary reporting. 

Some commenters opposed the removal of OP-4, noting that this measure provides 

incentives for better care and improves patient outcomes, and the data help Medicare 

beneficiaries make informed choices about their health care options. One commenter 

recommended that CMS not remove OP-4 until there are at least 2 years of continued 

high performance data. 

 Response: We agree with the commenters that OP-4 should be retained. Upon 

further analysis, we have found that, although technically “topped-out,” the rate 

distributions for OP-4 indicate that hospitals with a small number of cases have lower 
CMS-1613-FC 690 

rates. Because performance for OP-4 is still low in some hospitals, and there is 

substantial evidence indicating that aspirin at arrival is associated with better patient 

outcomes, we are not finalizing our proposal to remove OP-4. 

 Comment: Some commenters opposed the removal of OP-6 and OP-7, noting 

that the removal of these measures may cause unnecessary harm to surgical patients. One 

commenter recommended that CMS not remove OP-6 and OP-7 until there are at least 

2 years of continued high performance data. 

 Response: We thank the commenters for expressing their concerns. Our 

proposed criteria for topped-out measures did not include a timeframe for sustained 

statistical performance; however, we will take this suggestion into consideration for 

future rulemaking. Based on our topped-out analysis, both OP-6 and OP-7 are 

“topped-out” across hospitals, and we do not believe that removal of these two measures 

would cause unnecessary harm to surgical patients because our data show that hospital 

performance on OP-6 and OP-7 is high and unvarying, indicating that HOPDs have been 

in compliance with OP-6 in exercising the correct timing as well as with OP-7 in 

administering the appropriate antibiotic for surgical patients. In addition, unlike OP-4, 

we did not see indications in the measure distributions for OP-6 and OP-7 that imply 

outlier hospitals with a small number of cases have statistically significantly lower rates. 

Therefore, this leads us to believe that removal of these two measures would not cause 

unnecessary harm to surgical patients. Because our data indicate that hospital 

performance on OP-6 and OP-7 is high and unvarying, we believe the costs associated 

with the maintenance of our administrative systems and the costs to hospitals to continue 

reporting outweigh the benefits of retaining of these measures in the Hospital OQR 
CMS-1613-FC 691 

Program. We expect hospitals to follow appropriate standards-of-care and clinical 

guidelines in exercising positive interventions, regardless of whether a measure is 

removed. Therefore, as noted below, we are finalizing our proposal to remove the OP-6 

and OP-7 measures and will continue to monitor clinical trends and repropose these 

measures if we see the performance gap widening. 

 Comment: One commenter noted that, beginning with CY 2015 reporting, 

hospitals will be required to report a new element (Rectal Culture-Guided Antibiotic) for 

OP-7. The commenter requested clarification because CMS proposed to remove this 

measure. 

 Response: We clarify that, as stated above, we are removing OP-7 from the 

Hospital OQR Program beginning with the CY 2017 payment determination. The patient 

encounter period for the CY 2017 payment determination is January 1, 2015 through 

December 31, 2015. Therefore, beginning with CY 2015 patient encounters, hospitals 

are not required to submit Rectal Culture-Guided Antibiotic data or other data for OP-7. 

 After consideration of the public comments we received and for the reasons we 

discussed above, we are finalizing our proposal to remove OP-6 and OP-7 from the 

Hospital OQR Program as proposed. However, we are not finalizing our proposal to 

remove OP-4 and are retaining that measure in the Hospital OQR Program for reasons 

discussed above. Hospitals are to report data on OP-4 as previously required. We refer 

readers to the CY 2008 OPPS/ASC final rule with comment period (FR 72 66865), the 

CY 2013 OPPS/ASC final rule with comment period (77 FR 68482), and the CY 2014 

OPPS/ASC final rule with comment period (78 FR 75111 through 75112) for more 

information about OP-4 and the data submission requirements. Set out in the table below 
CMS-1613-FC 692 

are the measures we are removing for the CY 2017 payment determination and 

subsequent years. 

Hospital OQR Program Measures Removed for the CY 2017 Payment 

Determination and Subsequent Years 

NQF # 

Measure 

N/A OP-6: Timing of Prophylactic Antibiotics 

0528 OP-7: Prophylactic Antibiotic Selection for Surgical Patients 

D. Quality Measures Previously Adopted for the CY 2016 Payment Determination and 

Subsequent Years 

 As previously discussed, in the CY 2013 OPPS/ASC final rule with comment 

period (77 FR 68471), we finalized a policy that, beginning CY 2013, when we adopt 

measures for the Hospital OQR Program, these measures are automatically adopted for 

all subsequent years’ payment determinations, unless we propose to remove, suspend, or 

replace the measures. The table below lists 27 measures that we adopted for the CY 2016 

payment determination and subsequent years under the Hospital OQR Program. 

Hospital OQR Program Measure Set Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

NQF# Measure Name 

N/A OP-1: Median Time to Fibrinolysis 

0288 OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival  

0290 OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention 

0286 OP-4: Aspirin at Arrival 

0289 OP-5: Median Time to ECG 

N/A OP-6: Timing of Prophylactic Antibiotics **  

528 OP-7: Prophylactic Antibiotic Selection for Surgical Patients** 

0514 OP-8: MRI Lumbar Spine for Low Back Pain 
CMS-1613-FC 693 

Hospital OQR Program Measure Set Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

NQF# Measure Name 

N/A OP-9: Mammography Follow-up Rates 

N/A OP-10: Abdomen CT – Use of Contrast Material 

0513 OP-11: Thorax CT – Use of Contrast Material 

N/A OP-12: The Ability for Providers with HIT to Receive Laboratory Data 

Electronically Directly into their ONC-Certified EHR System as Discrete 

Searchable Data 

0669 OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac 

Low Risk Surgery 

N/A 

OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT) 

N/A OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache 

N/A OP-17: Tracking Clinical Results between Visits 

0496 OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients 

N/A OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional 

0662 OP-21: Median Time to Pain Management for Long Bone Fracture 

N/A OP-22: ED- Left Without Being Seen**** 

0661 OP-23: ED- Head CT or MRI Scan Results for Acute Ischemic Stroke or 

Hemorrhagic Stroke who Received Head CT or MRI Scan Interpretation 

Within 45 minutes of Arrival 

N/A OP-25: Safe Surgery Checklist Use 

N/A OP-26: Hospital Outpatient Volume on Selected Outpatient Surgical 

Procedures* 

0431 OP-27: Influenza Vaccination Coverage among Healthcare Personnel 

0658 OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients 

0659 OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with 

a History of Adenomatous Polyps – Avoidance of Inappropriate Use 

1536 OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery*** 

* OP-26: Procedure categories and corresponding HCPCS codes are located at: 

http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobhe

ader=multipart%2Foctet-stream&blobheadername1=ContentDisposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata

&blobtable=MungoBlobs. 

** Measures removed beginning with the CY 2017 payment determination, as set forth in 

section XIII.D.3.b. of this final rule with comment period. 

*** Measure collected voluntarily, as set forth in section XIII.D.3.b. of this final rule with comment period. 

  Name has been updated to correspond with NQF-endorsed name. 
CMS-1613-FC 694 

 Comment: Some commenters expressed views on previously adopted Hospital 

OQR Program measures. Some commenters were supportive of previously adopted 

measures, and some commenters recommended changing measure specifications for 

some measures. Several commenters asked CMS to consider removing previously 

adopted measures from the Hospital OQR Program, specifically, OP-9, OP-10, OP-14, 

OP-15, OP-20, OP-22, and OP-25, because these measures are no longer NQF-endorsed, 

are not recommended by the MAP, or are deemed unsuitable for public reporting. 

 Response: Because we did not propose to remove OP-9, OP-10, OP-14, OP-15, 

OP-20, OP-22, or OP-25 from the Hospital OQR Program, change their measure 

specifications, or discuss the related MAP recommendations in the CY 2015 OPPS/ASC 

proposed rule, these comments are beyond the scope of the proposed rule. Therefore, we 

are not changing the status of any of the measures referred to by commenters. However, 

we will take into consideration commenters’ concerns regarding these measures for 

future rulemaking. 

 Regarding removal of measures from the Hospital OQR Program based upon 

NQF endorsement, we focus on measures appropriate to the specific provider category 

that reflect the level of care and the most important areas of service and measures for that 

provider category. Section 1833(t)(17)(C)(i) of the Act requires the Secretary to 

‘‘develop measures that the Secretary determines to be appropriate for the measurement 

of the quality of care (including medication errors) furnished by hospitals in outpatient 

settings and that reflect consensus among affected parties and, to the extent feasible and 

practicable, shall include measures set forth by one or more national consensus building 

entities.’’ This provision does not require that the measures we adopt for the Hospital 
CMS-1613-FC 695 

OQR Program be endorsed by any particular entity, and we believe that consensus among 

affected parties can be achieved by means other than endorsement by a national 

consensus building entity, including through the measure development process, through 

broad acceptance and use of the measure(s), and through public comment. 

 At this time, we continue to believe there is value in collecting and reporting these 

measures, but we can consider removal in future rulemaking. We thank the commenters 

for the measure suggestions and will share them with measure stewards. 

1. Data Submission Requirements for OP-27: Influenza Vaccination Coverage Among 

Healthcare Personnel (NQF # 0431) Reported via NHSN for the CY 2017 Payment 

Determination and Subsequent Years 

 The Influenza Vaccination Coverage among Healthcare Personnel (HCP) 

(NQF # 0431) was finalized for the Hospital OQR Program in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 75097 through 75099). We refer readers to the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75116 through 75117) for a 

discussion of the previously finalized data submission requirements for this measure. 

This measure was previously finalized for the Hospital IQR Program in the FY 2012 

IPPS/LTCH PPS final rule (76 FR 51631). In the CY 2015 OPPS/ASC proposed rule 

(79 FR 41035), we made two clarifications: (1) correcting the previously stated 

submission deadline; and (2) clarifying that hospitals should report the Influenza 

Vaccination Coverage among HCP (NQF # 0431) measure by CMS Certification Number 

(CCN) rather than separately reporting for both the inpatient and outpatient setting. 
CMS-1613-FC 696 

a. Clarification of Submission Deadline and Data Submitted 

 We noted that there was a typographical error in our discussion in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 75116 through 75117), and we 

proposed to remedy that error in the proposed rule. Specifically, we stated that the 

deadline for hospitals to submit NHSN hospital-acquired infection (HAI) measure 

collection data would be “May 15, 2015, with respect to the October 1, 2015 through 

March 31, 2015 encounter period” (78 FR 75117). In the CY 2015 OPPS/ASC proposed 

rule, we clarified that the beginning of the encounter period should be “October 1, 2014” 

instead of “October 1, 2015.” In addition, we clarified that the data to be submitted are 

more specifically referred to as “Healthcare Personnel (HCP) Influenza Vaccination 

summary reporting data” instead of “HAI measure collection data.” 

 Comment: Commenters supported the CMS clarification of the reporting 

deadline for OP-27 because this deadline will align the reporting for both inpatient and 

outpatient settings. 

 Response: We thank commenters for their support. We agree that measures 

should be aligned across our quality reporting and value-based purchasing programs to 

the extent possible. 

 As stated above, we are clarifying that the beginning of the encounter period is 

October 1, 2014, and that the data to be submitted are “Healthcare Personnel Influenza 

Vaccination summary reporting data” instead of “HAI measure collection data.” 

b. Clarification on Reporting by CMS Certification Number (CCN) 

 We received public comment about the burden of separately collecting HCP 

influenza vaccination status for both the hospital inpatient and outpatient settings 
CMS-1613-FC 697 

(78 FR 75098). We believe that reporting a single vaccination count for each health care 

facility enrolled in NHSN will be less burdensome to facilities. Therefore, in response to 

these concerns, we collaborated with CDC and clarified in an Operational Guidance 

document that, beginning with the 2014-2015 influenza season (CY 2014 reporting 

period and CY 2016 payment determination), facilities will report data to NHSN by 

enrolled facility (also known as OrgID). CDC will then translate and submit the data to 

CMS on behalf of the facilities by CCN.1

 The CDC also has produced an Operational 

Guidance document regarding reporting for this measure, which can be found at: 

http://www.cdc.gov/nhsn/PDFs/HCP/Operational-Guidance-ACH-HCP-Flu.pdf. 

 Reporting data in this way will allow health care facilities with multiple care 

settings to simplify data collection and submit a single count applicable across the 

inpatient and outpatient settings. We will then publicly report the percentage of HCP 

who received an influenza vaccination per CCN. This single count per CCN will inform 

the public of the percentage of vaccinated HCP at a particular healthcare facility, which 

would still provide meaningful data and help to improve the quality of care. Specific 

details on data submission for this measure can be found at: 

http://www.cdc.gov/nhsn/acute-care-hospital/hcp-vaccination/ and at: 

http://www.cdc.gov/nhsn/acute-care-hospital/index.html. This clarification was also noted in 

the FY 2015 IPPS/LTCH PPS final rule for the Hospital IQR Program (79 FR 50217). 

 Comment: Many commenters supported CMS’ guidance allowing hospitals to 

report OP-27 for both the inpatient and outpatient settings using one single count because 

it provides a clearer picture of vaccination rates, reduces provider burden, and aligns the 

 

1 We erroneously referred to “CNN” in the CY 2015 OPPS/ASC proposed rule (79 FR 41035). We have 

corrected that reference in this final rule with comment period to “CCN.”
CMS-1613-FC 698 

inpatient and outpatient settings. Some commenters, however, requested further 

clarification on this guidance because the Hospital IQR Program clarified in the FY 2015 

IPPS/LTCH PPS final rule that hospitals “should report a single count per enrolled 

facility, and not CCN” and that facilities should “collect and submit a single vaccination 

count for each health care facility enrolled in NHSN by facility OrgID.” 

 Response: We thank commenters for their support of the guidance issued. 

Consistent with the Hospital IQR Program in the FY 2015 IPPS/LTCH PPS final rule 

(79 FR 50217), for OP-27, hospitals should report a single count per enrolled facility 

(by OrgID), and not per CCN. We require facilities to collect and submit a single 

vaccination count for each health care facility enrolled in NHSN by facility OrgID.

 Comment: One commenter was concerned that viewers of Hospital Compare will 

not understand that the measure entails data in both hospital inpatient and outpatient 

settings. The commenter believed this would create confusion among consumers and 

misinform their decision-making. 

 Response: We thank the commenter for its concern. However, we do not agree 

that reporting a single vaccination count for each enrolled health care facility will cause 

confusion. We believe that it will be easier for consumers to understand the influenza 

vaccination rate of a hospital as a whole when we combine data for both the inpatient and 

outpatient settings, and we believe the measure is important enough for it to be 

implemented in both the inpatient and outpatient settings. 

 As stated above, we clarify that, consistent with the Hospital IQR Program and 

CDC Operational Guidance, hospitals should report to NHSN a single count per 

enrolled facility by the facility OrgID.
CMS-1613-FC 699 

2. Delayed Data Collection for OP-29 and OP-30 

 In the CY 2014 OPPS/ASC final rule with comment period, we adopted OP-29: 

Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy 

in Average Risk Patients (NQF # 0558) (78 FR 75102) and OP-30: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps – 

Avoidance of Inappropriate Use (NQF # 0659) (78 FR 75102), both chart-abstracted 

measures, and proposed that aggregate data would be collected via an online Web-based 

tool (the QualityNet Web site) beginning with the CY 2016 payment determination. We 

finalized that, for the CY 2016 payment determination, hospitals would be required to 

submit aggregate-level encounter data between July 1, 2015 and November 1, 2015 for 

data collected during January 1, 2014 through December 31, 2014 (78 FR 75114). 

 On December 31, 2013, we issued guidance stating that we would delay the 

implementation of OP-29 and OP-30 for 3 months for the CY 2016 payment 

determination, changing the encounter period from January 1, 2014 through 

December 31, 2014 to April 1, 2014 through December 31, 2014 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier3&cid=1228772854917). The data submission window for data collected from 

April 1, 2014 through December 31, 2014 is still July 1, 2015 through November 1, 2015. 

The data submission windows and the encounter periods for subsequent years remain as 

previously finalized (78 FR 75114); hospitals are to submit Web-based data between 

July 1 and November 1 of the year prior to a payment determination with respect to the 

encounter period of January 1 to December 31 of 2 years prior to a payment 

determination year. 
CMS-1613-FC 700 

 Comment: Several commenters noted their support for efforts to limit the overuse 

of colonoscopies, but expressed concern that OP-29 and OP-30 are burdensome because 

they are chart-abstracted measures, have not been specified or tested at the facility level, 

and are measures of physician quality rather than facility quality. Another commenter 

stated that these measures are not yet meaningful due to low sample sizes and the lack of 

specifications detailed with algorithms for the measures. 

 Response: We have previously responded to the commenters’ concerns that the 

measure is not specified or tested at the facility level and is a measure of physician 

quality rather than facility quality. We refer readers to our responses in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 75099 through75103) where we 

finalized these measures. We continue to believe the measures are suitable for HOPDs 

based on the reasons we discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75100 through 75102). In addition, we understand the commenters’ 

concerns regarding the administrative effort associated with chart-abstraction. We will 

continue to examine options for less burdensome reporting mechanisms for these and 

other program measures in the future. 

 Comment: Many commenters supported CMS’ delayed collection of OP-29 and 

OP-30, but requested specific rationale for the delay. 

 Response: Based on feedback from stakeholders, we believed it would be too 

burdensome to require hospitals to implement OP-29 and OP-30 by January 1, 2014 since 

these measures could require coordination with other physicians (78 FR 75113). 

Consequently, we delayed the data collection period until April 1, 2014. We believe that 
CMS-1613-FC 701 

this 3-month period was sufficient to allow hospitals to put the necessary mechanisms in 

place to collect these data. 

3. OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery 

 In the CY 2014 OPPS/ASC final rule with comment period, we adopted OP-31 

Cataracts – Improvement in Patient’s Visual Function within 90 Days Following Cataract 

Surgery (NQF # 1536) for the CY 2016 payment determination and subsequent years 

(78 FR 75103). This measure assesses the rate of patients 18 years and older (with a 

diagnosis of uncomplicated cataract) in a sample who had improvement in visual function 

achieved within 90 days following cataract surgery based on completing both a 

pre-operative and post-operative visual function survey. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41036), we: (1) corrected our 

response to public comments, (2) noted our decision to delay data collection for the 

CY 2016 payment determination, and (3) proposed voluntary data collection for the 

CY 2017 payment determination and subsequent years for OP-31: Cataracts: 

Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery 

(NQF # 1536). 

a. Correction of Response to Public Comments 

In the CY 2014 OPPS/ASC final rule with comment period, we stated, in 

response to commenters concerned that the proposed chart-abstracted measures had not 

been field-tested, that “all three measures that we are finalizing . . . were field-tested in 

the HOPD facility setting by the measure stewards. These three measures are: 

(1) Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 
CMS-1613-FC 702 

Colonoscopy in Average Risk Patients (NQF # 0658); (2) Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a History of Adenomatous Polyps – Avoidance of 

Inappropriate Use (NQF # 0659); and (3) [OP-31] Cataracts: Improvement in Patient’s 

Visual Function within 90 Days Following Cataract Surgery (NQF # 1536)” 

(78 FR 75099 through 75100). 

 We inadvertently misstated that the OP-31: Cataracts: Improvement in Patient’s 

Visual Function within 90 Days Following Cataract Surgery (NQF # 1536) had been 

field-tested in the HOPD setting, and we are clarifying here that this measure has not 

been field-tested in that setting. However, we note that, in considering and selecting this 

measure, we took into account other principles or factors, including: NQS goals, type of 

measure, HHS Strategic Plan and Initiatives, NQF endorsement, MAP support, 

stakeholder input, alignment with quality goals and settings, relevance, utility, and 

burden. More information about these principles can be found in the CY 2014 

OPPS/ASC proposed rule and final rule with comment period (78 FR 43643 through 

43644) and in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68467 

through 68468). 

b. Delayed Data Collection for OP-31 and Exclusion from the CY 2016 Payment 

Determination Measure Set 

 Since our adoption of this measure, we have come to believe that it can be 

operationally difficult for hospitals to collect and report this measure. Specifically, we 

are concerned that the results of the survey used to assess the pre-operative and 

post-operative visual function of the patient may not be shared across clinicians, making 
CMS-1613-FC 703 

it difficult for hospitals to have knowledge of the visual function of the patient before and 

after surgery. 

 We also are concerned about the use of inconsistent surveys to assess visual 

function; the measure specifications allow for the use of any validated survey and results 

may be inconsistent should clinicians use different surveys. Therefore, on 

December 31, 2013, we issued guidance stating that we would delay the implementation 

of OP-31 by 3 months from January 1, 2014 to April 1, 2014 for the CY 2016 payment 

determination 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier3&cid=1228772854917). Because of continuing concerns, on April 2, 2014, we 

issued additional guidance stating that we would further delay the implementation of the 

measure from April 1, 2014 to January 1, 2015 for the CY 2016 payment determination 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier2&cid=1228721506778). In the CY 2015 OPPS/ASC proposed rule (79 FR 41036), 

we proposed to exclude OP-31 Cataracts: Improvement in Patient’s Visual Function 

within 90 Days Following Cataract Surgery (NQF # 1536) from the CY 2016 payment 

determination measure set. We proposed not to subject hospitals to a payment reduction 

with respect to this measure for the CY 2016 payment determination. 

 We invited comment on this proposal. 

 Comment: Many commenters commended CMS’ recognition of the associated 

operational issues and the proposal to exclude OP-31 from the CY 2016 payment 

measure determination set. Other commenters disagreed; they stated that complications 

following cataract surgery are not acceptable, and they strongly believed that OP-31 
CMS-1613-FC 704 

tracks patient-centered clinical outcomes and improves care coordination among 

providers. 

 Response: We agree that complications following cataract surgery are not 

acceptable. While OP-31 does not address complications following cataract surgery, it 

does address improvement in visual function following cataract surgery and tracks an 

important patient-centered clinical outcome. Based on stakeholder feedback, we believe 

this measure should be excluded from the CY 2016 payment determination because there 

are a low number of hospitals ready to operationalize this measure for the CY 2016 

payment determination. As noted below, we believe that by the CY 2017 payment 

determination, many more hospitals will be operationally able to collect the data 

necessary for this measure and may choose to do so. 

 After consideration of the public comments we received, we are finalizing our 

proposal to exclude OP-31 from the CY 2016 payment determination measure set as 

proposed. Therefore, we will not subject hospitals to a payment reduction with respect to 

OP-31 for the CY 2016 payment determination. 

c. Voluntary Collection of Data for OP-31 for the CY 2017 Payment Determination and 

Subsequent Years 

 We continue to believe that OP-31 promotes accountability for Medicare 

beneficiaries, improve coordination of services, reduce fragmented care, encouraged 

redesigned care processes for high quality and efficient service delivery, and incentivize 

higher value care (78 FR 75099). Furthermore, we believe that HOPDs should be 

partners in care with physicians and other clinicians, and this measure provides an 

opportunity to do so. Therefore, we are continuing to include this measure in the 
CMS-1613-FC 705 

Hospital OQR Program measure set. However, in the CY 2015 OPPS/ASC proposed 

rule (79 FR 41036), we proposed that hospitals have the option to voluntarily collect and 

submit OP-31 data for the CY 2015 encounter period/CY 2017 payment determination 

and subsequent years. In addition, we proposed to not subject hospitals to a payment 

reduction with respect to this measure during the period of voluntary reporting. For 

hospitals that choose to submit data voluntarily, we would request that they submit such 

data using the means and timelines finalized in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75112 through 75113). Data submitted voluntarily will be 

publicly reported as discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 43645)

and final rule with comment period (78 FR 75092). 

 We invited public comment on this proposal. 

 Comment: Many commenters requested that CMS remove the measure from the 

program entirely, rather than delaying implementation and allowing voluntary reporting. 

The commenters repeated similar concerns expressed in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75099 through 75103), where this measure was 

finalized, regarding associated burden, suitability for the Hospital OQR Program versus 

the PQRS, program alignment of this measure, non-standardization of collected 

information, NQF endorsement, MAP recommendations, and coordination challenges 

faced by facilities. 

 Response: We do not agree that we should remove the measure entirely, because 

we believe OP-31 addresses an area of care that is not adequately addressed in our 

current measure set and is an important area of care coordination between performing 

physicians, practitioners that assess visual function, and HOPDs where procedures are 
CMS-1613-FC 706 

performed. We previously addressed the above concerns in our responses the CY 2014 

OPPS/ASC final rule with comment period where we finalized this measure and refer 

readers to that final rule with comment period (78 FR 75099 through 75103) for a 

discussion of these issues. 

 Comment: Commenters opposed to voluntary reporting of OP-31 were concerned 

that incomplete display of data is confusing and not meaningful to consumers and is hard 

to validate. Furthermore, commenters feared that the display of data from some hospitals 

but not others would lead some patients to conclude that some hospitals are more 

committed to improving cataract surgery. 

 Response: We appreciate the commenters’ concerns, but we do not agree that 

voluntary data reporting will result in data that are confusing, are not meaningful, or 

cause patients to conclude that some hospitals are more committed to improving cataract 

surgery. There are many situations where hospitals do not submit information to the 

Hospital OQR Program due to lack of cases or low case volume. Where quality 

information is submitted, we make this information publicly available as statutorily 

required, and we state when it is not available. Furthermore, reporting of measure data 

by some hospitals and not others under voluntary reporting would not affect the validity 

of data reported for this Web-based measure any more so than a required measure where 

not all hospitals had cases. We note that at this time, we do not validate aggregate data 

submitted to CMS using an online tool, so difficulty to validate this information is not a 

program issue. We refer readers to section XIII.H.3 of this final rule with comment 

period where we discuss our validation procedures. 
CMS-1613-FC 707 

 We understand some facilities are capable of reporting data for this measure at 

this time, and we believe those facilities should report if they are operationally able to do 

so. We believe voluntary reporting is beneficial for HOPDs because all HOPDs, both 

participating and not participating in voluntary reporting, can use the reported data to 

gauge their own performance and identify improvement efforts. By retaining the 

measure but allowing voluntary reporting, we can continue to monitor the data submitted 

to assess further enhancement of the measure as necessary. 

 Comment: Commenters expressed support for patient-reported outcome measures 

like OP-31 and recommended additional outcome measures for cataract procedures, such 

as Complications within 30 Days Following Cataract Surgery Requiring Additional 

Procedures (NQF #0564) and Better Visual Acuity Within 90 Days Following Cataract 

Surgery (NQF #0565). 

 Response: We thank the commenters for the support and their input regarding 

patient-reported outcome measures. We may consider these suggestions for future 

measure selection. 

 Comment: One commenter suggested that CMS allow voluntary reporting for all 

newly adopted measures, given the inconvenience and burden associated with preparing 

to report a measure that later may become suspended or for which we delay 

implementation. 

 Response: We thank the commenter for the suggestion. We understand that 

hospitals may have been inconvenienced by this measure, but disagree that all newly 

adopted measures should be voluntarily reported. We have retained the vast majority of 

measures adopted for the Hospital OQR Program. 
CMS-1613-FC 708 

 After consideration of the public comments we received, we are finalizing our 

proposal that hospitals have the option to voluntarily collect and submit OP-31 data for 

the CY 2015 encounter period/CY 2017 payment determination and subsequent years as 

proposed. For hospitals that choose to submit data, we request that they submit such data 

using the means and timelines finalized in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75113 through 75115). We will not subject hospitals to a 

payment reduction with respect to this measure during the period of voluntary reporting. 

However, data submitted voluntarily will be publicly reported. 

E. New Quality Measure for the CY 2018 Payment Determination and Subsequent Years 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41036 through 41039), we 

proposed to adopt one new claims-based measure into the Hospital OQR Program for the 

CY 2017 payment determination and subsequent years: OP-32: Facility 7-Day RiskStandardized Hospital Visit Rate after Outpatient Colonoscopy. Colonoscopy is one of 

the most frequently performed procedures in the outpatient setting in the United States.2 

The most recent data available indicate that, in 2002 alone, physicians performed an 

estimated 14 million colonoscopies in the United States.3 Colonoscopies are associated 

with a range of well-described and potentially preventable adverse events that can lead to 

hospital visits, repeat procedures, or surgical intervention for treatment, including colonic 

perforation, gastrointestinal (GI) bleeding, and cardiopulmonary events such as hypoxia, 

aspiration pneumonia, and cardiac arrhythmias. While hospital visits are generally 

 

2

 Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based Ambulatory Surgery, 2007: Statistical Brief 

#86. Healthcare Cost and Utilization Project (HCUP) Statistical Briefs. Rockville (MD)2006. 

3

 Seeff LC, Richards TB, Shapiro JA, et al. How many endoscopies are performed for colorectal cancer 

screening? Results from CDC's survey of endoscopic capacity. Gastroenterology. Dec 

2004;127(6):1670-1677. 
CMS-1613-FC 709 

unexpected after outpatient colonoscopy, the literature suggests that the majority of these 

visits occur within the first 7 days.4,5,6 Reported hospital visit rates after outpatient 

colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post procedure, and from 2.4 to 

3.8 percent at 30 days post procedure.7,8,9

 Some adverse events such as bleeding occur 

after the 7th day, but based on input from clinical experts, public comment, and empirical 

analyses, we concluded that unplanned hospital visits within 7 days is the optimal 

outcome to ensure capture of procedure-related adverse events and to minimize capture 

of hospital visits unrelated to the procedure. This measure provides the opportunity for 

providers to improve quality of care and to lower the rates of adverse events leading to 

hospital visits after outpatient colonoscopy; this measure will encourage providers to 

achieve the outcome rates of the best performers. 

 We believe it is important to reduce adverse patient outcomes associated with 

preparation for colonoscopy, the procedure itself, and follow-up care. Therefore, we 

proposed to include OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy, which is based on paid Medicare FFS claims, in the Hospital 

OQR Program for the CY 2017 payment determination and subsequent years. We expect 

that the measure would promote improvement in patient care over time because 

 

4

 Rathgaber SW, Wick TM. Colonoscopy completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 2006; 64:556-62. 5

 Rabeneck L, Saskin R, Paszat LF. Onset and clinical course of bleeding and perforation after outpatient 

colonoscopy: a population-based study. Gastrointest Endosc. 2011; 73:520-3. 6

 Ko CW, Riffle S, Michael L, et al. Serious complications within 30 days of screening and surveillance 

colonoscopy are uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73. 7

 Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor complications and time lost from normal 

activities after screening or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;65(4):648-656. 

8

 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 

9

 Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A, Brooks R. Is there a relationship 

between physician and facility volumes of ambulatory procedures and patient outcomes? J Ambul Care 

Manage. Oct-Dec 2008;31(4):354-369. 
CMS-1613-FC 710 

transparency in publicly reporting measure scores will make patient unplanned hospital 

visits (emergency department visits, observation stays, and inpatient admissions) 

following colonoscopies more visible to providers and patients and encourage providers 

to incorporate quality improvement activities in order to reduce these visits. Providers 

are often unaware of complications following colonoscopy for which patients visit the 

hospital.10 This risk-standardized quality measure will address this information gap and 

promote quality improvement by providing feedback to facilities and physicians, as well 

as transparency for patients on the rates and variation across facilities in unplanned 

hospital visits after colonoscopy. 

 The outcome measured in the OP-32 measure is all-cause, unplanned hospital 

visits (admissions, observation stays, and emergency department visits) within 7 days of 

an outpatient colonoscopy procedure. The measure score, also referred to as the facilitylevel risk-standardized hospital visit rate, is derived from the calculation of the ratio of 

the numerator to the denominator multiplied by the crude rate. The numerator is the 

number of predicted (meaning adjusted actual) hospital visits, which is the number of 

unplanned hospital visits within 7 days of colonoscopy that the facility is predicted to 

have based on its case-mix. The denominator is the number of expected hospital visits,

which is the number of unplanned hospital visits the facility is expected to have based on 

the nation’s performance with the facility’s case-mix. The crude rate is the national 

unadjusted number of patients who had a hospital visit post-colonoscopy among all 

patients who had a colonoscopy. 

 

10 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 
CMS-1613-FC 711 

 Based on discussions with clinical and technical panel experts, the measure 

excludes colonoscopies for patients undergoing concomitant high-risk upper GI 

endoscopy because these patients are at a higher risk for hospital visits than patients 

undergoing a typical colonoscopy, and patients with a history of inflammatory bowel 

disease (IBD) or diverticulitis in the year preceding the colonoscopy because we likely 

could not fully characterize and adjust for their pre-procedure risk of needing a 

post-procedure hospital visit or identify whether these admissions are planned or 

unplanned. The measure also excludes procedures for patients who lack continuous 

enrollment in Medicare FFS Parts A and B in the 1 month after the procedure to ensure 

all patients have complete data available for outcome assessment. The statistical risk 

adjustment model includes 15 clinically relevant risk-adjustment variables that are 

strongly associated with risk of hospital visits within 7 days following colonoscopy. 

Additional methodology details and information obtained from public comments for 

measure development are available at: http://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html under 

“Hospital Outpatient Colonoscopy.” 

 Section 1890A(a)(2) of the Act outlines the pre-rulemaking process established 

under section 1890A of the Act, which requires the Secretary to make available to the 

public by December 1 of each year a list of quality and efficiency measures that the 

Secretary is considering. This measure was included on a publicly available document 

titled “MAP Pre-Rulemaking Report: 2014 Recommendations on Measures for More 

than 20 Federal Programs” on the NQF Web site at: 

http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Progr
CMS-1613-FC 712 

ams.aspx (formerly referred to as the “List of Measures Under Consideration”) in 

compliance with section 1890A(a)(2) of the Act. (We note that at the time the measure 

was listed on the “MAP Pre-Rulemaking Report: 2014 Recommendations on Measures 

for More than 20 Federal Programs,” it was named “High-Acuity Care Visits after 

Outpatient Colonoscopy Procedure.”) 

 The MAP, which represents stakeholder groups, conditionally supported the 

measure, “noting the need to provide outcome information to inform consumer decisions 

and drive quality improvement.” The MAP further stated that “[t]his measure addresses 

an important quality and safety issue with incidence of these events ranging from 10 to 

22 per 1,000 after risk adjustment.” However, the MAP also “recognized the need for the 

measure to be further developed and gain NQF endorsement. The MAP expects the 

endorsement process to resolve questions of the reliability and validity of the measure as 

well as with the accuracy of the algorithm for attributing claims data in light of possible 

effects of the Medicare 3-day payment window policy.” As required under 

section 1890A(a)(4) of the Act, we considered the input and recommendations provided 

by the MAP in selecting measures to propose for the Hospital OQR Program. 

 We believe we have addressed the concerns raised by the MAP to the extent 

possible. The measure is well-defined and precisely specified for consistent 

implementation within and between organizations that will allow for comparability. 

Reliability testing demonstrated the measure data elements produced were repeatable; 

that is, the same results were produced a high proportion of the time when assessed in the 

same population in the same time period. Validity testing demonstrated that the measure 

data elements produce measure scores that correctly reflect the quality of care provided 
CMS-1613-FC 713 

and that adequately identify differences in quality. In order to ensure the accuracy of the 

algorithm for attributing claims data and the comprehensive capture of HOPD 

colonoscopies potentially affected by the policy, we identified physician claims for 

colonoscopy in the HOPD setting from the Medicare Part B Standard Analytical Files 

(SAF) with an inpatient admission within 3 days and lacking a corresponding HOPD 

facility claim. We then attribute the colonoscopies identified as affected by this policy to 

the appropriate HOPD facility using the facility provider ID from the inpatient claim. 

 Section 1833(t)(17)(C)(i) of the Act states that, “The Secretary shall develop 

measures . . . that reflect consensus among affected parties and, to the extent feasible and 

practicable, shall include measures set forth by one or more national consensus building 

entities.” We believe that this proposed measure reflects consensus among the affected 

parties, because the MAP, which represents stakeholder groups, reviewed, conditionally 

supported the measure, and stated that it “would provide valuable outcome information to 

inform consumer decision and drive quality improvement.” Further, the measure was 

subject to public comment during the MAP and measure development processes, with 

some public commenters agreeing with the MAP’s conclusions on the measure (MAP 

Report, January 2014, p. 184 http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Progr

ams.aspx). We also note that the measure was submitted to NQF for endorsement on 

February 21, 2014. 

 Currently, there are no publicly available quality of care reports for providers or 

facilities that conduct outpatient colonoscopies. Thus, adoption of this measure provides 

an opportunity to enhance the information available to patients choosing among providers 

who offer this elective procedure. We believe this measure would reduce adverse patient 
CMS-1613-FC 714 

outcomes associated with preparation for colonoscopy, the procedure itself, and 

follow-up care by capturing and making more visible to providers and patients all 

unplanned hospital visits following the procedure. Further, providing outcome rates to 

providers will make visible to clinicians meaningful quality differences and encourage 

improvement. Although this measure is not NQF-endorsed, it is currently undergoing the 

endorsement process, as noted above. Therefore, we believe the statutory requirement 

for included measures to have, to the extent feasible and practicable, been set forth by a 

national consensus-building entity has been met. 

 We invited public comment on the proposal to include OP-32 in the Hospital 

OQR Program for the CY 2017 payment determination and subsequent years. 

 Comment: Several commenters supported the adoption of OP-32, stating that it 

will provide patients with important information about the quality of colonoscopy care 

furnished in outpatient settings. Some commenters noted that CMS has appropriately 

considered the MAP’s input in adopting this measure and that the measure’s adoption is a 

good first step in the continued evolution of the Hospital OQR Program. 

 Response: We thank commenters for their support and acknowledgement that the 

measure is appropriate for the Hospital OQR Program. We agree that measuring quality 

of care associated with colonoscopy procedures is an important clinical care area to 

assess for HOPDs. 

 Comment: Many commenters urged CMS not to adopt OP-32 until it is 

NQF-endorsed. Several of these commenters also noted that the MAP supported this 

measure on condition of NQF-endorsement, and stated that the NQF process would 

resolve a number of questions about the reliability, validity and feasibility of this 
CMS-1613-FC 715 

measure. The commenters requested that, in general, CMS only include measures in the 

Hospital OQR Program that have been NQF-endorsed in order to avoid subsequent 

suspension or removal of these measures. 

 Response: We note that not all of the measures adopted by the Hospital OQR 

Program are NQF-endorsed, and as we stated in our earlier discussion in this final rule 

with comment period, NQF endorsement is not a program requirement, as consensus 

among affected parties can be reached through means other than NQF endorsement. 

Under section 1833(t)(17)(C)(i) of the Act, the Secretary must develop measures that 

reflect consensus among affected parties and, to the extent feasible and practicable, must 

include measures set forth by one or more national consensus building entities. 

 Whenever possible, we strive to adopt NQF-endorsed measures because these 

measures will meet these requirements. However, we believe the requirements that 

measures reflect consensus among affected parties can be achieved in other ways, 

including through the measure development process, through broad acceptance and use of 

the measure, and through public comments. Further, it may not be feasible or practicable 

to adopt an NQF-endorsed measure, such as when an NQF-endorsed measure does not 

exist. Section 1833(t)(17)(C)(i) of the Act does not require that each measure we adopt 

for the OQR Program be endorsed by a national consensus building entity, or by the NQF 

specifically. As discussed below, we believe the measure as developed exhibits sufficient 

levels of reliability, validity, and feasibility to be adopted for the Hospital OQR Program. 

We have also submitted this measure to the NQF for endorsement. 

 Comment: A few commenters noted that the measure is currently being reviewed 

by the NQF All-Cause Admissions and Readmissions Standing Committee. Commenters 
CMS-1613-FC 716 

were disappointed that the Committee’s minutes indicated there were no discussions of 

consideration of key elements of the measure’s construction and testing. 

 Response: We thank the commenters for sharing their concerns. We believe the 

NQF process is rigorous and transparent. We understand the NQF All-Cause Admissions 

and Readmissions Standing Committee applies the four NQF criteria for measure 

endorsement11 and votes on each criterion. In addition, our understanding is that the 

measure was discussed in detail by NQF working groups prior to the measure discussion 

at the All-Cause Admissions and Readmissions Standing Committee 

(http://www.qualityforum.org/ProjectMaterials.aspx?projectID=73619). 

NQF also seeks public comments on measures before endorsement. 

http://www.qualityforum.org/comments_By_Project.aspx?projectID=110&ActivityID=762#p=3. (This 

link requires users to log in to the NQF Web site.) For questions related to NQF internal 

procedures, we suggest contacting the NQF directly at

http://www.qualityforum.org/About_NQF/Contact_NQF.aspx. 

 Comment: Many commenters did not support CMS’ proposal to finalize OP-32, 

stating that complications from colonoscopies are rare and hospitals already take steps to 

ensure colonoscopies are conducted in such a way so as to eliminate preventable 

complications. Some commenters specifically noted that the literature indicates the 

measured incidence rate is less than 2 percent, and does not rise to the level of 

importance needed for a national quality measurement program. 

 Response: Given the widespread use of colonoscopy for colorectal cancer 

screening in the outpatient setting, we consider measuring the quality of this high volume 

procedure to be a priority. We agree that the incidence of colonoscopy complications is 

 

11 Available at: http://www.qualityforum.org/docs/measure_evaluation_criteria.aspx.
CMS-1613-FC 717 

relatively low. However, serious adverse events, such as perforation of the bowel and 

bleeding, may occur following colonoscopies. We view OP-32 as a critical outcome 

measure for which the goal is to drive toward and sustain zero harm. In addition, some 

literature suggests that many facilities performing colonoscopies are unaware of patients 

accessing hospital-based care with adverse events because patients return to different 

facilities, including other hospitals and emergency departments, and would not return to 

the same outpatient facility. For example, one study showed that physicians were 

unaware of nearly 75 percent of hospital admissions for adverse events following 

colonoscopy.12 While most colonoscopies are performed without subsequent 

complication, we note that, among Medicare patients aged 65 and older, 1.6 percent of 

outpatient colonoscopies resulted in an unplanned hospital visit within 7 days.13 This is 

based on a 20-percent sample of nationwide Medicare FFS patients. If we were to use 

full national data (that is, a 100 percent sample), we estimate 1.7 million colonoscopies 

would have been performed among Medicare FFS patients and nearly 27,000 unplanned 

hospitals visits would have occurred within 7 days of colonoscopy. These findings 

suggest that adverse events are not as rare or inconsequential as many believed and that 

quality measurement for colonoscopy procedures in the hospital outpatient setting is 

important. 

 Comment: Many commenters expressed concern that OP-32 includes hospital 

visits unrelated to colonoscopy (counted in the numerator). Some commenters 

 

12 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010; 170(19): 1752–1757. 

13 2010 Medicare 20 percent fee-for-service sample. Based on an analysis of 20 percent sample of 

Medicare FFS data from 2010 during measure development. The 20 percent sample included 332,391 

outpatient colonoscopies meeting the measure inclusion and exclusion criteria, and 1.6 percent of these 

colonoscopies were followed by an unplanned hospital visit. This equates to 5,331 unplanned hospital 

visits in the 20 percent sample. 
CMS-1613-FC 718 

questioned why the measure uses an all-cause categorization versus only admissions 

attributable to colonoscopies. One commenter suggested that all high-risk colonoscopies 

(such as patients with multiple biopsies, patients with inflammatory bowel disease, and 

diverticulitis) should be excluded from the measure. Commenters recommended that 

OP-32 should be limited to low-risk surveillance and screening colonoscopies as well as 

nontherapeutic colonoscopies for Medicare patients. One commenter appreciated that 

OP-32 includes a mechanism for excluding hospital visits for certain “planned” 

procedures, but encouraged CMS to expand that list to also include bone fractures and 

behavioral health disorders. 

 Response: We clarify that this measure is purposely designed to use a broad 

outcome of hospital visits following surgery rather than a narrow set of easily identifiable 

complications. From a patient and health care system perspective, the goal of this 

measure is to encourage and inform provider efforts to minimize all potential acute 

complications, not just those narrowly related to procedural technique. This is important 

as the literature14,15,16,17,18 suggests that hospital visits following colonoscopy occur due to 

a range of adverse events relating to the bowel preparation, anesthesia, the colonoscopy 

procedure itself, and follow-up care. These adverse events include a range of symptoms 

and signs such as abdominal pain, bloating, dizziness and collapse, electrolyte 

disturbances, and cardiorespiratory symptoms (from sedation use) in addition to other 

 

14 Day LW, Kwon A, Inadomi JM, et al. Adverse events in older patients undergoing colonoscopy: a 

systematic review and meta-analysis. 2011;74:885-96. 

15 Ko CW, Dominitz JA. Complications of colonoscopy: magnitude and management. Gastrointest Endosc 

Clin N Am 2010;20:659-71. 

16 ASGE Standards of Practice Committee, Fisher DA, Maple JT, et al. Complications of colonoscopy. 

Gastrointest Endosc 2011;74:745-52. 

17 Baudet JS, Diaz-Bethencourt D, Aviles J, et al. Minor adverse events of colonoscopy on ambulatory 

patients: the impact of moderate sedation. Eur J Gastroenterol Hepatol 2009;21:656-61. 

18 Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor complications and time lost from normal 

activities after screening or surveillance colonoscopy. 2007;65:648-56. 
CMS-1613-FC 719 

complications, such as bleeding and bowel perforation, that are directly related to 

procedural techniques. The broad outcome of unplanned hospital visits captures all of 

these potential acute complications of colonoscopy. 

 As to the suggestion of expanding the list to include bone fractures and behavioral 

health disorders, we note that inpatient admissions for bone fracture and behavioral 

health disorders (such as depression and anxiety) are typically acute and are not generally 

considered as “planned” admissions. We do not expect planned admissions for these 

conditions within the first 7-days following colonoscopy. Furthermore, we have adapted 

the planned readmission algorithms developed by CMS independent of OP-32. This 

algorithm has been validated against medical record (chart-extracted) data to ensure it 

only removes planned admissions. 

 Our goal for including the measure is to encourage providers to be mindful of 

reducing post-colonoscopy admission caused by prior colonoscopy procedures performed 

at a HOPD. For example, patients may be at higher risk of falls post-colonoscopy 

secondary to dehydration following the bowel preparation for the procedure, and there 

may be opportunities for providers to minimize this risk. Furthermore, we removed 

planned admissions from the measure outcome by adapting CMS’ Planned Readmission 

Algorithm version 3.0.19,20 This algorithm removes nonacute admissions for scheduled 

procedures (for example, total hip replacement) and other types of care always 

considered planned (for example, rehabilitation or maintenance chemotherapy) from the 

 

19 Horwitz L, Grady J, Dorsey K, Zhang W, Keenan M, Keshawarz A, Cohen D, Ngo C, Okai M, Nwosu 

C, Lin Z, Bhat K, Krumholz H, Bernheim S. 2014 Measures Updates and Specifications Report: HospitalWide All-Cause Unplanned Readmission--Version 3.0. 2014: Centers for Medicare & Medicaid Services, 

2014. 

20Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/Measure-Methodology.html
CMS-1613-FC 720 

outcome because these admissions do not reflect differences in colonoscopy quality of 

care. 

 Comment: One commenter noted that CMS stated that the statistical risk 

adjustment model includes 15 clinically relevant risk- adjustment variables (such as 

number of polyps removed) that are strongly associated with risk of hospital visits within 

seven days following colonoscopy and certain patients receiving colonoscopies that 

would be more likely to have a subsequent visit were excluded. The commenter stated 

that CMS did not report the variation between hospitals in the application for 

NQF-endorsement. The commenter raised the possibility of no statistically significant 

difference between a hospital’s risk-adjusted visit rate and the national average. The 

commenter believed this scenario would make it impossible to identify poor performers 

and good performers for this measure. Without this type of differentiation, the 

commenter did not understand how this measure will be actionable for care improvement. 

The commenter suggested that CMS conduct a root cause analysis for specific related 

readmission after colonoscopy or test of the variation of the measure between hospital 

providers. The commenter also suggested that The Joint Commission’s guidelines and 

relevant Conditions of Participation standards would enhance care improvement efforts. 

 Response: We thank the commenter for their suggestions to enhance 

improvement efforts for colonoscopy. We clarify that, in the application for NQF 

endorsement, we noted that the measure, following risk-adjustment, is able to detect 

statistically significant variation (good and poor performers) between outpatient facilities 

by demonstrating measure score variation using the 2010 Healthcare Cost and Utilization 

Project (HCUP) data from four States (California, New York, Nebraska, and Florida). 
CMS-1613-FC 721 

Using a very conservative bootstrapping (sampling with replacement) statistical 

technique, we constructed 95 percent interval estimates (similar to confidence intervals) 

around the facility measure score and used the estimates to place facilities into three 

performance categories: worse than expected; no different than expected; and better than 

expected. Based on this analysis, we identified 5 outlier facilities among a total of 992 

ASCs and HOPDs. This analysis included only about one-tenth of all outpatient facilities 

in the United States, and typically we see greater variation between facilities when 100 

percent of nationwide facilities are included for actual measure implementation and 

reporting due to increased precision related to greater sample size. 

 We disagree with the notion that there is a possibility of no statistically significant 

difference between a hospital’s risk-adjusted visit rate and the national average. Our 

analysis shows statistically significant facility variation. Some facilities have a hospital 

visit rate that is higher than the expected national average rate and this is statistically 

significant. Also, we only tested provider variation using data from 4 States. We expect 

greater variation and more outliers using nationwide data. 

 We are committed to filling the performance gaps in colonoscopy performed in 

the outpatient setting. Therefore, we believe this measure is appropriate for the 

outpatient setting. However, in response to comments, to allow sufficient time to conduct 

further analysis of this measure, we are finalizing this measure beginning with the 

CY 2018 payment determination, rather than the CY 2017 payment determination as 

proposed. We plan to perform a dry run of the measure in 2015. From our perspective, a 

dry run is a preliminary analysis of data in which HOPDs may review their measure 

results, and ask questions about and become familiar with the measure methodology. 
CMS-1613-FC 722 

Dry runs will include 3 to 4 years of paid Medicare FFS claims. We will use the most 

recent complete claims samples (usually 6 to 9 months prior to the start date) for dry 

runs. For example, if the dry run begins in March 2015, the most recent data available 

may be July 2011 to June 2014 (assuming we use 3 years of data). Because we use paid 

Medicare FFS claims, HOPDs will not need to submit any additional data for the dry run. 

General information about dry run as well as confidential reports will be made available 

for hospitals to review on their accounts at https://www.qualitynet.org. The dry run will 

generate confidential reports at the patient level, indicating whether the patient had a 

hospital visit, the type of visit (admission, emergency department visit, or observational 

stay), the admitting facility, and the principal discharge diagnosis. Further, the dry run 

will enable HOPDs to see the measure score reports and have the opportunity to receive 

individual patient data and information contained within individual patient records. In 

addition, we will continue to generate these reports for HOPDs after we implement the 

measure beginning with the CY 2018 payment determination. HOPDs can use the 

information to identify performance gaps and develop quality improvement strategies. 

 Dry run results are not linked to public reporting, payment determinations, or 

reliability testing. We expect the dry run to take approximately one month to conduct, 

during which facilities will be provided the confidential report and the opportunity to 

review their performance and provide feedback to us. The measure will have no payment 

impact until the CY 2018 payment determination and subsequent years. Public display of 

data will occur on or after December 1, 2017, but there will be no public display of the 

dry run data. 
CMS-1613-FC 723 

We agree that adhering to The Joint Commission’s guidelines and relevant 

Conditions of Participation standards could enhance care improvement efforts and 

hospitals’ rates on this measure, and we encourage hospitals to follow these guidelines 

and standards. We also believe that issuing reports to hospitals, such as those that we 

will provide during the dry-run, would help hospitals to identify the root cause (practices 

and conditions) that could cause hospital visits after colonoscopy. 

 Comment: Many commenters expressed concern that OP-32 is not sufficiently 

reliable to be included in the Hospital OQR Program; specifically, the measure developer 

has indicated that the measure is only “fairly” reliable, with an interclass correlation 

coefficient (ICC) of 0.335. These commenters contended that “fair” reliability is not 

sufficient for publicly reported quality metrics since such information could misinform 

the public, and urged CMS to conduct an analysis on the measure’s reliability to 

understand the amount of data required to achieve “good” reliability. Several 

commenters argued that “good” reliability should result in an ICC of at least 0.60. Other 

commenters believed that reliability will improve with several years’ worth of data. 

Another commenter requested that data from this measure be withheld from public 

reporting until concerns about its reliability and validity can be thoroughly assessed. 

 Response: We disagree with commenters and believe that OP-32 is sufficiently 

reliable to be included in the Hospital OQR Program. The ICC value submitted in the 

initial NQF application (0.335) was calculated using a split sample of data from 2 years. 

We randomly split the patient cohort at each hospital into two equal halves, calculated the 

measure using each half, and then calculated the agreement between these two (the ‘test’ 

and the ‘retest’). After submitting the measure to NQF for endorsement review, we 
CMS-1613-FC 724 

conducted additional calculations of the reliability testing score, this time using the 

Spearman-Brown prophecy formula. The Spearman-Brown prophecy formula is an 

accepted statistical method which estimates the ICC if the sample were increased. 

Therefore, it allows us to estimate what the reliability score would be if all observations 

were used for public reporting rather than using a split sample. Our Spearman-Brown 

prophecy formula calculations resulted in a higher ICC of 0.43. 

 The NQF considers the ICC values ranging from 0.21 to 0.40 as “fair” reliability 

and values ranging from 0.41 to 0.60 as “moderate” reliability. Therefore, the ICC values 

of 0.335 and 0.43 are interpreted as “fair” and “moderate” reliability, respectively. These 

ICC values are also in line with other NQF-endorsed outcome measures used in other 

CMS programs. For example, in the Hospital Readmissions Reduction Program, the 

Inpatient Acute Myocardial Infarction (AMI) 30-day Risk Standardized Readmission 

measure (NQF #0505) (76 FR 51667) has an ICC of 0.369, and the Pneumonia (PN) 

30-day Risk Standardized Readmission measure (NQF #0506), also in the Hospital 

Readmissions Reduction Program (76 FR 51667), has an ICC of 0.406. Both measures 

are NQF-endorsed. 

 Regarding the concerns that the public may be misinformed and that we should 

withhold public reporting until the measure’s reliability and validity is addressed, as 

stated above, we believe the reliability of the measure is sufficiently reliable for inclusion 

in the Hospital OQR Program and do not agree that the public may be misinformed or 

that we should withhold public reporting. In addition to our calculations above, 

reliability testing previously conducted by the measure steward demonstrated the measure 

data elements produced were repeatable; that is, the same results were produced a high 
CMS-1613-FC 725 

proportion of the time when assessed in the same population in the same time period. 

Also, validity testing by the measure steward demonstrated that the measure data 

elements produce measure scores that correctly reflect the quality of care provided and 

that adequately identify differences in quality. 

 As the commenters suggested, the measure reliability may be further improved by 

using several years’ worth of data; however, we must balance the reliability of the 

measure with the timeliness of the measure. As discussed, at this time, we believe that 

1 year of data appropriately balances these competing interests for payment determination 

purposes, but we will continue to assess this belief during the dry run. Also, we will 

consider conducting additional reliability assessments of the measure using an extended 

data period. 

 Moreover, we believe it is important to include this measure in the program 

because colonoscopy is a high volume, common procedure performed at outpatient 

facilities and is frequently performed on relatively healthy patients to screen for 

colorectal cancer (CRC). Given the widespread use of colonoscopy, understanding and 

minimizing procedure-related adverse events is a high priority. These adverse events, 

such as abdominal pain, bleeding, and intestinal perforation, can result in unanticipated 

hospital visits post procedure. Physicians performing colonoscopies are often unaware 

that patients seek acute care at hospitals following the procedure and the associated 

adverse events are potentially preventable. We strongly believe that the measure would 

promote improvement in patient care over time because transparency in publicly 

reporting measure scores would make patient unplanned hospital visits (emergency 

department visits, observation stays, and inpatient admissions) following colonoscopies 
CMS-1613-FC 726 

more visible to HOPDs and patients and incentivize HOPDs to incorporate quality 

improvement activities in order to reduce these visits. 

 Finally, we believe this measure should be included in the program because 

currently, this risk-standardized colonoscopy quality measure is the only measure 

available that would address this information gap and promote quality improvement by 

providing feedback to facilities and physicians, as well as transparency for patients on the 

rates and variation across facilities in unplanned hospital visits after colonoscopy. There 

are no publicly available quality of care reports for HOPDs that conduct outpatient 

colonoscopies. Therefore, adoption of this measure provides an opportunity to enhance 

the information available to patients choosing among HOPDs that offer this elective 

procedure. We believe this measure would reduce adverse patient outcomes associated 

with preparation for colonoscopy, the procedure itself, and follow-up care by capturing 

and making more visible to HOPDs and patients all unplanned hospital visits following 

the procedure. In addition, providing outcome rates to HOPDs would make visible to 

clinicians meaningful quality differences and incentivize improvement. 

 In response to comments, however, to allow sufficient time to conduct further 

analysis of this measure, we are finalizing this measure beginning with the CY 2018 

payment determination, rather than the CY 2017 payment determination as proposed. 

We plan to perform a dry run (a preliminary analysis) of the measure in 2015. We refer 

readers to our discussion of the dry run above, in response to a previous comment. 

 With national implementation of a dry run of this measure, we will also review 

the appropriate cutoff volume for facilities, if necessary, in reporting the measure score. 

We require a minimum volume (cutoff volume) of colonoscopies per facility to be able to 
CMS-1613-FC 727 

calculate a reliable measure score for the facility. We have yet to determine the 

minimum volume per facility (that is, the cutoff colonoscopy volume). Because we used 

a Medicare 20 percent sample to develop the measure, we could not estimate this cutoff 

during measure development. However, testing during the measure dry-run with 

100 percent of the sample per facility will help us to determine the appropriate cutoff 

volume of colonoscopies per facility. HOPDs will be notified via the QualityNet Web 

site of the cutoff volume of colonscopies per facility. 

 While some HOPDs perform too few colonoscopies for us to calculate a measure 

score, and we would not publicly report their data, these facilities would remain in the 

measure cohort. Typically, for public reporting of hospital measures on the Hospital 

Compare Web site, the measure score is reported as “Number of cases too small” for 

hospitals with fewer cases than the cutoff. We will use the same protocol when the 

measure is publicly reported for the Hospital OQR Program, and will report a measure 

score as “Number of cases too small” for HOPDs with fewer cases than the cutoff on the 

QualityNet Web site. 

 Comment: Many commenters were concerned that HOPDs may not have 

actionable information generated from OP-32. Specifically, commenters were concerned 

that claims would not accurately capture the data of patients who had initial colonoscopy 

at a facility but had a subsequent hospital visit at a different facility. Several of these 

commenters questioned whether this measure will benefit facilities or patients if each 

facility only receives a report with an aggregate number of claims based on historical 

data. Commenters requested that CMS clarify its plan to report detailed patient-level data 

confidentially to facilities that indicate whether the patient had a hospital visit, the type of 
CMS-1613-FC 728 

visit (admission, emergency department visit, and observational stay), the admitting 

facility, and the principal discharge diagnosis. These reports would enable facilities to 

understand their performance and take steps where remediation is needed. One 

commenter also recommended that CMS allow at least a two-quarter black-out period so 

that hospitals have ample time to review and request corrections to their data. 

 Response: We do not believe that claims data will be difficult to capture at a 

facility different from where the colonoscopy was performed. Hospitals are responsible 

for accurately populating claims, regardless of where the patient had the procedure done. 

In addition, due to commenters’ concerns, we intend to conduct a dry run 

(discussed in detail above) and provide detailed facility specific information containing 

confidential patient-level data to all HOPDs. The dry run will generate confidential 

reports at the patient level, indicating whether the patient had a hospital visit, the type of 

visit (admission, emergency department visit, or observational stay), the admitting 

facility, and the principal discharge diagnosis. Further, it will enable HOPDs to see the 

measure score reports and have the opportunity to receive individual patient data and 

information contained within individual patient records. In addition, we will continue to 

generate these reports for HOPDs after we implement the measure beginning with the 

CY 2018 payment determination. HOPDs can use the information to identify 

performance gaps and develop quality improvement strategies. As we previously stated, 

dry runs have no payment impact and are not linked to public reporting. The main 

purpose of the dry run is to provide opportunities for hospitals to review their measure 

results and ask questions about measure methodology. 
CMS-1613-FC 729 

 Comment: A few commenters stated that the measure methodology should 

include risk adjustment for socioeconomic factors so the results are accurate and reflect 

differences in socioeconomic burden and racial composition of patients across hospitals. 

Commenters were concerned that without proper risk adjustment, a hospital that serves a 

disproportionate share of low-income patients with confounding socioeconomic factors 

may have more unplanned visits following outpatient procedures. Commenters stated 

that the measure score can be skewed by factors such as race, homelessness, cultural and 

linguistic barriers, and low literacy. Commenters also stated that the readmissions of 

low-income patients with confounding socioeconomic factors are caused by factors 

beyond the control of the hospital and, therefore, do not reflect the quality of care being 

provided. Several commenters recommended that, after the NQF has reviewed OP-32, 

CMS consider submitting this measure as part of the socioeconomic status (SES) trial 

period created by the NQF Board of Directors. 

 Response: We do not believe that the measure is biased for low-income patients 

with confounding socioeconomic factors. When developing the measure, we tested how 

the measure score varied among outpatient facilities with varying proportion of low SES 

patients. Using patient dual eligibility status as an indicator of low SES, we noted that 

the median measure score, and the measure score distribution, was similar among 

facilities with many low SES patients compared to facilities with a few low SES patients. 

Based on our testing as well as input from the measure developer and the national 

technical expert panel, we concluded that facilities with a high proportion of low SES 

patients were not biased by this measure and that the measure score was unaffected by 
CMS-1613-FC 730 

SES status. These findings were presented to the NQF All-Cause Admissions and 

Readmissions Measures Standing Committee on May 6, 2014.21

 Also, we thank the commenters for the suggestions to submit the measure as part 

of the SES trial period, which is a trial for a defined period that would assess the impact 

and implications of risk adjusting relevant quality measures for sociodemographic factors 

and was a recommendation of the Consensus Standards Approval Committee following 

its review of the NQF Expert Panel’s report Risk Adjustment for Socioeconomic Status 

and Other Sociodemographic Factors. 

(http://www.qualityforum.org/Press_Releases/2014/NQF_Board_Approves_Trial_Risk_Adjustm

ent.aspx). We will take this suggestion into consideration in future years. 

 Comment: One commenter requested clarification of how the measure numerator 

and denominator for OP-32 are calculated. 

 Response: The measure score is the ratio of predicted hospital visits (numerator) 

over the expected hospital visits (denominator) multiplied by the crude national rate. The 

measure score numerator is the predicted rate, which is the number of unplanned hospital 

visits the facility is predicted to have within 7 days of colonoscopy, and it accounts for 

the observed unplanned hospital visit rate, the number of colonoscopies performed at the 

facility, and the facility’s case mix. This is sometimes referred to as the “adjusted actual 

rate.” 

 The measure score denominator is the expected rate, which is the number of 

unplanned hospital visits the facility is expected to have based on the nation’s 

performance with that facility’s case and mix. It is the sum of all patients’ expected 

probabilities of a hospital visit, given their risk factors and the risk of readmission at an 

 

21 Available at: http://www.qualityforum.org/All-Cause_Admissions_and_Readmissions_Measures.aspx.
CMS-1613-FC 731 

average facility. The contribution of each risk factor (for example, age) to the patient’s 

risk of a hospital admission is calculated based on all of the patients in the measure 

cohort. The crude national rate is the average rate of hospital visits following 

colonoscopy observed in the entire measure cohort. We also refer readers to the measure 

discussion above and measure specifications 

(http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=75057) for a more 

detailed discussion of how the numerator and denominator are calculated. 

 Comment: Commenters believed that the Medicare 3-day window payment 

policy for hospitals does not allow HOPDs to generate a claim when there is an inpatient

admission during the 3-day window payment policy, that is, during the 3 days subsequent 

to the colonoscopy. Commenters stated that HOPDs may be advantaged with systematic 

undercounting of hospital visits while ASCs get a full count of all hospital visits within 

7 days subsequent to outpatient colonoscopy. Commenters did not believe the 

methodological solution proposed by the measure developer, using physician claims with 

an HOPD Place of Service (POS) code, is adequate due to the high error rates in POS 

coding on physician claims. Commenters were concerned that these challenges would 

make comparisons of HOPD and ASC data impossible, and significantly reduce the 

validity of the measure in the HOPD setting. 

 Response: We agree that the ability to detect meaningful variation is an important 

indication of the value of a measure. We have shown facility variation in unplanned 

hospital visits following colonoscopy in both nationwide Medicare data from HOPDs and 

also in the 2010 Healthcare Cost and Utilization Project (HCUP) data. We have also 

shown facility variation in unplanned hospital visits among ASCs alone using HCUP data 
CMS-1613-FC 732 

from California. ASCs are unaffected by the 3-day payment window policy.22 We are 

confident that the variation shown is a reflection of facility variation in quality and not as 

a result of any issues to do with the 3-day window payment policy. We are aware of the 

impact of the 3-day window payment policy and will ensure HOPD colonoscopies 

affected by the 3-day window payment policy are included in the measure cohort and 

outcome to the fullest extent possible. Based on our internal testing with claims data, we 

believe our current algorithm is appropriate and accurate. However, since we always 

strive for improvement, we will evaluate the colonoscopy measure dry run data and work 

with HOPDs and ASCs to further review and refine the algorithm if necessary. 

 We clarify that HOPD colonoscopy claims for calculation of the measure are 

identified using both the physician and the facility claims. We did not intend to imply 

that colonoscopies performed in HOPDs are solely identified from physician claims. For 

both ASCs and HOPDs, the measure first identifies colonoscopy claims using both the 

physician claim and the corresponding facility claim to ensure that each colonoscopy 

claim is attributed to the appropriate facility. As a second step, the measure matches 

(1) physician claims that contain HOPD as the POS that do not have a matching facility 

claim with (2) inpatient claims to identify potential HOPD colonoscopies that have a 

subsequent inpatient admission within the measure’s timeframe of interest. This second 

step identifies HOPD colonoscopy claims affected by the 3-day window payment policy. 

 An OIG review (http://oig.hhs.gov/oas/reports/region10/11000516.pdf), concluded that, 

based on a sample of 2009 claims, inaccuracies in physician POS coding often occur 

where a procedure occurs at a HOPD or ASC and a facility claim exists, yet the physician 

 

22 Center for Medicare and Medicaid Services, “Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy,” National Quality Form Measure Submission Form, 20. 
CMS-1613-FC 733 

claimed a nonfacility POS. By matching both facility and physician colonoscopy claims 

for any given patient, we ensure that we accurately identify colonoscopy claims to the 

fullest extent possible and attribute the colonoscopy to the appropriate provider including 

HOPD colonoscopies affected by the 3-day window payment policy. 

 We also have taken steps to educate providers about the appropriate POS coding 

and actively audit providers to improve the accuracy of POS coding. Beginning in 2012, 

we also introduced the “PD” modifier to indicate physician claims affected by the 3-day 

window payment policy. 

 Regarding the comment concerning challenges in comparing HOPD and ASC 

data, the measure includes colonoscopies from all outpatient settings to ensure that the 

expected hospital visit rate for any facility is estimated using the full national experience 

of colonoscopy patients. We appreciate the concern that there are structural differences 

in claims across HOPD and ASC settings. However, the measure links claims across 

multiple settings to identify outpatient colonoscopy claims, comorbidities for 

risk-adjustment, and patient outcomes. Linking patient claims across multiple settings 

largely mitigates the impact of potential difference in coding practice among settings and 

allows comparisons of colonoscopy quality across settings. 

 Comment: One commenter was concerned that the low occurrence rate may 

make the measure unreportable. 

 Response: On Hospital Compare, we report measure rates, but may refrain from 

publishing numerator and/or denominator data if either are less than 11. Consistent with 

the CMS Policy for Privacy Act Implementation & Breach Notification, 2007, CMS 

statistical, aggregate or summarized information created as a result of analysis conducted 
CMS-1613-FC 734 

using identifiable CMS data obtained under CMS-approved projects/studies may only be 

disclosed if the data are not individual-specific and the data are aggregated to a level 

where no data cells contain 10 or fewer individuals https://www.cms.gov/ResearchStatistics-Data-and-Systems/CMS-InformationTechnology/SystemLifecycleFramework/downloads/privacypolicy.pdf.

 Comment: Many commenters expressed concern that, if finalized, the OP-32 

measure’s data collection period would begin July 1, 2014, several months before 

adoption of the measure is finalized. These commenters requested that CMS delay the 

beginning of the data submission period until at least 30 days after the rule is finalized. 

 Response: After consideration of the public comments we received, we are not 

finalizing our proposal to use paid Medicare FFS claims from a 12-month period from 

July 1 of the year 3 years before the payment determination year to June 30 of the 

following year. We will not use administrative claims data for services that occur prior to 

January 1, 2015. Instead, after the dry run, we will use paid Medicare FFS claims from a 

12-month period from January 1 to December 31 of the year 2 years before a payment 

determination year. Specifically, since we are finalizing this measure beginning with the 

CY 2018 payment determination, and we will start with paid Medicare FFS claims from 

January 1, 2016 to December 31, 2016. 

 Comment: Some commenters suggested that CMS consider developing 

additional outcomes measures specific to colonoscopies, such as a measure of whether 

colonoscopy patients remain cancer free. 

 Response: We appreciate the commenters’ suggestions and will take them into 

consideration for future measure selection. 
CMS-1613-FC 735 

 We continue to believe that quality of care measurement in the clinical area of 

outpatient colonoscopy is an important gap area with ample room for improvement and 

that this measure has sufficient reliability and validity for use in the Hospital OQR 

Program. Therefore, after consideration of the public comments we received, we are 

finalizing our proposal to adopt the OP-32: Facility Seven-Day Risk-Standardized 

Hospital Visit Rate after Outpatient Colonoscopy measure for the Hospital OQR 

Program. However, to allow HOPDs sufficient time to review their measure data from 

the dry run and utilize the confidential facility reports with patient-level associated 

hospital event information, we are finalizing to make this measure required beginning 

with the CY 2018 payment determination and subsequent years, instead of the CY 2017 

payment determination and subsequent years as proposed. 

 We plan to perform a dry run of the measure in 2015. Also, with national 

implementation of a dry run of this measure, we will also review the appropriate cutoff 

volume for facilities, if necessary, in reporting the measure score. We refer readers to our 

discussion of the dry run and the cutoff volume above, in responses to previous 

comments. 

 The finalized measure set for the Hospital OQR Program CY 2017 payment 

determination and subsequent years, which includes previously finalized measures, is 

listed below. 

Finalized Hospital OQR Program Measure Set for the CY 2017 Payment 

Determination and Subsequent Years 

NQF # Measure Name 

N/A OP-1: Median Time to Fibrinolysis 

0288 OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival** ** 
CMS-1613-FC 736 

Finalized Hospital OQR Program Measure Set for the CY 2017 Payment 

Determination and Subsequent Years 

NQF # Measure Name 

0290 OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention 

0286 OP-4: Aspirin at Arrival 

0289 OP-5: Median Time to ECG 

0514 OP-8: MRI Lumbar Spine for Low Back Pain 

N/A OP-9: Mammography Follow-up Rates 

N/A OP-10: Abdomen CT – Use of Contrast Material 

0513 OP-11: Thorax CT – Use of Contrast Material 

N/A OP-12: The Ability for Providers with HIT to Receive Laboratory Data 

Electronically Directly into their ONC-Certified EHR System as Discrete 

Searchable Data 

0669 OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac 

Low Risk Surgery 

N/A 

OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT) 

N/A OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache 

N/A OP-17: Tracking Clinical Results between Visits 

0496 OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients 

N/A OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional 

0662 OP-21: Median Time to Pain Management for Long Bone Fracture 

N/A OP-22: ED- Left Without Being Seen*** 

0661 OP-23: ED- Head CT or MRI Scan Results for Acute Ischemic Stroke or 

Hemorrhagic Stroke who Received Head CT or MRI Scan Interpretation 

Within 45 minutes of Arrival 

N/A OP-25: Safe Surgery Checklist Use 

N/A OP-26: Hospital Outpatient Volume on Selected Outpatient Surgical 

Procedures* 

0431 OP-27: Influenza Vaccination Coverage among Healthcare Personnel 

0658 OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients 

0659 OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients 

with a History of Adenomatous Polyps – Avoidance of Inappropriate Use 

1536 OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 

Days Following Cataract Surgery** 

* OP-26: Procedure categories and corresponding HCPCS codes are located at: 

http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobhe

ader=multipart%2Foctet-stream&blobheadername1=Content-
CMS-1613-FC 737 

Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata

&blobtable=MungoBlobs.

** Measure voluntarily collected as set forth in section XIII.D.3.b. of this final rule with comment period. 

*** Name has been updated to correspond with NQF-endorsed name. 

 The finalized measure set for the Hospital OQR Program CY 2018 payment 

determination and subsequent years, which includes previously finalized measures, and 

which includes the newly adopted measure, OP-32, is listed below. 

Finalized Hospital OQR Program Measure Set for the CY 2018 Payment 

Determination and Subsequent Years 

NQF # Measure Name 

N/A OP-1: Median Time to Fibrinolysis 

0288 OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival  

0290 OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention 

0286 OP-4: Aspirin at Arrival 

0289 OP-5: Median Time to ECG 

0514 OP-8: MRI Lumbar Spine for Low Back Pain 

N/A OP-9: Mammography Follow-up Rates 

N/A OP-10: Abdomen CT – Use of Contrast Material 

0513 OP-11: Thorax CT – Use of Contrast Material 

N/A OP-12: The Ability for Providers with HIT to Receive Laboratory Data 

Electronically Directly into their ONC-Certified EHR System as Discrete 

Searchable Data 

0669 OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac 

Low Risk Surgery 

N/A 

OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT) 

N/A OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache 

N/A OP-17: Tracking Clinical Results between Visits 

0496 OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients 

N/A OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional 

0662 OP-21: Median Time to Pain Management for Long Bone Fracture 

N/A OP-22: ED- Left Without Being Seen** * 
CMS-1613-FC 738 

Finalized Hospital OQR Program Measure Set for the CY 2018 Payment 

Determination and Subsequent Years 

NQF # Measure Name 

0661 OP-23: ED- Head CT or MRI Scan Results for Acute Ischemic Stroke or 

Hemorrhagic Stroke who Received Head CT or MRI Scan Interpretation 

Within 45 minutes of Arrival 

N/A OP-25: Safe Surgery Checklist Use 

N/A OP-26: Hospital Outpatient Volume on Selected Outpatient Surgical 

Procedures* 

0431 OP-27: Influenza Vaccination Coverage among Healthcare Personnel 

0658 OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients 

0659 OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients 

with a History of Adenomatous Polyps – Avoidance of Inappropriate Use 

1536 OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 

Days Following Cataract Surgery** 

N/A OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy**** 

* OP-26: Procedure categories and corresponding HCPCS codes are located at: 

http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobhe

ader=multipart%2Foctet-stream&blobheadername1=ContentDisposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata

&blobtable=MungoBlobs. 

** Measure voluntarily collected as set forth in section XIII.D.3.b. of this final rule with comment period. 

*** Name has been updated to correspond with NQF-endorsed name. 

**** New measure finalized for the CY 2018 payment determination and subsequent years. 

F. Possible Hospital OQR Program Measures and Topics for Future Consideration 

 The current measure set for the Hospital OQR Program includes measures that 

assess processes of care, imaging efficiency patterns, care transitions, ED throughput 

efficiency, the use of health information technology (health IT), care coordination, patient 

safety, and volume. For future payment determinations, we are considering expanding 

these measure areas and creating measures in new areas. Specifically, we are exploring 

(1) electronic clinical quality measures; (2) partial hospitalization measures; 

(3) behavioral health measures; and (4) other measures that align with the National 

Quality Strategy and the CMS Quality Strategy domains. 
CMS-1613-FC 739 

1. Electronic Clinical Quality Measures 

 HHS believes all patients, their families, and their health care providers should 

have consistent and timely access to their health information in a standardized format that 

can be securely exchanged between the patient, providers, and others involved in the 

patient’s care. (HHS August 2013 Statement, “Principles and Strategy for Accelerating 

Health Information Exchange” 

(http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf) The 

Department is committed to accelerating health information exchange (HIE) through the 

use of electronic health records (EHRs) and other types of health information technology 

(health IT) across the broader care continuum through a number of initiatives 

including: (1) alignment of incentives and payment adjustments to encourage provider 

adoption and optimization of health IT and HIE services through Medicare and Medicaid 

payment policies; (2) adoption of common standards and certification requirements for 

interoperable health IT; (3) support for privacy and security of patient information across 

all HIE-focused initiatives; and (4) governance of health information networks. 

 More information on the governance of health information networks and its role 

in facilitating interoperability of health information systems can be found at: 

http://www.healthit.gov/sites/default/files/ONC10yearInteroperabilityConceptPaper.pdf. 

 These initiatives are designed to encourage HIE among health care providers, 

including professionals and hospitals eligible for the Medicare and Medicaid EHR 

Incentive Programs as well as those who are not eligible for those programs, and are 

designed to improve care delivery and coordination across the entire care continuum. For 

example, the Transition of Care Measure #2 in Stage 2 of the Medicare and Medicaid 
CMS-1613-FC 740 

EHR Incentive Programs (77 FR 54017 through 54020) requires HIE to share summary 

records for more than 10 percent of care transitions. 

 We anticipate that as EHR technology evolves and more infrastructure is 

operational, we will begin to accept electronic reporting of many measures from EHR 

technology certified under the ONC health IT Certification Program. We are working 

diligently toward this goal. We believe that submitting data for the Hospital OQR 

Program electronically would significantly reduce the administrative burden associated 

with reporting chart-abstracted measures. We recognize that considerable work needs to 

be done by measure owners and health IT developers and implementers to make this 

possible with respect to the clinical quality measures targeted for electronic specifications 

(e-specifications). This work includes completing e-specifications for measures, pilot 

testing, reliability and validity testing, and implementing such specifications in certified 

EHR technology to capture and calculate the results. 

 We received the following comments on these future measures. 

 Comment: Many commenters supported CMS’ efforts to establish electronic 

clinical quality measures after validation and testing, but expressed concerns and offered 

suggestions. One commenter specifically noted the importance of health information 

exchanges in disseminating infection prevention and control information across the care 

continuum. Some commenters encouraged CMS to obtain input from ONC and hospital 

staff, for the purpose of ensuring the maturity of e-specifications and the ability of 

certified EHRs to support valid, feasible, and reliable electronic clinical quality measures 

for implementation in different programs. Some commenters urged CMS to proceed in a 

phased approach to implementing electronic clinical quality measures. 
CMS-1613-FC 741 

 Response: We agree that health information exchanges are critical in quality care 

improvement, including infection prevention and control. To the greatest extent feasible, 

we strive to work with ONC and stakeholders, including hospital staff, to develop and 

specify electronic clinical quality measures before their adoption. If we decide to 

propose electronic clinical quality measures in the future, we will consider a phased 

approach. 

 Comment: One commenter stated that it is premature to expand the measure set 

to include electronic clinical quality measures at this time because tremendous work in 

developing or defining e-specifications, pilot testing, and validity and reliability testing is 

still needed. 

 Response: We recognize that much work needs to be done before the adoption of 

electronic clinical quality measures. However, we also believe that implementation of 

electronic clinical quality measures will ultimately reduce provider burden and facilitate 

care coordination and patient engagement. We will weigh and balance these concerns 

when we propose to adopt electronic clinical quality measures in the future. 

 Comment: One commenter stated that the additional time needed to develop 

electronic clinical quality measures will allow hospitals to optimize their EHRs and 

develop information sharing networks. 

 Response: We thank the commenter for raising this concern. We believe, to the 

extent feasible, it is important to ensure that hospitals are ready to implement EHRs and 

will continue to work with them as we implement electronic clinical quality measures. 

 We thank the commenters for their views and will consider them as we develop 

and implement future electronic clinical quality measures. 
CMS-1613-FC 742 

2. Partial Hospitalization Program Measures 

 We seek to develop a comprehensive set of quality measures to be available for 

widespread use for informed decision-making and quality improvement in the hospital 

outpatient setting. Therefore, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75106), we stated that, through future rulemaking, we intended to propose new 

measures that help us further our goal of achieving better health care and improved health 

for Medicare beneficiaries who receive health care in hospital outpatient settings, such as 

partial hospitalization programs (PHPs) that are part of HOPDs. 

 Partial hospitalization is an intensive outpatient program of psychiatric services 

provided to patients as an alternative to inpatient psychiatric care for individuals who 

have acute mental illness. The PHP was designed to assist individuals with acute 

psychiatric illness in managing debilitating symptoms and prevent the need for 

hospitalization or rehospitalization. Behavioral health treatments and services have 

improved and evolved through medication advances, recovery-based therapy, and 

evidenced-based interventions, including peer supports. PHP services have had the 

opportunity to evolve to provide individuals with a unique setting that can contribute to 

maintaining social and community connectivity while focusing on sustained recovery to 

prevent initial hospitalization during a given episode and subsequent rehospitalization. 

Currently, the Hospital OQR Program has not adopted measures applicable to PHPs. 

 Although we believe that the PHP is an important program offering an alternative 

to inpatient stays, we note that PHP utilization has been declining.23 Therefore, as we 

consider implementing PHP measures in future years, we invited public comment 

 

23 http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/Reports/downloads/Leung_PHP_PPS_2010.pdf. 
CMS-1613-FC 743 

regarding the utility of including measures for this care setting in the Hospital OQR 

Program. 

 We specifically requested public comment on three PHP measures we submitted 

to the MAP for consideration as part of the “MAP Pre-Rulemaking Report: 2014 

Recommendations on Measures for More than 20 Federal Programs” 

(http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Progr

ams.aspx (formerly referred to as the “List of Measures Under Consideration”)): 

● 30-Day Readmission; 

● Group Therapy; and 

● No Individual Therapy. 

 These measures are included in the Program for Evaluating Payment Patterns 

Electronic Reports (PEPPERs) developed under the Comprehensive Error Rate Testing 

(CERT) Program. Further information on these claims-based measures that provide 

indicators of quality of care can be found at 

http://www.pepperresources.org/LinkClick.aspx?fileticket=stK9uUmQWlM%3d&tabid=148.

 We also requested public input on other possible quality measures for partial 

hospitalization services for inclusion in the Hospital OQR Program in future years. 

 Comment: Some commenters supported CMS’ consideration of PHP measures, 

noting that these measures will encourage hospitals to monitor their performance over 

time and identify opportunities for quality improvement. 

 Response: We thank the commenters for their support. We agree that PHPs are 

an important alternative to inpatient stays and there may be value in collecting and 

reporting this data. 
CMS-1613-FC 744 

 Comment: Many commenters did not support PHP quality metrics in the Hospital 

OQR Program, stating that there are significant differences between outpatient and PHP 

treatment services, structure, and supervision, as well as other concerns. Commenters 

recommended that CMS adopt PHP measures that have been NQF-endorsed and are 

MAP-recommended, noting that the three PHP measures mentioned in the proposed rule 

were not recommended by the MAP because they were not well-defined or required 

additional evidence relating to their value. Commenters suggested that CMS address the 

MAP’s concerns before proposing these measures for use in the Hospital OQR Program. 

 Response: We disagree that PHP measures are not appropriate for the Hospital 

OQR Program based on differences between outpatient and PHP treatment services, 

structure, and supervision. Because PHP services are provided by HOPDs, are an 

important alternative to inpatient stays, and are utilized by Medicare beneficiaries, we 

believe that there may be value in collecting and reporting quality measure data for these 

services. However, at this time, we are not proposing any PHP measures for the Hospital 

OQR Program. The PHP measures on which we invited comment have not been 

recommended by the MAP. The MAP stated that it needed further information on the 

30-Day Readmission measure and recommended that the No Individual Therapy and 

Group Therapy measures be submitted for NQF endorsement before they are adopted by 

the Hospital OQR Program (http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Progr

ams.aspx). 

 If we do consider proposing PHP measures in the future, to the extent feasible, we 

intend to propose to adopt measures which are NQF-endorsed and have been MAPrecommended. Before adopting a measure, we try to address stakeholder concerns, 
CMS-1613-FC 745 

including the differences in the outpatient and PHP settings. Finally, if we choose to 

propose the three measures discussed in the proposed rule, we will consider the 

comments of the MAP and address them to the extent feasible. We note, however, that 

not all of the measures adopted by the Hospital OQR Program are NQF-endorsed, nor is 

NQF endorsement a program requirement (section 1833(t)(17)(C)(i) of the Act). 

 Comment: Some commenters believed that using PHP measures in the Hospital 

OQR Program would constitute a duplication of efforts because the measures are already 

included in PEPPER. Other commenters also viewed PEPPER measures as auditing 

tools rather than quality measures. 

 Response: We will consider the commenters’ viewpoint if we propose to adopt 

the PEPPER measures in future rulemaking. We note that these measures, while 

addressing areas of payment concern, also address areas of quality of care concern and 

that the PEPPER measures are not publicly reported at the facility level. 

 Comment: Commenters expressed concerns about the 30-day readmissions 

measure because this patient population tends to be readmitted for behavioral conditions 

due to social issues for which hospitals have little control. Commenters stated that PHP 

patients’ clinical needs evolve over time, that readmissions are often needed to stabilize 

patients, and that measuring facilities on readmission rates could cause unintended 

consequences. Commenters further stated that the readmission measure is not 

sufficiently risk-adjusted. 

 Response: We thank the commenters for raising these concerns. We will 

consider these concerns if we propose to adopt the 30-day readmission PEPPER measure 

for the Hospital OQR Program in future rulemaking. 
CMS-1613-FC 746 

 Comment: Some commenters stated that CMS should better understand the 

challenges facing PHP and readmissions before imposing PHP quality measures because 

quality measures could further destabilize the PHP rate and threaten access to this 

service. 

 Response: We understand that utilization of PHP services has been decreasing 

and that many challenges may be unique to the PHP setting. We will consider these 

issues before proposing to adopt any PHP measures in future rulemaking. 

 Comment: One commenter recommended that CMS include the 60+ Days of 

Service measure in the PHP measure suite as well as assessments of intensive outpatient 

programs that treat individuals with substance use disorders. 

 Response: We thank the commenter for the recommendation and will consider 

this measure if we propose to adopt PHP measures in future rulemaking. We note that 

Medicare does not cover intensive outpatient program (IOP) services, and this could 

affect the usefulness of the recommended measure for the Hospital OQR Program. 

 Comment: Some commenters encouraged CMS to develop specific PHP 

measures such as: (1) requiring PHPs to identify a specific appointment within 14 days; 

(2) requiring continuing care information be provided directly to the follow-up provider; 

and (3) establishing Quality Service Criteria for use in judging performance, including 

criteria relating to access, treatment intensity, discharge planning, and continuity of care. 

 Response: We appreciate the commenters’ suggestions. We support coordination 

of care efforts and will consider developing these types of measures for the Hospital 

OQR Program. 
CMS-1613-FC 747 

 Comment: One commenter argued that the Group Therapy measure should only 

be adopted as a percentage rating of group therapy as a comparison to all interventions 

billed. The commenter also noted that both group therapy and individual psychotherapy 

are needed for optimal success. 

 Response: We thank the commenter for sharing its views. We are unclear what 

the commenter means by “a percentage rating of group therapy” and so cannot respond at 

this time. However, we welcome clarification and will consider all of the commenter’s 

concerns if we propose to adopt PHP measures in future rulemaking. 

 Comment: One commenter voiced support for our efforts in working toward 

electronic quality of care measures in the PHP setting of care. 

 Response: We note that we did not specifically discuss electronic quality-of-care 

measures for the PHP setting in the proposed rule. However, we are working diligently 

to implement electronic measures across the quality reporting programs, and we may 

consider electronic clinical quality measures for the PHP setting in the future. 

 We thank the commenters for their views and will consider them as we develop 

future policies. 

3. Behavioral Health Measures 

 In addition to PHP measures, we are considering other measures specific to 

behavioral health in the outpatient setting, including measures addressing depression and 

alcohol abuse. Major depression is a leading cause of disability in the United States, 

complicates the treatment of other serious illnesses, and is associated with an increased 

risk of suicide. Major depression is a common mental health condition, affecting 6 to 
CMS-1613-FC 748 

9 percent of those over 55 years of age.24 Along with other serious mental health 

conditions, it has a higher Medicare inpatient readmission rate than all other conditions 

with the exception of heart failure.25 Alcohol use disorders are the most prevalent type of 

addictive disorder in individuals ages 65 and over.26 Roughly 6 percent of the elderly are 

considered to be heavy users of alcohol.27 Alcohol abuse is often associated with 

depression and contributes to the etiology of serious medical conditions, including liver 

disease and coronary heart disease. Because of the prevalence of depression and alcohol 

abuse and their impact on the Medicare population, we believe that we should consider 

measures in these and other behavioral health areas for use in future Hospital OQR 

Program payment determination years. Therefore, we invited public comment on 

measures applicable to these areas that would be suitable for the Hospital OQR Program. 

 Comment: Many commenters supported CMS’ efforts to develop and implement 

quality measurement tools related to alcohol abuse and depression because of the 

prevalence of these conditions within the Medicare population and the need to improve 

care coordination for these conditions. Commenters encouraged CMS to incorporate 

measures that address the following principles: (1) the patient’s readiness for treatment; 

(2) the treatment will address mental health issues in conjunction with the alcohol abuse; 

and (3) the patient’s willingness to participate in an alcohol abuse program without the 

need for coerced efforts. 

 

24 O’Connor E, Whitlock E, Beil T, et al. Screening for depression in adult patients in primary care 

settings: a systematic evidence review. Annals of Internal Medicine 2009 December 1:151(11):793-803. 

25 Stephen F. Jencks, M.D., M.P.H., Mark V. Williams, M.D.,and Eric A. Coleman, M.D., M.P.H. 

Rehospitalizations among Patients in the Medicare Fee-for-Service Program. N Engl J Med 

2009;360:1418-28. 

26 Stephen Ross. Alcohol Use Disorders in the Elderly. Psychiatry Weekly (no date) Available at: 

http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19.

27 AL Mirand and JW Welte. Alcohol consumption among the elderly in a general population, Erie 

County, New York. Am J Public Health. 1996 July; 86(7): 978–984. 
CMS-1613-FC 749 

 Response: We thank commenters for their support, and we will consider these 

principles if we choose to propose to adopt behavioral health measures in the future. 

 Comment: One commenter suggested adopting a measure that evaluates 

screening for psychological/physical or sexual trauma, arguing that trauma informed care 

is critical to successful recovery and better engagement and retention in ambulatory care. 

 Response: We agree that this clinical topic is important, and we will consider 

adopting a measure screening for trauma in the future. 

 Comment: Some commenters argued that behavioral health measures are more 

suited to the IPFQR Program. 

 Response: We disagree with this view. We believe all care settings should seek 

to improve the behavioral health outcomes of their patients. 

 Comment: One commenter recommended that CMS work with the NQF to 

develop appropriate measures related to beneficiary wellness concerns. The commenter 

noted that behavioral health quality measures are used in the nursing home and home 

health care settings, and that these measures should be reviewed to determine if they are 

applicable to the outpatient setting. The commenter believed that any measures used 

should be claims-based and not generated by chart abstraction to minimize administrative 

burden. 

 Response: We interpret “beneficiary wellness concerns” to mean measures of 

behavioral health. We endeavor to adopt measures that are NQF-endorsed and believe it 

is critical to work with stakeholders to develop measures. However, we note that not all 

of the measures adopted by the Hospital OQR Program are NQF-endorsed, nor is NQF 

endorsement a program requirement (section 1833(t)(17)(C)(i) of the Act) as consensus 
CMS-1613-FC 750 

among affected parties can be reflected through means other than NQF endorsement. In 

addition, to the extent feasible, we believe it is important to align measures across all our 

quality reporting programs, and we will look to other settings for measures of behavioral 

health. Finally, we will continue to examine options for less burdensome reporting 

mechanisms for these and other program measures in the future; this includes 

claims-based and electronically submitted data. 

 Comment: Some commenters recommended that behavioral health quality 

measures not be considered at this time for the Hospital OQR Program, arguing that 

additional research and education needs to be done to develop helpful behavioral 

measures. 

 Response: We will continue to research appropriate measures and work with 

stakeholders as we consider behavioral health measures for the Hospital OQR Program in 

the future. 

 Comment: One commenter urged CMS to work with its behavioral health 

Technical Experts Panel (TEP) and the MAP to identify and bring forward behavioral 

health measures that are suitable for this population and for consideration by all 

stakeholders. 

 Response: We convene TEPs, groups of stakeholders and experts, to provide 

technical input on the development, selection, and maintenance of measures. Convening 

TEPs is one important step in the measure development or reevaluation process to ensure 

transparency and it provides an opportunity to receive multi-stakeholders input early in 

the process. We refer readers to http://www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/MMS/TechnicalExpertPanels.html for more information on TEPs. 
CMS-1613-FC 751 

We believe it is important to work with stakeholders as we develop and adopt behavioral 

health measures. We will leverage both TEPs and the MAP as we consider future 

measures. 

 Comment: One commenter recommended that CMS incorporate standardized 

behavioral health measures that are currently in widespread use, such as the National 

Center for Quality Assurance’s behavioral health measures. 

 Response: We thank the commenter for its recommendation, and we will 

consider these measures for future rulemaking. 

 Comment: Some commenters supported CMS’ efforts to identify depression and 

depression-related issues in the Medicare population. The commenters believed that an 

identification tool should be used for any new patient encounter and recommended that 

every Medicare provider should be required to use a depression screening tool at any 

initial patient screening/encounter. Some commenters, however, noted that depression 

screening in the ambulatory setting is nearly universal, and, therefore, such a measure 

may be “topped-out” even before adoption. 

 Response: We thank commenters for their support. We interpret the 

commenters’ suggestions to mean that we should include measures that encourage 

providers to screen patients to identify depression. We will consider depression 

screening measures in the future. 

 We thank the commenters for their views on behavioral health measures in the 

outpatient setting and will consider them as we develop future policies. 
CMS-1613-FC 752 

4. National Quality Strategy and CMS Quality Strategy Measure Domains 

 In considering future Hospital OQR Program measures, we are focusing on the 

following National Quality Strategy and CMS Quality Strategy measure domains: make 

care safer, strengthen person and family engagement, promote effective communication 

and coordination of care, promote effective prevention and treatment, work with 

communities to promote best practices of healthy living, and make care affordable. We 

believe measures in these areas will promote better care and align measures across 

multiple CMS quality programs, in particular, the Hospital OQR, Hospital IQR, and 

ASCQR Programs. 

 We received the following comments on these future measures. 

 Comment: Many commenters supported the Hospital OQR Program’s effort to 

align future measures with the NQS priorities and CMS quality strategy, noting that 

doing so will make the Hospital OQR Program more consistent with the Hospital IQR 

Program. Commenters urged CMS to further align our measures with other quality 

reporting programs. One commenter stated that CMS should respond to all MAP 

recommendations as part of any proposed rule so that stakeholders may gain a better 

understanding of our decisions, particularly when a MAP recommendation is not being 

followed. 

 Response: We thank the commenters for their support. To the extent practicable, 

we strive to align measures across our quality reporting programs. We also appreciate 

the feedback of the MAP and work to address its concerns before adopting measures in 

the Hospital OQR Program. As we stated above, to the extent feasible, we strive to state 

and address the MAP concerns when adopting a measure. 
CMS-1613-FC 753 

 Comment: Some commenters recommended that CMS introduce measures to 

track and monitor radiation dose exposure and contrast dose exposure, including 

organ-specific radiation exposure based on patient weight and contrast administration, 

and a meaningful tracking mechanism for patient longitudinal exposure. One commenter 

noted that the PQRS program has included some similar measures giving radiologists an 

incentive to track patient exposure. In addition, the commenter noted that The Joint 

Commission, the FDA, and the EPA have all issued guidance recommending that 

exposure to radiation through medical devices be minimized. 

 Response: We thank the commenters for their recommendations, and we may 

consider these types of measures in future years. 

 Comment: One commenter urged CMS to require hospitals to comply with all 

manufacturing standards for imaging equipment to facilitate patient safety and promote 

the overall quality of patient care in hospitals. The commenter also recommended a 

measure tracking the demonstrated reduction in suboptimal or nondiagnostic 

echocardiograms and the resulting improvements in diagnosis and reductions in costs to 

Medicare and beneficiaries. 

 Response: We thank the commenter for its recommendation, and we may 

consider these types of measures in future years. 

 Comment: One commenter encouraged the implementation of a CAHPS survey 

used to encourage patient experience improvement across the ambulatory surgery sector. 

The commenter urged CMS to continue to analyze and address the role of the survey and 

discuss the comparative roles of surveys across other care settings and quality reporting 
CMS-1613-FC 754 

programs. Another commenter encouraged CMS to involve consumers and purchasers in 

refinement of the CAHPS survey for the outpatient setting. 

 Response: We thank the commenters for these suggestions. We intend to include 

such survey measures for the outpatient setting on our December 1, 2014 Measures under 

Consideration (MUC) List for MAP review. We currently use patient experience-of-care 

surveys in a variety of health care settings. For example, both the ESRD QIP and the 

Hospital IQR Program use patient experience-of-care surveys, the In-center Hemodialysis 

Consumer Assessment of Healthcare Providers and Systems (ICH CAHPS) and the 

Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), 

respectively. We agree that, to the extent feasible, survey instruments should be aligned 

and coordinated across settings. The developmental process of CAHPS and patient 

experience-of-care surveys involves several opportunities for input from patients, patient 

advocates, and stakeholders from the HOPD and ASC industry, including professional 

associations, clinicians, accreditation organizations, and the government. These 

opportunities include serving on the TEP, responding to the Federal Register notice 

requesting measures, topics, or public domain questionnaires, and providing comment on 

the survey through the OMB clearance process.

 Comment: One commenter recommended that CMS target high volume 

procedures that may be unnecessary at the composite, individual hospital, and physician 

levels, including those that are part of the Choosing Wisely campaign. 

 Response: We thank the commenter for its recommendation, and we may 

consider these types of measures in future years. 
CMS-1613-FC 755 

 Comment: One commenter requested that CMS risk-adjust measures of clinical 

outcomes for SES in order to avoid disadvantaging hospitals, particularly safety-net 

hospitals that are evaluated on these outcomes. 

 Response: We thank the commenter for this feedback. We addressed the topic of 

risk adjustment with respect to the Hospital IQR and Hospital Readmissions Reduction 

Programs in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50219 and 50026 through 

50027), and we believe the same approach would apply to risk adjustment for Hospital 

OQR Program measures because the Hospital OQR Program outcome measures are 

risk-adjusted, and this approach aligns with outcome measures methodology used in other 

programs across settings. The purpose of risk adjustment when comparing outcome rates 

for two different outpatient facilities is to statistically compensate (or adjust) for risk 

factor differences in the two facilities so that the outcome rates can be compared 

legitimately despite the differences in risk factors. 

 We appreciate the commenters’ suggestions on the importance of addressing SES 

in the Hospital OQR Program. We continue to consider and evaluate stakeholder 

concerns regarding the impact of patients’ SES on Hospital OQR measures. 

 Comment: Many commenters urged CMS to adopt only NQF-endorsed measures 

for its quality reporting and pay-for-performance programs, arguing that the 

consensus-based process validates quality measures’ rigor and ensures that the measures 

have been are reliable and have been carefully tested, validated, and scrutinized. 

Commenters also commended CMS for considering the MAP’s input in selecting 

measures, particularly because the MAP considers NQF endorsement, measures’ 

feasibility of implementation, stakeholder input, and validity. 
CMS-1613-FC 756 

 Response: We thank commenters for their support for the MAP process. To the 

extent feasible, we seek to adopt measures that have been NQF-endorsed. However, we 

also note that consensus among affected parties can be reflected through means other 

than NQF endorsement. We also refer readers to our discussion above in section XIII.E. 

of this final rule with comment period in response to a similar comment. 

 Comment: Commenters suggested that CMS consider adopting measures of 

HAIs, such as SSI, CLABSI, CAUTI, MRSA, and C. difficile, or infection control 

process measures, such as MRSA colonization at admission or hand hygiene adherence, 

use of barrier precautions, or other process measures. Commenters noted that infections 

such as MRSA and C. difficile are a significant source of morbidity and mortality. One 

commenter encouraged CMS to develop composite measures of common surgical 

infections; another commenter requested that CMS adopt measures that have aligned data 

elements with the CDC’s NHSN. 

 Response: We agree that it is important to minimize infection events that present 

significant health risks to patients. We also believe that infection prevention measures 

provide information critical to quality improvement efforts. We note that several 

measures that focus on these infections are already included in the Hospital IQR Program 

(79 FR 50202) and are aligned with the CDC’s NHSN. We will consider including these 

types of measures for the outpatient setting in the Hospital OQR Program and aligning 

them with other quality reporting programs, such as the Hospital IQR Program, to the 

extent feasible in future years. 
CMS-1613-FC 757 

 Comment: One commenter suggested that CMS consider measures of adverse 

outcomes from high-volume procedures such as cataract removals, other eye procedures, 

endoscopies, musculoskeletal procedures, and colonoscopies. 

 Response: We thank the commenter for its suggestion and may consider these 

types of measures in future years. 

 We thank the commenters for their views and will consider them as we develop 

future policies. 

G. Payment Reduction for Hospitals That Fail to Meet the Hospital Outpatient Quality 

Reporting (OQR) Program Requirements for the CY 2015 Payment Update 

1. Background 

 Section 1833(t)(17) of the Act, which applies to subsection (d) hospitals (as 

defined under section 1886(d)(1)(B) of the Act), states that hospitals that fail to report 

data required to be submitted on the measures selected by the Secretary, in the form and 

manner, and at a time, required by the Secretary will incur a 2.0 percentage point 

reduction to their Outpatient Department (OPD) fee schedule increase factor; that is, the 

annual payment update factor. Section 1833(t)(17)(A)(ii) of the Act specifies that any 

reduction applies only to the payment year involved and will not be taken into account in 

computing the applicable OPD fee schedule increase factor for a subsequent payment 

year. 

 The application of a reduced OPD fee schedule increase factor results in reduced 

national unadjusted payment rates that apply to certain outpatient items and services 

provided by hospitals that are required to report outpatient quality data in order to receive 

the full payment update factor and that fail to meet the Hospital OQR Program 
CMS-1613-FC 758 

requirements. Hospitals that meet the reporting requirements receive the full OPPS 

payment update without the reduction. For a more detailed discussion of how this 

payment reduction was initially implemented, we refer readers to the CY 2009 

OPPS/ASC final rule with comment period (73 FR 68769 through 68772). 

 The national unadjusted payment rates for many services paid under the OPPS 

equal the product of the OPPS conversion factor and the scaled relative payment weight 

for the APC to which the service is assigned. The OPPS conversion factor, which is 

updated annually by the OPD fee schedule increase factor, is used to calculate the OPPS 

payment rate for services with the following status indicators (listed in Addendum B to 

this proposed rule, which is available via the Internet on the CMS Web site): “P,” “Q1,” 

“Q2,” “Q3,” “R,” “S,” “T,” “V,” or “U.” We note that we are finalizing our proposal to 

delete status indicator “X”’ as described in sections II.A.3. and X. of this final rule with 

comment period. We also note that we are finalizing our proposal to develop status 

indicator “J1” as part of our comprehensive APC policy, effective for CY 2015, 

discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74861 through 74910) and sections II.A.2.e. of the CY 2015 OPPS/ASC proposed 

rule and this final rule with comment period. Payment for all services assigned to these 

status indicators will be subject to the reduction of the national unadjusted payment rates 

for hospitals that fail to meet Hospital OQR Program requirements, with the exception of 

services assigned to New Technology APCs with assigned status indicator “S” or “T.” 

We refer readers to the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68770 through 68771) for a discussion of this policy. 
CMS-1613-FC 759 

 The OPD fee schedule increase factor is an input into the OPPS conversion factor, 

which is used to calculate OPPS payment rates. To reduce the OPD fee schedule increase 

factor for hospitals that fail to meet reporting requirements, we calculate two conversion 

factors--a full market basket conversion factor (that is, the full conversion factor), and a 

reduced market basket conversion factor (that is, the reduced conversion factor). We 

then calculate a reduction ratio by dividing the reduced conversion factor by the full 

conversion factor. We refer to this reduction ratio as the “reporting ratio” to indicate that 

it applies to payment for hospitals that fail to meet their reporting requirements. 

Applying this reporting ratio to the OPPS payment amounts results in reduced national 

unadjusted payment rates that are mathematically equivalent to the reduced national 

unadjusted payment rates that would result if we multiplied the scaled OPPS relative 

payment weights by the reduced conversion factor. For example, to determine the 

reduced national unadjusted payment rates that applied to hospitals that failed to meet 

their quality reporting requirements for the CY 2010 OPPS, we multiplied the final full 

national unadjusted payment rate found in Addendum B of the CY 2010 OPPS/ASC final 

rule with comment period by the CY 2010 OPPS final reporting ratio of 0.980 

(74 FR 60642). 

 In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 through 

68772), we established a policy that the Medicare beneficiary’s minimum unadjusted 

copayment and national unadjusted copayment for a service to which a reduced national 

unadjusted payment rate applies would each equal the product of the reporting ratio and 

the national unadjusted copayment or the minimum unadjusted copayment, as applicable, 

for the service. Under this policy, we apply the reporting ratio to both the minimum 
CMS-1613-FC 760 

unadjusted copayment and national unadjusted copayment for services provided by 

hospitals that receive the payment reduction for failure to meet the Hospital OQR 

Program reporting requirements. This application of the reporting ratio to the national 

unadjusted and minimum unadjusted copayments is calculated according to § 419.41 of 

our regulations, prior to any adjustment for a hospital’s failure to meet the quality 

reporting standards according to § 419.43(h). Beneficiaries and secondary payers thereby 

share in the reduction of payments to these hospitals. 

 In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68772), we 

established the policy that all other applicable adjustments to the OPPS national 

unadjusted payment rates apply when the OPD fee schedule increase factor is reduced for 

hospitals that fail to meet the requirements of the Hospital OQR Program. For example, 

the following standard adjustments apply to the reduced national unadjusted payment 

rates: the wage index adjustment; the multiple procedure adjustment; the interrupted 

procedure adjustment; the rural sole community hospital adjustment; and the adjustment 

for devices furnished with full or partial credit or without cost. Similarly, OPPS outlier 

payments made for high cost and complex procedures will continue to be made when 

outlier criteria are met. For hospitals that fail to meet the quality data reporting 

requirements, the hospitals' costs are compared to the reduced payments for purposes of 

outlier eligibility and payment calculation. We established this policy in the OPPS 

beginning in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60642). 

For a complete discussion of the OPPS outlier calculation and eligibility criteria, we refer 

readers to section II.G. of this final rule with comment period. 
CMS-1613-FC 761 

2. Reporting Ratio Application and Associated Adjustment Policy for CY 2015 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41017), we proposed to 

continue our established policy of applying the reduction of the OPD fee schedule 

increase factor through the use of a reporting ratio for those hospitals that fail to meet the 

Hospital OQR Program requirements for the full CY 2015 annual payment update factor. 

For the CY 2015 OPPS, the proposed reporting ratio is 0.980, calculated by dividing the 

proposed reduced conversion factor of $72.692 by the proposed full conversion factor of 

$74.176. We proposed to continue to apply the reporting ratio to all services calculated 

using the OPPS conversion factor. For the CY 2015 OPPS, we proposed to apply the 

reporting ratio, when applicable, to all HCPCS codes to which we have assigned status 

indicators “P,” “Q1,” “Q2,” “Q3,” “R,” “S,” “T,” “V,” and “U” (other than new 

technology APCs to which we have assigned status indicators “S” and “T”). We note 

that we are finalizing our proposal to delete status indicator “X” as described in sections 

II.A.3. and X. of the proposed rule and this final rule with comment period. We note that 

we are finalizing our proposal to develop status indicator “J1” as part of our CY 2015 

comprehensive APC policy, discussed in sections II.A.2.e. of the CY 2015 OPPS/ASC 

proposed rule and this final rule with comment period and to apply the reporting ratio to 

the comprehensive APCs. We proposed to continue to exclude services paid under New 

Technology APCs. We proposed to continue to apply the reporting ratio to the national 

unadjusted payment rates and the minimum unadjusted and national unadjusted 

copayment rates of all applicable services for those hospitals that fail to meet the Hospital 

OQR Program reporting requirements. We also proposed to continue to apply all other 

applicable standard adjustments to the OPPS national unadjusted payment rates for 
CMS-1613-FC 762 

hospitals that fail to meet the requirements of the Hospital OQR Program. Similarly, we 

proposed to continue to calculate OPPS outlier eligibility and outlier payment based on 

the reduced payment rates for those hospitals that fail to meet the reporting requirements. 

 We did not receive public comments on our proposal. Therefore, we are 

finalizing our proposal to apply the Hospital OQR Program reduction in the manner 

described above. We also are finalizing our proposal, with modification, to reflect the 

CY 2015 OPPS status indicators to which the adjustment would apply. For the CY 2015 

OPPS, the final reporting ratio is 0.980, calculated by dividing the final reduced 

conversion factor of $72.661 by the final full conversion factor of $74.144. 

 As a result, for the CY 2015 OPPS, we are applying a reporting ratio of 0.980 to 

the national unadjusted payments, minimum unadjusted copayments, and national 

unadjusted copayments for all applicable services for those hospitals failing to meet the 

Hospital OQR Program reporting requirements. This reporting ratio applies to HCPCS 

codes assigned status indicators “J1,” “P,” “Q1,” “Q2,” “Q3,” “R,” “S,” “T,” “U,” or 

“V,” excluding services paid under New Technology APCs. All other applicable 

standard adjustments to the OPPS national unadjusted payment rates for hospitals that fail 

to meet the requirements of the Hospital OQR Program will continue to apply. We 

continue to calculate OPPS outlier eligibility and outlier payment based on the reduced 

rates for those hospitals that fail to meet the reporting requirements. 
CMS-1613-FC 763 

H. Requirements for Reporting Hospital OQR Program Data for the CY 2017 Payment 

Determination and Subsequent Years 

1. Administrative Requirements for the CY 2017 Payment Determination and 

Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75108 through 75109) for a discussion of the Hospital OQR Program procedural 

requirements for the CY 2015 payment determination and subsequent years. In that final 

rule with comment period, we codified these procedural requirements at 

42 CFR 419.46(a). 

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

a. General Procedural Requirements 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75110 through 75111) for a discussion of Hospital OQR Program general 

procedural requirements. In that final rule with comment period, we finalized our 

proposal to codify these general procedural requirements at 42 CFR 419.46(c). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we proposed to correct 

a typographical error in 42 CFR 419.46(c). This section states, “Except as provided in 

paragraph (d) of this section, hospitals that participate in the Hospital OQR Program must 

submit to CMS data on measures selected under section 1833(17)(C) of the Act . . .” We 

proposed to correct the erroneous reference of “section 1833(17)(C)” to “section 

1833(t)(17)(C).” 

 We invited public comment on this proposal. 
CMS-1613-FC 764 

 We did not receive any public comments on this proposal. Therefore, we are 

finalizing the typographical correction as proposed. 

b. Requirements for Chart-Abstracted Measures Where Data Are Submitted Directly to 

CMS for the CY 2017 Payment Determination and Subsequent Years 

 The following chart-abstracted measures finalized previously and retained in the 

Hospital OQR Program require data to be submitted for the CY 2017 payment 

determination and subsequent years: 

● OP-1: Median Time to Fibrinolysis; 

● OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival 

(NQF # 0288); 

● OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention (NQF # 0290); 

● OP-4: Aspirin at Arrival (NQF# 286) 

● OP-5: Median Time to ECG (NQF # 0289); 

● OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients (NQF # 0496); 

● OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional; 

● OP-21: ED – Median Time to Pain Management for Long Bone Fracture 

(NQF # 0662); 

● OP-22: ED – Left Without Being Seen; 

● OP-23: ED – Head CT Scan Results for Acute Ischemic Stroke or Hemorrhagic 

Stroke who Received Head CT Scan Interpretation Within 45 Minutes of Arrival 

(NQF # 0661); 
CMS-1613-FC 765 

● OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients (NQF # 0658); and 

● OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with 

a History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF # 1536). 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68481 through 68484) for a discussion of the form and manner for data 

submission of these measures. 

 As we noted in the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we neither 

proposed new chart-abstracted measures where patient-level data is submitted directly to 

CMS nor proposed new requirements for data submission for chart-abstracted measures. 

c. Claims-Based Measure Data Requirements for the CY 2017 and CY 2018 Payment 

Determination and Subsequent Years 

 We proposed one additional claims-based measure for the CY 2017 payment 

determination and subsequent years, OP-32: Facility 7-Day Risk-Standardized Hospital 

Visit Rate after Outpatient Colonoscopy (79 FR 41036 through 41039). However, as 

discussed in section XIII.E. of this final rule with comment period, we are finalizing this 

measure for the CY 2018 payment determination and subsequent years instead of the 

CY 2017 payment determination and subsequent years as proposed. As discussed in 

section XIII.E. of this final rule with comment period, we will use claims data from 

January 1, 2016 – December 31, 2016 to calculate OP-32 for the CY 2018 payment 

determination in order to use the most recently available data. Therefore, we are 

finalizing that to calculate OP-32, we will use claims data from January 1 – December 31 

of the calendar year 2 years prior to the payment determination year (for example, for the 
CMS-1613-FC 766 

CY 2018 payment determination, we will use data from January 1, 2016 – 

December 31, 2016). 

 Therefore, there will be a total of seven claims-based measures for the CY 2017 

payment determination and subsequent years: 

● OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514); 

● OP-9: Mammography Follow-Up Rates; 

● OP-10: Abdomen CT – Use of Contrast Material; 

● OP-11: Thorax CT – Use of Contrast Material; 

● OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac 

Low Risk Surgery (NQF # 0669); 

● OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT); and 

● OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache. 

 For the CY 2018 payment determination and subsequent years, there will be a 

total of eight claims-based measures: 

● OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514); 

● OP-9: Mammography Follow-Up Rates; 

● OP-10: Abdomen CT – Use of Contrast Material; 

● OP-11: Thorax CT – Use of Contrast Material; 

● OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac 

Low Risk Surgery (NQF # 0669); 
CMS-1613-FC 767 

● OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT); 

● OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache; and 

● OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy. 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75111 through 75112) for a discussion of the claims-based measure data 

submission requirements for the CY 2015 payment determination and subsequent years. 

 In the CY 2012 OPPS/ASC final rule with comment period, we deferred the 

public reporting of OP-15 (76 FR 74456). We extended the postponement of public 

reporting for this measure in the CY 2013 and CY 2014 OPPS/ASC final rules with 

comment period (77 FR 68481, 78 FR 75111). As we noted in the CY 2015 OPPS/ASC 

proposed rule (79 FR 41042), we did not propose any changes to this policy. Public 

reporting for OP-15 continues to be deferred, and this deferral has no effect on any 

payment determinations; however, hospitals are still required to submit data as previously 

finalized (76 FR 74456). 

 Comment: One commenter supported the proposed deferral of the public 

reporting of OP-15. The commenter appreciated CMS’ concerns regarding inappropriate 

use of brain CT imaging and the need for an established clinical guideline to address this 

issue. However, the commenter did not believe older adults or adults on anticoagulant 

medications should be included in OP-15, and noted that current research suggests 

headaches are a potential contraindication. The commenter also expressed concern that 
CMS-1613-FC 768 

claims are not detailed enough to capture the clinical indications needed for appropriate 

exclusions. As a result, the commenter was concerned that this measure may discourage 

clinically appropriate brain CTs for higher-risk older populations. The commenter 

believed that CMS should focus its efforts on other CT measures, particularly after 

trauma or suspected pulmonary embolism. Another commenter asked CMS to remove 

OP-15 from the measure set. 

 Response: Given stakeholder concerns, including those of this commenter, we 

continue to evaluate whether OP-15 needs to be refined before being publicly reported. 

We continue to believe, for the reasons stated in the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74456), that the measure has value, and we will continue to 

collect data with regard to this measure. However, we will also continue to defer public 

reporting until we have resolved these concerns. Because the measure is claims-based, 

this deferral does not affect data submission requirements for the Hospital OQR Program 

(that is, HOPDs do not submit data for claims-based measures other than the actual FFS 

claims), and an HOPD’s payment determination will not be affected based on OP-15 

while public reporting is deferred. 

d. Data Submission Requirements for Measure Data Submitted via the CMS Web-Based 

Tool for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75112 through 75115) for a discussion of the requirements for measure data 

submitted via the Web-based tool on a CMS Web site (the QualityNet Web site) for the 

CY 2016 payment determination and subsequent years. 
CMS-1613-FC 769 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we did not propose any 

changes to the data submission requirements for data submitted via the CMS Web-based 

tool. 

e. Population and Sampling Data Requirements for the CY 2017 Payment Determination 

and Subsequent Years 

 We refer readers to the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74482 through 74483) for discussions of our policy that hospitals may 

voluntarily submit aggregate population and sample size counts for Medicare and 

non-Medicare encounters for the measure populations for which chart-abstracted data 

must be submitted. In the CY 2015 OPPS/ASC proposed rule (79 FR 41042), we did not 

propose any changes to this policy. 

f. Review and Corrections Period for Chart-Abstracted Measures 

 Under the Hospital OQR Program, hospitals submit chart-abstracted data to CMS 

on a quarterly basis. These data are typically due 4 months after the quarter has ended, 

unless we grant an extension or exception, as further described in section XIII.J. of this 

final rule with comment period. We refer readers to the CY 2014 OPPS/ASC final rule 

with comment period for a discussion of our previously finalized policies regarding 

submissions deadlines for chart-abstracted measures (78 FR 68482). Hospitals may 

begin submitting data on the first discharge day of any reporting quarter and can modify 

this data up until the close of the submission period (or 4 months after the quarter has 

ended). For example, if a hospital enters data on January 2, it could continue to review, 

correct, and change these data until August 1, the first quarter submission deadline. We 
CMS-1613-FC 770 

generally provide rates for the measures that have been submitted for chart-abstracted, 

patient-level data 24 to 48 hours following submission. Hospitals are encouraged to 

submit data early in the submission schedule so that they can identify errors and resubmit 

data before the quarterly submission deadline. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41042 through 41043), we 

proposed to formalize this 4-month period as the review and corrections period for 

chart-abstracted data for the Hospital OQR Program. During this review and corrections 

period, hospitals can enter, review, and correct data submitted directly to CMS. 

However, after the submission deadline, hospitals would not be allowed to change these 

data. We believe that 4 months is sufficient time for hospitals to perform these activities. 

 We invited public comment on this proposal. 

 Comment: Many commenters did not support CMS’ proposal to have the data 

submission period run concurrently with the review and corrections period, stating that 

CMS allows a separate time period for review and corrections for nearly all of CMS’ 

other quality reporting programs. Commenters specifically stated that, with the 

proliferation of quality measures in each of CMS’ quality reporting programs, hospitals 

need all of the time currently afforded to capture and report data accurately. Commenters 

recommended that CMS provide at least 30 days immediately after the submission 

deadline to allow hospitals to review and correct their data. 

 Response: We disagree with the commenters who believed that our other quality 

reporting programs have a separate review and corrections period. Providers may review 

their data during the submission period, but are not afforded time after this period to 

correct their data. We note that our proposed review and corrections period is consistent 
CMS-1613-FC 771 

with the informal review and corrections period of other quality reporting programs, 

including the Hospital IQR Program. 

 As stated in the proposed rule (79 FR 41042-41043), hospitals typically have 

4 months to submit, review, and correct their chart-abstracted data, and we merely 

proposed to formalize this time period as the review and corrections period. We believe 

that 4 months is adequate because hospitals have been using this period of time to submit, 

view, and correct their chart-abstracted data for the life of the program. We strongly 

encourage hospitals to submit their data as early as possible so they can take full 

advantage of the time needed for review and correction. In addition, the length of time 

for data submission for chart-abstracted data that is validated affects the timeliness of the 

validation process; additional time would further lengthen the time from when care is 

rendered to when data can be made publicly available. 

 After consideration of the public comments we received, and consistent with our 

policy in other quality reporting programs, we are finalizing the 4 months review and 

corrections period as proposed. We strongly encourage hospitals to submit their data to 

CMS as early as possible to have the maximum time to review and correct their data. 

3. Hospital OQR Program Validation Requirements for Chart-Abstracted Measure Data 

Submitted Directly to CMS for the CY 2017 Payment Determination and Subsequent 

Years 

a. Background 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68484 through 68487) for a discussion of finalized policies regarding our 

validation requirements. We codified these policies at 42 CFR 419.46(e). In the 
CMS-1613-FC 772 

CY 2015 OPPS/ASC proposed rule (79 FR 41043 through 41044), we proposed three 

changes to our validation procedures: (1) we proposed to change the eligibility 

requirements for hospitals selected for validation so that a hospital would be eligible if it 

submits at least one case to the Hospital OQR Program Clinical Data Warehouse during 

the quarter containing the most recently available data; (2) we proposed to give hospitals 

the option to either submit paper copies of patient charts or securely transmit electronic 

versions of medical information for validation; and (3) we proposed that a hospital must 

identify the medical record staff responsible for submission of records under the Hospital 

OQR Program to the designated CMS contractor. 

b. Selection of Hospitals for Data Validation of Chart-Abstracted Measures for the 

CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2012 and CY 2013 OPPS/ASC final rules with 

comment period (76 FR 74484 through 74485 and 77 FR 68484 through 68485) for a 

discussion of finalized policies regarding our sampling methodology, including sample 

size, eligibility for validation selection, and encounter minimums for patient-level data 

for measures where data is obtained from chart abstraction and submitted directly to 

CMS from selected hospitals. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41043), we proposed one 

change to this process. Previously, to be eligible for random selection for validation, a 

hospital must have been coded as “open” in the CASPER system at the time of selection 

and must have submitted at least 10 encounters to the Clinical Data Warehouse during the 

data collection period for the applicable payment determination (76 FR 74484). We 

proposed that, beginning with the CY 2015 encounter period for the CY 2017 payment 
CMS-1613-FC 773 

determination and subsequent years, a hospital will be eligible for validation if it submits 

at least one case to the Hospital OQR Program Clinical Data Warehouse during the 

quarter containing the most recently available data. The quarter containing the most 

recently available data will be defined based on when the random sample is drawn. For 

example, if we draw a sample in December 2014, the most recent data available would be 

that from the second quarter of 2014, which ends June 2014, because the submission 

deadline for second quarter data would be November 1, 2014 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier2&cid=1205442125082; 78 FR 68482). As another example, if a sample is drawn in 

October 2014, the most recent available data would be from quarter one, which ended in 

March 2014, because data must have been submitted by August 1, 2014. We believe this 

change is necessary because it increases the probability that selected hospitals have 

current data in the Clinical Data Warehouse to be validated. Previously, hospitals that 

did not have data from the current year available could still be selected for validation. 

 We invited public comment on this proposal. 

 Comment: Many commenters supported CMS’ proposal to allow a hospital to be 

eligible for validation if it submits at least one case to the Hospital OQR Program 

Clinical Data Warehouse during the quarter with the most recently available data. One 

commenter, however, recommended that CMS change the number of cases for a facility 

to be eligible for validation from at least 1 case to at least 12 cases because up to 

12 records are required per hospital per quarter for validation. Commenters also urged 

CMS to evaluate the appropriateness of hospital selection based on this narrower criterion 

and to propose refinements, if necessary, in the future. 
CMS-1613-FC 774 

 Response: We thank commenters for their support. We agree with the suggestion 

that a hospital should only be eligible for random selection for validation if it submits at 

least 12 cases to the Hospital OQR Program Clinical Data Warehouse during the quarter 

with the most recently available data. As the commenter noted, currently, when a 

hospital is selected for validation, we request up to 12 cases per quarter per hospital. We 

stated our rationale for requesting up to 12 cases per quarter in the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 74486), where we explained that we attempt to 

balance burden to hospitals with data accuracy. Accordingly, we recognize that allowing 

a hospital to be eligible for random selection for validation if it is “open” or requiring 

only one case in the quarter containing the most recently available data may not allow us 

an adequate number of records to ensure data submitted by the hospital is valid and are 

modifying our proposal accordingly to align with our validation procedures and goals. 

 After consideration of the public comments we received, and for the reasons 

stated above, we are finalizing our proposal with a modification that, beginning with the 

CY 2015 encounter period for the CY 2017 payment determination and subsequent years, 

a hospital will be eligible for random selection for validation if it submits at least 

12 cases, instead of just 1 as proposed, to the Hospital OQR Program Clinical Data 

Warehouse during the quarter containing the most recently available data. The quarter 

containing the most recently available data will be defined based on when the random 

sample is drawn. 
CMS-1613-FC 775 

c. Targeting Criteria for Data Validation Selection for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68485 through 68486) for a discussion of our targeting criteria. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41043), we did not propose any changes to these 

policies. 

d. Methodology for Encounter Selection for the CY 2017 Payment Determination and 

Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68486) for a discussion of our methodology for encounter selection. In the 

CY 2015 OPPS/ASC proposed rule (79 FR 41043), we did not propose any changes to 

this policy. 

e. Medical Record Documentation Requests for Validation and Validation Score 

Calculation for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68486 through 68487) for a discussion of our previously finalized procedures for 

requesting medical record documentation for validation and validation score calculation. 

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75118), we codified 

these procedures at 42 CFR 419.46(e)(1) and (e)(2). In the CY 2015 OPPS/ASC 

proposed rule (79 FR 41043 through 41044), we proposed two changes to these policies 

for the CY 2017 payment determination and subsequent years: (1) we proposed to give 

hospitals the option to either submit paper copies of patient charts or securely transmit 

electronic versions of medical information for validation; and (2) we proposed that a 
CMS-1613-FC 776 

hospital must identify the medical record staff responsible for submission of records 

under the Hospital OQR Program to the designated CMS contractor. 

 For records stored electronically, hospitals expend additional resources printing 

records onto paper that may be more efficiently transmitted electronically. In addition, 

the length of paper charts has been increasing, and the paper used to submit these records 

has an environmental impact. Therefore, we proposed to give hospitals the option to 

either submit copies of paper patient charts or securely transmit electronic versions of 

medical information, which has the potential to significantly reduce administrative 

burden, cost, and environmental impact. We have already finalized a similar policy for 

the Hospital IQR Program in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50834 

through 50836) that allows hospitals for the Hospital IQR Program to submit electronic 

records through the mail on a CD, DVD, or flash drive. In addition, in the FY 2015 

IPPS/LTCH PPS final rule for the Hospital IQR Program (79 FR 50269), we finalized 

our proposal to also allow hospitals to submit patient charts using a Secure File Transfer 

Portal on the QualityNet Web site. 

 The current Hospital OQR Program regulation at § 419.46(e)(1) states: ‘‘Upon 

written request by CMS or its contractor, a hospital must submit to CMS supporting 

medical record documentation that the hospital used for purposes of data submission 

under the program. . . .” We proposed that this requirement may be met by employing 

either of the following options for the CY 2017 payment determination and subsequent 

years: (1) a hospital may submit paper medical records, the form in which we have 

historically requested them; or (2) a hospital may securely transmit electronic versions of 

medical information. 
CMS-1613-FC 777 

 For the CY 2017 payment determination and subsequent years, we proposed that 

hospitals that chose to securely transmit electronic versions of medical information 

should either: (1) download or copy the digital image (that is, PDF) of the patient chart 

onto CD, DVD, or flash drive and ship the electronic media following instructions 

specified on the QualityNet Web site; or (2) securely submit digital images (PDFs) of 

patient charts using a Secure File Transfer Portal on the QualityNet Web site. The Secure 

File Transfer Portal would allow hospitals to transfer files through either a Web-based 

portal or directly from a client application using a secure file transfer protocol. The 

system provides a mechanism for securely exchanging documents containing sensitive 

information such as Protected Health Information (PHI) or Personally Identifiable 

Information (PII). Detailed instructions on how to use this system are available in the 

Secure File Transfer 1.0 User Manual available on QualityNet at: 

http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnet

Basic&cid=1228773343598. 

 In addition, in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68486 through 68487), we stated that our validation contractor would request 

medical documentation from each hospital selected for validation via certified mail or 

other trackable method. This request would be sent to “the hospital’s medical record 

staff identified by the hospital for the submission of records under the Hospital IQR 

Program (that is, the hospital’s medical records staff identified by the hospital to the State 

QIO)” (77 FR 68487). Quality Improvement Organizations (QIOs) are CMS contractors 

required by the Act (section 1152 through 1154) tasked with, among other 

responsibilities, assisting hospitals with quality improvement activities. Due to the 

evolution of the structure of the QIO program, beginning with CY 2015 for the CY 2017 
CMS-1613-FC 778 

payment determination and subsequent years, we proposed that a hospital must identify 

the medical record staff responsible for submission of records under the Hospital OQR 

Program to the designated CMS contractor; this CMS contractor may be a contractor 

other than the State QIO. 

 Finally, we noted that a typographical error exists in our validation language in 

§ 419.46(e). This section states, “CMS may validate one or more measures selected 

under section 1833(17)(C) of the Act . . . .” “[S]ection 1833(17)(C)” should instead state 

“section 1833(t)(17)(C).” We proposed to make this change in the regulation text. 

 We invited public comment on these proposals. 

 Comment: Commenters supported CMS’ proposal to offer hospitals the option to 

submit, for validation purposes, either paper copies of patient charts or to securely 

transmit electronic versions of medical information using either electronic media (for 

example, CD, DVD, flash drive) or PDFs submitted using the Secure File Transfer Portal 

on the QualityNet Web site. Commenters noted that the prevalence of electronic medical 

records lends itself well to electronic submission of records. 

 Response: We thank commenters for their support and we agree with their 

comments. 

 Comment: Commenters supported CMS’ proposal to require hospitals to identify 

the medical record staff responsible for submitting validation records for the Hospital 

OQR Program, but requested that CMS make every effort to work with State hospital 

associations to ensure that the correct individuals have been identified through this new 

process. Commenters also requested that CMS require contractors to update their lists 

quarterly to ensure that information is kept current. 
CMS-1613-FC 779 

 Response: We thank commenters for their support. We will consider 

commenters’ concerns when instructing our contractors to keep validation contacts 

up-to-date, and, to the extent feasible, we will attempt to work with state hospital 

associations. 

 After consideration of the public comments we received, we are finalizing our 

proposals: (1) to give hospitals the option to either submit: (a) paper copies of patient 

charts; or (b) electronic versions of medical information by: (i) downloading or copying 

the digital image (that is, PDF) of the patient chart onto encrypted CD, DVD, or flash 

drive and shipping the encrypted electronic media following instructions specified on the 

QualityNet Web site; or (ii) securely submitting PDFs of patient charts using a Secure 

File Transfer Portal on the QualityNet Web site; (2) that hospitals must identify the 

medical record staff responsible for submission of records under the Hospital OQR 

Program to the designated CMS contractor as proposed; and (3) to correct our 

typographical error in regulation text to read “section 1833(t)(17)(C)” as proposed. 

I. Hospital OQR Program Reconsideration and Appeals Procedures for the CY 2017 

Payment Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68487 through 68489) and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75118 through 75119) for a discussion of our reconsideration and appeals 

procedures. We codified this process by which participating hospitals may submit 

requests for reconsideration at 42 CFR 419.46(f). We also codified language at 

§ 419.46(f)(3) stating that a hospital that is dissatisfied with a decision made by CMS on 
CMS-1613-FC 780 

its reconsideration request may file an appeal with the Provider Reimbursement Review 

Board. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41044), we did not propose any 

changes to the reconsideration and appeals procedures.

J. Extension or Exception Process for the CY 2017 Payment Determination and 

Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 75119 

through 75120), and 42 CFR 419.46(d) for a complete discussion of our extraordinary 

circumstances extension or waiver process under the Hospital OQR Program. In the 

CY 2015 OPPS/ASC proposed rule (79 FR 41044), we did not propose any substantive 

changes to these policies or the processes. 

 However, in the future, we will refer to the process as the Extraordinary 

Circumstances Extensions or Exemptions process, instead of the Extraordinary 

Circumstances Extensions or Waiver process. We are in the process of revising the 

Extraordinary Circumstances/Disaster Extension or Waiver Request form (CMS-10432), 

approved under OMB control number 0938-1171. We are updating the forms and 

instructions so that a hospital or facility may apply for an extension for all applicable 

quality reporting programs at one time. 

 In addition, we proposed to make a conforming change from the phrase 

“extension or waiver” to the phrase “extension or exemption” in 42 CFR 419.46(d). 

 We proposed to revise the language in 42 CFR 419.46(d) at 79 FR 41081 (July 

14, 2014) to state that CMS may grant an extension or exception of one or more data 
CMS-1613-FC 781 

submission deadlines and requirements in the event of extraordinary circumstances 

beyond the control of the hospital, such as when an act of nature affects an entire region 

or locale or a systemic problem with one of CMS’ data collection systems directly or 

indirectly affects data submission. CMS may grant an extension or exception as follows: 

• Upon request by the hospital. Specific requirements for submission of a 

request for an extension or exception are available on the QualityNet Web site. 

• At the discretion of CMS. CMS may grant exceptions or extensions to 

hospitals that have not requested them when CMS determines that an 

extraordinary circumstance has occurred. 

 We invited comments on this proposal. 

 Comment: Commenters supported CMS’ decision to update the forms and 

instructions for the extension or exception process so that a hospital may apply for an 

extension for all applicable quality programs at one time. 

 Response: We thank commenters for their support. 

 After consideration of the public comments we received, we are finalizing our 

proposal to change the phrase “extension or waiver” to the phrase “extension or 

exemption” at 42 CFR 419.46(d) as proposed. 

XIV. Requirements for the Ambulatory Surgical Center Quality Reporting 

(ASCQR) Program 

A. Background 

1. Overview 

 We refer readers to section XIII.A.1. of this final rule with comment period for a 

general overview of our quality reporting programs. 
CMS-1613-FC 782 

2. Statutory History of the Ambulatory Surgical Center Quality Reporting (ASCQR) 

Program 

 We refer readers to section XIV.K.1. of the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74492 through 74493) for a detailed discussion of the statutory 

history of the ASCQR Program. 

3. Regulatory History of the ASCQR Program 

 We refer readers to section XV.A.3. of the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75122) for an overview of the regulatory history of the ASCQR 

Program. 

B. ASCQR Program Quality Measures 

1. Considerations in the Selection of ASCQR Program Quality Measures 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68493 through 68494) for a detailed discussion of the priorities we consider for 

ASCQR Program quality measure selection. 

2. Policy for Removal of Quality Measures from the ASCQR Program 

 We previously adopted a policy to retain measures from the previous year’s 

ASCQR Program measure set for subsequent years’ measure sets except when they are 

removed, suspended, or replaced as indicated (76 FR 74504; 77 FR 68494 through 

68495; 78 FR 75122). In the CY 2015 OPPS/ASC proposed rule (79 FR 41045), we 

proposed a process for removing adopted measures. 

 In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863 through 43865), we 

finalized a process for immediate retirement (a term we later changed to “removal”) of 

RHQDAPU Program (now referred to as the Hospital IQR Program) measures based on 
CMS-1613-FC 783 

evidence that the continued use of the measure as specified raised patient safety concerns. 

We stated that we believe immediate retirement of quality measures should occur when 

the clinical evidence suggests that continued collection of the data may result in harm to 

patients. For example, we removed the AMI-6: Beta Blocker at Arrival measure from 

the Hospital IQR Program because it encouraged care that raised potential safety 

concerns according to newly published research suggesting that beta-blockers could 

increase mortality risks for certain patient populations (74 FR 43863). Under such 

circumstances, we may not be able to wait until the annual rulemaking cycle or until we 

have had the opportunity to obtain input from the public to retire a measure because of 

the need to discourage potentially harmful practices, which may result from continued 

collection of the measure. 

 In these situations, we would promptly retire the measure and notify hospitals and 

the public of the retirement of the measure and the reasons for its retirement through the 

usual communication channels. Further, we would confirm the retirement of the measure 

that was the subject of immediate retirement in the next program rulemaking. Finally, we 

stated that, in other circumstances where we do not believe that continued use of a 

measure raises specific safety concerns, we intend to use the rulemaking process to retire 

the measure. For the same reasons stated for the Hospital IQR Program, we believe that 

this process also would be appropriate for the ASCQR Program. Therefore, in the 

CY 2015 OPPS/ASC proposed rule (79 FR 41045), we proposed to adopt this same 

removal process for the ASCQR Program. Under this process, we would immediately 

remove an ASCQR Program measure based on evidence that the continued use of the 

measure as specified raised patient safety concerns. In these situations, we would 
CMS-1613-FC 784 

promptly remove the measure and notify ASCs and the public of the removal of the 

measure and the reasons for its removal through the ASCQR Program ListServe and the 

ASCQR Program QualityNet Web site at: 

http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnet

Tier2&cid=1228772879650. Further, we would confirm the removal of the measure that 

was the subject of immediate removal in the next OPPS/ASC rulemaking. 

 For situations where we do not believe the continued use of a measure raises 

specific safety concerns, we proposed to use the regular rulemaking process to remove a 

measure to allow for public comment. In the FY 2013 IPPS/LTCH PPS final rule 

(77 FR 53505 through 53506), we listed the criteria we have used to determine whether 

to remove measures from the Hospital IQR Program. These criteria are: (1) measure 

performance among hospitals is so high and unvarying that meaningful distinctions and 

improvements in performance can no longer be made (“topped out” measures); 

(2) availability of alternative measures with a stronger relationship to patient outcomes; 

(3) a measure does not align with current clinical guidelines or practice; (4) the 

availability of a more broadly applicable (across settings, populations, or conditions) 

measure for the topic; (5) the availability of a measure that is more proximal in time to 

desired patient outcomes for the particular topic; (6) the availability of a measure that is 

more strongly associated with desired patient outcomes for the particular topic; and 

(7) collection or public reporting of a measure leads to negative unintended consequences 

other than patient harm. These criteria were suggested through public comment on 

proposals for the Hospital IQR Program, and we agreed that these criteria should be 

considered in evaluating the Hospital IQR Program quality measures for removal 

(75 FR 53506). We believe that these criteria also are applicable in evaluating ASCQR 
CMS-1613-FC 785 

Program quality measures for removal because we have found them useful for evaluating 

measures in the Hospital IQR Program and our other quality reporting programs, which 

share similar goals to the ASCQR Program. Accordingly, we proposed to adopt these 

measure removal criteria for the ASCQR Program. 

 We invited public comment on these proposals. 

 Comment: Many commenters supported CMS’ proposed measure removal policy 

and commended CMS for fostering an aligned approach for measures removal criteria 

across our quality reporting and value-based purchasing programs. 

 Response: We thank the commenters for their support. We agree that for 

consistency, an approach to removing measures should be aligned across our quality 

reporting and value-based purchasing programs to the extent possible. 

 Comment: One commenter supported CMS’ proposal to immediately remove 

measures that raise public safety concerns. The commenter recommended that CMS 

notify ASCs by mail and also post notification on the CMS Web site on the ASCQR Web 

page under the “Announcements” heading, in addition to communication through the 

ASCQR Program ListServe and the QualityNet Web site. 

 Response: We thank the commenter for supporting our proposal and the 

suggestions for notifying ASCs. Past experience indicates that the current notification 

process using the QualityNet Web site and the ASCQR Program ListServe is a fast, 

efficient, and effective means of publicly communicating information about the ASCQR 

Program, and using this process would be consistent with how other ASCQR Program 

information is provided. Therefore, we are not including these additional modes of 

communication with ASCs for purposes of ASCQR Program notices at this time. 
CMS-1613-FC 786 

 Comment: One commenter believed that proposed measure removal criteria 

(2) (availability of alternative measures with a stronger relationship to patient outcomes) 

and (6) (the availability of a measure that is more strongly associated with desired patient 

outcomes for the particular topic) are duplicative, and that criterion (2) should read as 

“performance or improvement on a measure does not result in better patient outcomes.” 

The commenter also suggested that criterion (3) (a measure does not align with current 

clinical guidelines or practice) and criterion (7) (collection or public reporting of a 

measure leads to negative unintended consequences other than patient harm) should be 

applied to all measures, but the remaining criteria should be applied more selectively on a 

measure-by-measure basis. 

 Response: We thank the commenter for these recommendations. We disagree 

with the commenter that criterion (2) and criterion (6) are the same and that criterion 

(2) should be reworded as suggested. Criterion (2) applies when there is more than one 

alternative measure with a stronger relationship to patient outcomes that is available, and 

criterion (6) applies where there is only one measure that is strongly and specifically 

associated with desired patient outcomes for the particular topic that is available. For 

criterion (2), there may be different alternative measures available that meet this criterion 

to different degrees. The suggestion to rephrase criterion (2) to read “performance or 

improvement on a measure does not result in better patient outcomes” would change the 

meaning of criterion (2). 

 As we discuss earlier, the measure removal criteria have been developed through 

public comment on proposals for the Hospital IQR Program. We believe that these 

criteria also are applicable in evaluating the ASCQR Program quality measures for 
CMS-1613-FC 787 

removal, because we have found them useful for evaluating measures in the Hospital IQR 

Program as well as other quality reporting programs, which share similar goals to the 

ASCQR Program. We note that we did not propose any changes to criterion (2) in the 

CY 2015 OPPS/ASC proposed rule. Further, based on our experience with the Hospital 

IQR Program, we believe criterion (2) is appropriate and do not believe that additional 

refinement is necessary. Therefore, we are not revising this criterion. We thank the 

commenters for their views and will take them into consideration as we continuously 

assess these criteria. 

 With respect to the commenter’s suggestion that criteria (3) and (7) apply to all 

measures but the remaining criteria be applied more selectively on a case-by-case basis, 

we disagree with respect to selective application of the criteria. We intend for all the 

criteria, including criteria (3) and (7), to apply to all measures to the extent possible. In 

any given situation, we will focus only on removal criteria that are relevant to a particular 

set of circumstances. If more than one of the measure removal criteria appears to be 

relevant, we intend to take a balanced approach in assessing the value of each of the 

different criteria in a given situation before removing any measure. 

 After consideration of the public comments we received, we are finalizing our 

proposal without modification on the measure removal process and criteria. Specifically, 

we will immediately remove an ASCQR Program measure based on evidence that the 

continued use of the measure as specified raises patient safety concerns. In these 

situations, we will promptly remove the measure and notify ASCs and the public of the 

removal of the measure and the reasons for its removal through the ASCQR Program 

ListServe and the ASCQR Program QualityNet Web site. Further, we will confirm the 
CMS-1613-FC 788 

removal of the measure that was the subject of immediate removal in the next OPPS/ASC 

rulemaking. 

 For situations where we do not believe the continued use of a measure raises 

specific safety concerns, we will use the regular rulemaking process to remove a measure 

to allow for public comment. In these situations, we will use the following criteria to 

determine whether to remove the measures from the ASCQR Program: (1) measure 

performance among ASCs is so high and unvarying that meaningful distinctions and 

improvements in performance can no longer be made (“topped out” measures); 

(2) availability of alternative measures with a stronger relationship to patient outcomes; 

(3) a measure does not align with current clinical guidelines or practice; (4) the 

availability of a more broadly applicable (across settings, populations, or conditions) 

measure for the topic; (5) the availability of a measure that is more proximal in time to 

desired patient outcomes for the particular topic; (6) the availability of a measure that is 

more strongly associated with desired patient outcomes for the particular topic; and 

(7) collection or public reporting of a measure leads to negative unintended consequences 

other than patient harm. 

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

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41045 through 41046), we 

proposed to define criteria for when we would consider a measure to be “topped-out.” A 

measure is “topped-out” when measure performance among ASCs is so high and 

unvarying that meaningful distinctions and improvements in performance can no longer 

be made (“topped-out” measures). We do not believe that measuring ASC performance 

on “topped-out” measures provides meaningful information on the quality of care 
CMS-1613-FC 789 

provided by ASCs. We further believe that quality measures, once “topped-out,” 

represent care standards that have been widely adopted by ASCs. We believe such 

measures should be considered for removal from the ASCQR Program because their 

associated reporting burden may outweigh the value of the quality information they 

provide. 

 Specifically, we proposed that a measure under the ASCQR Program is 

“topped-out” when it meets both of the following criteria: 

● Statistically indistinguishable performance at the 75th and 90th percentiles; and 

● A truncated coefficient of variation less than or equal to 0.10. 

 To identify if a measure has statistically indistinguishable performance at the 75th

and 90th percentiles, we would determine whether the difference between the 75th and 90th

percentiles for an ASC’s measure is within two times the standard error of the full 

dataset. The coefficient of variation (CV) is a descriptive statistic that expresses the 

standard deviation as a percentage of the sample mean; this provides a statistic that is 

independent of the units of observation. Applied to this analysis, a large CV would 

indicate a broad distribution of individual ASC scores, with large and presumably 

meaningful differences between ASCs in relative performance. A small CV would 

indicate that the distribution of individual facility scores is clustered tightly around the 

mean value, indicating that it is not useful to draw distinctions among individual ASCs 

on measure performance. The truncated CV excludes observations whose rates are below 

the 5th percentile and above the 95th percentile; this avoids undue effects of the highest 

and lowest outlier values, which, if included, can inappropriately widen the dispersion of 

the distribution. These same criteria for when we would consider a measure to be 
CMS-1613-FC 790 

“topped-out” have been adopted in the Hospital VBP Program (79 FR 50055), the 

Hospital IQR Program (79 FR 50204), and the Hospital OQR Program (section XIII.C.2 

of this final rule with comment period). 

 We invited public comment on this proposal. 

 Comment: Many commenters supported CMS’ proposed “topped-out” criteria for 

measure removal and the alignment of these criteria across the Hospital IQR and Hospital 

VBP Programs. One commenter suggested that CMS refine the first criterion to ensure 

that measures exhibit sufficient lack of variability before they are removed. Several 

commenters suggested that CMS have a mechanism in place to identify a significant 

decline in adherence rates after a measure has been removed. 

 Response: We thank the commenters for their support of the proposed topped-out 

criteria. We expect ASCs to always follow appropriate standards-of-care and clinical 

guidelines, regardless of whether a quality measure exists. We believe that ASCs are 

committed to providing quality care to patients, and we do not have any indication that 

ASCs will stop doing so when measures are removed. 

 While it is possible that removing a measure could result in reduced performance, 

we have guarded against this possibility by setting topped-out criteria that evidence very 

high, unvarying levels of performance. Further, we intend to continue to work with 

quality measurement stakeholders to ensure that performance does not decline 

significantly after removing a measure. However, we must balance the costs of 

continued monitoring of a successful measure with high levels of performance with the 

adoption of other measures where there are opportunities for improvement in clinical 

quality. 
CMS-1613-FC 791 

 Regarding the suggestion to further refine the first criterion, which refers to 

determining that a measure exhibits sufficient lack of variability before removal, we 

proposed topped-out criteria that evidence very high, unvarying levels of performance 

and, at this time, do not believe additional refinement that would make the criteria more 

stringent is necessary. However, we will consider the need for refinement and, if we 

determine changes may be necessary, we will propose such changes in future rulemaking. 

In addition, we will not use our topped-out criteria exclusively when evaluating the 

retention or removal of a measure; a measure that meets our topped-out criteria could be 

retained for other program reasons as discussed below. 

 Comment: One commenter cautioned against removing measures solely based on 

the proposed “topped out” criteria, and was concerned that these criteria might lead to the 

removal of valuable program measures. The commenter cited the example of patient 

safety measures and surgical site infection rates, which are intended to drive toward and 

sustain zero harm. The commenter believed that these types of measures could have 

performance scores that meet the topped out criteria over time. However, the commenter 

believed they would have enduring value to consumers and providers. Some commenters 

urged CMS to assess “topped-out” measures individually, that is, case-by-case, and in a 

broader context before removing them from the ASCQR Program. 

 Response: We agree that some measures that are quantitatively “topped-out” may 

still be appropriate for other reasons. Therefore, as we do for the Hospital IQR Program 

and the Hospital VBP Program, and consistent with our discussion above in section 

XIV.B.3. of this final rule with comment period, we will evaluate several factors in 

considering the removal of measures for the ASCQR Program. We will assess the 
CMS-1613-FC 792 

benefits of retaining a measure on a case-by-case basis before proposing to remove a 

measure from a quality data reporting program and will not remove a measure solely on 

the basis of meeting any specific criterion. 

 Comment: One commenter requested clarification whether ASC-5: Prophylactic 

IV antibiotic timing is topped-out because this measure is topped-out in the HOPD 

setting. 

 Response: We thank the commenter for this request. In response, we have 

reviewed data collected under the ASCQR Program. Our analysis indicated that 

performance for the prophylactic IV antibiotic timing measure is relatively high. 

However, because we continue to have some facilities with completeness of reporting 

issues and data have been collected for a relatively short time, we do not believe we have 

sufficient data to support a topped out analysis for the purposes of measure removal for 

the ASCQR Program at this time. Furthermore, we believe that a prophylactic antibiotic 

timing measure remains relevant clinically or for quality improvement purposes under the 

ASCQR Program. 

 After consideration of the public comments we received, we are finalizing the 

proposed “topped-out” criteria. Specifically, we are finalizing a policy that a measure 

under the ASCQR Program is “topped-out” when it meets both of the following criteria: 

(1) statistically indistinguishable performance at the 75th and 90th percentiles; and (2) a 

truncated coefficient of variation less than or equal to 0.10. To identify if a measure has 

statistically indistinguishable performance at the 75th and 90th percentiles, we will 

determine whether the difference between the 75th and 90th percentiles for an ASC’s 

measure is within two times the standard error of the full dataset. 
CMS-1613-FC 793 

 As we do for the Hospital IQR Program and the Hospital VBP Program, and 

consistent with our discussion above in section XIV.B.3. of this final rule with comment 

period, we will evaluate several factors in considering the removal of measures for the 

ASCQR Program. We will assess the benefits of retaining a measure on a case-by-case 

basis before proposing to remove a measure from the ASCQR Program and will not 

remove a measure solely on the basis of meeting any specific criterion. 

4. ASCQR Program Quality Measures Adopted in Previous Rulemaking 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492 through 

74517), we implemented the ASCQR Program beginning with the CY 2014 payment 

determination. In the CY 2012 OPPS/ASC final rule with comment period, we adopted 

five claims-based measures for the CY 2014 payment determination and subsequent 

years, two measures with data submission via an online Web page for the CY 2015 

payment determination and subsequent years, and one process of care, 

healthcare-associated infection measure for CY 2016 payment determination and 

subsequent years (76 FR 74496 to 74511). In the CY 2014 OPPS/ASC final rule with 

comment period, we adopted three chart-abstracted measures for the CY 2016 payment 

determination and subsequent years (78 FR 75124 to 75130). 

 The quality measures that we previously adopted are listed in the chart below. 

ASC Program Measure Set Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

ASC # NQF # Measure Name 

ASC-1 0263 Patient Burn 

ASC-2 0266 Patient Fall 

ASC-3 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, 

Wrong Implant 

ASC-4 0265 Hospital Transfer/Admission 

ASC-5 0264 Prophylactic Intravenous (IV) Antibiotic Timing 

ASC-6 N/A Safe Surgery Checklist Use 
CMS-1613-FC 794 

ASC Program Measure Set Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

ASC # NQF # Measure Name 

ASC-7 N/A ASC Facility Volume Data on Selected ASC Surgical Procedures 

Procedure categories and corresponding HCPCS codes are located 

at: 

http://qualitynet.org/dcs/ContentServer?c=Page&pagename=Qnet

Public%2FPage%2FQnetTier2&cid=1228772475754 

ASC-8 0431 Influenza Vaccination Coverage among Healthcare Personnel 

ASC-9 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval 

for Normal Colonoscopy in Average Risk Patients 

ASC-10 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients 

with a History of Adenomatous Polyps-Avoidance of 

Inappropriate Use 

ASC-11 1536 Cataracts: Improvement in Patient’s Visual Function within 90 

Days Following Cataract Surgery* 

* Measure voluntarily collected as set forth in section XIV.E.3.c. of this final rule with comment period. 

 The comments we received on these previously adopted measures and our 

responses are set forth below. 

 Comment: Some commenters asked CMS to remove some previously adopted 

measures for ASCs, because they believed these measures were either inappropriate or 

too burdensome for ASCs. 

 Response: We thank the commenters for their suggestions. At this time, we are 

not removing any of the measures suggested by commenters. We did not propose to 

remove any measures from the ASCQR Program in the CY 2015 OPPS/ASC proposed 

rule. Further, there is no evidence that continued use of the measures as specified raises 

patient safety concerns that would require immediate removal of the measures based on 

the process we are finalizing in this final rule with comment period. However, we will 

take these suggestions into consideration in future years using the measure removal 

criteria we are adopting in this final rule with comment period. 
CMS-1613-FC 795 

5. New ASCQR Program Quality Measure for the CY 2018 Payment Determination and 

Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75124) for a detailed discussion of our approach to ASCQR measure selection. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41046 through 41048), we 

proposed to adopt one new claims-based measure into the ASCQR Program for the 

CY 2017 payment determination and subsequent years: ASC-12: Facility Seven-Day 

Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

 Colonoscopy is the most commonly performed ambulatory surgery in the United 

States.28 The most recent data available indicate that, in 2002 alone, physicians 

performed an estimated 14 million colonoscopies in the United States.29 Colonoscopies 

are associated with a range of well-described and potentially preventable adverse events 

that can lead to hospital visits, repeat procedures, or surgical intervention for treatment, 

including colonic perforation, gastrointestinal (GI) bleeding, and cardiopulmonary events 

such as hypoxia, aspiration pneumonia, and cardiac arrhythmias. While hospital visits 

are generally unexpected after outpatient colonoscopy, the literature suggests that the 

majority of these visits occur within the first 7 days.30,31,32 Reported hospital visit rates 

after outpatient colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post procedure, 

 

28 Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based Ambulatory Surgery, 2007: Statistical Brief 

#86. Healthcare Cost and Utilization Project (HCUP) Statistical Briefs. Rockville (MD)2006. 29 Seeff LC, Richards TB, Shapiro JA, et al. How many endoscopies are performed for colorectal cancer 

screening? Results from CDC's survey of endoscopic capacity. Gastroenterology. 

Dec 2004;127(6):1670-1677. 

30 Rathgaber SW, Wick TM. Colonoscopy completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 2006; 64:556-62. 31 Rabeneck L, Saskin R, Paszat LF. Onset and clinical course of bleeding and perforation after outpatient 

colonoscopy: a population-based study. Gastrointest Endosc. 2011; 73:520-3. 32 Ko CW, Riffle S, Michael L, et al. Serious complications within 30 days of screening and surveillance 

colonoscopy are uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73. 
CMS-1613-FC 796 

and from 2.4 to 3.8 percent at 30 days post procedure.33,34,35 Some adverse events such as 

bleeding occur after day 7, but based on input from clinical experts, public comment, and 

empirical analyses, we concluded that unplanned hospital visits within 7 days is the 

optimal outcome to ensure capture of procedure-related adverse events and to minimize 

capture of hospital visits unrelated to the procedure. This measure provides the 

opportunity for ASCs to improve quality of care and to lower the rates of adverse events 

leading to hospital visits after outpatient colonoscopy; this would encourage ASCs to 

achieve the outcome rates of the best performers. 

 We believe it is important to reduce adverse patient outcomes associated with 

preparation for colonoscopy, the procedure itself, and follow-up care. Therefore, we 

proposed to include the ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit 

Rate after Outpatient Colonoscopy measure, which is calculated from paid Medicare FFS 

claims, in the ASCQR Program for the CY 2017 payment determination and subsequent 

years. We expect the measure would promote improvement in patient care over time 

because transparency in publicly reporting measure scores would make patient unplanned 

hospital visits (emergency department visits, observation stays, and inpatient admissions) 

following colonoscopies more visible to ASCs and patients and incentivize ASCs to 

incorporate quality improvement activities in order to reduce these visits. ASCs are often 

 

33 Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor complications and time lost from normal 

activities after screening or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;65(4):648-656. 34 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 35 Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A, Brooks R. Is there a relationship 

between physician and facility volumes of ambulatory procedures and patient outcomes? J Ambul Care 

Manage. Oct-Dec 2008;31(4):354-369. 
CMS-1613-FC 797 

unaware of complications following colonoscopy for which patients visit the hospital.36 

This risk-standardized quality measure would address this information gap and promote 

quality improvement by providing feedback to facilities and physicians, as well as 

transparency for patients on the rates and variation across facilities in unplanned hospital 

visits after colonoscopy. 

 The outcome measured in the ASC-12 measure is all-cause, unplanned hospital 

visits (admissions, observation stays, and emergency department visits) within 7 days of 

an outpatient colonoscopy procedure. The measure score, also referred to as the 

facility-level risk-standardized hospital visit rate, is derived from the calculation of the 

ratio of the numerator to the denominator multiplied by the crude rate. The numerator is 

the number of predicted (meaning adjusted actual) hospital visits, which is the number of 

unplanned hospital visits within 7 days of colonoscopy that the facility is predicted to 

have based on its case-mix. The denominator is the number of expected hospital visits, 

which is the number of unplanned hospital visits the facility is expected to have based on 

the nation’s performance with the facility’s case-mix. The crude rate is the national 

unadjusted number of patients who had a hospital visit post-colonoscopy among all 

patients who had a colonoscopy. 

 Based on discussions with clinical and technical panel experts, the measure 

excludes colonoscopies for patients undergoing concomitant high-risk upper GI 

endoscopy because these patients are at a higher risk for hospital visits than patients 

undergoing a typical colonoscopy, and patients with a history of inflammatory bowel 

disease (IBD) or diverticulitis in the year preceding the colonoscopy because we likely 

 

36 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 
CMS-1613-FC 798 

could not fully characterize and adjust for their pre-procedure risk of needing a 

post-procedure hospital visit or identify whether these admissions are planned or 

unplanned. The measure also excludes procedures for patients who lack continuous 

enrollment in Medicare FFS Parts A and B in the first month after the procedure to ensure 

all patients included in the analysis have complete data available for outcome assessment. 

The statistical risk adjustment model includes 15 clinically relevant risk-adjustment 

variables that are strongly associated with risk of hospital visits within 7 days following a 

colonoscopy. Additional methodology details and information obtained from public 

comment for measure development are available at: http://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. 

 Section 1890A of the Act requires the Secretary to establish a pre-rulemaking 

process with respect to the selection of certain categories of quality and efficiency 

measures. Under section 1890A(a)(2) of the Act, the Secretary must make available to 

the public by December 1 of each year a list of quality and efficiency measures that the 

Secretary is considering for the Medicare program. The measure that we proposed was 

reviewed by the MAP and was included on a publicly available document entitled “MAP 

Pre-Rulemaking Report: 2014 Recommendations on Measures for More than 20 Federal 

Programs” (formerly referred to as the “List of Measures Under Consideration”) on the 

NQF Web site at: http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Progr

ams.aspx (“MAP Report”). We note that, at the time the measure was listed on the “MAP 

Pre-Rulemaking Report: 2014 Recommendations on Measures for More than 20 Federal 

Programs,” it was named “High-Acuity Care Visits after Outpatient Colonoscopy 

Procedure.” The MAP conditionally supported this measure for the ASCQR Program. 
CMS-1613-FC 799 

 The MAP Report stated that the measure “[s]hould be submitted for and receive 

NQF endorsement; Measure is promising but needs further development” (p. 187). 

Further, the MAP Report stated that the measure “would provide valuable outcome 

information to inform consumer decision and drive quality improvement” and that the 

“NQF endorsement process would resolve questions about the reliability and validity of 

the measure.” The MAP also stated that NQF endorsement would resolve questions 

about “the feasibility of the algorithm for attributing claims data in light of possible 

effects of the Medicare three-day payment window” (p. 187, MAP Report). However, 

this concern with Medicare Part A hospital payments relates to the Hospital OQR 

Program and not the ASCQR Program. As required under section 1890A(a)(4) of the 

Act, we considered the input and recommendations provided by the MAP in selecting 

measures to propose for the ASCQR Program. 

 We believe we have addressed the concerns raised by the MAP to the greatest 

extent possible. The measure was submitted to NQF for endorsement on 

February 21, 2014. The measure is well-defined and precisely specified for consistent 

implementation within and between organizations that will allow for comparability. 

Reliability testing demonstrated the measure data elements produced were repeatable; 

that is, the same results were produced a high proportion of the time when assessed in the 

same population in the same time period. Validity testing demonstrated that the measure 

data elements produce measure scores that correctly reflect the quality of care provided 

and that adequately identify differences in quality. 

 Currently, there are no publicly available quality of care reports for ASCs that 

conduct outpatient colonoscopies. Therefore, adoption of this measure provides an 
CMS-1613-FC 800 

opportunity to enhance the information available to patients choosing among ASCs that 

offer this elective procedure. We believe this measure would reduce adverse patient 

outcomes associated with preparation for colonoscopy, the procedure itself, and 

follow-up care by capturing and making more visible to ASCs and patients all unplanned 

hospital visits following the procedure. In addition, providing outcome rates to ASCs 

would make visible to clinicians meaningful quality differences and incentivize 

improvement. 

 Sections 1833(i)(7)(B) and 1833(t)(17)(C)(i) of the Act, when read together, 

require the Secretary, except as the Secretary may otherwise provide, to develop 

measures appropriate for the measurement of the quality of care furnished by ASCs, that 

reflect consensus among affected parties and, to the extent feasible and practicable, that 

include measures set forth by one or more national consensus building entities. As stated 

in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74465 and 74505), we 

believe that consensus among affected parties can be reflected through means other than 

NQF endorsement, including consensus achieved during the measure development 

process, consensus shown through broad acceptance and use of measures, and consensus 

through public comment. We believe this proposed measure meets these statutory 

requirements. We believe that this measure is appropriate for the measurement of quality 

of care furnished by ASCs because this procedure is commonly performed in ASCs and, 

as discussed above, can signify important issues in the care being provided in ASCs. We 

also believe this measure reflects consensus among affected parties because the MAP, 

which represents stakeholder groups, reviewed and conditionally supported the measure, 

and stated that it “would provide valuable outcome information to inform consumer 
CMS-1613-FC 801 

decision and drive quality improvement.” Further, the measure was subject to public 

comment during the MAP and measure development processes, with some public 

commenters agreeing with the MAP’s conclusions on the measure (p. 187, MAP Report, 

January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Progr

ams.aspx). 

 As discussed above, the statute also requires the Secretary, except as the Secretary 

may otherwise provide, to include measures set forth by one or more national consensus 

building entities to the extent feasible and practicable. This measure is not 

NQF-endorsed; however, as noted above, this measure is currently undergoing the NQF 

endorsement process. We note that sections 1833(i)(7)(B) and (t)(17) of the Act do not 

require that each measure we adopt for the ASCQR Program be endorsed by a national 

consensus building entity, or by the NQF specifically. Further, under section 

1833(i)(7)(B) of the Act, section 1833(t)(17)(C)(i) of the Act, which contains this 

requirement, applies to the ASCQR Program, except as the Secretary may otherwise 

provide. Under this provision, the Secretary has further authority to adopt nonendorsed 

measures. 

 In summary, we proposed to adopt one new measure for the ASCQR Program for 

the CY 2017 payment determination and subsequent years. 

ASC # NQF# Proposed ASCQR Measure for the CY 2017 Payment 

Determination and Subsequent Years 

ASC-12 Pending Facility Seven-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy 
CMS-1613-FC 802 

 We invited public comment on our proposal to include ASC-12: Facility 

Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy in the 

ASCQR Program beginning with the CY 2017 payment determination. 

 Comment: Several commenters agreed that the ASC-12 measure addresses an 

important area to monitor for quality improvement, given the number of colonoscopy 

procedures performed annually in ASCs. 

 Response: We thank the commenters for their support. We agree that the quality 

of care associated with colonoscopy procedures is an important clinical care area to 

assess quality of care for ASCs. 

 Comment: Many commenters urged CMS not to adopt ASC-12 until it is 

NQF-endorsed. Several of these commenters also noted that the MAP supported this 

measure on condition of NQF-endorsement, noting that the NQF process would resolve a 

number of questions about the reliability, validity and feasibility of this measure. These 

commenters requested that, in general, CMS only include measures in the ASCQR 

Program that have been NQF-endorsed in order to avoid later suspending or removing 

these measures. 

 Response: We appreciate the commenters’ concerns. Under sections 

1833(i)(7)(B) and (t)(17)(C)(i) of the Act, except as the Secretary may otherwise provide, 

the Secretary must develop measures that reflect consensus among affected parties and, 

to the extent feasible and practicable, must include measures set forth by a national 

consensus building entity. Whenever possible, we strive to adopt NQF-endorsed 

measures because these measures will meet these requirements. However, we believe the 

requirements that measures reflect consensus among affected parties can be achieved in 
CMS-1613-FC 803 

other ways, including through the measure development process, through broad 

acceptance and use of the measure, and through public comments. 

 Further, it may not be feasible or practicable to adopt an NQF-endorsed measure, 

such as when an NQF-endorsed measure does not exist. Section 1833(t)(17)(C)(i) of the 

Act does not require that each measure we adopt for the ASCQR Program be endorsed by 

a national consensus building entity, or by the NQF specifically. Moreover, 

section 1833(i)(7)(B) of the Act states that section 1833(t)(17) of the Act, which contains 

this requirement, applies to the ASCQR Program, except as the Secretary may otherwise 

provide. Under this provision, the Secretary has further authority to adopt measures that 

do not reflect consensus among affected parties and that are not endorsed by a national 

consensus building entity. Therefore, not all of the measures adopted for the ASCQR 

Program are required to be NQF-endorsed. 

 As discussed below, we believe the measure as developed exhibits sufficient 

levels of reliability, validity, and feasibility to be adopted for the ASCQR Program. As 

noted above, we also have submitted this measure to NQF for endorsement. 

 Comment: Many commenters did not support CMS’ proposal to finalize ASC-12 

because complications from colonoscopies are very rare and ASCs already take steps to 

ensure colonoscopies are conducted to eliminate preventable complications. Many 

commenters noted that the literature on the measure indicates the incidence of 

complications following colonoscopy is less than 2 percent. These commenters 

suggested that this low incidence meant that the measure should not be included in the 

ASCQR Program as it may be topped out or that the quality concern addressed by the 
CMS-1613-FC 804 

measure does not rise to the level of importance needed for a national quality 

measurement program. 

 Response: Given the widespread use of colonoscopy for colorectal cancer 

screening in the outpatient setting, we consider colonoscopy a high volume procedure 

and measuring the quality of care associated with colonoscopies a high priority for us. 

We commend ASCs that are already taking steps to ensure colonoscopies are conducted 

to eliminate preventable complications. While we agree that the incidence of 

colonoscopy complications is relatively low, serious adverse events, such as perforation 

of the bowel and bleeding, may occur following colonoscopies. We view this measure as 

a critical outcome measure where the goal is to drive toward and sustain zero harm. 

 In addition, some literature suggests that many facilities performing 

colonoscopies are unaware of patients accessing hospital-based care with adverse events 

because patients return to different facilities, including hospitals and emergency 

departments, and would not return to the ASC facility. For example, one study showed 

that physicians were unaware of nearly 75 percent of hospital admissions for adverse 

events following colonoscopy.37 While most colonoscopies are performed without 

subsequent complication, we note that, in our analysis of Medicare FFS data, this 

measure showed that among Medicare patients aged ≥65, 1.6 percent of outpatient 

colonoscopies resulted in an unplanned hospital visit within 7-days.38 This estimate is 

based on a 20 percent sample of nationwide Medicare fee-for-service patients. If we 

 

37 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 38 2010 Medicare 20 percent fee-for-service sample. Based on an analysis of 20 percent sample of 

Medicare FFS data from 2010 during measure development. The 20 percent sample included 332,391 

outpatient colonoscopies meeting the measure inclusion and exclusion criteria, and 1.6 percent of these 

colonoscopies were followed by an unplanned hospital visit. This equates to 5,331 unplanned hospital 

visits in the 20 percent sample. 
CMS-1613-FC 805 

were to use full national data (that is, a 100 percent sample), we estimate 1.7 million 

colonoscopies would have been performed among Medicare FFS patients and nearly 

27,000 unplanned hospitals visits would have occurred within 7-days of the procedure. 

These findings suggest adverse events are not as rare or inconsequential as many believed 

and that quality measurement for colonoscopy procedures in the outpatient setting is 

important. 

 We agree with the commenters’ statement that the low incidence rate may suggest 

that the measure is topped-out, but in addition to the reasons for adopting this measure 

discussed above, we believe that a low incidence rate does not conclusively determine 

whether a measure has reached topped-out status. After the measure has been 

implemented, over time, we will assess it again for topped-out status using the two 

topped-out criteria we are finalizing in section XIV.B.3. of this final rule with comment 

period. 

 Comment: Many commenters expressed concern that ASC-12 is not sufficiently 

reliable to be included in the ASCQR Program, specifically, that the measure developer 

has indicated that the measure is only “fairly” reliable, with an interclass correlation 

coefficient (ICC) of 0.335. These commenters contended that “fair” reliability is not 

sufficient for publicly reported quality metrics because such information could misinform 

the public, and urged CMS to conduct an analysis on the measure’s reliability to 

understand the amount of data required to achieve “good” reliability. Several 

commenters argued that “good” reliability should result in an ICC of at least 0.60. Other 

commenters believed that reliability will improve with several years’ worth of data. 
CMS-1613-FC 806 

Another commenter requested that data from this measure be withheld from public 

reporting until concerns about its reliability and validity can be thoroughly assessed. 

 Response: We disagree with commenters and believe that ASC-12 is sufficiently 

reliable to be included in the ASCQR Program. The ICC value submitted in the initial 

NQF application (0.335) was calculated using a split sample of data from 2 years. We 

randomly split the patient cohort at each hospital into two equal halves, calculated the 

measure using each half, and then calculated the agreement between these two (the ‘test’ 

and the ‘retest’). After submitting the measure to NQF for endorsement review, we 

conducted additional calculations of the reliability testing score, this time using the 

Spearman-Brown prophecy formula. The Spearman-Brown prophecy formula is an 

accepted statistical method which estimates the ICC if the sample were increased. 

Therefore, it allows us to estimate what the reliability score would be if all observations 

were used for public reporting rather than using a split sample. Our Spearman-Brown 

prophecy formula calculations resulted in a higher ICC of 0.43. 

 The NQF considers the ICC values ranging from 0.21 to 0.40 as “fair” reliability 

and values ranging from 0.41 to 0.60 as "moderate" reliability. Therefore, the ICC values 

of 0.335 and 0.43 are interpreted as “fair” and “moderate” reliability, respectively. These 

ICC values are also in line with other NQF-endorsed outcome measures used in other 

CMS programs. For example, in the Hospital Readmissions Reduction Program 

(76 FR 51667), the Inpatient Acute Myocardial Infarction (AMI) 30-day Risk 

Standardized Readmission measure (NQF #0505) has an ICC of 0.369 and the 

Pneumonia (PN) 30-day Risk Standardized Readmission measure (NQF #0506) has an 
CMS-1613-FC 807 

ICC of 0.406. Both measures are NQF-endorsed. We consider the reliability of 0.335, as 

noted in the proposed rule, acceptable for the ASCQR Program. 

 Regarding the concerns that we should withhold public reporting until the 

measure’s reliability and validity is addressed, as stated above, we believe the reliability 

of the measure is sufficiently reliable for inclusion in the ASCQR Program and do not 

agree that the public may be misinformed or that we should withhold public reporting. In 

addition to our calculations above, reliability testing previously conducted by the measure 

steward demonstrated the measure data elements produced were repeatable; that is, the 

same results were produced a high proportion of the time when assessed in the same 

population in the same time period. Also, validity testing by the measure steward 

demonstrated that the measure data elements produce measure scores that correctly 

reflect the quality of care provided and that adequately identify differences in quality. 

 As the commenters suggested, the measure reliability may be further improved by 

using several years’ worth of data; however, we must balance the reliability of the 

measure with the timeliness of the measure. As discussed, at this time, we believe that 

1 year of data appropriately balances these competing interests for payment determination 

purposes, but we will continue to assess this belief during the dry run we discuss below. 

Also, we will consider conducting additional reliability assessments of the measure using 

an extended data period. 

 Moreover, we believe it is important to include this measure in the program 

because colonoscopy is a high volume, common procedure performed at outpatient 

facilities and is frequently performed on relatively healthy patients to screen for 

colorectal cancer. Given the widespread use of colonoscopy, understanding and 
CMS-1613-FC 808 

minimizing procedure-related adverse events is a high priority. These adverse events, 

such as abdominal pain, bleeding, and intestinal perforation, can result in unanticipated 

hospital visits post procedure. Physicians performing colonoscopies are often unaware 

that patients seek acute care at hospitals following the procedure and the associated 

adverse events are potentially preventable. We strongly believe that the measure would 

promote improvement in patient care over time because transparency in publicly 

reporting measure scores would make patient unplanned hospital visits (emergency 

department visits, observation stays, and inpatient admissions) following colonoscopies 

more visible to ASCs and patients and incentivize ASCs to incorporate quality 

improvement activities in order to reduce these visits. 

 Finally, we believe this measure should be included in the program because 

currently this risk-standardized quality measure is the only measure available that would 

address this information gap and promote quality improvement by providing feedback to 

facilities and physicians, as well as transparency for patients on the rates and variation 

across facilities in unplanned hospital visits after colonoscopy. There are no publicly 

available quality of care reports for ASCs that conduct outpatient colonoscopies. 

Therefore, adoption of this measure provides an opportunity to enhance the information 

available to patients choosing among ASCs that offer this elective procedure. We believe 

this measure would reduce adverse patient outcomes associated with preparation for 

colonoscopy, the procedure itself, and follow-up care by capturing and making more 

visible to ASCs and patients all unplanned hospital visits following the procedure. In 

addition, providing outcome rates to ASCs would make visible to clinicians meaningful 

quality differences and incentivize improvement. 
CMS-1613-FC 809 

 In response to comments, however, to allow sufficient time to conduct further 

analysis of this measure, we are finalizing the adoption of this measure beginning with 

the CY 2018 payment determination, rather than beginning with the CY 2017 payment 

determination as proposed. We plan to perform a dry run of the measure in 2015. From 

our perspective, a dry run is a preliminary analysis of data in which ASCs may review 

their measure results, and ask questions about and become familiar with the measure 

methodology. Dry runs will include three to four years of paid Medicare FFS claims. 

We will use the most recent complete claims samples (usually 6 to 9 months prior to the 

start date) for dry runs. For example, if the dry run begins in March 2015, the most 

recent data available may be July 2011 to June 2014 (assuming 3 years of data). Because 

we use paid Medicare FFS claims, ASCs will not need to submit any data for the dry run. 

The general information on the dry run as well as the confidential dry run reports will be 

available for ASCs to review on their accounts at https://www.qualitynet.org. The dry run 

will generate confidential reports at the patient level, indicating whether the patient had a 

hospital visit, the type of visit (admission, emergency department visit, or observational 

stay), the admitting facility, and the principal discharge diagnosis. Further, the dry run 

will enable ASCs to see the measure score reports and have the opportunity to receive 

individual patient data and information contained within individual patient records. 

ASCs can use the information to identify performance gaps and develop quality 

improvement strategies. Dry run results are not linked to public reporting or payment 

determinations. We expect the dry run to take approximately 1 month to conduct once 

data are obtained, after which facilities will be provided the confidential report and the 

opportunity to review their performance and provide feedback to us. 
CMS-1613-FC 810 

 In addition, we will continue to generate these reports for ASCs after we 

implement the measure beginning with the CY 2018 payment determination. The 

measure will have no payment impact until the CY 2018 payment determination and 

subsequent years. Public display of measure data will occur on or after 

December 1, 2017, but there will be no public display of the dry run data. 

 With national implementation of a dry run of this measure, we also will review 

the appropriate cutoff volume for facilities, if necessary, in reporting the measure score. 

We require a minimum volume (cutoff volume) of colonoscopies per facility to be able to 

calculate a reliable measure score. We have yet to determine the minimum volume per 

facility (that is, the cutoff colonoscopy volume). Because we used a Medicare 20-percent 

sample to develop the measure, we could not estimate this cutoff during measure 

development. However, testing during the measure dry-run with 100 percent of the 

sample per facility will help us to determine the appropriate cutoff volume of 

colonoscopies per facility. ASCs will be notified via the QualityNet Web site of the 

cutoff volume of colonoscopies per facility, if any. 

 While some ASCs perform too few colonoscopies for us to calculate a measure 

score and we would not publicly report their data, these facilities would remain in the 

measure cohort. Typically, for public reporting of hospital measures on the CMS Web 

site Hospital Compare, the measure score is reported as “Number of cases too small” for 

hospitals with fewer cases than the cutoff. We will use the same protocol when the 

measure is publicly reported for the ASCQR Program, and will report a measure score as 

“Number of cases too small” for ASCs with fewer cases than the cutoff on the QualityNet 

Web site. 
CMS-1613-FC 811 

 Comment: Several commenters pointed out that, from the perspective of using 

claims as a data source for this measure, the codes for ASCs are services rendered-driven, 

while the codes for HOPDs are diagnosis-driven. Commenters were concerned that the 

coded information and the associated risk-adjustment for this measure may not be able to 

capture the sensitivity and specificity of the clinical care following an outpatient 

colonoscopy. Given the difference in coding practices and claims architecture between 

HOPDs and ASCs, commenters recommended further testing for a fair performance 

comparison between HOPDs and ASCs. One commenter inquired if CMS plans to field 

test this measure prior to implementation. Commenters contended that the measure must 

be systematically assessed to assure the measure results are attributable to differences in 

quality alone. The commenters suggested that the measure score should be directly 

validated against outpatient medical records and measure results across settings must be 

assessed to ensure that any comparisons are valid. 

 Response: We thank the commenters for expressing their concerns regarding 

possible effects of coding practices and claims architecture on the data available through 

administrative claims in capturing the sensitivity and specificity of the clinical care 

following an outpatient colonoscopy. The measure is designed, however, to mitigate any 

differences in coding practices across HOPDs and ASCs. For example, to capture 

comorbidities for risk adjustment, the measure uses claims across care settings, including 

physician outpatient claims, so differences in claims submitted during the procedure are 

not likely to affect the comorbidities assigned to the patient. In addition, the outcome 

counts hospital visits regardless of whether they are billed as admissions, emergency 

room visits, or observations stays; therefore, if there are differences between 
CMS-1613-FC 812 

colonoscopies done at ASCs and HOPDs in the type of hospital visit a patient with 

complications incurs (for example, whether observation stays or ED visits are used), the 

measure will be insensitive to these differences. 

 We recognize that the claims architecture differs for HOPDs and ASCs because 

the two facility types utilize different bill forms and have different payment systems. 

However, we do not agree that our measure specifications do not account for differences 

in claims architecture and necessary billing codes in discerning hospital events following 

colonoscopy. The measure includes colonoscopies from all outpatient settings to ensure 

that the expected hospital visit rate for any facility is estimated using the full national 

experience of colonoscopy patients. Specifically, we include all outpatient colonoscopies 

to make sure that (1) the effects that risk factors exert on the outcome are estimated 

based on colonoscopies performed among all outpatient settings; and (2) the national 

average rate of hospital visits following colonoscopy is calculated based on all outpatient 

colonoscopies. Our approach includes all outpatient claims, including HOPD, ASC, and 

physician claims. To identify all outpatient colonoscopy claims, including claims 

affected by the Medicare 3-day payment window policy, the measure specifications link 

claims across multiple care settings (outpatient and inpatient). Furthermore, the measure 

specifications link claims across multiple care settings to derive comorbidity data to 

ensure the patient comorbidities are captured to the fullest extent possible for 

risk-adjustment and to identify patient outcomes. 

 Linking patient claims across multiple settings largely mitigates the impact of 

potential difference in coding practice among settings and allows comparisons of 

colonoscopy quality across settings. For example, potential variation in the coding of 
CMS-1613-FC 813 

comorbidities in the index colonoscopy claim may occur based on the setting. However, 

we derive comorbidities for risk adjustment from all inpatient and outpatient claims in the 

preceding 12 months. By using all claims in the preceding year, we capture patient 

comorbidities to the fullest extent possible and mitigate the impact of potential coding 

differences between settings that would occur if we used the index colonoscopy claim 

alone. 

 Further, similar approaches to deriving comorbidities from claims data are used 

for other risk-adjusted outcome measures. The measure developer has validated the 

accuracy of this approach on multiple occasions for prior measures developed for the 

inpatient setting. For example, in the Hospital Readmissions Reduction Program 

(76 FR 51667), the Inpatient Acute Myocardial Infarction (AMI) 30-day Risk 

Standardized Readmission measure (NQF #0505) has an ICC of 0.369, and the 

Pneumonia (PN) 30-day Risk Standardized Readmission measure (NQF #0506) has an 

ICC of 0.406. Both measures are NQF-endorsed. 

 Regarding the suggestion that the measure score should be directly validated 

against outpatient medical records, at this time, we believe that it would be overly 

burdensome to validate the reported data, because of the limited experience that ASCs 

have with reporting quality data to CMS coupled with the low incidence of cases for this 

measure. In addition, as stated in section XIV.D.6. of this final rule with comment 

period, we refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53641 through 

53642) for a complete discussion of our policy not to require validation of claims-based 

measures (beyond the usual claims validation activities conducted by our Medicare 

Administrative Contractors). 
CMS-1613-FC 814 

 We appreciate commenters’ concerns regarding factors that may impact HOPDs 

and ASCs. In response to comments, to allow sufficient time to conduct further analysis 

of this measure, we are finalizing the adoption of this measure beginning with the 

CY 2018 payment determination, rather than beginning with the CY 2017 payment 

determination as proposed. 

 In addition, we plan to perform a dry run (a preliminary analysis) of the measure 

in 2015. We refer readers to our discussion of the dry run above, in response to a 

previous comment. 

 Comment: Several commenters disagreed with the statement in the proposed rule 

(79 FR 41047) that the ASC-12 measure is “well-defined and precisely specified for 

consistent implementation within and between organizations that will allow for 

comparability.” These commenters raised the issue that the Medicare payment window 

policy that applies to hospitals will result in under-detection of hospital events for 

colonoscopies performed by HOPDs; the 3-day (or 1-day) payment window applies to 

outpatient services furnished by hospitals and hospitals that are wholly owned or wholly 

operated Part B entities. Hospitals are required to bundle the technical component of all 

outpatient diagnostic services and related nondiagnostic services (for example, 

therapeutic) with the claim for an inpatient stay when services are furnished to a 

Medicare beneficiary in the 3 days (or, in the case of a hospital that is not a subsection (d) 

hospital, during the 1-day) preceding an inpatient admission in compliance with section 

1886 of the Act. Commenters expressed their concern that as a result of this payment 

policy, HOPDs may have systematic undercounting of hospital visits while ASCs get a 

full count of all hospital visits within 7 days subsequent to outpatient colonoscopy. 
CMS-1613-FC 815 

Commenters did not believe the methodological solution proposed by the measure 

developer, using physician claims with an HOPD Place of Service (POS) code indicating 

the colonoscopy was performed at an HOPD, is adequate due to the high error rates in 

POS coding on physician claims. Commenters were concerned that these challenges 

would make comparison of HOPD and ASC data impossible, and significantly reduce the 

validity of the measure in the HOPD setting. 

 Response: We disagree with the commenters, and we continue to believe this 

measure is “well-defined and precisely specified for consistent implementation within 

and between organizations that will allow for comparability,” as we stated in the 

CY 2015 OPPS/ASC proposed rule (79 FR 41047). 

 We agree that the ability to detect meaningful variation is an important indication 

of the value of a measure. As the commenter has correctly noted, we have shown facility 

variation in unplanned hospital visits following colonoscopy in both nationwide Medicare 

data from HOPDs and also in the 2010 Healthcare Cost and Utilization Project (HCUP) 

data. We have also shown facility variation in unplanned hospital visits among ASCs 

alone using HCUP data from California. 39 The observed average hospital visit rate and 

the variation in unplanned hospital visit rates among ASCs, which are unaffected by the 

3-day payment window policy, were very similar to HOPDs suggesting that the measure 

performs equally well in both settings. Accordingly, we are confident that the variation 

shown is a reflection of facility variation in quality and not as a result of any issues to do 

with the 3-day payment window policy. 

 

39 Center for Medicare and Medicaid Services, “Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy,” National Quality Form Measure Submission Form, 20. 
CMS-1613-FC 816 

 Based on our internal testing with claims data, we believe our current algorithm is 

appropriate and accurate. However, since we always strive for improvement, we will 

evaluate the colonoscopy measure dry run data and work with HOPDs and ASCs to 

further review and refine the algorithm if necessary. 

 Regarding POS billing, the OIG has found billing errors incorrectly assigning the 

service site for both HOPDs and ASC-related claims on physician claims where there 

were matching HOPD or ASC claims and that the percentage of incorrectly billed claims 

was significantly higher for ASC-related claims.40 Many physicians’ services can be 

furnished either in a facility setting such as an HOPD or ASC, or in a non-facility setting 

such as a physician’s office, urgent care center or independent clinic. For these services, 

Medicare has two different payment rates under the physician fee schedule (PFS). The 

PFS facility rate is generally lower to reflect the fact that certain resources are supplied 

by the facility, and Medicare makes a separate payment to the facility under another 

payment system. By matching both facility and physician colonoscopy claims for any 

given patient, the current measure methodology ensures that colonoscopy claims are 

identified to the fullest extent possible and attribute the colonoscopy to the appropriate 

provider when billing is affected by the 3-day window payment policy. 

 We clarify that HOPD claims for colonoscopy procedures for calculation of the 

measure are identified using both physician and facility claims. We did not intend to 

imply that HOPD colonoscopy claims are identified solely from physician claims. For 

both ASCs and HOPDs, the measure first identifies colonoscopy claims using both the 

physician claim and the corresponding facility claim to ensure the site of the colonoscopy 

 

40 OIG, Physician services processed by Medicare Part B Contractors during Calendar Year 2009, 

September 2011, A-01-10-00516. 
CMS-1613-FC 817 

service is attributed to the appropriate provider. As a second step, the measure matches 

(1) physician claims that contain HOPD as the POS that do not have a matching facility 

claim with (2) inpatient claims to identify potential HOPD colonoscopies resulting in an 

inpatient admission. This second additional step identifies HOPD colonoscopy claims 

affected by the 3-day window payment policy. 

 Therefore, we do not agree that ASCs will be adversely affected by use of POS 

billing to locate colonoscopies performed by physicians due to high levels of coding 

errors in POS coding on Part B for physician services because our measure calculation 

methodology addresses this concern. 

 We also have taken steps to educate physicians about the appropriate POS coding 

and actively audit physicians to improve the accuracy of POS coding 

http://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNMattersArticles/downloads/MM7502.pdf. In addition, from 2012 onwards, Medicare 

billing introduced the “PD” modifier to indicate physician claims affected by the 3-day 

window payment policy. 

 Comment: In reference to the statement in the CY 2015 OPPS/ASC proposed 

rule (79 FR 41047) that “there are no publicly available quality of care reports for ASCs 

that conduct outpatient colonoscopies,” one commenter stated that, on the Physician 

Compare Web site, CMS includes data on colonoscopy measures that provide a detailed 

look at the quality of colonoscopy services provided. This commenter suggested that 

CMS further enhance publicly available data by including measures captured by 

Qualified Clinical Data Registries to increase the robustness of publicly available data on 

colonoscopy provided across all sites of service. 
CMS-1613-FC 818 

 Response: We thank the commenter for providing this input, but note that the 

cited information is available at the physician level. We believe that quality of care 

measure information also should be reported at the facility level, and that facilities have a 

role in monitoring the surgical procedures performed at their facility and subsequent 

adverse outcomes. Patients and facilities should be able to review reported quality of 

care measure information at the ASC-facility level. We thank the commenter for the 

suggestion to include measures captured by Qualified Clinical Data Registries to further 

enhance publicly available data such as the colonoscopy data and we may take this into 

consideration in future rule making. 

 Comment: While some commenters believed that a long collection period, such 

as three years, is needed in order to generate measure scores that are moderately reliable, 

they also were concerned that the publicly reported measure score would not be a 

reflection of current, or even recent, performance. Commenters were concerned that 

consumers could be misled by the outdated data. 

 Response: As discussed previously, we agree with the commenter that a longer 

data collection period may increase measure reliability. However, we must balance the 

reliability of the measure with the timeliness of the measure and, as discussed later, at 

this time, we believe that 1 year of data appropriately balances these competing interests. 

We will continue to assess this belief during the dry run. 

 Comment: Several commenters expressed concern that the measure that was put 

forth to NQF review retained elements of the inpatient measure. Commenters stated that 

including these elements was inappropriate, and interpreted this action to mean that the 

measure has not been thoroughly reviewed and fully adapted for outpatient use. These 
CMS-1613-FC 819 

commenters gave examples of the alleged inappropriate inpatient elements: (1) certain 

condition categories (CCs) are not included in risk adjustment if they are only recorded at 

the time of the colonoscopy, and yet they are considered to be possible adverse outcomes; 

and (2) although end stage renal disease (ESRD) would not be a complication of 

colonoscopy diagnosed and recorded at the time of the procedure, it was included on the 

list of CCs. Commenters urged CMS to ensure that revised specifications are developed 

and then independently reviewed to ensure outpatient adaptation is complete prior to 

measure implementation. 

 Response: We appreciate the commenters’ concerns. In keeping with good 

practice, we have continued to review and seek comment on the measure specifications 

subsequent to measure development and implementation to ensure the measure remains 

up-to-date in view of any potential new information. As the commenters noted, the 

measure technical specifications included a list of CCs that the measure does not consider 

for risk adjustment if the CC(s) occurred at the time of colonoscopy. In view of the 

comments, we have revised the list of CCs and updated the measure specifications to 

ensure only conditions relevant to colonoscopy are included. Of note, the inclusion of 

ESRD on the list was an error; we have revised the list and will use the revised list in 

implementing the measure. We corrected the list in subsequent measure descriptions 

during the NQF public comment period. 

 Comment: Many commenters expressed concern that the ASC-12 measure 

includes hospital visits unrelated to colonoscopy. Some commenters requested 

explanation for why the measure uses an all-cause categorization rather than only 

admissions related to colonoscopies. 
CMS-1613-FC 820 

 Response: We clarify that this measure is purposely designed to use a broad 

outcome of hospital visits following surgery rather than a narrow set of easily identifiable 

complications. From a patient and health system perspective, the goal of this measure is 

to encourage and inform ASC efforts to minimize all potential acute complications, not 

just those narrowly related to procedural technique. This is important as the literature 

suggests,41,42,43,44 that hospital visits following colonoscopy occur due to a range of 

adverse events relating to the bowel preparation, anesthesia, the colonoscopy procedure 

itself, and follow-up care. These include a range of symptoms and signs such as 

abdominal pain, bloating, dizziness and collapse, electrolyte disturbances, and 

cardiorespiratory symptoms (from sedation use), in addition to complications that are 

directly related to procedural technique such as bleeding and bowel perforation. The 

broad outcome of unplanned hospital visits captures all of these potential acute 

complications of colonoscopy. 

 Our goal for the measure is to encourage ASCs to be mindful of reducing postcolonoscopy admissions caused by the prior colonoscopy procedure performed at their 

facility. For example, patients may be at higher risk of falls post-colonoscopy secondary 

to dehydration following the bowel preparation for the procedure and there may be 

opportunities for ASCs to minimize this risk. We removed planned admissions from the 

 

41 Ko CW, Dominitz JA. Complications of colonoscopy: magnitude and management. Gastrointest Endosc 

Clin N Am 2010;20:659-71. 

42 ASGE Standards of Practice Committee, Fisher DA, Maple JT, et al. Complications of colonoscopy. 

Gastrointest Endosc 2011;74:745-52. 

43 Baudet JS, Diaz-Bethencourt D, Aviles J, et al. Minor adverse events of colonoscopy on ambulatory 

patients: the impact of moderate sedation. Eur J Gastroenterol Hepatol 2009;21:656-61. 

44 Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor complications and time lost from normal 

activities after screening or surveillance colonoscopy. 2007;65:648-56. 
CMS-1613-FC 821 

measure outcome adapting CMS’ Planned Readmission Algorithm version 3.0.45,46 This 

algorithm removes nonacute admissions for scheduled procedures (for example, total hip 

replacement) and other types of care always considered planned (for example, 

rehabilitation or maintenance chemotherapy) from the outcome. That is, we removed 

planned admissions from the outcome because planned admissions do not reflect 

differences in colonoscopy quality of care. 

 Comment: One commenter requested that CMS clarify how the numerator and 

denominator for ASC-12 are calculated. 

 Response: The measure score is the ratio of predicted hospital visits (numerator) 

over the expected hospital visits (denominator) multiplied by the crude national rate. The 

measure score numerator is the predicted rate, which is the number of unplanned hospital 

visits the facility is predicted to have within 7 days of colonoscopy, and it accounts for 

the observed unplanned hospital visit rate, the number of colonoscopies performed at the 

facility, and the facility’s case mix. This is sometimes referred to as the “adjusted actual 

rate.” 

 The measure score denominator is the expected rate, which is the number of 

unplanned hospital visits the facility is expected to have, based on the nation’s 

performance with that facility’s case-mix. It is the sum of all patients’ expected 

probabilities of a hospital visit, given their risk factors and the risk of readmission at an 

average hospital. The contribution of each risk factor (for example, age) to the patient’s 

 

45 Horwitz L, Grady J, Dorsey K, Zhang W, Keenan M, Keshawarz A, Cohen D, Ngo C, Okai M, Nwosu 

C, Lin Z, Bhat K, Krumholz H, Bernheim S,. 2014 Measures Updates and Specifications Report: HospitalWide All-Cause Unplanned Readmission--Version 3.0. 2014: Centers for Medicare & Medicaid Services, 

2014. 

46 Available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/Measure-Methodology.html.
CMS-1613-FC 822 

risk of a hospital admission is based on all of the patients in the measure cohort. The 

crude national rate is the average rate of hospital visits following colonoscopy observed 

in the entire measure cohort. We also refer readers to the measure discussion above and 

measure specifications 

(http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=75057) for a 

more detailed discussion of how the numerator and denominator are calculated. 

 Comment: Many commenters were concerned that facilities would lack 

actionable information generated from ASC-12. Several of these commenters questioned 

whether this measure will benefit facilities and patients because each facility will only 

receive a report with an aggregate number of claims that will be based on historical data, 

which will make it difficult for the facility to set a course for improvement if needed. 

Commenters requested that CMS clarify its plan to report detailed patient-level data 

confidentially to ASCs that indicates whether the patient had a hospital visit, the type of 

visit (admission, emergency department visit, or observational stay), the admitting 

facility, and the principal discharge diagnosis to assist facilities with quality 

improvement, to enable facilities to understand their performance and take steps where 

remediation is needed. Several commenters also noted that ASCs do not provide 

post-operative follow-up care after patient discharges and do not have direct access to the 

records of other health care facilities. Consequently, this constraint would limit their 

ability to identify improvements based on the data provided by this measure. 

 Response: The primary purpose of this measure is to illuminate the quality 

differences in colonoscopies that are presently not visible to patients and may not be 

visible to some facilities. In measure development, we found the facility variations in the 
CMS-1613-FC 823 

measure score suggest some facilities provide worse than expected care. We believe the 

detailed patient-level data that we will provide confidentially to ASCs will help them 

identify areas for improvement efforts. The data would indicate whether the patient had a 

hospital visit, the type of visit (admission, emergency department visit, or observational 

stay), the admitting facility, and the principal discharge diagnosis. The dry run will 

enable ASCs to see the measure score reports and have the opportunity to receive 

individual patient data and information contained within individual patient records. We 

will continue to generate these reports for ASCs after we implement the measure 

beginning with the CY 2018 payment determination. ASCs can use the information to 

identify performance gaps and develop quality improvement strategies. 

 We understand the challenges involved in following up with ASC patients. The 

colonoscopy measure addresses these challenges by providing feedback to facilities and 

clinicians about the outcomes experienced by their patients following colonoscopy. 

Many clinical experts noted that facilities were often unaware of patients’ return visits to 

hospitals. They noted that many patients would often return to a different facility or an 

emergency department. One study noted that physicians were unaware of 75 percent of 

return hospital visits following colonoscopy at a major tertiary center.47

 Comment: Several commenters expressed concern that ASC-12 does not include 

risk-adjustment to account for patient differences, stating that CMS does not report the 

variation between ASCs once this risk adjustment has been applied and that there may be 

no statistically significant difference between an ASC’s risk-adjusted visit rate and the 

national average making it impossible to identify low performers and high performers. 

 

47 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med 2010;170:1752-7. 
CMS-1613-FC 824 

One commenter specifically recommended that patients with conditions such as 

inflammatory bowel disease and diverticulitis should be included with appropriate risk 

adjustment. Commenters recommended CMS consider the drawbacks of the current 

methodology, conduct analysis to test the variation of the measure between ASCs, and 

reconsider this measure for inclusion in future proposals. 

 Response: We thank the commenters for all the suggestions to improve the 

measure. In the measure application for NQF endorsement, we note that the measure, 

following risk-adjustment, is able to detect statistically significant variation between 

outpatient facilities by demonstrating measure score variation using the 2010 HCUP data 

from four States (California, New York, Nebraska, and Florida). Using a very 

conservative sampling technique (sampling with replacement),48 we constructed 

95 percent interval estimates around the facility measure score (similar to confidence 

intervals) and used the estimates to place facilities into three performance categories: 

worse than expected; no different than expected; and better than expected. Based on this 

analysis, we identified 5 outlier facilities among a total of 992 ASCs and HOPDs. This 

analysis included only about one-tenth of all outpatient facilities in the United States. 

Typically, we see greater variation between facilities when 100 percent of nationwide 

facilities are included for actual measure implementation and reporting. 

 As to the commenter’s recommendation to risk-adjust patients with certain 

conditions, we excluded patients with inflammatory bowel disease (IBD) and 

diverticulitis because it is difficult to assess from claims data whether these patients have 

an active or inactive disease which may alter their risk of the outcome. We determined 

 

48 Efron, B. (1979). Bootstrap methods: Another look at jackknife. Ann. Stat. 7, 1-26.
CMS-1613-FC 825 

that we could not adequately risk-adjust for the risk of the outcome for these patients. 

Second, our analysis suggested that nearly half of the patients with IBD and diverticulitis 

have post-colonoscopy hospital visits with a primary diagnosis of IBD and diverticulitis 

respectively. We could not tell from the claims data whether these visits were planned or 

unplanned. We did test for variation among ASCs and HOPDs independently using 

HCUP data from California (see Measure Technical Report). As we previously 

discussed, the measure was able to adequately detect variation in the measure score 

among ASCs. 

 As for the inquiry about further testing the measure, we have more time to further 

test the measure because, in response to comments, we are finalizing the adoption of this 

measure beginning with the CY 2018 payment determination, rather than beginning with 

the CY 2017 payment determination as proposed. We plan to perform a dry run (a 

preliminary analysis) of the measure in 2015. We refer readers to our discussion of the 

dry run above, in response to a previous comment. 

 Comment: One commenter expressed concern that ASCs would have difficulty 

gathering and reporting the information for the proposed ASC-12 measure. 

 Response: We thank the commenter for providing this input and note that this 

measure will be calculated completely from data obtained from paid Medicare FFS 

claims submitted by ASCs, hospitals, and physicians. For this reason, it will not require 

any additional information-gathering on the part of ASCs. 

 We continue to believe that quality of care measurement in the clinical area of 

outpatient colonoscopy is an important gap area with ample room for improvement and 

that this measure has sufficient reliability and validity for use in the ASCQR Program. 
CMS-1613-FC 826 

Therefore, after consideration of the public comments we received, we are finalizing our 

proposal to adopt the ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy measure for the ASCQR Program. However, to allow 

ASCs sufficient time to review their measure data from the dry run and utilize the 

confidential facility reports with patient-level associated hospital event information, we 

are finalizing the adoption of this measure for the CY 2018 payment determination and 

subsequent years, instead of the CY 2017 payment determination and subsequent years as 

proposed. 

 We plan to perform a dry run (a preliminary analysis) of the measure in 2015. 

Also, with national implementation of a dry run of this measure, we also will review the 

appropriate cutoff volume for facilities, if necessary, in reporting the measure score. We 

refer readers to our discussion of the dry run and the cutoff volume above, in our 

response to a previous comment. 

 The finalized measure set for the ASCQR Program CY 2017 payment 

determination and subsequent years, is listed below. 

 
CMS-1613-FC 827 

Finalized ASC Program Measure Set for the CY 2017 Payment Determination 

and Subsequent Years 

ASC # NQF # Measure Name 

ASC-1 0263 Patient Burn 

ASC-2 0266 Patient Fall 

ASC-3 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, 

Wrong Implant 

ASC-4 0265 Hospital Transfer/Admission 

ASC-5 0264 Prophylactic Intravenous (IV) Antibiotic Timing 

ASC-6 N/A Safe Surgery Checklist Use 

ASC-7 N/A ASC Facility Volume Data on Selected ASC Surgical 

Procedures 

Procedure categories and corresponding HCPCS codes are 

located at: 

http://qualitynet.org/dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier2&cid=1228772475754

ASC-8 0431 Influenza Vaccination Coverage among Healthcare Personnel 

ASC-9 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up 

Interval for Normal Colonoscopy in Average Risk Patients 

ASC-10 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous Polyps-Avoidance of 

Inappropriate Use 

ASC-11 1536 Cataracts: Improvement in Patient’s Visual Function within 

90 Days Following Cataract Surgery* 

* Measure voluntarily collected starting as set forth in section XIV.E.3.c. of this final rule with comment 

period. 

 The finalized measure set for the ASCQR Program CY 2018 payment 

determination and subsequent years, which includes previously finalized measures and 

the newly-adopted measure, ASC-12, is listed below. 

 
CMS-1613-FC 828 

Finalized ASC Program Measure Set for the CY 2018 Payment Determination 

and Subsequent Years 

ASC # NQF # Measure Name 

ASC-1 0263 Patient Burn 

ASC-2 0266 Patient Fall 

ASC-3 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, 

Wrong Implant 

ASC-4 0265 Hospital Transfer/Admission 

ASC-5 0264 Prophylactic Intravenous (IV) Antibiotic Timing 

ASC-6 N/A Safe Surgery Checklist Use 

ASC-7 N/A ASC Facility Volume Data on Selected ASC Surgical 

Procedures 

Procedure categories and corresponding HCPCS codes are 

located at: 

http://qualitynet.org/dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier2&cid=1228772475754

ASC-8 0431 Influenza Vaccination Coverage among Healthcare Personnel 

ASC-9 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up 

Interval for Normal Colonoscopy in Average Risk Patients 

ASC-10 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous Polyps-Avoidance of 

Inappropriate Use 

ASC-11 1536 Cataracts: Improvement in Patient’s Visual Function within 

90 Days Following Cataract Surgery* 

ASC-12 Pending Facility Seven-Day Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy** 

* Measure voluntarily collected starting as set forth in section XIV.E.3.c. of this final rule with comment 

period. 

** New measure finalized for CY 2018 payment determination and subsequent years. 

6. ASCQR Program Measures for Future Consideration 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68493 through 68494), where we finalized our approach to future measure 

selection for the ASCQR Program. We seek to develop a comprehensive set of quality 

measures to be available for widespread use for informed “patient decision-making and 

quality improvement in the ASC setting” (77 FR 68496). We also seek to align these 
CMS-1613-FC 829 

quality measures with the National Quality Strategy (NQS), the CMS Strategic Plan 

(which includes the CMS Quality Strategy), and our other quality reporting and 

value-based purchasing programs, as appropriate. Accordingly, as we stated in the 

CY 2015 OPPS/ASC proposed rule (79 FR 41048 through 41049), in considering future 

ASCQR Program measures, we are focusing on the following NQS and CMS Quality 

Strategy measure domains: make care safer; strengthen person and family engagement; 

promote effective communication and coordination of care; promote effective prevention 

and treatment; work with communities to promote best practices of healthy living; and 

make care affordable. 

 Comment: Commenters supported CMS’ alignment efforts. One commenter 

supported the direction of the ASCQR Program to align future measures with the NQS 

priorities, noting that doing so will make the ASCQR Program more consistent with the 

Hospital IQR Program. Another commenter agreed with the goal of aligning measures in 

the ASCQR Program with the Hospital OQR Program and the Hospital IQR Program, 

and urged that the alignment should eliminate confusion and avoid disadvantaging ASCs. 

 Response: We thank the commenters for supporting our alignment efforts. To 

the extent practicable, we strive to align measures with national priorities, including the 

NQS priorities as well as across our quality reporting and value-based purchasing 

programs. 

 Comment: Several commenters requested that CMS collaborate with stakeholder 

communities to develop and implement appropriate ophthalmic measures for the ASC 

setting, potentially including measures of incidence of toxic anterior segment syndrome 

in cataract surgery patients, incorrect intraocular lens implantation in cataract surgery 
CMS-1613-FC 830 

patients, and unplanned anterior vitrectomy in cataract surgery patients. Another 

commenter suggested that CMS consider several new measures in the future, including 

adverse outcomes from high-volume procedures such as cataract removals, other eye 

procedures, endoscopies, musculoskeletal procedures, and colonoscopies. This 

commenter also encouraged CMS to develop composite measures of common surgical 

infections and to involve consumers and purchasers in refinement of the CAHPS survey 

for the outpatient setting. In addition, this commenter urged CMS to continue to analyze 

and address the role of the survey and discuss the comparative roles of PQRS CAHPS, 

ACO CAHPS, S-CAHPS, or the HOSD/ASC CAHPS surveys. 

 Response: We thank the commenters for these recommendations and will 

consider these types of measures in future years. We have included an unplanned 

anterior vitrectomy in cataract surgery patients and patient experience of care survey 

measures in our Measures under Consideration (MUC) list for the MAP for the ASC 

setting. We agree that the adoption and implementation of appropriate cataract surgery 

measures are important for the ASCQR Program, given the number of such procedures 

performed on Medicare beneficiaries in this setting. 

 We use patient experience of care surveys in a variety of health care settings. We 

agree that, to the extent feasible, survey instruments should be aligned and coordinated 

across settings. The developmental process of CAHPS and patient experience of care 

surveys involves several opportunities for input from patients, patient advocates, and 

stakeholders from the HOPD and ASC industry, including professional associations, 

clinicians, accreditation organizations, and the government. 
CMS-1613-FC 831 

 Comment: One commenter requested that CMS provide additional guidance with 

respect to the process for suggesting and submitting future ASCQR Program measures. 

This commenter further requested that CMS distinguish, when establishing reporting 

requirements, between ASCs that are equipped for the performance of sterile surgical 

operations and ambulatory endoscopy centers that are equipped to perform nonsurgical 

endoscopy procedures. 

 Response: We generally request comments on future ASCQR Program measure 

topics through the rulemaking process and did so in the CY 2014 OPPS/ASC proposed 

rule (78 FR 43664). We also accepted measures for consideration from associations 

through ONC's measure project tracking system (http://oncprojectracking.org/); associations 

were invited via the CMS Listserv to attend a training session for how to submit 

measures into this system. Regarding distinguishing ASCs by the services provided, we 

are aware that ASCs vary in the types of services they provide. This variety presents 

challenges in devising a measure set that can glean applicable quality of care information 

across ASCs. With respect to current claims-based measures that include surgical 

procedures, at this time, we are not able to identify facilities that would never perform 

surgical procedures from the information on claims. Therefore, we are not able to 

distinguish ineligibility for a measure from non-reporting. 

 Comment: One commenter recommended that CMS consider the following 

measure topics for the ASCQR Program: (1) Equipment Reprocessing (for patient safety, 

high-level disinfection and sterilization, with a particular emphasis on endoscope 

reprocessing); and (2) Sedation Safety – A possible anesthesia-related measure could 
CMS-1613-FC 832 

include the use of reversal agents to patients given moderate sedation agents (medications 

used to rescue patients from deeper levels of sedation than intended). 

 Response: We thank the commenter for these recommendations and will consider 

these measure topics for the ASCQR Program in future years. 

 Comment: One commenter noted that the program currently includes a measure 

on hospital transfer or admission after a procedure, which tracks whether patients are 

transferred or admitted directly to a hospital (including a hospital emergency room) upon 

discharge from an ASC. This commenter believed that this measure could be expanded 

to include patients who return home after the ASC procedure, but are admitted to a 

hospital shortly thereafter because of a problem related to the procedure because doing so 

would enable us to more comprehensively track patients who experience serious 

complications or medical errors related to an ASC procedure. 

 Response: We thank the commenter for providing this information and note that 

the ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy measure includes all unplanned hospital visits (emergency department 

visits, observation stays and inpatient admissions) within 7 days following the procedure. 

We will continue to consider additional measures that track hospital visits following ASC 

procedures as appropriate in the future. 

 Comment: One commenter recommended that CMS develop a measure to track 

surgical site infection rates for ambulatory surgeries in ASCs. The commenter observed 

that CMS stated in the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74503 through 74504) that we would consider proposing an SSI measure and 

requested an update. 
CMS-1613-FC 833 

 Response: We agree that it is important to encourage the reduction of SSIs. In the 

CY 2012 OPPS/ASC rulemaking, we proposed but did not finalize the Surgical Site 

Infection Rate measure (NQF # 0299), but stated that we will consider proposing the 

measure once a suitable set of procedures and a protocol for ASCs and HOPDs has been 

developed (76 FR 74504). We are not aware of any updates to this measure, but will 

consider these types of measures in future years. 

 Comment: One commenter recommended that the ASCQR Program should move 

to a value-based purchasing model no later than 2016, rewarding high-performing ASCs 

and penalizing low-performing ASCs. 

 Response: We thank the commenter for this recommendation. As we noted in 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75122), we currently do 

not have express statutory authority to implement a value-based purchasing program for 

ASCs. 

 Comment: One commenter requested that CMS publish each year, as part of the 

proposed rule, a 2-year or 3-year timeline of anticipated changes to the ASCQR Program 

to facilitate ASC facility planning. 

 Response: We thank the commenter for the comment and note that we seek to 

provide information to ASC facilities in advance whenever possible to support future 

planning. For example, in the CY 2012 OPPS/ASC rulemaking, we finalized measures 

sets for the CY 2014, CY 2015, and CY 2016 payment determinations (76 FR 74496 to 

74511). Similarly, in the CY 2013 OPPS/ASC final rule with comment period, we 

finalized a data collection and processing period policy for claims-based measures using 

QDCs for the CY 2015 payment determination and subsequent years (77 FR 68497 
CMS-1613-FC 834 

through 68498), and in the CY 2014 OPPS/ASC final rule with comment period, we 

finalized our policy regarding participation status for the CY 2016 payment 

determination and subsequent years (78 FR 75134 through 75135). In this year’s 

rulemaking, we also are finalizing policies that span more than one year, such as 

including the ASC-12 measure in the ASCQR Program measure set for the CY 2018 

payment determination and subsequent years, the process for removing measures, and 

topped-out criteria. While we cannot commit to providing a 2-year or 3-year timeline at 

this point due to the rapidly evolving quality measurement and program environment, we 

will continue to provide information to ASCs through the QualityNet Web site, the 

ASCQR Program ListServe, and the rulemaking process as appropriate. 

 Comment: Several commenters stated that they would welcome opportunities to 

work with CMS to explore alternative reporting options for measures that cut across 

CMS quality reporting programs, particularly measures that are included in both the 

ASCQR Program and PQRS. 

 Response: We thank the commenters for their offer to collaborate with CMS on 

alternative reporting options. We will continue to look for opportunities to work with 

ASC community stakeholders to continuously improve the ASCQR Program. 

 Comment: Several commenters expressed concern about the MAP, specifically 

the public comment process and the practice of submitting measure concepts for 

consideration. These commenters believed that the MAP does not adequately consider 

public comments, and stated that the MAP session agendas scheduled voting activities 

prior to public comments, which limited the ability of comments to impact voting, and 

that the public could not address the Coordinating Committee until after deliberations 
CMS-1613-FC 835 

were completed. These commenters also stated that the public could comment on the 

draft MAP Pre-Rulemaking Report, but that these comments were not considered by the 

Coordinating Committee and, therefore, did not result in revisions to the final report. 

These commenters recommended that public comments be solicited prior to, rather than, 

after voting on agenda items, and that the MAP Coordinating Committee be required to 

formally consider and respond to public comments on the draft report. Several other 

commenters expressed concern regarding the MAP’s review of measure “concepts” that 

have not been fully developed, saying that recommendations are premature for measure 

concepts or measure drafts. These commenters recommended that when “concepts” are 

presented, the MAP should determine whether the measure concept/draft would fill a 

measure gap but reserve further judgment for the completed measure. These commenters 

are further concerned that the inclusion of measure “concepts” results in an unreasonably 

large number of items for the MAP to consider, which can limit the time allotted to 

consider each measure. 

 Response: We thank the commenters for their comments and concerns, but note 

that they do not directly address any proposals included in the CY 2015 OPPS/ASC 

proposed rule; rather, they are directed towards MAP-specific processes. We invite the 

commenters to submit their MAP-specific concerns directly to the NQF, which convenes 

the MAP. 

 In response to the comments concerning the MAP's review of measure “concepts” 

that have not been fully developed, resulting in recommendations that are premature for 

measure concepts or measure drafts, we interpret the commenters’ use of the terms 

“concept” and “draft” to refer to measures under development as defined in our legend on 
CMS-1613-FC 836 

page 87 of the List of Measures under Consideration for December 1, 2013 

(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ve

d=0CCAQFjAA&url=http%3A%2F%2Fwww.qualityforum.org%2FSetting_Priorities%2FPartne

rship%2FMeasures_Under_Consideration_List.aspx&ei=aQUuVJrsM6nIsAT61IDQAg&usg=AF

QjCNFPjzG9-t7flmf-RFf7o_rSvpxxQ&sig2=V6Hi_GdCM2OUcP5xkoudcw&bvm=bv.76802529,d.cWc). We strive to 

ensure that the pre-rulemaking process allows for thorough review by the MAP and other 

stakeholders of all measures under consideration. 

 Comment: Some commenters suggested that CMS consider developing 

additional outcomes measures specific to colonoscopies and consider developing a 

measure of whether or not colonoscopy patients remain cancer free, specifically 

suggesting that we work with stakeholders to improve existing measures. 

 Response: We thank the commenter for their recommendations and will consider 

these types of measures in future years. 

 We also thank all commenters for providing their views and we will consider 

them as we develop future measures for the ASCQR Program. 

7. Maintenance of Technical Specifications for Quality Measures 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74513 through 74514), where we finalized our proposal to follow the same 

process for updating the ASCQR Program measures that we adopted for the Hospital 

OQR Program measures, including the subregulatory process for making updates to the 

adopted measures. In the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68496 through 68497) and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75131), we provided additional clarification regarding the ASCQR 
CMS-1613-FC 837 

Program policy in the context of the previously finalized Hospital OQR Program policy, 

including the processes for addressing nonsubstantive and substantive changes to adopted 

measures. 

 We maintain technical specifications for previously adopted ASCQR Program 

measures. These specifications are updated as we continue to develop the ASCQR 

Program. The manuals that contain specifications for the previously adopted measures 

can be found on the QualityNet Web site at: 

https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQne

tTier2&cid=1228772475754. 

 Many of the quality measures used in Medicare and Medicaid reporting programs 

are NQF-endorsed. We note that two of the measures previously adopted for the ASCQR 

Program are not NQF-endorsed, and NQF endorsement is not a program requirement. 

However, for those measures that are NQF-endorsed, the NQF requires measure stewards 

to submit annual measure maintenance updates and undergo maintenance of endorsement 

review every 3 years as part of its regular maintenance process for NQF-endorsed 

performance measures. In the measure maintenance process, the measure steward 

(owner/developer) is responsible for updating and maintaining the currency and relevance 

of the measure and will confirm existing or minor specification changes with the NQF on 

an annual basis. The NQF solicits information from measure stewards for annual 

reviews, and it reviews measures for continued endorsement in a specific 3-year cycle. 

 We note that the NQF’s annual or triennial maintenance processes for endorsed 

measures may result in the NQF requiring updates to measures in order to maintain 

endorsement status. Other non-NQF measures may undergo maintenance changes as 

well. We believe that it is important to have in place the subregulatory process that we 
CMS-1613-FC 838 

have adopted for the ASCQR Program to incorporate nonsubstantive updates into the 

measure specifications for measures so that the measure specifications remain current. 

We also recognize that some changes to measures are substantive in nature and might not 

be appropriate for adoption using a subregulatory process. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41049), we did not propose any 

changes to this policy. 

8. Public Reporting of ASCQR Program Data 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 through 

74515), we finalized a policy to make data that an ASC submitted for the ASCQR 

Program publicly available on a CMS Web site after providing an ASC an opportunity to 

review the data to be made public. When available, these data will be displayed at the 

CCN level; we intend to make data collected under the ASCQR program publicly 

available in CY 2015. In the CY 2015 OPPS/ASC proposed rule (79 FR 41049), we did 

not propose any changes to this policy. 

 Comment: One commenter urged CMS to make the data submitted by ASCs 

available to the public after giving ASCs an opportunity to preview the data. 

 Response: We thank the commenter for their comment, and note that in the 

CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 through 74515), we 

finalized a policy to make data that an ASC submitted for the ASCQR Program publicly 

available on a CMS Web site after providing an ASC an opportunity to review the data to 

be made public. These data will be displayed at the CCN level. We did not propose any 

changes to this policy (79 FR 41049). 
CMS-1613-FC 839 

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

1. Statutory Background 

 We refer readers to section XV.C.1. of the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75131 through 75132) for a detailed discussion of the statutory 

background regarding payment reductions for ASCs that fail to meet the ASCQR 

Program requirements. 

2. Reduction to the ASC Payment Rates for ASCs That Fail to Meet the ASCQR 

Program Requirements for a Payment Determination Year 

 The national unadjusted payment rates for many services paid under the ASC 

payment system equal the product of the ASC conversion factor and the scaled relative 

payment weight for the APC to which the service is assigned. Currently, the ASC 

conversion factor is equal to the conversion factor calculated for the previous year 

updated by the MFP-adjusted CPI-U update factor, which is the adjustment set forth in 

section 1833(i)(2)(D)(v) of the Act. The MFP-adjusted CPI-U update factor is the 

Consumer Price Index for all urban consumers (CPI-U), which currently is the annual 

update for the ASC payment system, minus the MFP adjustment. As discussed in the 

CY 2011 MPFS final rule with comment period (75 FR 73397), if the CPI-U is a negative 

number, the CPI-U would be held to zero. Under the ASCQR Program, any annual 

update will be reduced by 2.0 percentage points for ASCs that fail to meet the reporting 

requirements of the ASCQR Program. This reduction applied beginning with the 

CY 2014 payment rates. For a complete discussion of the calculation of the ASC 

conversion factor, we refer readers to section XII.G. of this final rule with comment 

period. 
CMS-1613-FC 840 

 In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 through 

68500), in order to implement the requirement to reduce the annual update for ASCs that 

fail to meet the ASCQR Program requirements, we finalized our proposal that we would 

calculate two conversion factors: a full update conversion factor and an ASCQR 

Program reduced update conversion factor. We finalized our proposal to calculate the 

reduced national unadjusted payment rates using the ASCQR Program reduced update 

conversion factor that would apply to ASCs that fail to meet their quality reporting 

requirements for that calendar year payment determination. We finalized our proposal 

that application of the 2.0 percentage point reduction to the annual update may result in 

the update to the ASC payment system being less than zero prior to the application of the 

MFP adjustment. 

 The ASC conversion factor is used to calculate the ASC payment rate for services 

with the following payment indicators (listed in Addenda AA and BB to this final rule 

with comment period, which are available via the Internet on the CMS Web site): “A2,” 

“G2,” “P2,” “R2,” “Z2,” as well as the service portion of device-intensive procedures 

identified by “J8.” We finalized our proposal that payment for all services assigned the 

payment indicators listed above would be subject to the reduction of the national 

unadjusted payment rates for applicable ASCs using the ASCQR Program reduced 

update conversion factor. 

 The conversion factor is not used to calculate the ASC payment rates for 

separately payable services that are assigned status indicators other than payment 

indicators “A2,” “G2,” “J8,” “P2,” “R2,” and “Z2.” These services include separately 

payable drugs and biologicals, pass-through devices that are contractor-priced, 
CMS-1613-FC 841 

brachytherapy sources that are paid based on the OPPS payment rates, and certain 

office-based procedures and radiology services where payment is based on the MPFS PE 

RVU amount and a few other specific services that receive cost-based payment. As a 

result, we also finalized our proposal that the ASC payment rates for these services would 

not be reduced for failure to meet the ASCQR Program requirements because the 

payment rates for these services are not calculated using the ASC conversion factor and, 

therefore, not affected by reductions to the annual update. 

 Office-based surgical procedures (performed more than 50 percent of the time in 

physicians’ offices) and separately paid radiology services (excluding covered ancillary 

radiology services involving certain nuclear medicine procedures or involving the use of 

contrast agents, as discussed in section XII.C.1.b. of this final rule with comment period) 

are paid at the lesser of the MPFS nonfacility PE RVU-based amounts or the amount 

calculated under the standard ASC ratesetting methodology. Similarly, in section 

XII.D.2.b. of this final rule with comment period, we are finalizing that payment for the 

new category of covered ancillary services (that is, certain diagnostic test codes within 

the medical range of CPT codes for which separate payment is allowed under the OPPS 

and when they are integral to an ASC covered surgical procedure) will be at the lesser of 

the MPFS nonfacility PE RVU-based amounts or the rate calculated according to the 

standard ASC ratesetting methodology. In the CY 2013 OPPS/ASC final rule with 

comment period (77 FR 68500), we finalized our proposal that the standard ASC 

ratesetting methodology for this type of comparison would use the ASC conversion factor 

that has been calculated using the full ASC update adjusted for productivity. This is 

necessary so that the resulting ASC payment indicator, based on the comparison, 
CMS-1613-FC 842 

assigned to these procedures or services is consistent for each HCPCS code regardless of 

whether payment is based on the full update conversion factor or the reduced update 

conversion factor. 

 For ASCs that receive the reduced ASC payment for failure to meet the ASCQR 

Program requirements, we believe that it is both equitable and appropriate that a 

reduction in the payment for a service should result in proportionately reduced 

copayment liability for beneficiaries. Therefore, in the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68500), we finalized our proposal that the Medicare 

beneficiary’s national unadjusted copayment for a service to which a reduced national 

unadjusted payment rate applies would be based on the reduced national unadjusted 

payment rate. 

 In that final rule with comment period, we finalized our proposal that all other 

applicable adjustments to the ASC national unadjusted payment rates would apply in 

those cases when the annual update is reduced for ASCs that fail to meet the 

requirements of the ASCQR Program (77 FR 68500). For example, the following 

standard adjustments would apply to the reduced national unadjusted payment rates: the 

wage index adjustment, the multiple procedure adjustment, the interrupted procedure 

adjustment, and the adjustment for devices furnished with full or partial credit or without 

cost. We believe that these adjustments continue to be equally applicable to payment for 

ASCs that do not meet the ASCQR Program requirements. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75132), we 

did not make any changes to these policies. In the CY 2015 OPPS/ASC proposed rule 

(79 FR 41049 through 41050), we did not propose any changes to these policies. 
CMS-1613-FC 843 

D. Administrative Requirements 

 We received a public comment on the ASCQR Program requirements in general. 

 Comment: One commenter expressed appreciation that CMS did not propose any 

substantial changes to participatory requirements, stating that this will provide ASCs with 

valuable time to stabilize the processes for what is currently required without adding 

additional burden on resources. 

 Response: We interpret the commenter as referring to program administrative 

requirements overall, and not to just participation status as the commenter makes 

reference to issues of burden. We thank the commenter for this support. We agree that 

program administrative process stability to the extent possible is important in developing 

the ASCQR Program. We continue to look for ways to minimize burden as we pursue 

the quality objectives of the ASCQR Program. 

1. Requirements Regarding QualityNet Account and Security Administrator 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75132 through 75133) for a detailed discussion of the QualityNet security 

administrator requirements, including setting up a QualityNet account, and the associated 

timelines, for the CY 2014 payment determination and subsequent years. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41050), we did not propose any changes to these 

policies. 

2. Requirements Regarding Participation Status 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75133 through 78 FR 75135) for a complete discussion of the participation status 

requirements for the CY 2014 payment determination and subsequent years. In the 
CMS-1613-FC 844 

CY 2015 OPPS/ASC proposed rule (79 FR 41050), we did not propose any changes to 

these policies. 

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

 We received public comments on alternate methods for submitting data for the 

ASCQR Program. 

 Comment: One commenter recommended that CMS allow ASCs to meet the 

requirements of the ASCQR Program using registry-based reporting, noting that using a 

registry is an option under the PQRS and that other registries are already in existence. 

This commenter recommended CMS issue proposals regarding this option in next year's 

proposed rule. The commenter also recommended that ASCs should also have the option 

of submitting quality data to CMS through an EHR-based reporting mechanism, as there 

are ASCs that have implemented this technology and could benefit from this option. 

 Response: We thank the commenter for these suggestions. We agree that it could 

reduce burden to have a registry-based mechanism for data submission. We have not 

proposed a registry-based reporting option because currently, there is not a registry in 

place that is collecting information on the quality measures that we have adopted for this 

program. Should registry-based reporting of the ASC quality measures adopted for the 

ASCQR Program become available in the future, we will explore further the viability of 

incorporating a registry-based reporting mechanism in the ASCQR Program. 

 Regarding the use of EHR systems for reporting quality data, we agree that 

reporting by this method could reduce reporting burden. However, we are not aware of 

quality measures for ASCs that have been specified for electronic reporting. If such 

measures do exist, an understanding of the level of EHR adoption and capabilities of 
CMS-1613-FC 845 

ASCs to utilize this method would be necessary before proposing their adoption by the 

ASCQR Program. As we discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75124 through 75126), in a recent environmental scan, which included an 

assessment of the readiness of ASC to electronically report quality data, we found 

evidence of low levels of EHR use by ASCs. We believe that ASCs continue to be slow 

to adopt EHRs because many of these facilities are small and the cost of EHRs may pose 

a barrier to adoption. Further, there has been no incentive program to encourage such 

adoption by ASCs. 

 Comment: One commenter requested a batch-processing data submission option 

for entities that own multiple ASCs. 

 Response: We interpret this comment as referring to the ability to send quality 

measure data electronically in a format that allows for data submission for multiple 

ASCs, rather than requiring individual ASC data entry as is currently required for data 

submitted via a CMS online data submission tool measure data. We thank the 

commenter for their request and are considering how to implement this capability into 

our data submission processes. In the event this method can be available for data 

submission, we would issue proposals through rulemaking for ASCQR Program 

implementation. 

1. Requirements Regarding Data Processing and Collection Periods for Claims-Based 

Measures Using Quality Data Codes (QDCs) 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75135) for a complete summary of the data processing and collection periods for 

the claims-based measures using QDCs for the CY 2014 payment determination and 
CMS-1613-FC 846 

subsequent years. In the CY 2015 OPPS/ASC proposed rule (79 FR 41050), we did not 

propose any changes to these policies. 

 We did not receive any public comments on data submission for claims-based 

measures using QDCs. 

2. Minimum Threshold, Minimum Case Volume, and Data Completeness for 

Claims-Based Measures Using QDCs 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75135 through 75137) for a complete discussion of the minimum thresholds, 

minimum case volume, and data completeness for successful reporting for the CY 2014 

payment determination and subsequent years. In the CY 2015 OPPS/ASC proposed rule 

(79 FR 41050), we did not propose any changes to these policies. 

 We received the following public comments on data collection using QDCs. 

 Comment: One commenter recommended that CMS raise the 50 percent 

threshold for claims meeting measure specifications containing QDCs, noting that many 

of the issues in the early years of the program that led to this standard have been resolved. 

 Response: We thank the commenter for the recommendation and, while we did 

not propose any changes to our QDC use threshold in this rulemaking, we will consider 

this comment as we move forward with program planning as ASCs now have experience 

in submitting data in this manner. 

 Comment: One commenter supported CMS’ decision not to propose any changes 

to minimum thresholds, minimum case volume, and data completeness for successful 

reporting, noting that program stability is important. Specifically, the commenter 
CMS-1613-FC 847 

supports maintaining the sample size requirements for the endoscopy measures, ASC-9 

and ASC-10. 

 Response: We thank the commenter for its support of these data-related policies, 

including the maintenance of the sample size requirements for the endoscopy measures. 

3. Requirements for Data Submitted Via a CMS Online Data Submission Tool 

a. Data Collection for ASC-6 and ASC-7 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74509) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75137 through 75138) for a complete discussion of the requirements for data 

collection and submission for the ASC-6: Safe Surgery Checklist Use and ASC-7: ASC 

Facility Volume Data on Selected ASC Surgical Procedures measures for the CY 2015 

payment determination and subsequent years. In the CY 2015 OPPS/ASC proposed rule 

(79 FR 41050), we did not propose any changes to these policies. 

b. Delayed Data Collection for ASC-9 and ASC-10 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 through 

75130), we adopted ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-up 

Interval for Normal Colonoscopy in Average Risk Patients (NQF #0658) and ASC-10: 

Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of 

Adenomatous Polyps – Avoidance of Inappropriate Use (NQF #0659), two additional 

chart-abstracted measures, and we finalized a policy that aggregate data (numerators, 

denominators, and exclusions) on all ASC patients would be collected via an online 

Web-based tool that would be made available to ASCs via the QualityNet Web site. 
CMS-1613-FC 848 

 We finalized that the data collection time period would be the calendar year 

(January 1 to December 31) 2 years prior to the affected payment determination year, and 

the data collected would be submitted during the time period of January 1 to August 15 in 

the year prior to the affected payment determination year. Thus, for the CY 2016 

payment determination, ASCs would be required to submit aggregate-level encounter 

data from January 1, 2014 to December 31, 2014 using our Web-based tool during the 

data submission window of January 1, 2015 to August 15, 2015 (78 FR 75138 through 

75139). 

 On December 31, 2013, we issued guidance stating that we would delay the 

implementation of ASC-9 and ASC-10 for 3 months for the CY 2016 payment 

determination, with a resulting encounter period of April 1, 2014 to December 31, 2014 

instead of January 1, 2014 to December 31, 2014 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier3&cid=1228772879036). The data submission timeframe and the encounter period 

for subsequent years remain as previously finalized (78 FR 75139). 

c. Delayed Data Collection and Exclusion for ASC-11 for the CY 2016 Payment 

Determination and Voluntary Data Collection for ASC-11 for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period, 

where we adopted ASC-11: Cataracts – Improvement in Patient’s Visual Function within 

90 Days Following Cataract Surgery (NQF #1536) beginning with the CY 2016 payment 

determination (78 FR 75129), and finalized the data collection and data submission 

timelines (78 FR 75138 to 75139). This measure assesses the rate of patients 18 years 
CMS-1613-FC 849 

and older (with a diagnosis of uncomplicated cataract) in a sample who had improvement 

in visual function achieved within 90 days following cataract surgery based on 

completing both a pre-operative and post-operative visual function survey. 

 Since our adoption of this measure, we have come to believe that it can be 

operationally difficult at this time for ASCs to collect and report this measure. 

Specifically, we are concerned that the results of the survey used to assess the 

pre-operative and post-operative visual function of the patient may not be shared across 

clinicians and facilities, making it difficult for ASCs to have knowledge of the visual 

function of the patient before and after surgery. We are also concerned about the surveys 

used to assess visual function; the measure allows for the use of any validated survey and 

results may be inconsistent should clinicians use different surveys. 

 Therefore, on December 31, 2013, we issued guidance stating that we would 

delay data collection for ASC-11 for 3 months (data collection would commence with 

April 1, 2014 encounters) for the CY 2016 payment determination 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier3&cid=1228772879036). We issued additional guidance on April 2, 2014, stating 

that we would further delay the implementation of ASC-11 for an additional 9 months, 

until January 1, 2015 for the CY 2016 payment determination, due to continued concerns 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQn

etTier3&cid=1228773811586). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41051), we proposed to exclude 

ASC-11 Cataracts: Improvement in Patient’s Visual Function within 90 Days Following 

Cataract Surgery (NQF #1536) from the CY 2016 payment determination measure set. 
CMS-1613-FC 850 

We would not subject ASCs to a payment reduction with respect to this measure for the 

CY 2016 payment determination. 

 We continue to believe that this measure addresses an area of care that is not 

adequately addressed in our current measure set and the measure serves to drive 

coordination of care (78 FR 75129). Further, we believe ASCs should be a partner in 

care with physicians and other clinicians using their facility and that this measure 

provides an opportunity to do so. Therefore, we are continuing to include this measure in 

the ASCQR Program measure set for the CY 2017 payment determination and 

subsequent years. However, we understand the concerns and, therefore, proposed that 

data collection and submission be voluntary for this measure for the CY 2017 payment 

determination and subsequent years. ASCs would not be subject to a payment reduction 

for failing to report this measure during the period of voluntary reporting. For ASCs that 

choose to submit data, we continue to request that they submit such data using the means 

and timelines finalized in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75138 to 75139). Data submitted voluntarily will be publicly reported as 

discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 75138 to 75139). 

 We invited public comment on this proposal. 

 Comment: Some commenters stated that complications following cataract 

surgery are not acceptable and believed that ASC-11 tracks patient-centered clinical 

outcomes. The commenters stated that the measure would promote and improve care 

coordination among providers. Some commenters commended CMS’ recognition of the 

associated operational issues and taking the approach to delay implementation of this 

measure as well as allowing voluntary collection. 
CMS-1613-FC 851 

 Response: We appreciate the commenters that supported and agreed with our 

view and the approach we take for this measure. We agree that complications following 

cataract surgery are not acceptable. While ASC-11 does not address complications 

following cataract surgery, it does address improvement in visual function following 

cataract surgery and it tracks an important patient-centered clinical outcome. 

 Comment: Some commenters did not support voluntary data reporting based on 

concerns regarding the extent to which ASCs would report data for ASC-11 if reporting 

was voluntary. Some commenters stated that incomplete display of data is not 

meaningful to consumers. Other commenters expressed concerns that the display of data 

from some ASCs but not others would lead some patients to conclude that some ASCs 

are more committed to improving cataract surgery. Several other commenters predicted 

that very few ASCs will report data for the ASC-11 measure, leading to an insufficient 

sample. 

 Response: We thank the commenters for their views. We note that the proposal, 

which we are finalizing in this final rule with comment period, is for the measure to be 

voluntarily reported by ASCs. Therefore, ASCs would be able to choose whether to 

implement data collection and reporting processes for this measure. We continue to 

believe the ASC-11 measure has value in this care setting. We do not agree that an 

insufficient sample of facilities will report data for the ASC-11 measure because we also 

have self-reports from ASCs that some did put processes in place to collect data for this 

measure, and that these ASCs would like to report data for this measure because they 

view the measure as an important quality measure for facilities. 
CMS-1613-FC 852 

 We do not agree that ASC-11 data reported on a voluntary basis would not be 

meaningful for consumers. There are many situations where ASCs do not submit 

information to the ASCQR Program because they do not have such information due to 

lack of cases or low case volume. In the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74514 through 74515), we finalized a policy to make data that an ASC 

submitted for the ASCQR Program publicly available on a CMS Web site after providing 

an ASC an opportunity to review the data to be made public. Therefore, when ASCs’ 

information is submitted, we will make this information publicly available. Where this 

information is not submitted, we will state that the information is not available. We also 

do not agree that reporting of measure data by some ASCs and not others under voluntary 

reporting would affect the validity of data reported for this Web-based measure because 

this situation is no different than any other measure where not all ASCs had cases. 

 Comment: Many commenters requested that CMS remove the ASC-11 measure 

from the program entirely, rather than delaying implementation and allowing voluntary 

reporting. These commenters reiterated similar concerns expressed in the CY 2014 

OPPS/ASC final rule with comment period regarding associated burden, suitability for 

ASCQR Program versus PQRS, program alignment of this measure, nonstandardization 

of collected information, NQF endorsement, MAP recommendation, and coordination 

challenges faced by facilities. 

 Response: We continue to believe this measure addresses the importance area of 

care coordination and responsibility for monitoring patient outcomes between performing 

physicians, practitioners that assess visual function, and facilities where procedures are 
CMS-1613-FC 853 

performed; therefore, we are not removing ASC-11 from the ASCQR Program measure 

set for the CY 2017 payment determination and subsequent years. 

 With respect to the concerns raised by commenters about the measure, we refer 

commenters to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 

through 75126, 75129, and 75138 through 75139) where we previously have responded 

to these concerns. 

 After consideration of the public comments we received, for the reasons discussed 

above, we are finalizing our proposal to allow voluntary data collection and reporting of 

this measure for the CY 2017 payment determination and subsequent years. We also are 

finalizing our proposal to exclude the measure entirely from the CY 2016 payment 

determination measure set. ASCs will be able to begin reporting with January 1, 2015 

services as described above in section XIV.E.3. of this final rule with comment period. 

For ASCs that choose to submit data, we request that they submit such data using the 

means and timelines finalized in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75138 to 75139). ASCs will not be subject to a payment reduction for failing to 

report this measure during the period of voluntary reporting. Data voluntarily submitted 

will be publicly reported. 

4. Claims-Based Measure Data Requirements for the New Measure for the CY 2018 

Payment Determination and Subsequent Years 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41046-41048), we proposed to 

adopt the ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy measure, which is a claims-based measure that does not require 

any additional data submission apart from standard Medicare FFS claims. In the 
CMS-1613-FC 854 

CY 2015 OPPS/ASC proposed rule (79 FR 41051), we also proposed that, for this 

measure, which uses ASC Medicare claims data as specified in the ASCQR 

Specifications Manual and does not require any additional data submission such as 

QDCs, we would use paid Medicare FFS claims from a 12-month period from July 1 of 

the year 3 years before the payment determination year to June 30 of the following year. 

Thus, we stated, for the CY 2017 payment determination for this measure, claims from 

July 1, 2014 to June 30, 2015 would be used. We noted that we proposed to adopt this 

measure under the ASCQR Program as well as the Hospital OQR Program, as described 

in section XIII.H.2.c. of the proposed rule. We stated that this ASCQR Program time 

period provides for the timeliest data possible while aligning the proposed data 

submission requirements with our Hospital OQR Program proposal, which would use the 

claims-based measure data submission requirements for the CY 2015 payment 

determination and subsequent years that we adopted in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75111 through 75112). 

 We invited public comment on this proposal. 

 Comment: Many commenters expressed concern that, if finalized, the ASC-12 

measure’s data collection period would begin July 1, 2014, several months before 

adoption of the measure is finalized. Several commenters recommended that data 

collection begin July 1, 2015. 

 Response: As we stated above in section XIV.B.5. of this final rule with 

comment period, we are finalizing the adoption of ASC-12 for the CY 2018 payment 

determination and subsequent years instead of the CY 2017 payment determination and 

subsequent years as proposed. We are finalizing the data submission time period for 
CMS-1613-FC 855 

ASC-12 to use paid Medicare FFS claims from the calendar year 2 years before the 

payment determination calendar year. For the CY 2018 payment determination, we will 

use paid Medicare FFS claims from January 1, 2016 to December 31, 2016. We believe 

the reliability of the measure using 1 year of data is sufficiently reliable. While we 

believe that measure reliability may be further improved by using a longer time period, 

we must balance the reliability of the measure with the timeliness of the measure. At this 

time, we believe that 1 year of data appropriately balances these competing interests, but 

we will continue to assess this belief during the dry run. 

 After consideration of the public comments we received, we are not finalizing our 

proposal to use paid Medicare FFS claims from a 12-month period from July 1 of the 

year 3 years before the payment determination year to June 30 of the following year. 

Instead, we will use paid Medicare FFS claims from the calendar year 2 years before the 

payment determination calendar year. Specifically, with respect to the CY 2018 payment 

determination, for calculating ASC-12, we will use paid Medicare FFS claims from 

January 1, 2016 to December 31, 2016. 

5. Data Submission Requirements for ASC-8 (Influenza Vaccination Coverage Among 

Healthcare Personnel) Reported via the National Healthcare Safety Network (NHSN) for 

the CY 2016 Payment Determination and Subsequent Years 

a. Previously Adopted Requirements for the CY 2016 Payment Determination 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74510) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75139 through 75140) for a complete discussion of the ASC-8 measure (Influenza 

Vaccination Coverage among Healthcare Personnel) (NQF #0431), including the data 
CMS-1613-FC 856 

collection timeframe and the data reporting standard procedures for the CY 2016 

payment determination. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75139 through 

75140), we finalized our proposal to use the data submission and reporting standard 

procedures that have been set forth by the CDC for NHSN participation in general and 

for submission of this measure to NHSN. We refer readers to the CDC’s NHSN Web site 

for detailed procedures for enrollment (http://www.cdc.gov/nhsn/ambulatorysurgery/enroll.html), set-up (http://www.cdc.gov/nhsn/ambulatory-surgery/setup.html), 

and reporting (https://sams.cdc.gov) (user authorization through Secure Access 

Management Services (SAMS) is required for access to NHSN). We note that the 

reporting link was updated in the CY 2015 OPPS/ASC proposed rule (79 FR 41051). 

b. Data Collection Timeframes for the CY 2017 Payment Determination and Subsequent 

Years and Submission Deadlines for the CY 2016 Payment Determination and 

Subsequent Years 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74510), we 

finalized our policy that data collection for the CY 2016 payment determination would be 

from October 1, 2014 through March 31, 2015 (the 2014-2015 influenza season data). In 

the CY 2015 OPPS/ASC proposed rule (79 FR 41051 through 41052, we proposed that 

for the CY 2017 payment determination and subsequent years, ASCs would collect data 

from October 1 of the year 2 years prior to the payment determination year to March 31 

of the year prior to the payment determination year. For example, the CY 2017 payment 

determination would require data collection from October 1, 2015 to March 31, 2016. 
CMS-1613-FC 857 

 In the CY 2014 OPPS/ASC proposed rule, we proposed that ASCs would have 

until August 15, 2015 to submit their 2014-2015 influenza season data (October 1, 2014 

through March 31, 2015) to NHSN. We stated that this date is the latest date possible for 

data entry that would provide sufficient time for us to make the CY 2016 payment 

determinations and is aligned with the data entry deadline for the measures entered via 

the CMS online tool (78 FR 43670). While some commenters supported this proposal, 

others expressed disagreement with this proposal because it differed from the May 15 

deadline proposed for the Hospital IQR Program (78 FR 27700, 50822) and the Hospital 

OQR Program (78 FR 43656, 75116 through 75117) and they believed this difference in 

deadlines could cause confusion, thereby disadvantaging ASCs (78 FR 75140). Other 

commenters believed that providing ASCs with a later deadline would provide an unfair 

advantage because ASCs would have longer to submit their data. Due to these concerns, 

we did not finalize the August 15, 2015 deadline. We stated that we intended to propose 

a submission deadline for this measure for the CY 2016 payment determination in this 

proposed rule. 

 In the proposed rule, we proposed that May 15 of the year in which the influenza 

season ends be the submission deadline for each payment determination year, similar to 

the Hospital IQR and OQR Programs. For example, for the CY 2016 payment 

determination, ASCs would be required to submit their 2014-2015 influenza season data 

(October 1, 2014 through March 31, 2015) by May 15, 2015. Similarly, for the CY 2017 

payment determination, ASCs would be required to submit their 2015-2016 influenza 

season data (October 1, 2015 through March 31, 2016) by May 15, 2016. We believe a 

May 15 reporting deadline would enable ASCs to use data summarizing the results of 
CMS-1613-FC 858 

their previous influenza vaccination campaign to set targets and make plans for their 

influenza vaccination campaigns prior to the next influenza season. This deadline also 

would enable us to post and the public to review the summary data before the start of the 

next influenza season. Finally, this date aligns to the May 15 deadline used in the 

Hospital IQR and OQR Programs for this measure. 

 We invited public comment on this proposal. 

 Comment: Many commenters supported the proposed submission deadline of 

May 15 for ASC-8. One commenter expressed concern that there is a time lag for 

reporting this data, and urged that the public should have access to the data at the time the 

data is most useful. 

 Response: We thank the commenters for their support. We believe a May 15

reporting deadline will enable ASCs to use data summarizing the results of their previous 

influenza vaccination campaign to set targets and make plans for their influenza 

vaccination campaigns prior to the next influenza season. This deadline also will enable 

us to post and the public to review the summary data before the start of the next influenza 

season. Finally, this date aligns with the May 15 deadline used in the Hospital IQR and 

OQR Programs for this measure. 

 Comment: Several commenters opposed setting the submission deadline for 

ASC-8 to May 15, arguing that the August 15 deadline considered in the prior year rule 

was better aligned with the other measures in the ASCQR Program and would minimize 

confusion and reporting burden. One commenter suggested that the Hospital IQR and 

Hospital OQR Programs should move their deadlines to August 15 to support program 

alignment. 
CMS-1613-FC 859 

 Response: We thank the commenters for supporting last year’s proposal 

regarding a data submission deadline for the ASC-8 measure. We proposed an August 15 

data submission deadline in the CY 2014 OPPS/ASC proposed rule (78 FR 43670), but 

did not finalize this proposal due to commenters’ concerns with nonalignment with other 

quality reporting programs (78 FR 75140). 

 While we seek to align reporting deadlines whenever possible within the ASCQR 

Program (78 FR 75140), we believe alignment across programs with the May 15 

reporting deadline will prevent confusion in reporting across different facilities. We also 

believe this earlier deadline will enable us to make the data publicly available in time for 

ASCs to use the data summarizing the results of their previous influenza vaccination 

campaign to set targets and make plans for their influenza vaccination campaigns prior to 

the next influenza season. This would be very difficult to achieve with an August 15 

reporting deadline. 

 After consideration of the public comments we received, for the reasons set forth 

above, we are finalizing our proposal without modification to adopt May 15 of the year in 

which the influenza season ends as the data submission deadline for the ASC-8 measure 

for each payment determination year, beginning with the CY 2016 payment 

determination. We also are finalizing our proposal without modification that, for the 

CY 2017 payment determination and subsequent years, ASCs will collect data from 

October 1 of the year 2 years prior to the payment determination year to March 31 of the 

year prior to the payment determination year. 
CMS-1613-FC 860 

6. ASCQR Program Validation of Claims-Based and CMS Web-Based Measures 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53641 

through 53642) for a complete discussion of our policy not to require validation of 

claims-based measures (beyond the usual claims validation activities conducted by our 

Medicare Administrative Contractors) or Web-based measures for the ASCQR Program, 

which is in alignment with our requirements for the Hospital IQR and OQR Programs. In 

the CY 2015 OPPS/ASC proposed rule (79 FR 41052), we did not propose any changes 

to this policy. 

 We received the following comment on data validation for the ASCQR Program. 

 Comment: One commenter recommended that CMS develop an ASCQR data 

validation program to assure the accuracy and integrity of quality data that will be 

publicly reported under the ASCQR Program. 

 Response: We thank the commenter for the comment, and note that we continue 

to evaluate the feasibility of data validation for the ASCQR Program. We refer readers to 

the FY 2013 IPPS/LTCH PPS final rule (77 FR 53641 through 53642) for a complete 

discussion of our policy not to require validation of claims-based measures (beyond the 

usual claims validation activities conducted by our Medicare Administrative Contractors) 

or Web-based measures for the ASCQR Program. At this time, we believe that it would 

be overly burdensome to validate the reported data given the inexperience that ASCs 

have with reporting quality data to CMS coupled with the low incidence of cases for the 

claims-based measures. As we gain more experience with the ASCQR Program, we will 

reassess whether a data validation process for claims-based measures and measures 

where aggregate data are reported via an online tool is needed. 
CMS-1613-FC 861 

7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53642 

through 53643) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75140 through 75141) for a complete discussion of our extraordinary 

circumstances extension or waiver process under the ASCQR Program. In the CY 2015 

OPPS/ASC proposed rule (79 FR 41052), we did not propose any substantive changes to 

these policies or the processes. However, in the future, we will refer to the process as the 

“Extraordinary Circumstances Extensions or Exemptions” process rather than the 

“Extraordinary Circumstances Extensions or Waivers” process. 

 We also are in the process of revising the Extraordinary Circumstances/Disaster 

Extension or Waiver Request form (CMS-10432), approved under OMB control number 

0938-1171. We are updating the instructions and the form so that a hospital or facility 

may apply for an extension for all applicable quality reporting programs at the same time. 

In addition, the instructions for the form will be updated. 

8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53643 

through 53644) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75141) for a complete discussion of our informal reconsideration process for the 

ASCQR Program for the CY 2014 payment determination and subsequent years. In the 

CY 2015 OPPS/ASC proposed rule (79 FR 41052), we did not propose any changes to 

the informal reconsideration process. 
CMS-1613-FC 862 

XV. Changes to the Rural Provider and Hospital Ownership Exceptions to the 

Physician Self-Referral Law: Expansion Exception Process

A. Background 

1. Statutory Basis 

 Unless the requirements of an applicable exception are satisfied, section 1877 of 

the Act, also known as the “physician self-referral law”--(1) prohibits a physician from 

making referrals for certain designated health services payable by Medicare to an entity 

with which the physician (or an immediate family member) has a financial relationship 

(ownership or compensation); and (2) prohibits the entity from submitting claims to 

Medicare (or billing another individual, entity, or third party payer) for those designated 

health services furnished as a result of a prohibited referral. The Act establishes a 

number of specific exceptions to the physician self-referral law and grants the Secretary 

the authority to create regulatory exceptions for financial relationships that the Secretary 

determines pose no risk of program or patient abuse. Since the original enactment of the 

statute in 1989, we have published a series of final rules interpreting the statute and 

promulgating numerous exceptions. 

 Section 1877(d) of the Act sets forth exceptions related to ownership and 

investment interests held by a physician (or an immediate family member of a physician) 

in an entity that furnishes designated health services. Section 1877(d)(2) of the Act 

provides an exception for ownership and investment interests in rural providers. Under 

the provision of section 1877(d)(2) of the Act, in order for an ownership or investment 

interest to qualify for the exception, the designated health services must be furnished in a 

rural area (as defined in section 1886(d)(2) of the Act), and substantially all of the 
CMS-1613-FC 863 

designated health services furnished by the entity must be furnished to individuals 

residing in a rural area. Section 1877(d)(3) of the Act provides the hospital ownership 

exception, often referred to as the “whole hospital exception,” for ownership and 

investment interests in a hospital located outside of Puerto Rico, provided that the 

referring physician is authorized to perform services at the hospital and the ownership or 

investment interest is in the hospital itself (and not merely in a subdivision of the 

hospital). 

2. Affordable Care Act Amendments to the Rural Provider and Hospital Ownership 

Exceptions to the Physician Self-Referral Law 

 Section 6001(a) of the Affordable Care Act amended the rural provider and whole 

hospital exceptions to the physician self-referral law to impose additional restrictions on 

physician ownership and investment in rural providers and hospitals. Section 6001(a) 

defines a “physician owner or investor” as a physician, or immediate family member of a 

physician, who has a direct or indirect ownership or investment interest in a hospital. We 

refer to hospitals with direct or indirect physician owners or investors as 

“physician-owned hospitals.” 

 Section 6001(a)(3) of the Affordable Care Act established new section 1877(i) of 

the Act, which imposes additional requirements for physician-owned hospitals to qualify 

for the rural provider or whole hospital exception. In addition to other requirements, 

section 1877(i)(1) of the Act prohibits a physician-owned hospital from expanding its 

facility capacity beyond the number of operating rooms, procedure rooms, and beds for 

which the hospital was licensed as of March 23, 2010, unless an exception is granted by 

the Secretary. 
CMS-1613-FC 864 

 Section 1877(i)(3) of the Act requires the Secretary to establish and implement an 

exception process to the prohibition on expansion of facility capacity. We refer to this 

process as the “expansion exception process.” Section 1877(i)(3)(A)(i) of the Act 

provides that a hospital qualifying as an “applicable hospital” or a “high Medicaid 

facility” may apply for an expansion exception. Section 1877(i)(3)(E) of the Act sets 

forth the eligibility criteria for applicable hospitals, which include criteria concerning 

inpatient Medicaid admissions, bed capacity, and bed occupancy. Section 1877(i)(3)(F) 

of the Act sets forth the eligibility criteria for high Medicaid facilities, which include a 

criterion concerning inpatient Medicaid admissions. 

 In the CY 2011 OPPS/ASC final rule with comment period (75 FR 72240), we 

addressed many of the additional requirements that were established by section 6001(a) 

of the Affordable Care Act for the rural provider and whole hospital exceptions, 

including the prohibition on expansion of facility capacity. In that final rule with 

comment period, we finalized regulations at 42 CFR 411.362(b)(2) that prohibit a 

physician-owned hospital from increasing the number of operating rooms, procedure 

rooms, and beds beyond that for which the hospital was licensed on March 23, 2010 (or, 

in the case of a physician-owned hospital that did not have a provider agreement in effect 

as of that date, but did have a provider agreement in effect on December 31, 2010, the 

effective date of such agreement), if the hospital seeks to avail itself of the rural provider 

or whole hospital exception. 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74517), we 

promulgated regulations under 42 CFR 411.362(c) that govern the expansion exception 

process. Section 411.362(c)(2) sets forth the criteria for a physician-owned hospital to 
CMS-1613-FC 865 

qualify for an expansion exception as an applicable hospital. Specifically, 

§ 411.362(c)(2) states that: (1) the hospital’s annual percent of total inpatient admissions 

under Medicaid must be equal to or greater than the average percent with respect to such 

admissions for all hospitals located in the county in which the hospital is located during 

the most recent fiscal year for which data are available as of the date that the hospital 

submits its exception request; (2) the hospital must be located in a State in which the 

average bed capacity in the State is less than the national average bed capacity during the 

most recent fiscal year for which data are available as of the date that the hospital submits 

its request; and (3) the hospital must have an average bed occupancy rate that is greater 

than the average bed occupancy rate in the State in which the hospital is located during 

the most recent fiscal year for which data are available as of the date that the hospital 

submits its request. 

 Section 411.362(c)(3) specifies the criteria for a physician-owned hospital seeking 

an exception under the expansion exception process on the basis that it is a high Medicaid 

facility, including the requirement that, with respect to each of the three most recent fiscal 

years for which data are available as of the date that the hospital submits its exception 

request, the hospital must have an annual percent of total inpatient admissions under 

Medicaid that is estimated to be greater than such percent with respect to such admissions 

for any other hospital located in the county in which the hospital is located. 

 In the CY 2012 OPPS/ASC proposed rule (76 FR 42350 through 42352), we 

proposed that filed Medicare hospital cost report data from the CMS Healthcare Cost 

Report Information System (HCRIS) be used to determine whether a hospital satisfies the 

inpatient Medicaid admissions, bed capacity, and bed occupancy criteria for applicable 
CMS-1613-FC 866 

hospitals and the inpatient Medicaid admissions criterion for high Medicaid facilities. 

We requested public comments concerning alternative data sources that could result in 

more accurate determinations as to whether a hospital satisfies the relevant criteria 

(76 FR 42350). The public comments that we received provided no persuasive support 

for a data source more accurate than the filed hospital cost report data reported to HCRIS. 

Therefore, we finalized the requirement to use filed hospital cost report data for purposes 

of facility capacity expansion exception requests in the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74518). In this final rule with comment period, we refer to 

the filed hospital cost report data that are required under our existing regulations as 

“HCRIS data.” 

 As required by section 1877(i)(3)(A) of the Act, the regulations addressing the 

expansion exception process in the CY 2012 OPPS/ASC final rule with comment period 

were issued by January 1, 2012, and the process was implemented on February 1, 2012. 

B. Limitations Identified by Stakeholders Regarding the Required Use of HCRIS Data 

 Following the implementation of the expansion exception process on 

February 1, 2012, industry stakeholders informed us of what they believed to be certain 

limitations regarding the required use of HCRIS data under the regulations at 

42 CFR 411.362. In the CY 2015 OPPS/ASC proposed rule (79 FR 41053), we 

discussed the existing required use of HCRIS data and certain limitations of the data that 

were identified by stakeholders and CMS. We do not repeat that information here; rather, 

we refer readers to the proposed rule for a complete discussion of the issues. To address 

the limitations regarding the required use of HCRIS data, we proposed to modify the 
CMS-1613-FC 867 

expansion exception process to permit the use of certain non-HCRIS data sources for the 

inpatient Medicaid admissions, bed capacity, and bed occupancy criteria. 

 As of the publication date of the CY 2015 OPPS/ASC proposed rule, a correctly 

completed hospital cost report did not include Medicaid managed care admissions or 

discharges and, therefore, Medicaid managed care admissions and discharges were not 

available in HCRIS. As a result, the information collected to date through HCRIS cannot 

be used to estimate reliably Medicaid managed care admissions or discharges for 

purposes of estimating the percentages of inpatient Medicaid admissions under 

§§ 411.362(c)(2)(ii) and (c)(3)(ii). In addition, a hospital that has not participated as a 

provider in the Medicare program for each of the 3 most recent fiscal years for which 

data is available would be precluded from seeking a facility expansion exception as a 

high Medicaid facility. It would be similarly prohibitive if the requesting hospital is 

seeking an exception as either an applicable hospital or high Medicaid facility, and the 

hospitals in the county in which the requesting hospital is located were not Medicare 

participating providers or were not participating in the Medicare program during each of 

the years for which comparisons are required under the statute and our regulations. 

 We believe that some physician-owned hospitals that serve a significant number 

of Medicaid managed care patients and are interested in the expansion exception process 

may fail to qualify for an exception due to the exclusion of Medicaid managed care data. 

Accordingly, as detailed in section XV.C. of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41054), we proposed to revise the expansion exception process to permit 

physician-owned hospitals to use filed hospital cost report data, data from internal data 

sources, or data from external data sources to estimate the required percentages of 
CMS-1613-FC 868 

inpatient admissions under Medicaid. (We referred in the proposal to the non-HCRIS 

internal data sources and external data sources that we proposed to permit for purposes of 

the expansion exception process as “supplemental data sources.”) Also, as explained in 

section XV.B. of the CY 2015 OPPS/ASC proposed rule (79 FR 41054), we proposed to 

revise the expansion exception process to permit the use of supplemental data sources for 

the bed capacity and bed occupancy criteria for applicable hospitals. 

C. Changes to the Physician-Owned Hospital Expansion Exception Process 

 Below we discuss the provisions of the proposed rule and summarize and respond 

to the public comments we received in response to our proposals. For ease of reference, 

we have divided the comments and responses into the following categories: supplemental 

data sources; fiscal year standard; community input and timing of complete request; and 

additional considerations. 

1. Supplemental Data Sources 

 Given the limitations regarding the required use of HCRIS data (which we 

described in sections XV.B.1. and XV.B.2. of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41053 through 41054)), we proposed to revise our regulations at 

§§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and (c)(3)(ii) to permit physician-owned 

hospitals to use data from certain internal data sources or external data sources, in 

addition to HCRIS data, in order to estimate the percentages of inpatient Medicaid 

admissions, and to determine the bed capacities and the bed occupancy rates referenced 

in those sections. We stated in the proposed rule that we were not prescribing that 

hospitals use a specific individual data source or combination of data sources. 
CMS-1613-FC 869 

 We proposed that, for purposes of the expansion exception process, internal data 

sources would be sources generated, maintained, or under the control of the Department, 

and we gave as examples the Healthcare Cost and Utilization Project (HCUP), the 

Medicaid Statistical Information System (MSIS), and the Medicaid Analytic Extract 

(MAX). We sought public comments that recommended other possible internal data 

sources. We also proposed that, for purposes of the expansion exception process, 

“external data sources” would be data sources generated, maintained, or under the control 

of a State Medicaid agency, and we sought public comments that recommended other 

possible external data sources, including those of other State agencies or departments. 

Finally, we proposed to amend 42 CFR 411.351: (1) to define “internal data source” to 

include only non-HCRIS data sources that are reliable and transparent, and that maintain 

or generate data that are accurate, complete, and objectively verifiable for purposes of the 

expansion exception process, and to define “external data source” to include only data 

sources that are reliable and transparent, and that maintain or generate data that are 

accurate, complete, and objectively verifiable for purposes of the expansion exception 

process; and (2) to state that internal data sources and external data sources must maintain 

data that are readily available and accessible to the requesting hospital, comparison 

hospitals, and to CMS for purposes of the expansion exception process. 

 We noted in the proposed rule that the expansion exception process includes both 

the physician-owned hospital’s completion of its request and CMS’ consideration of the 

physician-owned hospital’s request. 

 We stated in the proposed rule that we believe that the supplemental data sources 

should-- 
CMS-1613-FC 870 

● Be transparent regarding what comprises the data, where the data originated, 

and the manner and method by which the data source received the data; 

● Be maintained on a secure database that prevents distortion or corruption of 

data and that ensures the accuracy of the data; 

● Contain sufficient information to enable accurate estimates of the percentages 

of inpatient Medicaid admissions, and accurate determinations of bed capacities and bed 

occupancy rates; 

● Contain sufficient information to enable the comparisons required by 

§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and (c)(3)(ii) for the fiscal year(s) at issue; and 

● Contain sufficiently clear and detailed data that will enable multiple users to 

produce consistent results and outcomes when using the same data set. 

 In the proposed rule, we recognized that, if a physician-owned hospital uses data 

from a supplemental data source, the hospital may ultimately need to make estimates or 

determinations in addition to those referenced in our existing regulations. Accordingly, 

we proposed to revise our regulations to allow for the additional estimates or 

determinations that may be necessary under our revised process. Specifically, we 

proposed to permit a requesting hospital to use data from a supplemental data source to: 

● Estimate its own annual percentage of inpatient Medicaid admissions 

(§ 411.362(c)(2)(ii)). 

● Estimate the average percentage with respect to such admissions for all 

hospitals located in the county in which the hospital is located (§ 411.362(c)(2)(ii)). 

● Determine the average bed capacity in the State in which the hospital is located 

(§ 411.362(c)(2)(iv)). 
CMS-1613-FC 871 

● Determine the national average bed capacity (§ 411.362(c)(2)(iv)). 

● Determine its own average bed occupancy rate (§ 411.362(c)(2)(v)). 

● Determine the average bed occupancy rate for the State in which the hospital is 

located (§ 411.362(c)(2)(v)). 

● Estimate its annual percentage of total inpatient admissions under Medicaid for 

each of the 3 most recent fiscal years for which data are available (§ 411.362(c)(3)(ii)). 

● Estimate the annual percentages of total inpatient admissions under Medicaid 

for every other hospital located in the county in which the hospital is located for each of 

the 3 most recent fiscal years for which data are available (§ 411.362(c)(3)(ii)). 

 We respond below to the specific comments that we received in response to our 

proposal. 

a. Internal Data Sources 

 Comment: All of the commenters supported CMS’ efforts to permit 

physician-owned hospitals to use supplemental data sources in the expansion exception 

process because of the limitations of the HCRIS data, especially with respect to the 

inpatient Medicaid admissions criteria. The commenters generally agreed that a more 

flexible approach would help ensure that the physician-owned hospitals that satisfy the 

statutory criteria are able to expand facility capacity under the CMS process. 

 Response: We appreciate the commenters’ support. Accordingly, we are 

finalizing a number of our proposals to revise the expansion exception process to provide 

for the flexibility called for by the commenters and other industry stakeholders to 

effectuate the purpose of section 6001(a) of the Affordable Care Act. 
CMS-1613-FC 872 

 Comment: One commenter stated that it appreciated CMS’ efforts to permit 

physician-owned hospitals to use supplemental data sources but also expressed concern 

that an internal data source as defined in the proposed rule would have limited utility in 

the expansion exception process. With respect to the internal data sources provided as 

examples in the proposed rule, the commenter identified limitations concerning the data 

sources’ completeness for purposes of the expansion exception process. Specifically, the 

commenter stated that certain States do not provide information to the HCUP and that the 

MSIS does not provide sufficient detail at the State or county level for purposes of the 

expansion exception process. The commenter added that the Medicaid Analytic Extract 

(MAX) would not be appropriate for the expansion exception process because it may not 

be used for nonresearch purposes. 

 Response: We share the concerns identified by the commenter. After publication 

of the proposed rule, we made additional inquiries into the utility of internal data sources 

with respect to the inpatient Medicaid admissions criteria. As a result of those inquiries 

and further review, we agree with the commenter that these data sources contain 

significant limitations, including incomplete data for purposes of the exception process, 

as well as issues related to timeliness, availability, and accessibility of the data. 

Accordingly, we do not believe that the three sources listed in the proposed rule satisfy 

all of the standards that we set forth in the proposed rule for supplemental data sources 

(79 FR 41055), which we continue to believe are critical for any supplemental data 

source that could be used in the expansion exception process. None of the commenters 

provided information regarding other potentially acceptable internal data sources, and we 

are unaware of any other internal data sources that could be used to estimate accurately 
CMS-1613-FC 873 

and reliably the percentages of inpatient Medicaid admissions required. Therefore, we 

are not finalizing our proposal to permit the use of any non-HCRIS internal data source 

for the inpatient Medicaid admissions criteria required at §§ 411.362(c)(2)(ii) and 

(c)(3)(ii). 

 We also believe that many of the limitations that the commenter and our review 

identified regarding the proposed internal data sources would also apply to the bed 

capacity and bed occupancy criteria at § 411.362(c)(2)(iv) and (c)(2)(v). Specifically, we 

do not believe that internal data sources other than HCRIS would include relevant and 

adequate information to determine accurately the average bed capacity for hospitals 

within a State or nationally; nor do we believe internal data sources other than HCRIS 

would include information to determine accurately bed occupancy rates in a State. 

Accordingly, we are not finalizing our proposed revisions to §§ 411.362(c)(2)(iv) and 

(c)(2)(v) that would permit the use of any non-HCRIS internal data source for those 

criteria. Because no internal data source, other than HCRIS, will be permitted in the 

expansion exception process under this final rule with comment period, we are not 

finalizing our proposal to add a definition of “internal data source” to § 411.351. 

 Comment: One commenter recommended that physician-owned hospitals be 

allowed to use as an internal data source the same Medicaid eligibility determination 

process that hospitals use for Medicare disproportionate share hospital (DSH) 

determinations. 

 Response: Medicare DSH determinations are based on Medicaid days, not 

admissions (or discharges). Based on our review, we do not believe that Medicaid days, 

without additional detailed information for the requesting and each comparison hospital, 
CMS-1613-FC 874 

could be used in calculations to estimate accurately or reliably the required percentages 

of inpatient Medicaid admissions. The commenter did not explain how Medicaid 

eligibility data could be used to estimate inpatient admissions under Medicaid for the 

requesting hospital and each comparison hospital, when required. Without further 

explanation, we cannot agree that the Medicaid eligibility determination process that 

hospitals use for Medicare DSH determinations should be considered a data source. 

b. External Data Sources 

 Comment: Most commenters urged CMS to finalize its proposal to permit the use 

of data from external data sources for the inpatient Medicaid admissions criteria. One 

commenter stated that its State Medicaid agency’s data on inpatient Medicaid admissions 

includes fee-for-service and managed care data, and that the data on total patient 

admissions are readily available from the Medicaid agency. The commenter indicated 

that the State Medicaid agency data could be used to determine accurately the 

percentages of inpatient Medicaid admissions referenced in § 411.362(c)(2)(ii) and 

(c)(3)(ii). The commenter also stated that the State did not charge a fee for providing the 

necessary data. 

 Response: We believe that States have a significant interest in ensuring that data 

generated, maintained, or under the control of the State Medicaid agency are accurate and 

reliable. In general, submission of data to a State Medicaid agency is not voluntary, and 

hospitals are incented to provide accurate data and other information to receive payment 

for the services that they provide to the State’s Medicaid enrollees. Accordingly, we are 

persuaded to finalize our proposal to permit the use of an external data source for the 

inpatient Medicaid admissions criteria at § 411.362(c)(2)(ii) and (c)(3)(ii) with the 
CMS-1613-FC 875 

modification stemming from the recent revision to the Medicare hospital cost report 

described in this response. We also are adopting as final our proposed definition of 

“external data source” with no modification. We are adding this definition at 

§ 411.362(a), rather than at § 411.351 as proposed, because the definition of “external 

data source” applies only to our regulations at § 411.362. 

 We note that CMS recently revised the hospital cost report to require the reporting 

of Medicaid managed care discharges in addition to Medicaid fee-for-service discharges. 

As a result of this revision, a correctly completed hospital cost report will include 

Medicaid managed care discharges and, thus, Medicaid managed care discharges 

eventually will be available in HCRIS. At such time, the limitations that led to our 

proposal will be resolved, and HCRIS should be sufficiently complete to estimate the 

percentages of Medicaid inpatient admissions required in § 411.362(c)(2)(ii) and 

(c)(3)(ii). However, we anticipate that it will take several years before physician-owned 

hospitals that are interested in requesting an expansion exception will be able to utilize 

the necessary Medicaid managed care data through HCRIS. Therefore, we are permitting 

physician-owned hospitals to use data from an external data source for the inpatient 

Medicaid admissions criteria until such time that the Secretary determines that HCRIS 

contains sufficiently complete inpatient Medicaid discharge data. At that time, going 

forward, physician-owned hospitals may use only filed Medicare hospital cost report data 

for the inpatient Medicaid admissions criteria. For additional information about the 

recent revisions to the hospital cost report, we refer readers to Transmittal 6 on the CMS 

Web site at: http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/2014-Transmittals-Items/R6P240.html. 
CMS-1613-FC 876 

 We did not receive any public comments regarding whether an external data 

source would contain adequate information to determine the remaining four calculations 

required for the Secretary to grant an exception to the facility expansion prohibition for 

an applicable hospital (that is, the average bed capacity in the State where the requesting 

hospital is located, national average bed capacity, the requesting hospital’s average bed 

occupancy, and the average bed occupancy for all hospitals in the State where the 

requesting hospital is located). Based on our own review, we do not believe that an 

external data source would meet the standards set forth in the proposed rule when used 

for the criteria at § 411.362(c)(2)(iv) and (c)(2)(v). Therefore, we are not finalizing our 

proposal to permit the use of external data sources for the four calculations specified in 

this paragraph and, thus, we are limiting the use of external data sources to the 

estimations of the percentages of inpatient Medicaid admissions at § 411.362(c)(2)(ii) 

and (c)(3)(ii). 

 Comment: One commenter suggested that physician-owned hospitals seeking an 

expansion exception be permitted to use the most current external data available, 

regardless of source. 

 Response: We interpret the comment as a suggestion that a requesting hospital 

should be able to use multiple external data sources to achieve the goal of using the “most 

current” data available when requesting an expansion exception, provided that each data 

source meets the criteria for an “external data source.” We disagree with the commenter 

because we believe that the use of more than one data source would add unnecessary 

complexity to the Secretary’s review and lead to inconsistent results, including from year 

to year where multiple-year comparisons are required. In order to ensure accurate and 
CMS-1613-FC 877 

consistent estimates and determinations and to facilitate the Secretary’s review of a 

physician-owned hospital’s request for a facility expansion exception, all of the data 

necessary for a physician-owned hospital to estimate or determine the percentages of 

inpatient Medicaid admissions referenced in §§ 411.362(c)(2)(ii) and (c)(3)(ii) must 

come from a single data source. Specifically, the same data source, whether HCRIS or an 

external data source, must be used in the numerator and denominator when determining 

or estimating the percentages of inpatient admissions under Medicaid for the requesting 

hospital and any other comparison hospital required under § 411.362(c)(2)(ii) and 

(c)(3)(ii). We will continue to monitor the use of data sources in the expansion exception 

process and, if necessary, we will provide additional guidance on the CMS Web site 

regarding how an external data source should be used for the inpatient Medicaid 

admissions criteria. 

 Comment: One commenter identified potential shortcomings in the data that its 

State Medicaid agency collects. Specifically, this commenter stated that its State collects 

Medicaid inpatient admissions data from general acute care hospitals but not psychiatric 

or specialty hospitals. (The commenter did not define “specialty hospital.”) For this 

reason, the commenter claimed that its State Medicaid agency data would be incomplete 

if the requesting hospital is a psychiatric or specialty hospital or must compare itself to a 

psychiatric or specialty hospital. 

 Response: Although we understand the potential implication of a State Medicaid 

agency not requiring a particular type of hospital to report admissions (or discharges) 

data to the agency, we note that HCRIS remains available under the policies set forth in 

this final rule with comment period. No Medicare participating hospital is exempt from 
CMS-1613-FC 878 

reporting cost report data in HCRIS. Hospitals requesting an exception to the Affordable 

Care Act’s facility expansion prohibition may use HCRIS data to make the necessary 

estimates and determinations required under the statute and our regulations. 

 Comment: One commenter recommended that physician-owned hospitals be 

permitted to use a State-provided listing of Medicaid DSH-eligible hospitals as an 

external data source. The commenter suggested that, if a hospital has been determined by 

its State Medicaid agency to be eligible for Medicaid DSH payments, the supporting data 

that show the Medicaid inpatient utilization rate or low-income utilization rate status of 

the hospital would be an adequate external data source. 

 Response: We do not believe that a listing of Medicaid DSH-eligible hospitals, 

even if developed by a State Medicaid agency, qualifies as an external data source under 

our proposed definition. Moreover, we are not persuaded to expand the definition of 

“external data source” to include such a listing because we are unclear how a listing, by 

itself, could provide the data necessary to estimate the percentages of inpatient Medicaid 

admissions required under the statute and our regulations. 

 Comment: One commenter suggested that admissions data, which it was able to 

obtain from the State health and human services commission, should be preferred over 

discharge data for purposes of the inpatient Medicaid admissions criteria. 

 Response: In the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74519), we determined that discharge data may be used to estimate the 

percentages of inpatient Medicaid admissions. We did not propose to revise this policy 

in the CY 2015 OPPS/ASC proposed rule. However, we are clarifying in this CY 2015 

OPPS/ASC final rule with comment period that either admissions data or discharge data 
CMS-1613-FC 879 

may be used to either determine or estimate the percentages referenced in 

§ 411.362(c)(2)(ii) and (c)(3)(ii), provided that the data being used are from a permitted 

data source. We are not persuaded to rank or prioritize these types of data. The 

Secretary will determine whether an estimate is accurate or appropriate given the specific 

facts and circumstances underlying a physician-owned hospital’s expansion exception 

request. 

c. Completeness of Supplemental Data Sources 

 Comment: One commenter expressed concern about the utility of an external data 

source, as defined in the proposed rule, for purposes of the expansion exception process. 

The commenter stated that, in some States, certain types of hospitals are not required to 

report any data to the States in which they are located. The commenter did not provide 

information regarding whether State Medicaid agencies can or do generate on their own 

(that is, without relying on reported information from hospitals) inpatient admissions data 

for those hospitals not required to report such data. The commenter requested that CMS 

clarify whether the State Medicaid sources would be considered “complete” for purposes 

of the expansion exception process under such circumstances. 

 Response: We recognize the possibility that a State Medicaid agency may not 

generate, maintain, or otherwise control a data source that would contain sufficient data 

for the inpatient Medicaid admissions criteria, the only eligibility criteria for which we 

are permitting the use of an external data source in this final rule with comment period. 

Thus, the utility of the external data sources that we are permitting likely will depend on 

the State in which the physician-owned hospital is located. 
CMS-1613-FC 880 

 Whether an external data source is considered complete depends on the facts and 

circumstances of the particular situation. For example, if a physician-owned hospital is 

seeking to qualify as a high Medicaid facility and the State’s data source does not include 

data on one of the comparison hospitals, the State’s data would not be considered 

complete for purposes of the process because a high Medicaid facility must compare 

itself against each other hospital in the county in which it is located. 

d. Other Issues Related to Supplemental Data Sources 

 Comment: One commenter expressed concern that contradictory data sources 

could create confusion for requesting physician-owned hospitals, those who wish to 

comment on an expansion exception request, and the Secretary in her review of a request. 

The commenter provided an example where a physician-owned hospital chooses to 

utilize available HCRIS data for its expansion request, but the available data from the 

State Medicaid agency conflict with the HCRIS data, appearing to show that the 

physician-owned hospital was not the highest Medicaid facility in a more recent fiscal 

year(s). Two commenters recommended that CMS consider issuing guidance as to how 

external data sources will be characterized or measured in comparison to HCRIS data, 

how CMS and the Secretary will evaluate comments received from opposing hospitals, 

and what criteria the Secretary intends to rely upon to make the ultimate determinations. 

Another commenter recommended that CMS not prioritize or rank additional data 

sources, given that access to supplemental data sources will vary based upon the entity 

requesting an expansion exception. 

 Response: Determinations regarding expansion exception requests will be made 

on a case-by-case basis, with consideration given to all information available to CMS at 
CMS-1613-FC 881 

the time of the review. We are not able to provide the specific guidance requested by the 

first commenter because the example provided is hypothetical in nature and not part of an 

actual request for the Secretary’s consideration. As we stated in the proposed rule, we 

believe that permissible data sources should, among other things, be transparent, be 

secure, enable accurate estimates of the percentages of inpatient Medicaid admissions, 

and provide for consistent results in order to enable the Secretary to make an informed 

decision regarding whether a requesting physician-owned hospital satisfies the statutory 

requirements for an exception to the facility expansion prohibition. We continue to 

believe in the importance of these attributes, and all data sources utilized by a requesting 

hospital and any community comments provided during the exception expansion process 

will be evaluated with them in mind. Because each request will be reviewed on a 

case-by-case basis, we decline to issue guidance regarding the relative priority of data 

sources. The Secretary will make determinations based on the criteria enumerated in the 

Affordable Care Act, as set forth in section 1877(i)(3) of the Act and our regulations. 

 Comment: One commenter recommended that, in addition to considering other 

data sources, CMS consider other factors when reviewing an expansion exception 

request. The commenter claimed that Medicaid patient days are a better metric than 

Medicaid admissions because Medicaid patient days reflect a hospital’s use of resources 

to care for a Medicaid patient. The commenter also suggested that CMS consider the 

specialty services, such as neonatal intensive care unit (NICU) services, that a hospital 

provides. Specifically, the commenter suggested that CMS consider the bed occupancy 

of a particular specialty service if that service treats a very large Medicaid population. 
CMS-1613-FC 882 

 Response: We do not have the authority to revise the expansion exception 

process to incorporate the factors that the commenter recommended. Section 6001(a) of 

the Affordable Care Act established criteria that physician-owned hospitals must satisfy 

in order to qualify for an expansion exception request, including criteria concerning 

inpatient Medicaid admissions. As we understand the comment, the commenter is 

recommending that we substitute (or additionally consider) a hospital’s inpatient 

Medicaid days as a criterion for granting an exception to the prohibition on facility 

expansion. The statute does not provide the Secretary discretion to consider inpatient 

Medicaid days in lieu of the inpatient Medicaid admissions criteria. Similarly, we lack 

the authority to consider the bed occupancy of specific specialty services, a factor which, 

even if permissible, would complicate our review of an exception request. 

e. Summary of Final Provisions Regarding Supplemental Data Sources 

 After consideration of the public comments we received on the use of 

supplemental data sources, we are not finalizing the proposed revisions to 

§ 411.362(c)(2)(ii) and (c)(3)(ii) that would permit physician-owned hospitals to use data 

from an internal data source other than HCRIS to estimate the percentages of inpatient 

Medicaid admissions referenced in those sections. Accordingly, we are not finalizing our 

proposal to add a definition of the term “internal data source” under § 411.351. As 

finalized, § 411.362(c)(2)(ii) and (c)(3)(ii) reflect modifications from our proposal that 

would have permitted physician-owned hospitals to use data from an external data source 

to estimate the percentages of inpatient Medicaid admissions referenced in those sections. 

Specifically, we are revising these sections to require the use of HCRIS data once they 

are complete and permit the use of data from an external data source only until then. We 
CMS-1613-FC 883 

also are finalizing the definition of “external data source” without modification, although 

we are adding the definition at § 411.362(a), rather than at § 411.351 as proposed. 

Finally, we are not finalizing the proposed revisions to those sections that would permit 

physician-owned hospitals to use data from a non-HCRIS data source to determine State 

average bed capacity, national averaged bed capacity, the requesting physician-owned 

hospital’s average bed occupancy rate, or the State average bed occupancy rate. We 

provide the following chart of the final provisions to assist the reader. 

Regulation Requirement 

Permissible 

Data 

Source(s) 

Limitations 

§ 411.362(c)(2)(ii) Estimate the requesting 

hospital’s own annual 

percentage of inpatient 

Medicaid admission 

HCRIS, 

external 

data source 

An external data source 

may be used only until 

such time as the 

Secretary determines 

that HCRIS contains 

sufficiently complete 

inpatient Medicaid 

discharge data. 

§ 411.362(c)(2)(ii) Estimate the average 

percentage with respect 

to such admissions for all 

hospitals located in the 

county in which the 

requesting hospital is 

located 

HCRIS, 

external 

data source 

An external data source 

may be used only until 

such time as the 

Secretary determines 

that HCRIS contains 

sufficiently complete 

inpatient Medicaid 

discharge data. 

§ 411.362(c)(2)(iv) Determine the average 

bed capacity in the State 

in which the requesting 

hospital is located 

HCRIS -- 

§ 411.362(c)(2)(iv) Determine the national 

average bed capacity 

HCRIS -- 

§ 411.362(c)(2)(v) Determine the requesting 

hospital’s own average 

bed occupancy rate 

HCRIS -- 

§ 411.362(c)(2)(v) Determine the average 

bed occupancy rate for 

HCRIS -- 
CMS-1613-FC 884 

Regulation Requirement 

Permissible 

Data 

Source(s) 

Limitations 

the State in which the 

requesting hospital is 

located 

§ 411.362(c)(3)(ii) Estimate the requesting 

hospital’s annual 

percentage of total 

inpatient admissions 

under Medicaid for each 

of the three most recent 

fiscal years for which 

data are available 

HCRIS, 

external 

data source 

An external data source 

may be used only until 

such time as the 

Secretary determines 

that HCRIS contains 

sufficiently complete 

inpatient Medicaid 

discharge data. 

§ 411.362(c)(3)(ii) Estimate the annual 

percentages of total 

inpatient admissions 

under Medicaid for every 

other hospital located in 

the county in which the 

requesting hospital is 

located for each of the 

three most recent fiscal 

years for which data are 

available 

HCRIS, 

external 

data source 

An external data source 

may be used only until 

such time as the 

Secretary determines 

that HCRIS contains 

sufficiently complete 

inpatient Medicaid 

discharge data. 

2. Fiscal Year Standard 

 Section 1877(i)(3)(F) of the Act requires that a high Medicaid facility use data 

from each of the 3 most recent fiscal years for which data are available. In the CY 2012 

OPPS/ASC final rule with comment period (76 FR 74518), we stated that we consider the 

most recent fiscal year for which data are available to be the most recent year for which 

HCRIS contains data from at least 6,100 hospitals. We currently apply this standard to 

expansion exception requests for both applicable hospitals and high Medicaid facilities. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41055), we proposed to revise 

our standard so that the most recent fiscal year for which data are available would be the 

year for which the data source(s) used in an expansion exception request contain 
CMS-1613-FC 885 

sufficient data to perform the comparisons required under § 411.362(c)(2)(ii), (c)(2)(iv), 

(c)(2)(v), and (c)(3)(ii). Specifically, we proposed that data sources, either alone or in 

combination with other data sources, would be considered to contain “sufficient data” if 

they contain all data from the requesting hospital and each hospital to which the 

requesting hospital must compare itself that are necessary to perform the estimates 

required in the expansion exception process. In addition, with respect to a hospital 

seeking an expansion exception as an applicable hospital, we proposed that, in order to be 

considered to contain “sufficient data,” the data sources, either alone or in combination 

with other data sources, must contain the data necessary to determine the State and 

national average bed capacity and the average bed occupancy rate in the State in which 

the requesting hospital is located for purposes of the expansion exception process. 

 We also proposed to require that data from the same fiscal year be used for the 

applicable hospital eligibility criteria at § 411.362(c)(2)(ii), (c)(2)(iv) and (c)(2)(v), even 

if the hospital uses multiple data sources for those criteria. We stated our belief that 

requiring the use of data from the same fiscal year will ensure consistency and 

equitability in the expansion exception process. We sought public comments on our 

proposal to revise the standard that determines the most recent fiscal year(s) for which 

data are available, as well as other ways to define “sufficient data” for purposes of the 

expansion exception process. 

 
CMS-1613-FC 886 

a. Summary of Public Comments and Our Responses Regarding the Fiscal Year 

Standard 

 Comment: All of the commenters that addressed this issue supported CMS’ 

proposal to revise the interpretation of the standard “the most recent fiscal year for which 

data are available.” The commenters stated generally that external data sources often 

have more recent data than the fiscal year for which HCRIS contains data from at least 

6,100 hospitals. Two commenters recommended deeming a data source “sufficient” and, 

thus, acceptable for use in an expansion exception request, if it contains all of the 

information necessary to complete the calculations required to determine eligibility for an 

exception as a high Medicaid facility or applicable hospital. Another commenter 

similarly supported the proposal and suggested that CMS consider the sufficiency of data 

on a case-by-case basis. 

 Response: We agree with the commenters that recommended that we deem a data 

source “sufficient” and, thus, acceptable for use in an expansion exception request, if it 

contains all of the information necessary to complete the calculations required to 

determine eligibility for an exception as a high Medicaid facility or applicable hospital. 

Although determining the sufficiency of a data source on a case-by-case basis could 

significantly lengthen the period of time required for a thorough review of an expansion 

exception request, we believe that evaluating the sufficiency of data on a modified 

case-by-case basis is nonetheless appropriate, as explained more fully below. 

 We are adopting separate standards to determine the sufficiency of data sources 

for the Medicaid inpatient admissions criteria and the bed capacity and occupancy criteria 

set forth in our regulations. For purposes of the Medicaid inpatient admissions estimates 
CMS-1613-FC 887 

required in § 411.362(c)(2)(ii) and (c)(3)(ii), we are adopting a standard under which we 

will consider a data source sufficient when it contains data from the requesting hospital 

and every hospital located in the same county as the requesting hospital. This applies to 

both external data sources and HCRIS. The statutory criteria at sections 1877(i)(3)(E)(ii) 

and (i)(3)(F)(ii) of the Act afford no flexibility to make these determinations based on 

data from fewer than all of the hospitals located in the same county as the requesting 

hospital. For purposes of the bed capacity and occupancy determinations required in 

§ 411.362(c)(2)(iv) and (c)(2)(v), we will consider HCRIS sufficient for a particular 

fiscal year on a State-by-State basis, rather than the current “6,100 hospitals reporting” 

standard. Specifically, this final rule with comment period requires a requesting 

physician-owned hospital to satisfy the bed capacity criterion in § 411.362(c)(2)(iv) 

during the most recent fiscal year for which HCRIS contains data from a sufficient 

number of hospitals in the requester’s State to determine the State’s average bed capacity 

and a sufficient number of hospitals nationally to determine the national average bed 

capacity. In addition, this final rule with comment period requires a requesting 

physician-owned hospital to satisfy the bed occupancy criterion in § 411.362(c)(2)(v) 

during the most recent fiscal year for which HCRIS contains data from a sufficient 

number of hospitals in the State to determine the requesting hospital’s average bed 

occupancy rate and the State’s average bed occupancy rate. “Sufficient number” means 

that enough hospitals have reported data such that the determinations in 

§ 411.362(c)(2)(iv) and (c)(2)(v) would not materially change after additional hospital 

data are reported. 
CMS-1613-FC 888 

 We will consult with the CMS Office of the Actuary to determine whether 

average bed capacity and bed occupancy rates would materially change upon additional 

hospital reporting. CMS intends to report on its Web site each State’s average bed 

capacity, the national average bed capacity, and each State’s average bed occupancy, per 

fiscal year, as they become available. A requesting physician-owned hospital may use 

only the averages posted on the CMS Web site as of the date that the hospital submits its 

expansion exception request. 

 We provide the following examples to illustrate the application of the standard 

applicable to the determinations required in § 411.362(c)(2)(iv) and (c)(2)(v). Assume 

that, for FY 2013, the requesting hospital is one of 200 Medicare-participating hospitals 

located in State A. Assume also that, after consultation with the CMS Office of the 

Actuary, we determine that State A’s FY 2013 average bed capacity and bed occupancy 

rates would not materially change once HCRIS contains data from at least 85 percent of 

State A hospitals (170 hospitals). Finally, assume that CMS is able to determine the 

FY 2013 national average bed capacity rate once 5,500 hospitals have reported bed 

capacity data in HCRIS, and that this rate would not materially change even if the 

remaining Medicare-participating hospitals reported data in HCRIS. Under the standard 

adopted in this final rule with comment period, the requesting hospital may use FY 2013 

HCRIS data to make the State bed capacity and occupancy determinations required in 

§ 411.362(c)(2)(iv) and (c)(2)(v) once HCRIS contains data from at least 170 of the 

Medicare-participating hospitals in State A for that fiscal year. The requesting hospital 

may use FY 2013 HCRIS data to determine the national average bed capacity required in 
CMS-1613-FC 889 

§ 411.362(c)(2)(iv) once HCRIS contains data from at least 5,500 Medicare-participating 

hospitals for that fiscal year. 

 In contrast, assume that, for FY 2013, there are only 10 Medicare-participating 

hospitals in State B. Assume also that, after consultation with the CMS Office of the 

Actuary, we determine that State B’s FY 2013 average bed capacity and bed occupancy 

rates would materially change unless HCRIS contains data from all of State B’s hospitals. 

Thus, a physician-owned hospital located in State B could not use FY 2013 HCRIS data 

until all 10 Medicare-participating hospitals in State B reported their bed capacity and 

occupancy data in HCRIS for that fiscal year. 

 With respect to external data sources, because we recognize that State Medicaid 

agencies likely will have varying collection time periods that may not line up with the 

Federal fiscal year end for which HCRIS data are available (for example, calendar year or 

State fiscal year), we are permitting the use of any 12-month period for the data, provided 

that all 3 years use the same 12-month cycle. For example, a State Medicaid agency may 

collect Medicaid inpatient admissions data on a calendar year cycle. A physician-owned 

hospital requesting an expansion exception as a high Medicaid facility may use calendar 

years 2013, 2012 and 2011 if the external data source, for each of those years, contains 

all data from the requesting hospital and every hospital located in the same county as the 

requesting hospital. 

 We note that, if the latest year for which HCRIS contained data sufficient to 

determine the average bed capacity in the State in which the requesting hospital is located 

and the national bed capacity was FY 2011, but HCRIS contained FY 2012 data 

sufficient to determine the requesting hospital’s own average bed occupancy and the 
CMS-1613-FC 890 

average bed occupancy rate for the State in which the requesting hospital is located, the 

hospital could use FY 2011 data for the determinations required in § 411.362(c)(2)(iv) 

and FY 2012 data for the determinations required in § 411.362(c)(2)(v). We recognize 

that using different years from the same permissible data source to make the estimates or 

determinations set forth in the criteria for applicable hospitals may require additional 

review of an expansion exception request by the Secretary. However, in light of our 

interpretation that each criterion that a physician-owned hospital seeking a facility 

expansion exception must meet is analyzed separately, we believe that allowing a 

requesting hospital to use data from 12-month periods that may be different for each 

criterion will permit use of the most recent data, result in more accurate determinations, 

and best effectuate the plain meaning of the statutory and regulatory language regarding 

these criteria. 

b. Summary of Final Provisions Regarding the Fiscal Year Standard 

 After consideration of the public comments we received on the standard regarding 

the most recent available data, we are finalizing our proposals with several modifications. 

For purposes of the estimates required in § 411.362(c)(2)(ii) and (c)(3)(ii), the most 

recent 12-month period for which data are available is the most recent 12-month period 

for which the data source used contains all data from the requesting hospital and each 

hospital to which the requesting hospital must compare itself. For purposes of the 

determinations required in § 411.362(c)(2)(iv), we require a requesting physician-owned 

hospital to satisfy the criterion during the most recent fiscal year for which HCRIS 

contains data from a sufficient number of hospitals to determine the relevant State’s 

average bed capacity and the national average bed capacity. For purposes of the 
CMS-1613-FC 891 

determinations required in § 411.362 (c)(2)(v), we require a requesting physician-owned 

hospital to satisfy the criterion during the most recent fiscal year for which HCRIS 

contains data from a sufficient number of hospitals to determine the requesting hospital’s 

average bed occupancy rate and the relevant State’s average bed occupancy rate. 

Because we are continuing to require the use of HCRIS data for the determinations 

required in § 411.362(c)(2)(iv) and (c)(2)(v), we believe that this bifurcated approach is 

necessary. 

 Finally, we note that we analyze each estimate or determination required under 

§ 411.362(c)(2) separately. We interpret the statute and our regulations to allow the use 

of different time periods for each estimate or determination, provided that the data source 

(or time period) used to perform the necessary calculation contains: (1) for purposes of 

§ 411.362(c)(2)(ii) and (c)(3)(ii), all data from the requesting hospital and each hospital 

to which the requesting hospital must compare itself; (2) for purposes of 

§ 411.362(c)(2)(iv), data from a sufficient number of hospitals to determine the relevant 

State’s average bed capacity and the national average bed capacity; and (3) for purposes 

of § 411.362(c)(2)(v), data from a sufficient number of hospitals to determine the 

requesting hospital’s average bed occupancy rate and the relevant State’s average bed 

occupancy rate, respectively. CMS will continue to determine and make available on its 

Web site State bed capacity and occupancy rates and the national average bed capacity 

rate. “Sufficient number” means that enough hospitals have reported data such that the 

determinations in § 411.362(c)(2)(iv) and (c)(2)(v) would not materially change even if 

data that may be missing from comparison hospitals were included. 

3. Community Input and Timing of a Complete Request 
CMS-1613-FC 892 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41055 through 41056), we 

proposed to require that a physician-owned hospital requesting an expansion exception 

provide actual notification directly to hospitals whose data are part of the comparisons set 

forth under § 411.362(c)(2)(ii) and (c)(3)(ii) of the regulations. Under proposed 

§ 411.362(c)(5), the notification must be in writing, in either electronic or hard copy 

form, and must be provided at the same time that the hospital discloses on any public 

Web site for the hospital that it is requesting an exception. We stated in the proposed rule 

that we believe that this additional safeguard would ensure that comparison hospitals are 

aware of the opportunity to confirm or dispute the accuracy or reliability of the data in the 

physician-owned hospital’s request. 

 Our existing regulations at § 411.362(c)(5) set forth the process for community 

input and the timing of a complete expansion exception request. These regulations 

provide for a 30-day comment period following publication in the Federal Register of 

notice of the physician-owned hospital’s expansion exception request and a 30-day 

rebuttal period for the requesting hospital to respond, if it chooses, to any written 

comments that CMS receives from the community. Currently, an expansion exception 

request is considered complete at the end of the 30-day comment period if CMS does not 

receive written comments from the community. If CMS receives written comments from 

the community, the request is considered complete at the end of the 30-day rebuttal 

period, regardless of whether the requesting hospital submits a rebuttal statement. 

 In the proposed rule, we explained that permitting the use of non-HCRIS data in 

an expansion exception request would likely require additional time for our review of the 

request, including any comments submitted with respect to the request. Therefore, we 
CMS-1613-FC 893 

proposed to revise our regulations at § 411.362(c)(5) to extend the date by which certain 

expansion exception requests will be deemed complete. Specifically, we proposed to 

revise § 411.362(c)(5) to provide that, where the request, any written comments, and any 

rebuttal statement include only HCRIS data, the current timeframes would apply. That is, 

such an expansion exception request would be deemed complete no later than: (1) the 

end of the 30-day comment period if no written comments from the community are 

received; and (2) the end of the 30-day rebuttal period if written comments from the 

community are received, regardless of whether the physician-owned hospital submitting 

the request submits a rebuttal statement. We also proposed that, where the request, any 

written comments, or a rebuttal statement includes data from a supplemental data source, 

an expansion exception request would be deemed complete no later than: (1) 180 days 

after the end of the 30-day comment period if no written comments from the community 

are received; and (2) 180 days after the end of the 30-day rebuttal period if written 

comments from the community are received, regardless of whether the physician-owned 

hospital submitting the request submits a rebuttal statement. 

a. Summary of Public Comments and Our Responses Regarding Community Input and 

Timing of a Complete Request 

 Comment: Some commenters encouraged CMS not to finalize the actual 

notification requirement, stating that it would impose a burden (both procedural and 

financial) on the requesting hospital or could lead to an increase in comments regarding 

each request and the complexity of those comments. One commenter stated that 

requiring actual notification to other hospitals located in the same county as the 
CMS-1613-FC 894 

requesting hospital goes beyond the intent of the Congress in enacting this provision of 

the Affordable Care Act. 

 Response: We believe that an actual notification requirement is important to 

ensure that comparison hospitals are aware of the opportunity to confirm or dispute the 

accuracy or reliability of the data in the physician-owned hospital’s request, and that any 

burden on the requesting hospital is outweighed by the facilitation of robust community 

input that can help inform the Secretary’s review of an expansion exception request. We 

believe that thorough vetting of all relevant information, both from the requesting 

hospital and the community in which the hospital is located, in fact, was the intent of the 

Congress. We disagree with the commenter that stated that this requirement goes beyond 

the congressional intent or our statutory authority. 

 Comment: One commenter opposed CMS’ proposal to deem an expansion 

exception request that relies on a non-HCRIS data source complete no later than 180 days 

after the end of the 30-day comment period if no written comments from the community 

are received, and 180 days after the end of the 30-day rebuttal period if written comments 

from the community are received, regardless of whether the physician-owned hospital 

submitting the request submits a rebuttal statement. The commenter stated that the 

additional time beyond the 30-day period provided for in our existing regulations is 

particularly unnecessary if the requesting hospital uses inpatient admissions data from a 

State Medicaid agency that shows the percentage of Medicaid admissions for all of the 

hospitals operating in the same county as the requesting hospital. 

 Response: The purpose of our proposed policy extending the timeframe for 

deeming complete an expansion exception request where the request itself, any 
CMS-1613-FC 895 

community input, or any rebuttal statement includes non-HCRIS data is to provide CMS 

with sufficient time to address any potential conflicts between data presented by the 

requesting hospital and data or other information presented by a commenter or in the 

possession of CMS. As we noted in the CY 2012 OPPS/ASC final rule with comment 

period, the limitations on data sources that may be used in a physician-owned hospital’s 

expansion exception request do not apply to members of the community or to CMS 

(76 FR 74522). Therefore, it is possible (if not likely) that, when reviewing an expansion 

exception request, CMS would need to verify the data (and other information, if any) 

provided by the requesting hospital and any commenters, as well as consider the data in 

light of the information otherwise available to CMS. This review could involve the use 

of internal experts or contractors, which will require additional time. We note that the 

timeframe for deeming an expansion exception request complete will be “no later than” 

180 days after the end of the 30-day comment period (if no written comments from the 

community are received) and 180 days after the end of the 30-day rebuttal period (if 

written comments from the community are received) does not preclude an earlier 

timeframe where the information submitted by the requesting hospital does not conflict 

with any community input or information otherwise available to CMS. 

b. Final Provisions Regarding Community Input and Timing of a Complete Request 

 After consideration of the public comments we received on community input and 

timing of a complete response, we are finalizing our proposal, without modification, 

recognizing that, under this final rule with comment period, the only permissible 

supplemental data sources are external data sources, as defined in this final rule with 

comment period at § 411.362. 
CMS-1613-FC 896 

D. Additional Considerations 

 We recognize the importance of an accurate and consistent expansion exception 

process. We stated in the CY 2015 OPPS/ASC proposed rule (79 FR 41056) that we are 

aware that data sources have unique characteristics due to their inputs, collection 

methods, compilation, and other factors, and that we would take this into consideration if 

we finalized our proposal to permit the use of supplemental data sources. In an effort to 

implement an accurate and consistent expansion exception process, we solicited 

comments on the utility, appropriateness, and limitations of our proposal to permit the 

use of supplemental data sources. Specifically, we sought comments that: 

● Address whether permitting the use of supplemental internal or external data 

sources would significantly affect the outcomes for any of the estimates or determinations 

required in our regulations. 

● Address whether permitting the use of supplemental data sources would 

materially affect a physician-owned hospital’s ability to request an exception or CMS’ 

determination on an exception request. 

● Describe the length of time that would be necessary to obtain or generate the 

required data from a specific data source. 

● Address whether and when the data will be available and accessible per fiscal 

year. 

● Address whether the data will be available and accessible in a format that 

enables the requesting hospital to perform the necessary comparisons. 

● Describe how supplemental data sources could or should be prioritized, 

including, but not limited to, rankings related to accuracy or reliability. 
CMS-1613-FC 897 

● Describe how data from a particular data source could be used in the expansion 

exception process. We encouraged commenters to specify whether a particular data 

source already maintains the percentages or rates required, or whether calculations will 

be necessary to generate the required percentages or rates. If calculations will be 

necessary, we requested that commenters describe the calculations. 

● Describe the cost to industry stakeholders, State governments, and the Federal 

government for obtaining or generating data from any potential data sources. We 

consider cost to include both resources (for example, human capital and information 

technology) and actual financial burden (for example, fees to use or purchase the data). 

 We also solicited comments on whether any additional burdens would affect the 

quality of care for beneficiaries as a result of additional costs borne by a requesting 

hospital. 

 We note that our inquiries were limited to solicitations of comments intended to 

inform our decision making regarding our actual proposals and, therefore, do not require 

a response in this final rule with comment period. However, we have chosen to 

summarize and respond to the comments that addressed ranking or prioritizing data 

sources and types of data because we believe discussion of these issues helps clarify how 

our revisions to the expansion exception process that we are finalizing will be 

implemented. 

 Comment: A few commenters who addressed the additional considerations set 

forth in the proposed rule discussed ranking or prioritizing permitted data sources. One 

commenter recommended that CMS not prioritize or rank additional data sources, given 

that access to supplemental data sources will vary based on the hospital seeking the 
CMS-1613-FC 898 

exception. Another commenter suggested that CMS give the highest priority to 

admissions data from State Medicaid agencies for the inpatient Medicaid admissions 

criteria. The commenter stated that the State in which the commenter is located provides 

an unbiased, reliable, single source of inpatient Medicaid admissions percentages that 

would eliminate the need for independent calculations by the requesting hospital and 

individuals and entities in the community in which the hospital is located. The 

commenter further suggested that if actual admissions data are unavailable through the 

State Medicaid agency, CMS permit the use of other data, including estimates of 

Medicaid admissions based on discharges using supplemental data. 

 Response: We share the concerns of the commenters that noted that the external 

data sources available to requesting hospitals will vary from State to State. We also 

believe that the quality and completeness of the external data sources available to 

requesting hospitals will vary in the same manner. We further note the complexity 

involved in making a generally applicable policy as to how to rank or prioritize various 

data sources. Therefore, we decline to provide guidance regarding the rank or 

prioritization of potentially available data sources for use in the expansion exception 

process. Our goal remains to ensure a fair, accurate, and consistent process to implement 

section 6001 of the Affordable Care Act. As discussed elsewhere in this preamble, each 

expansion exception request will be considered on a case-by-case basis. The Secretary 

will consider only reliable, credible information to determine whether a requesting 

physician-owned hospital qualifies for an exception to the facility expansion prohibition. 
CMS-1613-FC 899 

E. Summary of the Final Provisions Regarding the Expansion Exception Process under 

the Rural Provider and Hospital Ownership Exceptions to the Physician Self-Referral 

Law 

 In this final rule with comment period, we are finalizing the following policies 

related to the expansion exception process for physician-owned hospitals: 

● We are permitting the use of external data sources to estimate a 

physician-owned hospital’s annual percentage of inpatient admissions under Medicaid 

(§ 411.362(c)(2)(ii) and (c)(3)(ii)), the average percentage of inpatient admissions under 

Medicaid of all hospitals in the county in which a physician-owned hospital requesting an 

expansion exception as an “applicable hospital” is located (§ 411.362(c)(2)(ii)), and the 

annual percentage of inpatient admissions under Medicaid of any other hospital in the 

county in which a physician-owned hospital requesting an expansion exception as a “high 

Medicaid facility” is located (§ 411.362(c)(3)(ii)). However, on or after such date that 

the Secretary determines that HCRIS contains sufficiently complete inpatient Medicaid 

discharge data, a hospital may use only filed Medicare hospital cost report data to 

estimate the percentages of inpatient Medicaid admissions referenced in 

§ 411.362(c)(2)(ii) and (c)(3)(ii). 

● We are defining “external data source” at § 411.362 to mean a data source that 

(1) is generated, maintained, or under the control of a State Medicaid agency; (2) is 

reliable and transparent; (3) maintains data that, for purposes of the process described in 

§ 411.362(c), are readily available and accessible to the requesting hospital, comparison 

hospitals, and CMS; and (4) maintains or generates data that, for purposes of the process 
CMS-1613-FC 900 

described in § 411.362(c), are accurate, complete, and objectively verifiable. We are not 

finalizing our proposed definition of “internal data source.” 

● For purposes of § 411.362(c)(2)(ii) and (c)(3)(ii), we are interpreting the most 

recent 12-month period for which data are available as the most recent 12-month period 

for which the data source used contains all data from the requesting hospital and each 

hospital to which the requesting hospital must compare itself. 

● For purposes of the determinations required in § 411.362(c)(2)(iv), we require 

a requesting physician-owned hospital to satisfy the criterion during the most recent fiscal 

year for which HCRIS contains data from a sufficient number of hospitals to determine a 

State’s average bed capacity and the national average bed capacity. For purposes of the 

determinations required in § 411.362 (c)(2)(v), we require a requesting physician-owned 

hospital to satisfy the criterion during the most recent fiscal year for which HCRIS 

contains data from a sufficient number of hospitals to determine the requesting hospital’s 

average bed occupancy rate and the relevant State’s average bed occupancy rate. 

“Sufficient number of hospitals” means in this final rule with comment period that 

enough hospitals have reported data such that the determinations in § 411.362(c)(2)(iv) 

and (c)(2)(v) would not materially change even if data that may be missing from 

comparison hospitals were included. 

● Where the request, any written comments, and any rebuttal statement include 

only HCRIS data, we will consider a request for an expansion exception complete no 

later than: (1) the end of the 30-day comment period if no written comments from the 

community are received; and (2) the end of the 30-day rebuttal period if written 
CMS-1613-FC 901 

comments from the community are received, regardless of whether the physician-owned 

hospital submitting the request submits a rebuttal statement (§ 411.362(c)(5)(i)). 

● Where the request, any written comments, or any rebuttal statement include 

data from an external data source (as defined in this final rule with comment period), we 

will consider a request for an expansion exception complete no later than: (1) 180 days 

after the end of the 30-day comment period if no written comments from the community 

are received; and (2) 180 days after the end of the 30-day rebuttal period if written 

comments from the community are received, regardless of whether the physician-owned 

hospital submitting the request submits a rebuttal statement (§ 411.362(c)(5)(ii)). 

 We are not finalizing our proposal to revise the bed capacity and bed occupancy 

criteria at § 411.362(c)(2)(iv) and (c)(2)(v) to permit the use of non-HCRIS data sources. 

However, we are revising §§ 411.362(c)(2)(iv) and (c)(2)(v) to clarify the fiscal year 

periods that requesting hospitals must use to make the determinations required in those 

sections. 

XVI. Revision of the Requirements for Physician Certification of Hospital Inpatient 

Services Other Than Psychiatric Inpatient Services 

 In the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27644 through 27650), we 

discussed the statutory requirement for certification of hospital inpatient services for 

payment under Medicare Part A. The certification requirement for inpatient services 

other than psychiatric inpatient services is found in section 1814(a)(3) of the Act, which 

provides that Medicare Part A payment will only be made for such services “which are 

furnished over a period of time, [if] a physician certifies that such services are required to 

be given on an inpatient basis.” 
CMS-1613-FC 902 

 As discussed in the CY 2015 OPPS/ASC proposed rule (79 FR 41056 through 

41058), in commenting on our FY 2014 proposal mentioned above, some commenters 

argued that the statutory reference to services furnished “over a period of time” and the 

then-existing regulation’s lack of any specific deadline for physician certifications in 

nonoutlier cases indicated that no certification was required for short-stay cases. In 

support of their argument, the commenters cited the legislative history of section 

1814(a)(3) of the Act, which these commenters interpreted as indicating that the 

certification requirements should apply only to certain long-term stays. 

 As we indicated in our response to these public comments in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50939), we do not agree with the assertion that the 

only possible interpretation of the statute is that the requirement for physician 

certification only applies to long-stay cases. The statute does not define “over a period of 

time,” and further provides that “such certification shall be furnished only in such cases, 

and with such frequency, and accompanied by such supporting material . . . as may be 

provided by regulations.” By this language, Congress explicitly delegated authority to 

the agency to elucidate this provision of the statute by regulation. 

 In our previous regulations, we interpreted the statute’s requirement of a 

physician certification for inpatient hospital services furnished “over a period of time” to 

apply to all inpatient admissions. While this is not the only possible interpretation of the 

statute, we believe that it is a permissible interpretation. 

 We continue to believe that an order from a physician or other qualified 

practitioner in order to trigger an inpatient hospital admission as specified in 

42 CFR 412.3 is necessary for all inpatient admissions. As described more fully in the 
CMS-1613-FC 903 

FY 2014 IPPS/LTCH PPS final rule (78 FR 50938 through 50954), the requirement for a 

physician order for a hospital inpatient admission has long been clear in the Medicare 

hospital conditions of participation (CoPs), and we promulgated § 412.3 to make more 

explicit that admission pursuant to this order is the means whereby a beneficiary becomes 

a hospital inpatient and, therefore, is required for payment of hospital inpatient services 

under Medicare Part A. A beneficiary becomes a hospital inpatient when admitted as 

such after a physician (or other qualified practitioner as provided in the regulations) 

orders inpatient admission in accordance with the CoPs, and Medicare pays under Part A 

for such an admission if the order is documented in the medical record. The order must 

be supported by objective medical information for purposes of the Part A payment 

determinations. Thus, the physician order must be present in the medical record and be 

supported by the physician admission and progress notes in order for the hospital to be 

paid for hospital inpatient services. 

 As further noted in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50938 through 

50954), we believe the additional certification requirements now specified under 

§ 424.13(a)(2), (a)(3), and (a)(4) (that is, the reason for hospitalization, the estimated time 

the patient will need to remain in the hospital, and the plan of posthospital care, if 

applicable) generally can be satisfied by elements routinely found in a patient’s medical 

record, such as progress notes. 

 However, as we look to achieve our policy goals with the minimum 

administrative requirements necessary, and after considering previous public comments 

and our experience with our existing regulations, we believe that, in the majority of cases, 

the additional benefits (for example, as a program safeguard) of formally requiring a 
CMS-1613-FC 904 

physician certification may not outweigh the associated administrative requirements 

placed on hospitals. Because we continue to believe that an inpatient admission order is 

necessary for all inpatient admissions, we proposed in the CY 2015 OPPS/ASC proposed 

rule (79 FR 41057) to require such orders as a condition of payment based upon our 

general rulemaking authority under section 1871 of the Act rather than as an element of 

the physician certification under section 1814(a)(3) of the Act. Section 1871 of the Act 

authorizes the Secretary to “prescribe such regulations as may be necessary to carry out 

the administration of the insurance programs under [Title XVIII].” A clear regulatory 

definition of when and how a beneficiary becomes an inpatient is necessary to carry out 

the administration of Medicare Part A. Section 1861(b) of the Act defines “inpatient 

hospital services” as certain items and services furnished to “an inpatient of a hospital,” 

but does not define “an inpatient of a hospital.” Accordingly, § 412.3 provides the 

necessary definition for purposes of Medicare Part A payment by clarifying when “an 

individual is considered an inpatient of a hospital, including a critical access hospital.” 

We proposed to remove paragraph (c) from § 412.3. As we proposed to rely on a 

different statutory authority for such regulation, we proposed that an admission order 

would no longer be a required component of physician certification of medical necessity. 

 As to the physician certification requirement, we maintain that our prior 

longstanding policy was based upon a permissible interpretation of section 1814(a)(3) of 

the Act pursuant to that provision’s express delegation of authority to the agency to 

determine the circumstances under which such certification should be required. 

Nonetheless, after consideration of public feedback, our experience under the 

then-existing regulations, and our policy goals, in the CY 2015 OPPS/ASC proposed rule 
CMS-1613-FC 905 

(79 FR 41057), we proposed to change our interpretation of section 1814(a)(3) of the Act 

to require a physician certification only for long-stay cases and outlier cases. 

 As noted above, we believe that, in most cases, the admission order, medical 

record, and progress notes will contain sufficient information to support the medical 

necessity of an inpatient admission without a separate requirement of an additional, 

formal, physician certification. However, we believe that evidence of additional review 

and documentation by a treating physician beyond the admission order is necessary to 

substantiate the continued medical necessity of long or costly inpatient stays. While 

granting the Secretary broad discretion to determine the circumstances under which a 

physician certification should be required, the statute specifies that the certification by a 

physician with respect to inpatient hospital services (other than inpatient psychiatric 

hospital services) “shall be furnished no later than the 20th day” of the stay. Because the 

statute specifically requires that certification must occur no later than the 20th day, we 

believe that, at a minimum, Congress intended that physicians should conduct a more 

thorough review of such cases to help ensure that all requirements of medical necessity 

continue to be met. We also note the regulations at § 424.13(f)(2) specify our 

longstanding requirement that the physician certification for cost outlier cases occur no 

later than 20 days into the hospital stay, and we did not propose to change the 

requirements for these cases. Therefore, we believe that, for nonoutlier cases, 20 days is 

also an appropriate minimum threshold for the physician certification, and we proposed 

to define long-stay cases as cases with stays of 20 days or longer. 

 Specifically, in the CY 2015 OPPS/ASC proposed rule (79 FR 41057), we 

proposed to revise paragraph (a) of § 424.13 to specify that Medicare Part A pays for 
CMS-1613-FC 906 

inpatient hospital services (other than inpatient psychiatric facility services) for cases that 

are 20 inpatient days or more, or are outlier cases under subpart F of Part 412 of this 

chapter, only if a physician certifies or recertifies the following: 

 (1) The reasons for either— 

 (i) Continued hospitalization of the patient for medical treatment or medically 

required diagnostic study; or (We note that, in setting out the corresponding regulation 

text for this provision in the proposed rule (79 FR 41083), we inadvertently omitted the 

word “Continued” at the beginning of this paragraph (a)(1)(i). We are making a 

conforming correction in this final rule with comment period. We do not believe that this 

conforming correction results in any substantive change in policy.) 

 (ii) Special or unusual services for cost outlier cases (under the prospective 

payment system set forth in subpart F of Part 412 of this chapter). 

 (2) The estimated time the patient will need to remain in the hospital. 

 (3) The plans for posthospital care, if appropriate. 

 We also proposed to revise paragraph (b) of § 424.13 to specify that certifications 

for long-stay cases must be furnished no later than 20 days into the hospital stay. 

 Because the care furnished in inpatient psychiatric facilities is often purely 

custodial and therefore not covered under Medicare and because the primary purpose of 

the certification of these cases is to help ensure that Medicare pays only for services of 

the type appropriate for Medicare coverage, we did not propose changes to the 

certification requirements for inpatient psychiatric hospital services. 

 As discussed more fully in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50942 

through 50943), there also are inherent differences in the operation of and beneficiary 
CMS-1613-FC 907 

admission to IRFs. Therefore, we also did not propose any changes to the admission 

requirements for IRFs. 

 We invited public comment on these proposals. Summaries of the public 

comments we received and our responses to those public comments are set forth below. 

 Comment: Most commenters were supportive of the proposal to eliminate 

physician certification requirements for the majority of inpatient cases (other than long 

stay and cost outlier cases). Many commenters stated that the proposal would improve 

efficiency and would reduce the overall administrative burden on hospitals. Several 

commenters stated that the proposal would resolve ongoing issues within hospitals 

wherein certain practitioners routinely and appropriately admit patients, but are unable to 

complete the certification requirement because they do not meet the statutory definition 

of a physician. The commenters indicated that, because these cases rarely exceed 20 

days, and do not typically exceed outlier thresholds, these practitioners would not be 

required to seek approval from a physician to complete a physician certification 

statement. 

 Response: We thank the commenters for their support of our proposal to apply 

certification requirements at § 424.13 only to long-stay and outlier cases. We agree that 

our proposal would reduce administrative burden in general, and in particular would 

reduce the administrative burden associated with the majority of cases involving an 

admission order issued by a practitioner qualified to issue the order but who did not meet 

the statutory definition of a physician and therefore could not certify the case. 

 Comment: Several commenters, while appreciative of the proposal to limit 

physician certification requirements, continued to disagree that CMS has the statutory 
CMS-1613-FC 908 

authority to require signed admission orders for all inpatient cases. The commenters 

contended that CMS cannot use its general rulemaking authority under section 1871 of 

the Act to require a signed physician order for every inpatient admission. These 

commenters argued that that the continued requirement for admission orders is essentially 

the same as the certification requirement and stated that section 1814(a)(2) of the Act is 

explicit in requiring physician certification only for services “furnished over a period of 

time” and not for all services. 

 Response: We disagree with these commenters. While the inpatient admission 

order was a required component of the physician certification under our previous policy, 

the order and the physician certification do not serve identical policy goals under our 

proposal, which we are now finalizing. For all cases, a properly authorized and 

documented admission order is necessary because the admission order is integral to a 

clear regulatory definition of when and how a beneficiary becomes an inpatient. Such a 

definition is necessary to carry out the administration of Medicare Part A because, as 

noted previously, section 1861(b) of the Act defines “inpatient hospital services” as 

certain items and services furnished to “an inpatient of a hospital,” but does not define 

“an inpatient of a hospital.” Accordingly, for all cases, our admission order requirements 

at § 412.3 provide the necessary definition for purposes of Medicare Part A payment by 

clarifying when “an individual is considered an inpatient of a hospital, including a critical 

access hospital.” The development of admission order requirements is a necessary and 

appropriate use of our general rulemaking authority under section 1871 of the Act. 

 In most cases, the admission order, along with the medical record and progress 

notes, may also provide sufficient information to support the medical necessity of an 
CMS-1613-FC 909 

inpatient admission without the separate requirement of an additional, formal, physician 

certification. However, for long or very costly inpatient stays, we believe that additional 

review and documentation by a treating physician are necessary to help substantiate the 

continued medical necessity of such stays, and a physician certification provides evidence 

of such additional review. The fact that we have determined, in the majority of cases, 

that the additional benefits (for example, as a program safeguard) of formally requiring a 

physician certification do not outweigh the associated administrative requirements placed 

on hospitals in no way changes the necessity and appropriateness of requiring a signed 

admission order for all cases. 

 Comment: Some commenters requested that CMS require the admission order to 

be signed by the time of billing, not before discharge, as is permitted for CAH 

certification requirements. The commenters cited the administrative burden and 

logistical challenges involved with CMS’ requirements. 

 Response: We believe that, in most cases, matters relating to the determination of 

patient status should be resolved before discharge, due to the consequences that flow 

from such a determination. For example, whether services are billed under Medicare Part 

A or Part B can have a significant impact on a beneficiary’s financial liability. Therefore, 

we do not believe it is appropriate to change our existing policy which requires that 

inpatient orders be signed prior to discharge by a practitioner familiar with the case and 

authorized by the hospital to admit inpatients. 

 In the FY 2015 IPPS/LTCH PPS final rule (79 FR 50163 through 50165), we did 

finalize a provision to allow CAHs to complete certification requirements (including 

completion of the admission order) no later than 1 day before the date on which the claim 
CMS-1613-FC 910 

for payment is submitted as they had been allowed to do prior to FY 2014. However, this 

policy exists in part to provide CAHs with greater flexibility in meeting certification 

requirements unique to CAHs. For example, CAHs face a statutory requirement that a 

physician certify that a patient will be expected to be transferred or discharged within 96 

hours of admission. We do not believe it would be appropriate to apply this historical 

CAH policy more broadly to hospitals that do not face the same circumstances as CAHs. 

 Comment: Several commenters requested that CMS provide additional guidance 

regarding the required content and format of the physician certification statement. Some 

commenters asked that CMS confirm that the policy requiring physician certification 

only for long-stay and outlier cases did not otherwise alter the inpatient hospital 

admission guidelines discussed in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50944 

through 50953). Others commenters requested general guidance and clarification 

regarding CMS policies in this area. 

 Response: As discussed previously in the section, the physician certification 

requirements at § 424.13 generally may be satisfied by elements routinely found in a 

patient’s medical record, such as progress notes. CMS does not require that a physician 

certification comply with a specific standard or format--only that it ensures that the 

conditions at § 424.13(a) were met. If the medical record adequately describes the 

reasons for continued hospitalization, the estimated time the patient is expected to require 

inpatient care, and discharge planning (where appropriate), and the medical record is 

signed by a physician involved with and responsible for the patient’s care, this would 

satisfy certification requirements. 
CMS-1613-FC 911 

 Our proposed policy change regarding the physician certification requirements 

does not change unrelated requirements implemented in the FY 2014 IPPS/LTCH PPS 

final rule such as the requirements related to the 2-midnight policy. It also does not alter 

or remove any requirements for hospitals regarding admission orders. 

 We are committed to continuing to work closely with and provide outreach to 

stakeholders regarding inpatient admission policies and certification requirements. 

 Comment: Some commenters requested that CMS provide guidance on how 

MACs will review cases in the interim time period between publication of this final rule 

and the effective date of the regulation changes (January 1, 2015). 

 Response: Since the effective date of the FY 2014 IPPS/LTCH PPS final rule, we 

have worked closely with the MACs to ensure that the 2-midnight policy and related 

certification requirements are applied appropriately. As discussed previously, we believe 

that physician certification requirements for a high percentage of inpatient stays can be 

readily satisfied by elements routinely found in the medical record. Hospitals need to 

comply with all existing certification requirements until the finalized policy changes in 

this final rule with comment period go into effect on January 1, 2015. We are committed 

to continue to work with the MACs to prioritize medical review cases. 

 In summary, after consideration of the public comments we received, we continue 

to believe our certification proposal satisfies our policy goals while reducing the 

administrative burden on hospitals. Therefore, we are finalizing the policy as proposed in 

the CY 2015 OPPS/ASC proposed rule, which limits the requirement for physician 

certification to long-stay (20 days or longer) and outlier cases. We are finalizing our 

proposed revisions of paragraph (a) of § 424.13, with one minor modification. We are 
CMS-1613-FC 912 

adding the word “Continued” at the beginning of paragraph (a)(1)(i), which we 

inadvertently omitted when we set out the regulation text in the proposed rule. We note 

that the preamble discussion in the proposed rule included this word (79 FR 41057), as 

discussed earlier. We also are finalizing our proposed revision of paragraph (b) of 

§ 424.13, without modification, to specify that certifications for long-stay cases must be 

furnished no later than 20 days into the hospital stay. 

XVII. CMS-Identified Overpayments Associated with Payment Data Submitted by 

Medicare Advantage (MA) Organizations and Medicare Part D Sponsors 

(§§ 422.330 and 423.352) 

A. Background 

Medicare Part C and Part D payments to Medicare Advantage (MA) organizations 

and Part D sponsors are determined, in part, using data submitted to CMS by the MA 

organizations and Part D sponsors. These “payment data” include diagnosis data that are 

used by CMS to risk adjust Part C and Part D payments, Prescription Drug Event (PDE) 

data that are used by CMS to cost reconcile various Part D subsidies, as well as other 

types of data discussed below. MA organizations and Part D sponsors are obliged to 

submit accurate, complete, and truthful payment-related data, as described in regulations 

at 42 CFR 422.504(l) and 423.505(k). Through our review and oversight of payment 

data submitted by MA organizations and Part D sponsors, CMS identifies situations 

where MA organizations and/or Part D sponsors have submitted payment data to CMS 

that should not have been submitted either because the data submitted are inaccurate or 

because the data are inconsistent with Part C and Part D requirements. (Throughout this 

section, we refer to these data submissions as “erroneous payment data.”) If an MA 
CMS-1613-FC 913 

organization or Part D sponsor submits erroneous payment data to CMS, the MA 

organization or Part D sponsor can address errors by submitting corrected data to CMS 

payment systems. Our approach thus far to these types of situations has been to request 

that MA organizations and Part D sponsors make these data corrections voluntarily. 

 However, in instances where the MA organization or Part D sponsor fails to make 

the requested data correction, the payment amount for the plan, calculated using that 

erroneous payment data, may also be incorrect. As a result, we have concluded that CMS 

needs to establish a formal process that allows us to recoup overpayments that result from 

the submission of erroneous payment data by an MA organization or Part D sponsor in 

the limited circumstances when the organization fails to correct those data. We 

emphasize that, in our experience, the circumstance where an MA organization or Part D 

sponsor fails to correct identified erroneous payment data arises very infrequently. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41058 through 41063), we 

proposed a new process that is not intended to replace established recovery and appeals 

processes such as the Risk Adjustment Data Validation (RADV) audit dispute and appeal 

process described at 42 CFR 422.311 or the Part D payment appeals process described at 

42 CFR 423.350. We stated that this proposed process would not constitute a change to 

the existing Part C or Part D payment methodologies. Rather, we merely proposed to 

adopt a procedural mechanism for recouping overpayments that CMS will use in those 

limited circumstances when an MA organization or Part D sponsor fails to correct 

erroneous payment data after notice and request from CMS to do so. The established 

recovery and appeals processes do not support this scenario. Section 1856(b) of the Act 

establishes authority for CMS to add standards for Part C and MA organizations. Section 
CMS-1613-FC 914 

1853 of the Act for Part C and sections 1860D-14 and 1860D-15 of the Act for Part D 

establish the methodology for computing payments to MA organizations and Part D 

sponsors, respectively. We believe that inherent in the methodology under which we 

calculate payments to MA organizations and Part D sponsors is the authority for CMS to 

establish a process for identifying and recouping overpayments in order to ensure that 

payments are made consistent with the payment framework established in the statute. 

Therefore, we proposed to implement such a process through changes to our regulations. 

1. Medicare Part C Payment Background 

 For Medicare Part C, CMS makes prospective monthly payments to MA 

organizations for each enrollee in the plan. CMS’ monthly Part C payment for each MA 

plan enrollee consists of two components: the capitated payment for each enrollee 

(calculated as the plan-specific county payment rate multiplied by the enrollee risk 

score), plus the plan rebate amount (if any). The plan-specific county rates and the plan 

rebate amount are based on the bid approved by CMS and are set in advance for a 

payment year. In addition, payment rates may be adjusted for enrollees with end-stage 

renal disease, enrollees in Medical Savings Account MA plans, and enrollees in religious 

fraternal benefit society MA plans under § 422.304. Prospective payments are made 

during the year, subject to a reconciliation after the end of the year. 

 CMS adjusts the plan-specific county payment rate for each enrollee based on an 

enrollee risk score. Enrollee risk scores are determined using the CMS-Hierarchical 

Condition Category (CMS-HCC) risk adjustment model in effect for the payment year, 

plan-submitted diagnoses for the data collection year, and other data that CMS 

determines to be appropriate to perform risk adjustment. The CMS-HCC model is 
CMS-1613-FC 915 

prospective in that it uses diagnosis information from a base year (data collection year) to 

adjust payments for the next year (payment year or coverage year). For example, the risk 

adjustment model uses diagnosis data from 2013 to adjust payments to MA organizations 

for coverage in 2014. 

 To determine the appropriate risk score for each beneficiary, CMS uses 

demographic characteristics of beneficiaries and diagnostic information gathered in the 

administration of Original Medicare and submitted by MA organizations. MA 

organizations are currently required to submit an occurrence of an HCC model-relevant 

diagnosis only once during the data collection year, even though a beneficiary may have 

several service dates in a data collection year associated with a given diagnosis. The 

minimum data elements currently collected from MA organizations under § 422.310 are: 

Health Insurance Claim (HIC) Number; provider type (hospital inpatient, hospital 

outpatient, or physician); service from date; service through date; and ICD-9 codes at the 

level of specificity used by the HCC model. In addition, effective January 2012, CMS 

collects more detailed Part C utilization and cost data from MA organizations (often 

referred to as encounter data), that will be used in setting risk scores. 

 CMS allows 13 months after the end of a data collection year for MA 

organizations to update the risk adjustment data submitted under § 422.310; this period 

provides MA organizations an opportunity to identify and correct errors in data they have 

submitted for that data collection year (that is, by deleting diagnoses from CMS’ systems) 

and to identify and submit additional diagnoses not submitted during the data collection 

year. During this 13-month period, CMS uses the diagnosis data that MA organizations 

have submitted up to that point to calculate interim beneficiary risk scores for adjusting 
CMS-1613-FC 916 

prospective payments made during the payment year. The end of this 13-month period is 

called the final risk adjustment data submission deadline (§ 422.310(g)(2)(ii)). 

 For each payment year, we apply three sets of risk scores to adjust payments: 

initial and midyear risk scores during the payment year (both sets are based on 

incomplete diagnosis data from the data collection year) and final risk scores after the 

payment year using data MA organizations submitted as of the final deadline for risk 

adjustment data (which reflect complete data for the data collection year). During the 

year, CMS makes monthly prospective payments to MA organizations based on 

enrollment information and using interim risk scores calculated based on the data 

available before the final risk adjustment data submission deadline. CMS calculates the 

preliminary risk scores before the first payment is made (that is, for January of the 

payment year) and again in the middle of the payment year; an interim reconciliation is 

made so that the prospective payments to MA organizations are based on the most recent 

risk score available for each enrollee. 

 After the final risk adjustment data submission deadline, CMS conducts a 

reconciliation, in which the prospective Part C payments made during the coverage year 

based on interim risk scores are compared to Part C payments recalculated using final 

risk scores and the latest enrollment data. While changes in enrollment data are updated 

every month by CMS’ systems during the payment year (for example, disenrollments 

from MA organizations and dates of death from the Social Security Administration 

(SSA)), risk adjustment data are not finalized until the final risk adjustment data 

submission deadline. 
CMS-1613-FC 917 

 We note that after the deadline for submission of final risk adjustment data, MA 

organizations are allowed to submit corrected diagnosis data to correct overpayments 

they received from CMS. However, after this deadline, MA organizations are not 

allowed to submit diagnosis codes for additional payment, as specified in 

§ 422.310(g)(2)(ii); this provision was recently adopted in the final rule entitled 

“Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare 

Advantage and the Medicare Prescription Drug Benefit Programs” (79 FR 29843). When 

such corrections are submitted, CMS conducts another reconciliation to correct the 

payments made to the MA organization using the established payment adjustment 

process. In addition, under § 422.311, CMS conducts Risk Adjustment Data Validation 

(RADV) audits of the risk adjustment data submitted by MA organizations pursuant to 

§ 422.310. Such RADV audits are conducted at the MA organization contract level and 

are designed to calculate a contract–level error rate and payment adjustment amount for a 

specific payment year under audit. 

2. Medicare Part D Payment Background 

 For Medicare Part D, the Medicare Prescription Drug Benefit, Improvement, and 

Modernization Act (MMA), which amended the Act by adding Part D under Title 18, 

provides four payment mechanisms: direct subsidy (codified at § 423.329(a)); 

reinsurance subsidy (codified at § 423.329(c)); low-income subsidy (codified at 

§§ 423.780 and 423.782); and risk sharing (codified at § 423.336(b)). As a condition of 

payment, section 1860D-15(d)(2)(A) of the Act requires that Part D sponsors submit data 

and information necessary for CMS to carry out those payment provisions. Part D 
CMS-1613-FC 918 

sponsors submit PDE data, direct and indirect remuneration (DIR) data and risk 

adjustment data to CMS for payment purposes. 

 Throughout the coverage year, CMS makes prospective payments to Part D 

sponsors that cover three subsidies: the direct subsidy; the low-income cost-sharing 

subsidy; and the reinsurance subsidy. The payment amounts are based on information in 

the approved basic bid and on data received by CMS that are used to update payments 

throughout the year. Following the end of the coverage year, the prospective payments 

are reconciled against the actual costs of the Part D sponsor. Reconciliation of the lowincome cost-sharing subsidy and reinsurance and the calculation of risk sharing are based 

on PDE and DIR data submitted by the Part D sponsor, as well as data captured from 

other CMS systems. CMS instructs Part D sponsors that they should continually monitor 

their submitted data throughout the year in order to ensure that the reconciliation and 

final payment determinations are accurate. 

 The final Part D payment determination may be reopened and revised at CMS 

discretion under § 423.346. In our final rule, “Medicare Program; Medicare Prescription 

Drug Benefit” published in the Federal Register on January 28, 2005 (70 FR 4194), we 

stated that including the Medicare Part D reopening provision at § 423.346 would “ensure 

that the discovery of any overpayment or underpayments could be rectified” 

(70 FR 4316). However, this is only possible to the extent that the data submitted by Part 

D sponsors are accurate. Accordingly, prior to making a payment determination for a 

coverage year, either through a reconciliation described at § 423.343 or a reopening 

described at § 423.346, CMS periodically makes requests that Part D sponsors correct 

payment data that do not comply with program requirements (that is, what we have 
CMS-1613-FC 919 

defined as “erroneous payment data”). These may be general requests to all Part D 

sponsors to look for a type of payment issue (see for example, the Health Plan 

Management System (HPMS) memorandum, “Correcting Missing, Invalid, and Inactive 

Prescriber Identifiers on 2012 Prescription Drug Event (PDE) Records,” dated 

February 4, 2013.) or targeted requests to specific Part D sponsors known to have 

particular payment issues (as was done in the “Prescriber NPI Project” announced in the 

HPMS memorandum, “Announcement of Prescriber NPI Project and Website Release,” 

dated December 4, 2012). If a Part D sponsor fails to correct its payment data, the 

erroneous payment data remain in the payment system, rendering the reopening provision 

ineffective for rectifying overpayments as it was intended. 

B. Provisions of the Proposed Rule and Final Policies 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41058 through 41063), we 

proposed to establish regulations at 42 CFR 422.330, relating to MA organizations, and at 

42 CFR 423.352, relating to Part D sponsors, that would specify the procedural 

mechanism for CMS to recoup overpayments associated with data errors identified by 

CMS in payment data submitted by MA organizations and Part D sponsors. We also 

proposed to create a process whereby an MA organization or Part D sponsor can appeal 

the finding that payment data are erroneous. 

 We noted that our proposed policy is intended to establish a process to address 

data errors and payment adjustments that are not addressed by existing processes such as 

the RADV audit and appeal process or overpayments identified by the MA organization 

or Part D sponsor, which are subject to separate procedures. If an MA organization or a 

Part D sponsor self-identifies an overpayment, that overpayment must be reported and 
CMS-1613-FC 920 

returned to CMS in accordance with section 1128J(d) of the Act, which was added by 

section 6402 of the Affordable Care Act. Regulations implementing section 1128J(d) 

have recently been adopted at §§ 422.326 and 423.360 in the final rule entitled “Medicare 

Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage 

and the Medicare Prescription Drug Benefit Programs” (79 FR 29843). 

 Comment: Several commenters supported the establishment of a formal 

overpayment collection and appeals process. 

 Response: We appreciate the commenters’ support. 

 Comment: Several commenters expressed concern about including Part C and 

Part D proposed provisions in the OPPS/ASC proposed rule. The commenters stated that 

these proposed provisions are unrelated to the OPPS and ASC payment systems. 

 Response: The Secretary generally has discretion to schedule and group topics 

for rulemaking, meaning any proposed and final rule published in the Federal Register,

as long as proper public notice is given that includes an explanation of the proposed 

policies, the rationale and basis for the proposal, and the public is given an opportunity to 

comment. 

 Comment: A few commenters requested that CMS make clear that the proposal 

regarding CMS-identified overpayments has no relationship to other CMS overpayment 

regulations, specifically the overpayment regulations that were promulgated to implement 

the requirements of section 6402 of the Affordable Care Act, codified at section 1128J(d) 

of the Act (79 FR 29847). Commenters expressed concern that, given the connection 

between plan-identified overpayments and the False Claims Act, there is a potential for 

confusion and significant unintended consequences. 
CMS-1613-FC 921 

 Response: In the preamble to the CY 2015 OPPS/ASC proposed rule, we 

expressly limited the scope of our proposal to establishing a process to address data errors 

and payment adjustments that are not addressed by existing processes. We stated that 

overpayments identified by an MA organization or a Part D sponsor are subject to 

separate procedures and that if an MA organization or a Part D sponsor self-identifies an 

overpayment, the overpayment must be reported and returned to CMS in accordance with 

§§ 422.326 and 423.360 of the regulations. We are further clarifying here that the 

CMS-identified overpayment process that is being finalized is separate and distinct from 

the overpayment rule that implemented the Affordable Care Act requirements regarding 

plan-identified overpayments codified at section 1128J(d) of the Act. 

 Comment: A few commenters provided comments on and questioned the 

provisions of §§ 422.326 and 423.360 which relate to reporting and returning of 

overpayments identified by MA organizations and Part D sponsors, respectively. 

 Response: We consider these public comments to be out of the scope of the 

provisions of the proposed rule. The proposed rule was limited to the issue of 

CMS-identified overpayments arising from the submission of erroneous payment data. 

Therefore, we are not addressing these comments in this final rule. 

 Comment: A few commenters stated that it is essential that CMS has overall 

control over the CMS-identified overpayment process to ensure proper identification and 

monitoring of overpayments. The commenters stated that this control is necessary to 

ensure that requests from separate CMS components or the Department’s Office of the 

Inspector General (OIG) for payment data changes are consistent with CMS-issued 

payment regulations and guidance. The commenters recommended that CMS provide 
CMS-1613-FC 922 

adequate resources to the appropriate staff components in order to effectively coordinate 

and manage this process. 

 Response: In the CY 2015 OPPS/ASC proposed rule, we stated that we may 

identify payment data that need to be corrected through a variety of different 

mechanisms, including, but not limited to, CMS analyses of payment data, audits, and/or 

communications with the MA organization or Medicare Part D sponsor. Regardless of 

how a potential overpayment is identified, CMS will conduct an independent evaluation 

of the erroneous data finding, before issuing a data correction notice to an MA 

organization or Part D sponsor. Although CMS may utilize OIG reports or other 

information to help to identify erroneous payment data, it is CMS, not the OIG, which 

will issue the request to correct payment data. Likewise, other separate CMS 

components may identify erroneous payment data, but it is the Medicare Part C and 

Part D payment components at CMS that will determine if that erroneous payment data 

could result in an overpayment and whether or not the CMS-identified overpayment 

process will be used to correct the overpayment. In addition, requests to correct payment 

data will only be issued after CMS has thoroughly reviewed the source or the mechanism 

that identified the payment data and has concurred with the findings that the payment 

data were erroneous. 

 We appreciate and agree with the commenters’ suggestion that the CMS 

administration should provide adequate resources to the payment staff in order to 

effectively coordinate and manage this process. 
CMS-1613-FC 923 

 Comment: One commenter asked CMS to clarify whether this regulation would 

be used as a means to collect any alleged improper payments identified through the 

Recovery Audit Contractors (RAC) process. 

 Response: As we indicated in the preamble of the proposed rule, this process is 

not intended to replace established recovery and appeals processes. We do not anticipate 

using this process to collect any overpayments identified through the RAC process at this 

time. 

 Comment: Several commenters expressed concern that the proposed rule does 

not address underpayments identified by CMS or the health plan. A few commenters 

suggested that CMS add language to the regulation to explain how health plans recover 

underpayments that they or CMS have identified. One commenter suggested that CMS 

offset identified underpayments against overpayments before recouping any 

overpayments. 

 Response: The purpose of the proposed provisions is to recover overpayments 

identified by CMS and return them to the Medicare Trust Funds. The offset calculation 

used to determine the overpayments will follow the Medicare Part C and Part D payment 

rules, and, as a result, the offset calculation may capture some underpayments. The 

extent to which underpayments will be recognized in the offset calculation to net out an 

overpayment will be limited and will vary depending on the circumstance surrounding 

the overpayment. The purpose of the provisions is not to provide the opportunity for MA 

organizations and Part D sponsors to secure additional payment by submitting additional 

data after the data submission deadlines. As noted in the preamble of the proposed rule, 

MA organizations and Part D sponsors have a period of time after the end of the data 
CMS-1613-FC 924 

collection and coverage years, respectively, to update and supplement the payment data 

submitted throughout the year. In Part C, that period is 13 months, and in the Part D 

context, it is approximately 6 months. We believe that these periods are adequate for MA 

organizations and Part D sponsors to ensure that they have submitted the data necessary 

to substantiate their payments.

 Comment: One commenter expressed concern that MA organizations’ or Part D 

sponsors’ benefit filings, current business dealings, and statutory rights and obligations 

may be affected if the plan’s financial information is rendered uncertain due to an 

overpayment recovery by CMS. 

 Response: While we understand the commenter’s concern that the possibility of 

returning overpayments may introduce some financial uncertainty for MA organizations 

and Part D sponsors, CMS has an obligation to ensure that payments to MA organizations 

and Part D sponsors are made consistent with the applicable program requirements. 

Thus, we believe that CMS has the authority to recover, and MA organizations and Part 

D sponsors have an obligation to return, identified overpayments. 

 Comment: A few commenters stated that overpayment recoupments from Part D 

sponsors may negatively impact beneficiaries. Commenters urged CMS to ensure that 

any adjustments made to recoup CMS overpayments from Part D sponsors continue to be 

appropriate to ensure that beneficiaries are not financially negatively impacted. 

 Response: We understand the commenters’ concerns that overpayment 

recoupments not negatively affect beneficiaries. However, CMS has previously issued 

regulations that address this issue. Section 423.466(a) of the regulations states that 

whenever a Part D sponsor receives information that necessitates a retroactive claims 
CMS-1613-FC 925 

adjustment, the Part D sponsor must process the adjustment and issue refunds or recovery 

notices within 45 days of the Part D sponsor’s receipt of complete information regarding 

the claims adjustment. In addition, § 423.466(b) states that Medicare Part D sponsors 

must coordinate benefits with State Pharmaceutical Assistance Programs (SPAPs), other 

entities providing prescription drug coverage, beneficiaries, and other third party entities 

paying on the beneficiaries’ behalf for a period not to exceed 3 years from the date on 

which the prescription for a covered Part D drug was filled. 

 Comment: A few commenters expressed concern about the burden imposed on 

providers. Commenters stated that the overpayment recovery process might cause 

financial consequences or penalties for physicians. Commenters expressed concern over 

the burden of related documentation requests. One commenter urged CMS to ensure that 

any associated provider record requests are limited to the specific instance of erroneous 

data under dispute. The commenter suggested that the plan requesting medical records be 

required to provide documentation on the scope of the erroneous data dispute identified 

by CMS and to limit the data request to the specific data issue identified. 

 Response: These commenters appear to be focused on Part C and risk adjustment 

data. We recognize the commenters’ concerns that recoupment of overpayments may 

entail negative financial consequences for physicians. However, it is CMS’ 

responsibility to make payments to MA organizations and Part D sponsors that are 

consistent with the applicable statutes and regulations; this includes the authority to 

recover overpayments and return them to the Medicare Trust Funds. In addition, CMS is 

not allowed to interfere with the financial arrangements between MA organizations and 

their providers. Therefore, CMS is limited in how we can respond to the commenters’ 
CMS-1613-FC 926 

concern. While we recognize there may be some burden relating to the request for 

documentation, it is important for the integrity of the payment process that overpayments 

are properly identified and documented. 

 Comment: One commenter suggested that any Medical Loss Ratio (MLR) 

remittances paid by the plan to CMS should be considered when computing the 

overpayment recovery amount. For example, if a plan had an MLR below the statutory 

minimum and paid an MLR remittance to CMS, and then, at a later date, it was 

determined that the plan was overpaid for that year, the remittance would reduce the 

overpayment recovery amount. 

 Response: From a conceptual perspective, we believe that the impact or 

relationship between an MLR remittance and the overpayment offset amount is an issue 

about the payment calculation methodology and MLR administration, rather than a 

procedural issue. This regulation narrowly specifies a procedural mechanism for, first, 

recovering overpayments from MA organizations and Part D sponsors and, second, 

providing an appeals process related to the accuracy and correctness of the payment data 

underlying the offset. Therefore, we believe that these comments relating to MLR 

remittances are out of the scope of the provisions of the proposed rule. 

 Comment: One commenter expressed concern that there might be a large 

number of complications in situations where a contract has been terminated, or where 

there have been mergers or acquisitions involving the sponsor, or where other significant 

plan changes have occurred. The commenter requested guidance from CMS on the 

process in these situations. The commenter also asked that CMS be flexible in these 

scenarios. 
CMS-1613-FC 927 

 Response: We hold entities contracting with CMS responsible for returning 

overpayments, regardless of their merger and acquisition history. 

 After consideration of the public comments we received, we are finalizing the 

proposal to establish a process for recovering CMS-identified overpayments associated 

with erroneous payment data submitted by MA organizations and Part D sponsors. 

1. Definitions of “Payment Data” and “Applicable Reconciliation Date” 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41060), we proposed to define 

“payment data” to mean data controlled and submitted to CMS by an MA organization or 

a Part D sponsor that is used for payment purposes (proposed §§ 422.330(a) and 

423.352(a)). The MA organization or Part D sponsor is responsible for the accuracy of 

such data. MA organizations and Part D sponsors are currently required to attest to the 

accuracy, completeness, and truthfulness of such data under § 422.504(l) and 

§ 423.505(k), respectively. For Medicare Part C, the data submitted by the MA 

organization to CMS include, for example, enrollment data and risk adjustment data 

specified at § 422.310. For Medicare Part D, data submitted by the Part D sponsor to 

CMS include enrollment data and data submitted under § 423.329(b)(3) (risk adjustment 

data), § 423.336(c)(1) (cost data), § 423.343 (data for retroactive adjustments and 

reconciliations), and data provided for purposes of supporting allowable reinsurance costs 

and allowable risk corridor costs as defined in § 423.308, which include data submitted to 

CMS regarding direct or indirect remuneration (DIR). 

 There are additional payment-related data that CMS uses to calculate Part C and 

Part D payments that are submitted directly to CMS by other entities, such as SSA. 

These entities are the authoritative source for data that they submit to CMS, and MA 
CMS-1613-FC 928 

organizations and Part D sponsors are not the official source for data submitted by these 

other entities. For example, the SSA is the authoritative source for date of death of 

Medicare beneficiaries. An MA organization or a Part D sponsor generally does not 

submit a beneficiary’s date of death directly to CMS’ systems; such data come from the 

SSA data feed. When the SSA submits corrected data regarding a beneficiary’s date of 

death to CMS, CMS’ systems recalculate the payments made to the plan for that 

beneficiary and correct any incorrect payment through a routine retroactive payment 

adjustment process. Therefore, we proposed to define “payment data” as only data that 

the MA organization or Part D sponsor controls and submits to CMS for payment 

purposes. 

 For MA organizations under Part C, in the CY 2015 OPPS/ASC proposed rule 

(79 FR 41060), we proposed that the “applicable reconciliation date” occurs on the date 

of the annual final risk adjustment data submission deadline set under § 422.310(g)(2)(ii). 

While changes in enrollment data are updated every month by CMS’ systems during the 

payment year (for example, disenrollments from MA organizations and dates of death 

from the SSA), risk adjustment data are not finalized until the final risk adjustment data 

submission deadline. Prior to that deadline, CMS allows the MA organization to 

continue submitting corrected and new diagnosis data. However, once the final risk 

adjustment data submission deadline has passed, CMS uses this final diagnosis data to 

calculate the final risk scores for the payment year. CMS then uses those final risk scores 

for payment reconciliation. By proposing that the applicable reconciliation date occurs 

on the risk adjustment data submission deadline, we intend to signal that the normal 

payment process for the year has been concluded. 
CMS-1613-FC 929 

 For Part D sponsors, in the CY 2015 OPPS/ASC proposed rule (79 FR 41060), 

we proposed that the “applicable reconciliation date” is the later of either: the annual 

deadline for submitting PDE data for the annual Part D payment reconciliations 

referenced in § 423.343(c) and (d); or the annual deadline for submitting DIR data. The 

annual deadline for submitting PDE data is the last Federal business day prior to June 30 

of the year following the coverage year being reconciled. The annual deadline for 

submitting DIR data is announced annually through subregulatory guidance and generally 

occurs around the last business day in June of the year following the coverage year being 

reconciled. We selected these events to define the Part D applicable reconciliation date 

because data must be submitted by these deadlines in order to be used for the purposes of 

the final Part D payment reconciliation. 

 We noted in the proposed rule that the proposed definitions of “applicable 

reconciliation date” are nearly identical to the definitions of “applicable reconciliation” at 

existing §§ 422.326 and 423.360. Similarly, the proposed definitions of “payment data” 

are nearly identical to the definitions of “funds” at existing §§ 422.326 and 423.360. 

Although proposed §§ 422.330 and 423.352 addressed overpayments to MA 

organizations and Part D sponsors that have been identified by CMS, whereas §§ 422.326 

and 423.360 address overpayments that are identified by the MA organization or Part D 

sponsor, we stated in the proposed rule that we do not believe that the issue of which 

entity (CMS or the plan) identified the overpayment is relevant to the question of when 

the overpayment occurred or what information is at issue. Both the regulations regarding 

overpayments identified by MA organizations and Part D sponsors finalized earlier this 

year in the final rule entitled “Medicare Program; Contract Year 2015 Policy and 
CMS-1613-FC 930 

Technical Changes to the Medicare Advantage and the Medicare Prescription Drug 

Benefit Programs” and the regulations we proposed in the CY 2015 OPPS/ASC proposed 

rule to establish offset and appeal procedures for CMS-identified overpayments were 

intended to address circumstances in which an overpayment has been identified; 

therefore, we believe it would be appropriate and avoid unnecessary confusion to use 

similar definitions. 

 Comment: A few commenters requested that CMS clarify the definition of 

“payment data.” Specifically, commenters stated that the definition of “payment data” in 

the proposed rule is supposed to correspond to the definition of “funds” at §§ 422.326 

and 423.360. However, the commenters pointed out that, in the proposed rule, CMS 

defined “payment data” as “data controlled and submitted by” an MA organization or a 

Part D sponsor. Commenters noted that definition of “funds” omits the word 

“controlled.” Commenters expressed concern over the inclusion of the word “controlled” 

in the definition of “payment data” because MA organizations and Part D sponsors do not 

control all relevant data. Commenters requested that CMS revise the definition of 

“payment data” to conform to the definition of “funds” at §§ 422.326 and 423.360. 

 Response: We agree with the commenters. Our intent was to align the definitions 

of “payment data” with the definition of “funds” at §§ 422.326 and 423.360 

(79 FR 41060). Therefore, we are removing the word “controlled” from the regulatory 

definition of “payment data” in this final rule. 

 Comment: One commenter requested that CMS define “erroneous claims data” 

as used in the proposed rule. 
CMS-1613-FC 931 

 Response: We did not use the phrase “erroneous claims data” in the preamble 

language or regulation text of the proposed rule. In the preamble of the proposed rule, we 

used the phrase “erroneous payment data” to mean “...payment data...that should not 

have been submitted—either because the data submitted are inaccurate or because the 

data are inconsistent with Part C and Part D requirements” (79 FR 41058). We are 

adding the definition of “erroneous payment data” to the final regulation text at 

§§ 422.330(a) and 423.352(a). 

 Comment: A few commenters noted that, in the preamble of the proposed rule, 

CMS referenced specific provisions of §§ 422.504 and 423.505 of the regulations and 

stated that MA organizations and Part D sponsors are required to certify the accuracy, 

completeness, and truthfulness of their payment data. Commenters were concerned that 

CMS did not include the phrase “based on best knowledge, information, and belief” that 

is included under §§ 422.504 and 423.505. Commenters requested that CMS revise the 

preamble language of the final rule to acknowledge the “best knowledge, information, 

and belief” standard articulated at §§ 422.504 and 423.505 and to remove any incorrect 

references suggesting that MA organizations (or Part D sponsors) bear unqualified 

responsibility for data accuracy. 

 Response: We did not intentionally exclude “based on best knowledge, 

information, and belief” from the preamble discussion. We acknowledge that MA 

organizations and Part D sponsors certify, based on best knowledge, information, and 

belief, the accuracy, completeness, and truthfulness of all data related to payment as 

stated at §§ 422.504 and 423.505. After a review of the preamble language, we do not 

believe that additional edits are necessary as a result of the omission. 
CMS-1613-FC 932 

 After consideration of the public comments we received, we are finalizing the 

proposed regulatory definition of “payment data,” with a modification to remove the 

reference to “controlled,” as described earlier. We also are adding a definition of 

“erroneous payment data” in the final regulation text at §§ 422.330(a) and 423.352(a). 

2. Request for Corrections of Payment Data 

 Because MA organizations and Part D sponsors are required to submit accurate 

payment data, we have the authority to request that erroneous data be corrected when 

errors are discovered. In the CY 2015 OPPS/ASC proposed rule (79 FR 41060), we 

proposed a mechanism for recouping overpayments in situations where CMS has 

identified an error in payment data, the MA organization or Part D sponsor has not 

corrected that erroneous data upon request, and CMS determines that, as a result of the 

erroneous payment data, an overpayment was made. Under proposed §§ 422.330(b) and 

423.352(b), we proposed that CMS would make the request through a data correction 

notice that would contain or make reference to the specific payment data identified by 

CMS as erroneous, the reason why CMS believes that the payment data are erroneous, 

and the timeframe in which the MA organization or Part D sponsor must make 

corrections to the data. This proposal was not intended to limit our authority to request 

correction of erroneous payment data to only those narrow circumstances in which an 

overpayment has already been identified. CMS may identify payment data that need to 

be corrected through a variety of different mechanisms, including, but not limited to, 

CMS analyses of payment data, CMS audits, or communications with the MA 

organization or Part D sponsor. 
CMS-1613-FC 933 

 We understand that, at some point, it would no longer be practical for MA 

organizations and Part D sponsors to correct payment data for coverage years that have 

long since been reconciled. Therefore, consistent with the look-back period for 

overpayments that are identified by the MA organization or Part D sponsor found at 

existing §§ 422.326 and 423.360, in the CY 2015 OPPS/ASC proposed rule 

(79 FR 41060), we proposed that CMS would request corrections to erroneous payment 

data only if the erroneous data affects payments for one or more of the 6 most recently 

completed payment years. That would mean, for example, that after the initial 

reconciliation takes place for Part D payments under § 423.343 (that is, the determination 

of the final amount of direct subsidy described in § 423.329(a)(1), final reinsurance 

payments described in § 423.329(c), the final amount of the low-income subsidy 

described in § 423.329(d), or final risk corridor payments as described in § 423.336) for 

contract year 2015 (which would take place in 2016), CMS may request corrections to 

erroneous payment data for contract years 2010 through 2015. We proposed to use the 

same 6-year look-back period as applies to plan-identified overpayments under existing 

§§ 422.326 and 423.360 because both overpayment policies are intended to address 

circumstances in which an overpayment has been identified, and we do not believe that 

the issue of which entity (CMS or the plan) identified the overpayment is relevant to the 

length of the look-back period. 

 We proposed that the timeframes for correcting payment data would be the same 

as under our current practice for correcting payment data described in existing procedural 

rules and subregulatory guidance and would be explained in additional procedural rules 

and subregulatory guidance, as necessary. For example, current Part D guidance states 
CMS-1613-FC 934 

that corrections to PDE data must be completed within 90 days from discovery of the 

issue. We refer readers to the Health Plan Management System (HPMS) memorandum 

entitled “Revision to Previous Guidance Titled ‘Timely Submission of Prescription Drug 

Event (PDE) Records and Resolution of Rejected PDEs,’” dated October 6, 2011. 

 Comment: A few commenters believed that the proposed rule on CMS-identified 

overpayments should only apply to actual overpayments, not merely the submission of 

incorrect payment data. These commenters were concerned that CMS incorrectly 

assumes that erroneous payment data equates to an overpayment. 

 Response: We understand that correcting erroneous payment data submitted by 

an MA organization or a Part D sponsor and rerunning the payment process to determine 

the payment that should have been made may reflect an underpayment, overpayment, or 

no change when comparing the two results. Consistent with §§ 422.504(l) and 

423.505(k), MA organizations and Part D sponsors must submit accurate payment data 

(based on best knowledge, information, and belief). We clarify that CMS may make the 

request to correct erroneous payment data, regardless of whether or not that data would 

result in an overpayment under our existing and inherent authority related to 

administration of the payment processes; this rule does not change or limit that authority. 

Rather, this rule provides authority to initiate an offset to recover overpayments when 

erroneous payment data have been submitted, the erroneous payment data resulted in an 

overpayment, and the erroneous payment data were not subsequently corrected upon 

request from CMS. The intent of the provisions at §§ 422.330 and 423.352 is to provide 

a process whereby CMS-identified overpayments can be recovered; this process begins 

with CMS’ request for correction of the erroneous payment data that caused the 
CMS-1613-FC 935 

overpayment to occur. We will establish the existence and extent of an overpayment by 

applying the Part C and Part D payment rules and formulas applicable to the payment 

year in question. 

 Comment: Commenters requested that CMS clarify that the overpayment 

recoupment process would apply only to contract years for which CMS has completed 

final reconciliation. Commenters noted that CMS did not link the proposed regulatory 

definition of “applicable reconciliation date” to other subsections of the proposed 

regulations. The commenters stated that based on the proposed regulations, if CMS 

identifies an error in payment data and the payment error identified affects payments for 

any of the 6 most recently completed payment years, CMS may send a data correction 

notice to the MA organization or the Part D sponsor. However, CMS does not define 

“recently completed” or correlate the definition with the phrase “applicable reconciliation 

date.” Commenters requested that CMS clarify its intention to recoup overpayments only 

following the “applicable reconciliation date.” 

 Response: Our determination that an overpayment has occurred will be made 

after the applicable reconciliation date, as defined in this final rule, for the contract year 

in which the erroneous payment data were identified. In addition, the payment error must 

affect payment in one of the 6 most recently completed payment years. For example, 

after the initial reconciliation takes place for Part D payments under § 423.343 (that is, 

the determination of the final amount of direct subsidy described in § 423.329(a)(1), final 

reinsurance payments described in § 423.329(c), the final amount of the low-income 

subsidy described in § 423.329(d), or final risk corridor payments as described in 
CMS-1613-FC 936 

§ 423.336) for contract year 2015 (which would take place in 2016), the 6 most recently 

completed payment years would be 2010 through 2015. 

 Consistent with our statements above regarding our existing and inherent 

authority related to administration of the payment processes to make the request to 

correct erroneous payment data, regardless of whether or not that data would result in an 

overpayment, we believe we have authority to request the correction of erroneous data at 

any time. Accordingly, we are moving the language that limits CMS to the 6-year lookback period at §§ 422.330(b) and 423.352(b), “Request to correct payment data,” and 

associating it with §§ 422.330(c) and 423.352(c), “Payment offset,” in order to clarify 

that, while we may request the correction of erroneous payment data at any time, we will 

only use the payment offset procedures established in this rule to recover overpayments 

in the 6 most recently completed payment years. 

 Therefore, we are modifying proposed §§ 422.330(c) and 423.352(c) to indicate 

that when the MA organization or Part D sponsor fails to correct payment data in 

response to a request under §§ 422.330(b) and 423.352(b), CMS will conduct a payment 

offset against payments made to the MA organization or Part D sponsor if: (1) the 

payment error affects payments for any of the 6 most recently completed payment years; 

and (2) the payment error for a particular payment year is identified after the applicable 

reconciliation date for that payment year. 

 Comment: One commenter requested that CMS institute a single, uniform 

timeframe to correct any payment data errors before CMS initiates payment-offset 

procedures. The commenter believed that the different time periods associated with the 

resubmission or correction of various data points can lead to unnecessary confusion and 
CMS-1613-FC 937 

the potential for missed deadlines. This commenter recommended that CMS create a 

uniform timeframe of at least 120 days to submit data corrections. The commenter 

expressed concern that the process for collecting and verifying corrected data will involve 

numerous steps and that the process also likely will involve third parties, potentially 

including vendors no longer under contract, which would add additional steps and time to 

the process of collecting and validating the data. The commenter stated that a turnaround 

time of less than 120 days creates a risk for not being able to collect the payment data and 

conduct a diligent and fulsome analysis before responding to CMS. 

 Response: We understand that it makes sense to have a uniform timeframe for 

submitting corrected payment data in response to a CMS notification of CMS-identified 

erroneous payment data. We also understand that different timeframes for submitting 

corrected data could lead to confusion and missed deadlines. However, we disagree with 

the commenter that 120 days is necessary to correct all types of payment data. As we 

cited in the preamble of the proposed rule, current Part D guidance in the HPMS 

memorandum dated October 6, 2011, states that corrections to PDE data must be 

completed within 90 days from discovery of the issue. We have no reason to believe that 

the 90-day timeframe for correcting Part D data under this provision is inadequate. 

Therefore, we will not be making changes to this policy at this time. Timeframes for 

correcting Part C payment data will be explained in additional procedural rules and 

subregulatory guidance. 

 Comment: One commenter requested clarification regarding the submission of 

payment data corrections between the final risk adjustment submission deadline and 

when a payment reconciliation or payment rerun is conducted. 
CMS-1613-FC 938 

 Response: This commenter’s request appears to be directed at Part C and risk 

adjustment data. An overpayment may exist once applicable reconciliation has occurred, 

which is the final deadline for the submission of risk adjustment data for Part C. MA 

organizations should submit data corrections to correct an overpayment the MA 

organization has identified as soon as the MA organization recognizes the overpayment 

has occurred (§ 422.326). In the context of that rule and the process adopted under this 

rule, the operational action of conducting a risk adjustment payment rerun will be 

implemented according to our policy and schedules. The submission of data corrections 

should not be delayed relative to the timing of a risk adjustment rerun. If the data 

correction is not submitted, and we have identified the erroneous risk adjustment 

payment data, we may move forward with a payment offset. We agree that additional 

information on this issue would be helpful to MA organizations and will be providing 

further guidance as needed. 

 Comment: A few commenters noted that, in the proposed rule, CMS stated that if 

the MA organization or Part D sponsor submits corrected payment data in response to 

CMS’ request, CMS will perform a reconciliation in the payment system using the 

established payment adjustment process. The commenters requested that CMS clarify 

that the referenced reconciliation is in reference to the established reopening of a 

payment adjustment reconciliation process. The commenter stated that the current 

reopening process is well-established and equitable, balancing the rights and obligations 

of Part D sponsors and CMS, and, therefore, there is an appropriate adjustment of both 

overpayments and underpayments to the Part D sponsor. The commenters urged CMS to 

invest additional operational resources to strengthen the existing reopening process.
CMS-1613-FC 939 

 Response: If an MA organization or a Part D sponsor submits corrected payment 

data, as requested by CMS, we will recoup any overpayment amounts by performing a 

payment reconciliation according to our payment processing policies and schedules. We 

appreciate the commenter’s suggestion to invest additional operational resources to 

strengthen the existing reopening process, and will take this suggestion into 

consideration. 

 Comment: Several commenters expressed concern regarding the length of the 

6-year look-back period. Some of the commenters indicated the length of the look-back 

period would place undue burden on plans and providers. Another commenter stated that 

a 6-year timeframe is typically reserved for fraud and abuse processes and is not 

considered appropriate for routine operational processes. A few commenters 

recommended that the look-back period be 3 years. 

 Response: We believe that a 6-year look-back period is an appropriate timeframe 

for identifying overpayments. As stated in the proposed rule, the 6-year look-back period 

is consistent with the look-back period established for overpayments that are identified by 

MA organizations or Part D sponsors (§§ 422.326 and 423.360). Also as stated in the 

proposed rule, we proposed to use the same 6-year look-back period as applies to 

plan-identified overpayments because both overpayment policies are intended to address 

circumstances in which an overpayment has occurred and has been identified. We do not 

believe that the issue of which entity (CMS or the plan) identified the overpayment is 

relevant to the length of the look-back period. 

 Comment: A few commenters recommended that the look-back period be 

implemented prospectively. One commenter stated that a 6-year look-back period could 
CMS-1613-FC 940 

affect many distributed risk arrangements between plans and providers that cross multiple 

years and have already been reconciled. Another commenter asked that CMS phase in 

the look-back period, beginning with a 1-year look-back period and each year adding an 

additional year to the look-back period, until 2020 when a 6-year look-back could be 

applied. 

 Response: We disagree with the commenters' recommendations to implement the 

look-back period prospectively. We proposed 6 years as the length of the look-back 

period because we believe that this timeframe best balances the government’s interest in 

having overpayments returned with entities’ interest in finality. We note that the statute 

of limitations related to the False Claims Act is 6 years from the date of the violation or 

3 years from the date the relevant government official learns of the situation, but in no 

case more than 10 years from the date of the violation. Furthermore, under § 422.504(d) 

and § 423.505(d), MA organizations and Part D sponsors are required to maintain, for 

10 years books, records, documents, and other evidence of accounting procedures and 

practices related to costs, financial statements, cash flow, among others.

 After consideration of the public comments we received, we are finalizing 

proposed §§ 422.330(b) and 423.352(b) and proposed §§ 422.330(c) and 423.352(c) with 

modifications. We are moving the language regarding the 6-year look-back period from 

proposed §§ 422.330(b) and 423.352(b) to §§ 422.330(c)(1) and 423.352(c)(1) in order to 

indicate that if the MA organization or Part D sponsor fails to correct payment data, CMS 

will conduct a payment offset if the payment error affects payments for any of the 6 most 

recently completed payment years and the payment error for a particular payment year is 

identified after the applicable reconciliation date for that payment year. 
CMS-1613-FC 941 

3. Payment Offset 

 If the MA organization or Part D sponsor submits corrected payment data in 

response to CMS’ request pursuant to proposed § 422.330(b) and § 423.352(b), CMS will 

perform a reconciliation in the payment system using the established payment adjustment 

process. CMS’ systems will conduct a payment reconciliation and determine the 

associated payment adjustment based on the corrected data using established payment 

policies and procedures. However, if the MA organization or Part D sponsor fails to 

correct the erroneous payment data, in the CY 2015 OPPS/ASC proposed rule 

(79 FR 41061), we proposed that CMS would conduct a payment offset from plan 

payments (proposed §§ 422.330(c) and 423.352(c)). 

a. Offset Amount 

 Because the data would not have been corrected in the routine payment process, 

in the CY 2015 OPPS/ASC proposed rule (79 FR 41061 through 41062), we proposed, to 

be codified at §§ 422.330(c) and 423.352(c), that CMS determine the overpayment offset 

amount by applying a payment calculation algorithm to simulate the payment 

calculations currently applied by CMS to produce the routine Part C and Part D 

payments. The payment calculation algorithm would apply the Part C or Part D payment 

rules for the applicable year to calculate what the correct payment should have been using 

corrected payment data. CMS currently simulates payment error amounts for a variety of 

different purposes, including for the annual Part C and Part D error rate reporting 

(required by the Improper Payment Elimination and Recovery Act (IPERA) and subject 

to the annual agency’s Chief Financial Officer’s (CFO) audit and reported in the annual 

Agency Financial Report (AFR)), RADV payment error estimation (subject to public 
CMS-1613-FC 942 

comment), and the Part C and Part D monthly payment validation required by CFO 

auditors. These payment error calculations are all conducted outside of the suite of 

payment systems that CMS uses to make routine payments to MA organizations and Part 

D sponsors. In the proposed rule, we stated that we believe that these calculations are 

reliable and an accurate reflection of what the routine payment systems would calculate 

using the corrected data if the MA organization or Part D sponsor had submitted 

corrected payment data. 

 The actual process for calculating the overpayment will be different for Part C 

and Part D because of the different payment rules for the two programs. The Part C and 

Part D programs are both subject to risk adjustment payment error resulting from invalid 

diagnoses and to payment error due to inaccurate enrollment data. The Part D program is 

further subject to payment reconciliation error resulting from errors in PDE data and/or 

DIR data. The two programs also are subject to different schedules with regard to the 

applicable reconciliation date and subsequent payment reconciliation processes. 

 When new payment-related data are submitted to CMS payment systems, there is 

generally a change to the correct amount of payment once CMS conducts a payment 

reconciliation using the established payment adjustment process. However, it is not 

sufficient for the plan to just submit the new corrected risk adjustment, PDE, or DIR data 

to CMS systems because data submission does not automatically trigger a system 

reconciliation and payment adjustment. A change in payment will only occur if a 

payment reconciliation is conducted. If the applicable reconciliation has already been 

performed, CMS, at its discretion, may conduct risk adjustment reruns or Part D 

reopenings to ensure that payments also are corrected to reflect the newly corrected data. 
CMS-1613-FC 943 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41061), we proposed that, 

under the payment calculation algorithm, CMS would calculate the payment to the MA 

organization or Part D sponsor with and without the corrected data as of a specified date. 

The difference in the two amounts--that is, the amount by which the payments already 

made to the MA organization or Part D sponsor exceed the payments that should have 

been made as reflected in the calculation using the corrected data--would be the payment 

recovery or offset amount. We provided the following examples of how the offset 

amount would be calculated for Part C and Part D overpayments relative to two different 

types of payment data errors to illustrate our proposal: 

● Part C Offset Calculation. The example for Part C relates to incorrect 

diagnosis data identified by CMS in the process of calculating the national payment error 

estimate. A beneficiary’s final risk score and annual payment will be recalculated outside 

of the routine payment system without the invalid diagnoses but using all the other data 

used in the routine payment system. The year-appropriate CMS-HCC risk adjustment 

methodology will be used to produce the revised risk scores. The difference in payment 

for the beneficiary pre- and post- change in the invalid diagnosis will be the offset 

amount. This offset amount--generated using the same process for each beneficiary for 

whom erroneous payment data are identified by CMS--will be summed across all 

beneficiaries. 

● Part D Offset Calculation. The example for Part D relates to the situation in 

which a Part D plan sponsor has submitted PDE records for a beneficiary that include 

invalid National Drug Codes (NDCs). For payment purposes, PDEs are required to 

reference valid NDCs. In order to calculate the Part D payment offset amount, all of the 
CMS-1613-FC 944 

beneficiary’s entire post-reconciliation PDE data will be pulled, and the incorrect PDEs 

will be deleted or adjusted. The programmed calculation logic will keep track of a 

variety of payment-related information; for example, a beneficiary’s benefit phase, gross 

covered drug cost, true out-of-pocket (TrOOP) costs, low-income cost-sharing subsidies 

(if any), and plan payment as the beneficiary progresses through the Part D coverage 

benefit. The calculation algorithm will tap into a variety of different data sets, such as 

health plan benefit parameters, beneficiary low-income subsidy status, and standard 

low-income cost-sharing subsidy parameters. Reports will then be produced on Gross 

Covered Drug Cost (GCDC) and low-income cost-sharing subsidy payment differentials. 

These payment differential amounts will be incorporated into final reinsurance, lowincome cost-sharing subsidy, and risk sharing summary totals for a contract. DIR 

adjustments will be factored into these calculations to arrive at the related payment offset 

amount to be applied at the contract level. The difference in reinsurance, low-income 

cost-sharing subsidy, and risk sharing dollars with and without the correction to the PDEs 

will constitute the payment offset related to the beneficiaries with the incorrect PDEs. 

 If the erroneous payment data in question is subsequently corrected through the 

CMS payment system, the offset amount will be reversed, and the payment to the MA 

organization or Part D sponsor will be updated through the routine payment process. 

However, if the data in the CMS system are not corrected and CMS conducts a 

reconciliation or reopening for the applicable payment year after the offset has been 

determined, the data will not be properly synchronized, and it is possible that the 

resulting payment adjustments could be incorrect. In order to resolve this problem, CMS 

may reverse the original offset and recalculate the offset using the more recent data used 
CMS-1613-FC 945 

in the most recent payment reconciliation or reopening. The new offset amount will 

replace the previous offset amount, and CMS would need to evaluate and act on the 

resulting overpayment or underpayment. 

 Comment: A few commenters expressed concern about the payment calculation 

algorithm that will be used to determine the overpayment amount that should be 

recouped. Other commenters stated that they could not understand why CMS cannot 

simply correct the data in the payment systems of record and “run a reopening.” 

Commenters requested that CMS clarify why the traditional reopening process cannot 

adequately address the types of payment issues outlined in the proposed rule. The 

commenters noted that CMS has used its existing authority in the past to remove PDEs it 

believed should not have been submitted. One commenter stated that this proposal 

creates an environment where the sponsor’s records of the PDEs and the TrOOP 

accumulators would be out of sync with CMS systems timing and would pose challenges 

during the reconciliations of PDEs and payment data, as well as readjudication of 

beneficiary claims, and as a result, recommended that CMS withdraw the proposal and 

assess whether there are other current less onerous mechanisms that can be adopted to 

better meet its goals. 

 Response: For the Part C program and the Part D program, we believe that the 

traditional risk adjustment rerun and other reopening processes are the best mechanisms 

to recoup overpayments. We believe that these processes will be adequate to recoup 

overpayments in most cases because we assume that the majority of MA organizations 

and Part D sponsors will adjust their payment data upon request by CMS. However, as 

we stated in the preamble to our proposed rule, if an MA organization or Part D sponsor 
CMS-1613-FC 946 

fails to correct erroneous payment data, the established risk adjustment rerun and 

reopening processes are inadequate. Because the data would not have been corrected in 

the CMS payment system, we will have to determine the overpayment amount by 

applying a payment calculation algorithm to simulate the payment calculations currently 

applied by CMS systems to produce routine Part C and Part D payments. It is true, as 

one commenter stated, that, in the Part D program, CMS has used existing authority to 

remove PDE data that should not have been submitted. We use that authority in very 

limited circumstances when the erroneous data is PDE data. Part D payment data also 

includes, however, direct and indirect remuneration (DIR) data, for which we do not have 

a means to “correct” erroneous data. Likewise, we do not have a process in place to 

“correct” erroneous data in the Part C program. In addition, because we only expect to 

conduct these types of data corrections in a limited set of circumstances, and it would 

require significant resources to make the payment system changes to support such 

corrections, CMS is prepared to use a more economical process based on running a 

payment calculation algorithm to recover the improper payments.

 As stated in the proposed rule, CMS already simulates Part C and Part D 

payments outside of the core payment systems to accurately calculate payments and 

payment errors for a variety of different purposes. Therefore, we believe that this 

procedural mechanism is the least onerous mechanism that can be adopted to recoup 

overpayments, return them to the Medicare Trust Funds, and ensure that payments are 

made consistent with the payment framework established in statute. Therefore, we are 

not withdrawing the proposal, as one commenter recommended. 
CMS-1613-FC 947 

 Comment: One commenter stated that CMS should not implement any type of 

extrapolation methodology when calculating the payment offset for MA organizations or 

Part D sponsors. The commenter believed that CMS may seek to extrapolate the results 

of erroneous payment data to all beneficiaries enrolled under a contract if the MA 

organization or Part D sponsor does not submit corrected data as requested by CMS. The 

commenter believed that the proposed provision could be interpreted to mean that CMS 

may apply the offset amount to all beneficiaries, even though not all beneficiaries may 

have been affected by the incorrect data. The commenter opined that it would not be 

appropriate to extrapolate payment-offset calculations without providing MA 

organizations and Part D sponsors with notice or an explanation of the methodologies 

that CMS would employ. Commenters recommended that CMS expressly state that 

extrapolation will not be involved in payment recoupment under the CMS-identified 

overpayment regulations, and the payment offsets should be applied based on payment 

errors that have been determined for specific beneficiaries. 

 Response: CMS may identify erroneous payment data submitted by MA 

organizations or Part D sponsors through a variety of different means. In the proposed 

rule, we discussed the procedures that CMS would undertake when erroneous payment 

data are identified, but did not address the means by which CMS would identify 

erroneous payment data. Therefore, this comment is outside the scope of the proposed 

rule. 

 Comment: Several commenters raised the issue that, in cases where a 

CMS-identified overpayment is a result of errors in diagnosis data submitted by MA 

organizations, CMS’ determination of the overpayment amount should take into account 
CMS-1613-FC 948 

the fact that the CMS-HCC risk adjustment model used to risk-adjust payments to MA 

organizations is calibrated on diagnoses from Medicare fee-for-service claims not MA 

organizations’ claims. Commenters referred to this as the “data inconsistency 

issue.” Specifically, commenters noted that CMS has recognized, in the contract-level 

RADV context, that individual errors in risk adjustment data cannot be equated with 

overpayments without first accounting for the error rate in the fee-for-service (“FFS”) 

claims data. Commenters also stated that CMS has acknowledged when calculating 

overpayments based on medical record review for RADV audits that it must “account for 

the fact that the documentation standard used in RADV audits to determine a contract’s 

payment error (medical records) is different from the documentation standard used to 

develop the Part C risk-adjustment model (FFS claims).” Further, commenters noted 

that, to address this problem, CMS implemented a “FFS Adjuster” that offsets the 

payment recovery amount to account for FFS and MA program differences in 

documentation standards. These commenters believed that CMS’ application of the “FFS 

Adjuster” in the RADV context does fulfill the actuarial equivalence requirement under 

the risk adjustment provisions in the Act, and failure to maintain logical consistency by 

applying this adjuster in the context of the CMS-identified overpayments addressed by 

this rule would be contrary to the actuarial standard in statute. 

 Response: We understand from these comments that commenters are specifically 

recommending that any risk adjustment payment recovery amounts be adjusted to reflect 

medical record coding documentation differentials between FFS providers and MA 

organizations. We note that this type of adjustment would not apply to other types of 

data errors, such as those that might be found in PDE data. We further interpret the 
CMS-1613-FC 949 

commenters to be saying that the overpayment amounts should be adjusted downward to 

take the medical record coding documentation differential into account. From a 

conceptual perspective, we believe that the application of a FFS adjuster is a payment 

calculation methodology issue, rather than a procedural issue. Our proposal was 

narrowly tailored to specify a procedure for correcting the inaccurate data that MA 

organizations and Part D sponsors have submitted for payment and providing an appeals 

process. Therefore, we believe that these comments relating to data inconsistency and 

the application of a FFS adjuster to overpayments are outside the scope of the proposed 

provision. 

 After consideration of the public comments we received, we are finalizing our 

proposal, as proposed, without modification. 

b. Payment Offset Notification 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed that CMS 

would provide a payment offset notice to the MA organization or Part D sponsor 

(proposed §§ 422.330(d)(1) through (d)(3) and 423.352(d)(1) through (d)(3)). The notice 

would provide the dollar amount to be offset against a plan’s monthly prospective 

payments and an explanation of how the erroneous data were identified and of the 

calculation of the payment offset amount. Under our proposal, the payment offset notice 

would also explain that, in the event that the MA organization or Part D sponsor 

disagrees with the payment offset, it may request an appeal within 30 days of the issuance 

of the payment offset notice. 

 Comment: A number of commenters requested that CMS provide for an appeals 

process prior to conducting the payment recovery or offset. 
CMS-1613-FC 950 

 Response: We are concerned that if we allow for appeals prior to the offset, we 

are at risk of having an extensive process that inordinately delays the offset and the 

recovery of the overpayment. However, we are willing to engage in a dialogue with 

plans prior to the offset. We anticipate that this dialogue will help to resolve data issues 

prior to implementing the payment offset and recovery. Therefore, we are not making the 

requested changes to the proposed process for payment offset notification. 

 After consideration of the public comments we received, we are finalizing our 

proposal. However, we are making a minor modification to the accompanying regulation 

text at § 422.330(d) and § 423.352(d) to clarify that the payment offset notice will 

include at least the information outlined in the regulation, but may include other 

information relevant to the payment offset. 

4. Appeals Process for MA Organizations and Part D Sponsors 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed an appeals 

process for MA organizations and Part D sponsors with three levels of review, including 

reconsideration (described at proposed §§ 422.330(e)(1) and 423.352(e)(1)), an informal 

hearing (described at proposed §§ 422.330(e)(2) and 423.352(e)(2)), and an 

Administrator review (described at proposed §§ 422.330(e)(3) and 423.352(e)(3)). 

a. Reconsideration 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed that an 

MA organization or Part D sponsor must file its request for reconsideration within 30 

days from the date that CMS issued the payment offset notice to the MA organization or 

the Part D sponsor (proposed §§ 422.330(e)(1)(i) and 423.352(e)(1)(i)). At proposed 

§§ 422.330(e)(1)(ii) and 423.352(e)(1)(ii), we address the information that must be 
CMS-1613-FC 951 

included in the MA organization’s or Part D sponsor’s request for reconsideration. The 

request would have to contain the findings or issues with which the MA organization or 

Part D sponsor disagrees, the reasons for its disagreement, and any additional 

documentary evidence that the MA organization or Part D sponsor wishes to submit in 

support of its position. This additional evidence would have to be submitted with the 

request for reconsideration. Under our proposal, any information submitted after this 

time would be rejected as untimely. 

 Under our proposal, the CMS reconsideration official would review the 

underlying data that were used to determine the amount of the payment offset and any 

additional documentary evidence that the MA organization or Part D sponsor timely 

submitted with its reconsideration request (§§ 422.330(e)(1)(iii) and 423.352(e)(1)(iii)). 

We note that, in some instances, the CMS reconsideration official’s review of the 

underlying data may include review of information identifying or explaining the error in 

the payment data, such as information from the source that identified the erroneous 

payment data. We proposed at §§ 422.330(e)(1)(iv) and 423.352(e)(1)(iv) that the CMS 

reconsideration official would inform the MA organization or Part D sponsor of the 

decision. We proposed at §§ 422.330(e)(1)(v) and 423.352(e)(1)(v) that a 

reconsideration decision would be final and binding unless a timely request for an 

informal hearing is filed by the MA organization or Part D sponsor. 

 Comment: Several commenters stated that a 30-day window to submit an appeal 

request is too short. A few commenters asked that CMS provide at least 60 days from the 

time a data correction notice is issued for Part D sponsors to appeal the data correction 

decision. One commenter suggested a timeframe of 30 days to appeal and an additional 
CMS-1613-FC 952 

60 days for researching the issue and gathering supporting documents necessary for 

consideration. 

 Response: We have considered these concerns and suggestions, and we continue 

to believe that 30 days is sufficient time to file the appeal, particularly because the MA 

organization or Part D sponsor would have received an earlier notification and request to 

correct the erroneous data. 

 After consideration of the public comments we received, we are finalizing our 

proposal without modification. 

b. Informal Hearing 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed that if the 

MA organization or Part D sponsor is dissatisfied with CMS’ reconsideration decision, it 

would be entitled to request an informal hearing (proposed §§ 422.330(e)(2) and 

423.352(e)(2)). As proposed at §§ 422.330(e)(2)(i) and 423.352(e)(2)(i), a request for an 

informal hearing must be made in writing and filed within 30 days of the date of CMS’ 

reconsideration decision. The request must include a copy of CMS’ reconsideration 

decision and must specify the findings or issues in the decision with which the MA 

organization or Part D sponsor disagrees and the reasons for its disagreement (proposed 

§§ 422.330(e)(2)(ii) and 423.352(e)(2)(ii)). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we set forth the 

proposed procedures for conducting the informal hearing at proposed 

§§ 422.330(e)(2)(iii) and 423.352(e)(2)(iii). Under these procedures, CMS would 

provide written notice of the time and place of the informal hearing at least 10 days 

before the scheduled date of the hearing (proposed § 422.330(e)(2)(iii)(A) and 
CMS-1613-FC 953 

§ 423.352(e)(2)(iii)(A)); the informal hearing would be conducted by a CMS hearing 

officer. The hearing officer would be limited to reviewing the record that was before 

CMS when CMS made its reconsideration determination (proposed 

§ 422.330(e)(2)(iii)(B) and § 423.352(e)(2)(iii)(B)). Under our proposal, no new or 

additional documentation or evidence may be submitted at this hearing. At proposed 

§ 422.330(e)(2)(iii)(C) and § 423.352(e)(2)(iii)(C), we proposed that the CMS hearing 

officer would review the record of the proceeding before the CMS reconsideration 

official using the clearly erroneous standard of review. CMS’ reconsideration decision 

would not be reversed unless the MA organization or Part D sponsor establishes that the 

decision was clearly erroneous in light of the evidence in the record before the CMS 

reconsideration official. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), at proposed 

§§ 422.330(e)(2)(iv) and 423.352(e)(2)(iv), we proposed that the CMS hearing officer 

would send a written decision of the informal hearing to the MA organization or Part D 

sponsor explaining the basis for the decision. The CMS hearing officer’s decision would 

be final and binding, unless the decision is reversed or modified by the Administrator 

(proposed §§ 422.330(e)(2)(v) and 423.352(e)(2)(v)). 

 Comment: One commenter recommended that CMS allow plans the opportunity 

to present oral arguments during the informal hearing appeal stage and that written notice 

addressing the time and location of the hearing be provided at least 30 days prior, as 

opposed to the proposed 10 days. 

 Response: As proposed and finalized, this rule will permit MA organizations and 

Part D sponsors, at the informal hearing stage, to present oral arguments regarding 
CMS-1613-FC 954 

whether or not the CMS reconsideration official’s decision was clearly erroneous. At the 

informal hearing, the hearing officer will review, and the parties may discuss, the 

contents of the administrative record, which was before the reconsideration official. We 

understand that 10 days’ notice of the time and place of the hearing may be insufficient 

notice for some MA organizations and Part D sponsors to arrange for travel to the hearing 

location. Therefore, we are accepting the commenters’ suggestion to extend the 

timeframe for CMS to provide written notice of the time and place of the hearing, and are 

extending that timeframe to 30 days before the scheduled date for the informal hearing. 

 Comment: A few commenters stated that with the “clearly erroneous” standard, 

CMS is unfairly placing the burden of proving CMS wrong completely on the MA 

organizations and Part D sponsors. Commenters pointed out that a sponsor may be 

unable--not unwilling--to collect the data required to refute CMS’ assertions. One 

commenter stated that while the burden of proof falls to the sponsors to disprove CMS’ 

claims, there is no explicit requirement that CMS must be able to substantiate its 

concerns regarding data before it triggers the proposed incorrect payment notification 

process. The commenter is concerned that without changes to these standards the 

possibility exists for abuse of the process, putting sponsors on a continual defensive 

cycle. The commenter suggested that CMS be obligated to provide reasonable 

substantiation of its overpayment claim and that the standard for review be that the MA 

organization or Part D sponsor provide reasonable evidence, in light of the available data, 

that the CMS claim is not supportable. 

 Response: The issue of whether or not payment data submitted by an MA 

organization or Part D sponsor are erroneous is a factual issue that is determined by 
CMS-1613-FC 955 

looking at the payment data in relation to the payment framework established in statute 

and regulation, which the MA organizations and Part D sponsors agree to be 

contractually bound by when they sign the agreement with CMS to operate a Medicare 

Advantage and/or a Voluntary Medicare Prescription Drug Plan. Under the clearly 

erroneous standard of review, the hearing officer will only overturn the reconsideration 

official’s decision if that decision, based on the record before the reconsideration official, 

contains plain errors of fact or law. Because the determination of whether or not payment 

data submitted by an MA organization or Part D sponsor are erroneous is a factual one, 

we believe that the clearly erroneous standard is appropriate. The CMS reconsideration 

official reviews the underlying data that were submitted by the MA organization or Part 

D sponsor and any additional documentary evidence timely submitted by the MA 

organization or Part D sponsor, and thus is in the best position to determine the facts 

underlying the determination that erroneous payment data have been submitted. 

Accordingly, the reconsideration official’s decision should only be disturbed in the case 

of a clear error. 

 We believe commenters are concerned that there is no requirement that CMS 

substantiate its claims of an overpayment and that could lead to abuse of the process. To 

the contrary, paragraph (b) of both § 422.330 and § 423.352 imposes a burden and a 

requirement on CMS. Under these provisions, we can request corrections to payment 

data through a notice in which we are obligated to include or make reference to the 

specific data that need to be corrected and the reason why we believe that the data are 

erroneous. “Erroneous payment data,” as stated in the preamble of the proposed rule and 

the text of the regulations being adopted in this final rule, are data that should not have 
CMS-1613-FC 956 

been submitted because the data are either inaccurate or inconsistent with Part C or Part 

D requirements. We will determine payment data to be erroneous based on the 

applicable statutes and regulations. Based on the payment framework established in 

statute and regulation, we will determine whether or not that erroneous data result in an 

overpayment prior to conducting the payment offset. 

 Commenters are concerned that they will be unable--not unwilling--to refute 

CMS’ decision that the submission of erroneous payment data has resulted in an 

overpayment. As we stated in the preamble to our proposed rule, we proposed to 

establish a process for identifying and recouping overpayments to ensure that payments 

are made consistent with the payment framework established by statute. If we determine 

that an overpayment has occurred, the MA organization or Part D sponsor must be able to 

provide evidence to refute the finding that the underlying payment data are erroneous in 

order to succeed on appeal. As stated in the proposed rule at §§ 422.330(f) 

and 423.352(f), the MA organization or Part D sponsor must be able to prove by a 

preponderance of the evidence that our finding that the payment data are erroneous was 

incorrect or otherwise inconsistent with applicable program requirements. Thus, we 

believe that it is reasonable to expect that MA organizations and Part D sponsors provide 

evidence to support how their payment data are correct and consistent with program 

requirements in order for the CMS hearing officer to reverse both an initial determination 

by CMS and a reconsideration decision by the CMS reconsideration official that 

erroneous payment data have been submitted. 

 After consideration of the public comments we received, we are finalizing our 

proposals with respect to the procedures that will apply to a request for an informal 
CMS-1613-FC 957 

hearing, with a modification to provide that we will provide written notice of the time and 

place of the hearing 30 days before the scheduled date, as described above. 

c. Review by Administrator 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41062), we proposed that the 

MA organization or Part D sponsor may request review of the hearing officer’s decision 

by the Administrator within 30 days of issuance of the hearing officer’s decision 

(proposed §§ 422.330(e)(3)(i) and 423.352(e)(3)(i)). The MA organization or Part D 

sponsor may provide written arguments to the Administrator for review. Under proposed 

§§ 422.330(e)(3)(ii) and 423.352(e)(3)(ii), after receiving the request for review, the 

Administrator would have the discretion to elect to review the hearing determination or 

decline to review it. As provided at proposed §§ 422.330(e)(3)(iii) and 423.352(e)(3)(iii), 

if the Administrator declines to review the hearing officer’s decision, the hearing 

officer’s decision would be final and binding. At proposed §§ 422.330(e)(3)(iv) and 

423.352(e)(3)(iv), we proposed that if the Administrator elects to review the hearing 

officer’s decision, the Administrator would review the hearing officer’s decision, as well 

as any other information included in the record of the hearing officer's decision and any 

written arguments submitted by the MA organization or Part D sponsor. The 

Administrator would be able to uphold, reverse, or modify the hearing officer’s decision. 

The Administrator’s determination would be final and binding (proposed 

§§ 422.330(e)(3)(v) and 423.352(e)(3)(v)). 

 We did not receive any public comments on the proposal for review by the 

Administrator and are finalizing this proposal without modification. 
CMS-1613-FC 958 

5. Matters Subject to Appeal and Burden of Proof 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41063), at proposed 

§§ 422.330(f)(1) and (2) and 423.352(f)(1) and (2), we proposed to limit the subjectmatter that an MA organization or Part D sponsor may appeal under this provision and 

establish the burden of proof that the MA organization or Part D sponsor must meet in its 

appeal. Under this provision, an MA organization or a Part D sponsor would be able to 

appeal the notice of payment offset solely on the grounds that CMS’ finding that the MA 

organization’s or Part D sponsor’s payment data were either erroneous or otherwise 

inconsistent with applicable program requirements. The MA organization or Part D 

sponsor would bear the burden of proof by a preponderance of the evidence in 

demonstrating that CMS’ finding was incorrect or inconsistent with applicable program 

requirements. 

 At proposed §§ 422.330(g) and 423.352(g), we proposed that the appeals process 

under paragraph (e) of these sections would apply only to payment offsets described at 

proposed §§ 422.330(c) and 423.352(c). It would not apply to any other CMS payment 

offset process. 

 Comment: One commenter noted that, in the proposed rule, CMS stated that the 

burden of proof is on the MA organization or Part D sponsor to prove that the CMS 

finding was “incorrect or otherwise inconsistent with applicable program requirements.” 

This commenter asked that CMS clarify that plans would not be expected to conform to 

FFS requirements or business models in coding practices. The commenter stated that in 

the past there have been occasions when CMS has relied on the use of FFS requirements 

or customary practices in the absence of specific MA or Part D guidelines. The 
CMS-1613-FC 959 

commenter stated that this creates an unreasonable burden of regulations, rules, manuals, 

notices, and bulletins that must be considered in the process of identifying, reporting, and 

appealing matters of data accuracy and potential overpayment. In addition, the 

commenter believed that this practice does not address the fact that an error may have 

been solely caused by provider error, over which a plan has no control, and therefore 

places an unreasonable burden on the plan. 

 Response: We are not clear about the commenter’s concern. In the preamble of 

the proposed rule, the phrase “applicable program requirements” is referring to MA 

program requirements, not to FFS program requirements. If the commenter is asking 

about coding practices, CMS does not provide specific MA guidelines on how to code, 

but instead requires that MA organizations use the code sets and guidelines in whatever 

version of the International Classification of Diseases that is in effect for the 

classification and reporting of diseases for all U.S. health care settings (not just 

Medicare). Further, we are unsure as to what the commenter is referring in the statement 

“in the past there have been occasions when CMS has relied on the use of FFS 

requirements or customary practices in the absence of specific MA or Part D guidelines.” 

The commenter did not provide any examples, so we are unable to respond to this 

concern. Regarding the statement that an MA organization has no control over provider 

errors in data submission, we refer readers to the contracting provisions in the MA 

regulation at § 422.504 regarding the MA organization’s responsibility for data 

submissions. 

 After consideration of the public comments we received, we are finalizing our 

proposal without modification. 
CMS-1613-FC 960 

6. Effective Date of Appeals Process Provisions 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41063), we proposed that this 

new procedural mechanism for a payment offset at proposed § 422.330 and § 423.352 

would apply after the effective date of any final rule implementing the new payment 

offset and appeals process, but that requests to correct payment data under proposed 

§§ 422.330(b) and 423.352(b) and the payment offsets under proposed §§ 422.330(c) and 

423.352(c) may apply to any payment year, subject to the 6-year limitation under 

§§ 422.330(b) and 423.352(b). 

 We invited public comments on these proposals regarding the effective date and 

application of the rule. 

 We did not receive any public comments on these proposals, and we are finalizing 

our proposals with the modification discussed above to codify the 6-year limitation in 

paragraph (c) of §§ 422.330 and 423.352. 

 In summary, we are finalizing the provisions at §§ 422.330 and 423.352, with the 

following modifications. We are removing the phrase “controlled and” from the 

definition of “payment data” at §§ 422.330(a) and 423.352(a). We are adding the 

definition of “erroneous payment data” to the final regulation text at §§ 422.330(a) and 

423.352(a). At §§ 422.330(b) and 423.352(b), we are moving language regarding the 

6-year look-back period to §§ 422.330(c)(1) and 423.352(c)(1) to indicate that if the MA 

organization or Part D sponsor fails to correct payment data, CMS will conduct a 

payment offset if the payment error identified affects payments for any of the 6 most 

recently completed payment years and the payment error for a particular payment year is 

identified after the applicable reconciliation date for that payment year. At §§ 422.330(c) 
CMS-1613-FC 961 

and 423.352(c), we are adding paragraph (2) to clarify that CMS will calculate the 

payment offset amount using the correct payment data. In addition, we are making a 

minor modification to the regulation text at § 422.330(d) and § 423.352(d) to clarify that 

the payment offset notice will include at least the information outlined in the regulation, 

but may include other information relevant to the payment offset. Finally, we are 

revising §§ 422.330(e)(2)(iii)(A) and 423.352(e)(2)(iii)(A) to state that we will provide 

written notice of the time and place of the informal hearing at least 30 days before the 

scheduled date. 

XVIII. Files Available to the Public via the Internet 

 Addendum J to this final rule with comment period is a new addendum that we 

proposed for CY 2015, in response to requests by public commenters on the CY 2014 

OPPS/ASC final rule with comment period for additional data regarding ratesetting for 

the new comprehensive APCs established in that final rule with comment period, which 

are discussed in section II.A.2.e. of this final rule with comment period. Addendum J 

lists the HCPCS code pairs for which we are finalizing complexity adjustments for 

CY 2015, by clinical family; the HCPCS codes finalized for exclusion from the 

comprehensive APC payment bundle; and the relevant cost statistics. 

 The public comments that we received related to the proposed Addendum J to the 

CY 2015 OPPS/ASC proposed rule are discussed in detail in section II.A.2.e. of this final 

rule with comment period. We are finalizing our proposal to create Addendum J without 

modification. 

 The Addenda to the OPPS/ASC proposed rules and the final rules with comment 

period are published and available only via the Internet on the CMS Web site. To view 
CMS-1613-FC 962 

the Addenda to this final rule comment period pertaining to CY 2015 payments under the 

OPPS, we refer readers to the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html;

select “1613-FC” from the list of regulations. All OPPS Addenda to this final rule with 

comment period are contained in the zipped folder entitled “2015 OPPS 1613-F Addenda” 

at the bottom of the page. To view the Addenda to this final rule with comment period

pertaining to the CY 2015 payments under the ASC payment system, we refer readers to 

the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/ASC-Regulations-and-Notices.html; select “1613-FC” from the 

list of regulations. All ASC Addenda to this final rule with comment period are 

contained in the zipped folders entitled “Addendum AA, BB, DD1 and DD2,” and 

“Addendum EE”.

XIX. Collection of Information Requirements 

A. Legislative Requirements for Solicitation of Comments 

 Under the Paperwork Reduction Act of 1995, we are required to provide 60-day 

notice in the Federal Register and to solicit public comment before a collection of 

information requirement is submitted to the Office of Management and Budget (OMB) 

for review and approval. In order to fairly evaluate whether an information collection 

should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 

1995 requires that we solicit comment on the following issues: 

● The need for the information collection and its usefulness in carrying out the 

proper functions of our agency. 
CMS-1613-FC 963 

● The accuracy of our estimate of the information collection burden. 

● The quality, utility, and clarity of the information to be collected. 

● Recommendations to minimize the information collection burden on the 

affected public, including automated collection techniques. 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 741063 through 41067), we 

solicited public comments on each of the issues outlined above for the information 

collection requirements discussed below. 

B. Requirements in Regulation Text: Changes to the Rural Provider and Hospital 

Ownership Exceptions to the Physician Self-Referral Law: Expansion Exception Process 

(§ 411.362) 

 As discussed in section XV.C. of the CY 2015 OPPS/ASC proposed rule 

(79 FR 41054 through 41056) and in section XV.C. of this final rule with comment 

period, we proposed to modify the physician-owned hospital expansion exception process 

under the rural provider and hospital ownership exceptions to the physician self-referral 

law. Specifically, we proposed to permit physician-owned hospitals to use certain 

non-HCRIS data sources to demonstrate satisfaction of the expansion exception process 

eligibility criteria. 

 In section XIX.B. of the CY 2015 OPPS/ASC proposed rule (79 FR 41063), we 

stated that we believe the burden associated with our modifications to the 

physician-owned hospital expansion exception process is exempt from the PRA under 

5 CFR 1320.3(c) because the information collection will not impact 10 or more entities in 

a 12-month period. We did not receive any public comments on the proposed stated 
CMS-1613-FC 964 

burden of our proposed modifications to the physician-owned hospital expansion 

exception process. 

 As discussed in section XV.C. of this final rule with comment period, we are 

finalizing our proposal with certain modifications. The provisions are exempt from the 

PRA under 5 CFR 1320.3(c) because the information collection will not impact 10 or 

more entities in a 12-month period. 

C. Associated Information Collections Not Specified in Regulatory Text 

 In the CY 2015 OPPS/ASC proposed rule, we made reference to proposed 

associated information collection requirements that were not discussed in the regulation 

text contained in the proposed rule. The following is a discussion of those requirements, 

any public comments we received, and our responses to those public comments. 

1. Hospital OQR Program 

 As we stated in section XIV. of the CY 2012 OPPS/ASC final rule with comment 

period, the Hospital OQR Program has been generally modeled after the quality data 

reporting program for the Hospital IQR Program (76 FR 74451). We refer readers to the 

CY 2011 OPPS/ASC final rule with comment period (75 FR 72111 through 72114), the 

CY 2012 OPPS/ASC final rule with comment period (76 FR 74549 through 74554), the 

CY 2013 OPPS/ASC final rule with comment period (77 FR 68527 through 68532), and 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75170 through 75172) 

for detailed discussions of Hospital OQR Program information collection requirements 

we have previously finalized. 
CMS-1613-FC 965 

a. Revisions to the CY 2016 Payment Determination Estimates 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75103), we 

finalized the adoption of four new measures for the CY 2016 payment determination and 

subsequent years: (1) OP-27: Influenza Vaccination Coverage among Healthcare 

Personnel (NQF # 0431); (2) OP 29: Endoscopy/Polyp Surveillance: Appropriate 

Follow-up Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658); 

(3) OP 30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF # 0659); and 

(4) OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery (NQF # 1536). In the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171), we estimated measures OP-29, OP-30, and OP-31 would 

require 40 hours of reporting per quarter (96 cases x 0.417 hours). We also estimated that 

reporting these measures via our Web-based tool would take 10 minutes (or 0.167 hours) 

per measure per year (or 2.5 minutes for each quarter’s data, which are submitted on an 

annual basis) (78 FR 75171 through 75172). 

 We noted in section XIII.D.2. of the CY 2015 OPPS/ASC proposed rule and this 

final rule with comment period that we have delayed reporting for OP-29 and OP-30 for 

the CY 2016 payment determination by one quarter. Therefore, we estimate a reduction 

in burden of 40 hours for each of these measures (40 hours per quarter for reporting + 2.5 

minutes of reporting via the Web-based tool) per hospital for the CY 2016 payment 

determination. In addition, in section XIII.D.3. of the CY 2015 OPPS/ASC proposed rule 

and this final rule with comment period, we are finalizing our proposal to exclude OP-31 

from the CY 2016 payment determination measure set. Therefore, we estimate that there 
CMS-1613-FC 966 

will be no burden for reporting OP-31 for the CY 2016 payment determination, and an 

overall reduction in burden of 160 hours ((40 hours per quarter for reporting x 4 quarters) 

+ 0.167 hours per year for reporting via the Web-based tool) per hospital for the CY 2016 

payment determination. 

 Combining the estimated reductions in burden for all three of these measures, we 

estimate a total reduction in burden of 240 hours (40 hours + 40 hours + 160 hours) per 

hospital for the CY 2016 payment determination due to delayed data collection for OP-29 

and OP-30 and the exclusion of OP-31. We estimate that approximately 3,300 hospitals 

will participate in the Hospital OQR Program for the CY 2016 payment determination. 

Therefore, we estimate a total reduction in burden of 792,000 hours (240 hours x 3,300 

hospitals) for the CY 2016 payment determination from our original estimate of 

1.6 million hours (160 hours/measure x 3 measures x 3,300 hospitals) as discussed in the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75171 through 75172) for 

all hospitals participating in the Hospital OQR Program based on the data collection 

delays for OP-29 and OP-30 and the exclusion of OP-31. In the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 75171), we estimated that these measures would 

result in a financial burden of $30 per hour. Therefore, we estimate that the changes to 

these three measures will result in a reduction in financial burden of $23.8 million 

($30/hour x 792,000 hours) for the CY 2016 payment determination from our original 

estimate of $76.8 million ($1.6 million x $30) as discussed in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 75171 through 75172). 
CMS-1613-FC 967 

b. Hospital OQR Program Requirements for the CY 2017 Payment Determination and 

Subsequent Years 

 As we stated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75171), we believe there is a burden associated with successful participation in 

the Hospital OQR Program, where successful participation results in a full annual 

payment update (APU) for the particular payment determination. For the reasons stated 

in that rule, we believe that the burden associated with these requirements is 42 hours per 

hospital or 138,600 hours for all hospitals for the CY 2017 payment determination and 

subsequent years. We estimate a financial burden for these requirements of $4.2 million 

($30/hour x 138,600) for all hospitals. 

(1) Claims-Based Measures for the CY 2017 and CY 2018 Payment Determinations and 

Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68530) for detailed discussions of the information collection requirements for the 

previously finalized claims-based measures (OP-8, OP-9, OP-10, OP-11, OP-13, OP-14, 

and OP-15). In section XIII.E. of this final rule with comment period, we are finalizing 

our proposal to adopt one additional claims-based measure, OP-32: Facility Seven-Day 

Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy, but are finalizing its 

inclusion in the measure set for the CY 2018 payment determination and subsequent 

years instead of for the CY 2017 payment determination and subsequent years as 

proposed. Before publicly reporting this measure, however, we will conduct a dry run (a 

preliminary analysis) for facilities to review their performance and provide feedback. For 
CMS-1613-FC 968 

more detailed information about the dry run, we refer readers to our discussion in section 

XIII.E. of this final rule with comment period. 

 As we noted in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68530) and consistent with the modifications we are finalizing in this final rule 

with comment period, we calculate claims-based measures using Medicare FFS claims 

data that do not require additional hospital data submissions. 

(2) Chart-Abstracted Measures for the CY 2017 Payment Determination and Subsequent 

Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68530 through 68531) and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75171) for detailed discussions of the information collection requirements 

for the previously finalized chart-abstracted measures (OP-1, OP-2, OP-3, OP-4, OP-5, 

OP-6, OP-7, OP-18, OP-20, OP-21, OP-22, OP-23, OP-29, OP-30, and OP-31). 

 In the CY 2015 OPPS/ASC proposed rule (79 FR 41034), we proposed to remove 

three chart-abstracted measures from the Hospital OQR Program beginning with the 

CY 2017 payment determination, OP-4: Aspirin at Arrival (NQF # 0286); OP-6: Timing 

of Prophylactic Antibiotics; and OP-7: Perioperative Care: Prophylactic Antibiotic 

Selection for Surgical Patients (NQF # 0528). In section XIII.C.3. of this final rule with 

comment period, we are finalizing our proposal to remove two of these measures (OP-6 

and OP-7) from the Hospital OQR Program for the CY 2017 payment determination and 

subsequent years. We are not finalizing our proposal to remove OP-4 and refer readers to 

section XIII.C.3. of this final rule with comment period for a detailed discussion. We 

previously estimated that each participating hospital will spend 35 minutes (or 0.583 
CMS-1613-FC 969 

hours) per case to collect and submit the data required for the chart-abstracted measures 

finalized for the CY 2015 payment determination and subsequent years (OP-1, OP-2, 

OP-3, OP-4, OP-5, OP-6, OP 7, OP-18, OP-20, OP-21, OP-22, and OP-23) (78 FR 

75171). Because we are finalizing our proposals to remove two of these measures, we 

believe that the time to chart-abstract measures will be reduced by 16.7 percent (2 of 12 

measures) per case. Therefore, we estimate that hospitals will spend approximately 29 

minutes (0.483 hours) per case to collect and submit these data. 

 Data submitted for the CY 2014 payment determination indicate that the average 

hospital will submit approximately 1,266 cases per year for these measures. Therefore, 

as a result of our removal of 2 chart-abstracted measures, we estimate that the time it will 

take for the average hospital to abstract data for all of the chart-abstracted measures will 

be 612 hours per year (1,266 cases x 0.483 hours). We estimate that there will be 

approximately 3,300 hospitals that participate in the Hospital OQR Program for the 

CY 2017 payment determination and subsequent years. Therefore, we estimate that the 

chart-abstracted measures for the CY 2017 payment determination and subsequent years 

will result in a burden of 2.02 million hours (612 hours x 3,300 hospitals) for all 

participating hospitals, for a total financial burden of approximately $61 million 

(2.02 million hours x $30/hour). 

 In addition, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75171), we estimated that OP-29 and OP-30 would require 25 minutes 

(0.417 hours) per case per measure to chart-abstract. We also estimated that hospitals 

would abstract 384 cases per year for each of these measures. Our estimate for the 

CY 2017 payment determination and subsequent years has not changed from last year’s 
CMS-1613-FC 970 

estimate (although, as noted above, we have changed our estimate for the CY 2016 

payment determination based on the delay of reporting OP-29 and OP-30). Therefore, 

for the CY 2017 payment determination and subsequent years, we estimate a burden of 

1.1 million hours (3,300 hospitals x 0.417 hours/case x 384 case/measure x 2 measures) 

for all participating hospitals for OP-29 and OP-30 for a total financial burden of 

approximately $33 million ($30/hour x 1.1 million hours). 

 In section XIII.D.3. of this final rule with comment period, we are finalizing our 

proposal to exclude OP-31 from the CY 2016 payment determination measure set and, 

for the CY 2017 payment determination and subsequent years, to change this measure 

from required to voluntary. Hospitals will not be subject to a payment reduction with 

respect to this measure for the CY 2016 payment determination or during the period of 

voluntary reporting. We continue to believe this measure addresses an important area of 

care, and anticipate that many facilities will report this measure on a voluntary basis. In 

the CY 2014 ASC/OPPS final rule with comment period (78 FR 75171), we estimated 

that OP-31 would require 25 minutes (0.417 hours) per case to chart-abstract. We also 

estimated that hospitals would abstract 384 cases per year for this measure. We estimate 

that approximately 20 percent of hospitals (660 hospitals (3,300 hospitals x 0.2)) will 

elect to report this measure on a voluntary basis. Therefore, we are revising the estimated 

burden for this measure to 105,685 hours (660 hospitals x 0.417 hours/case x 384 cases) 

for participating hospitals for the CY 2017 payment determination and subsequent years, 

for a total financial burden of approximately $3.2 million ($30/hour x 105,685 hours). 

 Therefore, for the chart-abstracted measures, we estimate a total burden for all 

participating hospitals of 3.23 million hours (2.02 million hours + 105,685 hours + 
CMS-1613-FC 971 

1.1 million hours) and $96.9 million (3.23 million hours x $30/hour) for the CY 2017 

payment determination and subsequent years. 

(3) Web-Based Measures Submitted Directly to CMS for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75171) for detailed discussions of the information collection requirements for the 

previously finalized measures submitted via the Web-based tool. For the reasons stated 

in that final rule with comment period, we estimate that each participating hospital would 

spend 10 minutes per measure per year to collect and submit the data for the six measures 

(OP-12, OP-17, OP-25, OP-26, OP-29, and OP-30) submitted via the Web-based tool. 

Therefore, the estimated annual burden associated with these measures for all 

participating hospitals is 3,307 hours (3,300 hospitals x 0.167 hours/measure x 

6 measures/hospital) for the CY 2017 payment determination and subsequent years. 

 As stated above, in section XIII.D.3. of this final rule with comment period, we 

are finalizing our proposal that hospitals have the option to voluntarily collect and submit 

OP-31 data beginning with the CY 2015 encounter period for the CY 2017 payment 

determination and subsequent years; failing to report this measure will not affect 

hospitals’ payment determinations for CY 2017 and subsequent years. We continue to 

believe this measure addresses an important area of care and estimate that approximately 

20 percent of hospitals or 660 hospitals (3,300 hospitals x 0.2) will elect to report this 

measure on a voluntary basis. Therefore, we are revising the estimated burden for this 

measure for all participating hospitals to 111 hours (660 hospitals x 0.167 hours) for the 

CY 2017 payment determination and subsequent years. 
CMS-1613-FC 972 

 Moreover, we estimate that the financial burden incurred for the Web-based 

submission of these measures for all participating hospitals will be $119,070 ($30/hour x 

(3,858 hours + 111 hours)) for the CY 2017 payment determination and subsequent 

years. 

(4) NHSN HAI Measure for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75172) for detailed discussions of the information collection requirements for 

OP-27: Influenza Vaccination Coverage among Healthcare Personnel. In section 

XIII.D.1. of this final rule with comment period, we are clarifying the submission 

deadline for this measure. We do not believe there will be a change in burden due to this 

clarification because it was a typographical error and our previous estimates were based 

on the correct submission timeframe. We also noted that facilities should collect and 

submit a single vaccination count for each health care facility enrolled in NHSN by the 

facility OrgID. Although we believe an overall reduction in burden will occur because 

hospitals will only be required to submit this information once for both the Hospital IQR 

Program and the Hospital OQR Program, we do not believe there is a reduction in burden 

that is directly attributable to the Hospital OQR Program. That is, this requirement is 

independent of the Hospital IQR Program requirements. Therefore, our burden analysis 

remains the same. For the reasons discussed in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75172), we estimate a total burden for all participating hospitals 

of 106,940 hours and a total financial burden of $3,208,203 associated with this measure. 
CMS-1613-FC 973 

c. Review and Corrections Period Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

 In section XIII.H.2.f. of this final rule with comment period, we are finalizing our 

proposal to formalize that the time during which hospitals submit chart-abstracted data is 

the review and corrections period for those data. Because this proposal does not require 

hospitals to submit additional data, we do not believe it will increase burden for these 

hospitals. 

d. Hospital OQR Program Validation Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

 In sections XIII.H.3.b. and XIII.H.3.e. of this final rule with comment period, we 

are finalizing three changes to our validation procedures: (1) a hospital will be eligible 

for random selection for validation if it submits at least 12 cases to the Hospital OQR 

Program Clinical Data Warehouse during the quarter containing the most recently 

available data (we note that this is a modification of our proposal that a hospital would be 

eligible for random selection for validation if it submitted 1 case); (2) hospitals will have 

the option to either submit paper copies of patient charts or securely transmit electronic 

versions of medical information for validation; and (3) hospitals must identify the 

medical records staff responsible for submission of records under the Hospital OQR 

Program to the designated CMS contractor. We do not believe that these changes to the 

eligibility requirements will result in additional burden because we will continue to select 

500 hospitals for validation consistent with our previous burden estimates indicate 

(78 FR 75172). In addition, we do not believe requiring hospitals to identify the medical 

records staff responsible for submission of records will result in additional burden since 
CMS-1613-FC 974 

hospitals must already submit this information to our designated contractors (the State 

QIO), and only the contractor to whom the data is submitted may change. However, we 

do believe that the second requirement regarding the method of submission may result in 

a change in burden. 

 We are finalizing our proposal that the requirement to submit patient charts for 

validation of Hospital OQR Program data may be met by employing either of the 

following options: (1) a hospital may submit paper medical records, the form in which we 

have historically requested them; or (2) a hospital may securely transmit electronic 

versions of medical information beginning in the CY 2017 payment determination and 

for subsequent years. We are finalizing our proposal that hospitals that choose to 

securely transmit electronic versions of medical information should either: (1) download 

or copy the digital image (that is., a PDF) of the patient chart onto an encrypted CD, 

DVD, or flash drive and ship the encrypted electronic media following instructions 

specified on the QualityNet Web site; or (2) securely submit PDFs of patient charts using 

a Secure File Transfer Portal on the QualityNet Web site. In the FY 2014 IPPS/LTCH 

PPS final rule (78 FR 50834 through 50835), the Hospital IQR Program previously 

finalized a similar policy that also allows hospitals to submit electronic versions of 

records for validation using the first method. In the FY 2015 IPPS/LTCH PPS final rule, 

the Hospital IQR Program finalized secure submission of digital images via a Secure File 

Transfer Portal (79 FR 50269). For the same reasons outlined in the Hospital IQR 

Program (78 FR 50956), we are finalizing our proposal to set a reimbursement rate of 

$3.00 per patient chart submitted electronically (using either of the finalized methods for 

electronic submission) for validation for the CY 2017 payment determination and 
CMS-1613-FC 975 

subsequent years. We will continue to reimburse hospitals at a rate of 12 cents per page, 

plus shipping, for records provided on paper (76 FR 74577). 

 The burden associated with validation is the time and effort necessary to submit 

validation data to the CMS contractor. For some hospitals, we believe that submitting 

these data electronically may result in a reduction in burden; for others we believe that 

submitting paper copies will be the least burdensome option. As we have previously 

stated in the CY 2014 OPPS/ASC final rule with comment period, we sample 500 

hospitals for validation, and we estimate that it will take each hospital 12 hours to comply 

with the data submission requirements (78 FR 75172). Therefore, because the number of 

hospitals we sample for validation will remain the same, we estimate a total burden of 

approximately 6,000 hours (500 hospitals x 12 hours/hospital) and a total financial 

impact of $180,000 ($30/hour x 6,000 hours) for the CY 2017 payment determination 

and subsequent years. 

e. Extraordinary Circumstances Extensions or Exemptions Process 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 75119 

through 75120), and 42 CFR 419.46(d) for a complete discussion of our extraordinary 

circumstances extension or waiver process under the Hospital OQR Program. In this 

final rule with comment period, we are finalizing our proposal to change the phrase 

“extension or waiver” to “extension or exemption” throughout the regulation. In section 

XIII.J. of this final rule with comment period, we note that we intend to make certain 

changes to the form to ensure that the form is consistent across CMS quality reporting 
CMS-1613-FC 976 

programs. We do not anticipate that these minor changes will affect the collection of 

information burden estimates for this process. 

f. Reconsideration and Appeals 

 While there is burden associated with filing a reconsideration request, the 

regulations at 5 CFR 1320.4 for the PRA (44 U.S.C. 3518(c)(1)(B)) exclude collection 

activities during the conduct of administrative actions such as reconsiderations or 

appeals. 

 We invited public comment on the burden associated with these information 

collection requirements. We did not receive any public comments on this burden. 

2. ASCQR Program Requirements 

a. Background 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74554), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53672), the CY 2013 

OPPS/ASC final rule with comment period (77 FR 68532 through 68533), and the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 through 75174) for 

detailed discussions of the ASCQR Program information collection requirements we have 

previously finalized. 

b. Revisions to the CY 2016 Payment Determination Estimates 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 through 

75130), we finalized the adoption of three new measures for the CY 2016 payment 

determination and subsequent years: ASC-9: Endoscopy/Polyp Surveillance: 

Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients 

(NQF # 0658); ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for 
CMS-1613-FC 977 

Patients with a History of Adenomatous Polyps – Avoidance of Inappropriate Use 

(NQF # 0659); and ASC-11: Cataracts – Improvement in Patient’s Visual Function 

within 90 Days Following Cataract Surgery (NQF # 1536). In that final rule with 

comment period, we estimated that each participating ASC would spend 35 minutes per 

case to collect and submit the data for these measures, resulting in a total estimated 

burden for ASCs with a single case per ASC of 3,067 hours (5,260 ASCs × 0.583 hours 

per case per ASC). We also stated that we expected ASCs would vary greatly as to the 

number of cases per ASC due to ASC specialization (78 FR 75173). 

 As we stated in section XIV.E.3. of the CY 2015 OPPS/ASC proposed rule and 

this final rule with comment period, we have delayed reporting for ASC-9 and ASC-10 

for the CY 2016 payment determination by one quarter. Therefore, we estimate a 

25-percent reduction in cases and burden for these measures for the CY 2016 payment 

determination. As we stated in section XIV.E.3.c. of the CY 2015 OPPS/ASC proposed 

rule and this final rule with comment period, we delayed reporting of ASC-11 by 1 year. 

We also are finalizing our proposal to exclude ASC-11 from the CY 2016 payment 

determination measure set. As a result, we do not believe there would be any burden 

associated with this measure for the CY 2016 payment determination. 

c. Claims-Based Measures for the CY 2017 Payment Determination and Subsequent 

Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68532) and CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 

through 75174) for detailed discussions of the information collection requirements for the 

five previously-adopted claims-based ASCQR Program measures (four outcome 
CMS-1613-FC 978 

measures and one process measure). The five previously adopted measures are: ASC-1: 

Patient Burn (NQF # 0263); ASC-2: Patient Fall (NQF # 0266); ASC-3: Wrong Site, 

Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant (NQF # 0267); ASC-4: 

Hospital Transfer/Admission (NQF # 0265); and ASC-5: Prophylactic Intravenous (IV) 

Antibiotic Timing (NQF # 0264). For the reasons we discussed in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 75172 through 75173), we estimate 

that the reporting burden to report Quality Data Codes (QDCs) for these five 

claims-based outcome measures would be nominal for the CY 2017 payment 

determination and for subsequent years. 

 In section XIV.B.5. of this final rule with comment period, we are finalizing our 

proposal to add one additional claims-based measure to the ASCQR Program, but are 

finalizing its inclusion in the measure sets for the CY 2018 payment determination and 

subsequent years, instead of the measure set we proposed for the CY 2017 payment 

determination and subsequent years. Before publicly reporting this measure, we plan to 

perform a dry run (a preliminary analysis) of the measure in 2015. We refer readers to 

section XIV.B.5 of this final rule with comment period for a detailed discussion of the 

dry run. 

 Because this measure, ASC-12: Facility Seven-Day Risk-Standardized Hospital 

Visit Rate after Outpatient Colonoscopy, will be computed by CMS based on paid 

Medicare FFS claims, and will not require ASCs to submit QDCs, we do not anticipate 

that this measure would create additional burden to ASCs during the dry run or for the 

CY 2018 payment determination and subsequent years. 
CMS-1613-FC 979 

d. Web-Based Measures for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68532) and CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 

through 75174) for detailed discussions of the information collection requirements for the 

five previously-adopted Web-based measures, excluding ASC-11, which we proposed for 

voluntary inclusion in the ASCQR Program for the CY 2017 payment determination and 

subsequent years. The five previously adopted measures are: ASC-6: Safe Surgery 

Checklist Use; ASC-7: ASC Facility Volume Data on Selected ASC Surgical Procedures; 

ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel (NQF # 0431); 

ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 

Colonoscopy in Average Risk Patients (NQF # 0658); and ASC-10: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous 

Polyps-Avoidance of Inappropriate Use (NQF # 0659). 

 For the reasons we discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75173 through 75174), we estimate that the reporting burden for the 

ASC-6: Safe Surgery Checklist Use and the ASC-7: ASC Facility Volume measures 

would be 1,756 hours (5,260 ASCs x 2 measures x 0.167 hours per ASC) and $52,680 

(1,756 hours x $30.00 per hour) annually for the CY 2017 payment determination and for 

subsequent years. 

 For the reasons discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75173 through 75174), we estimate that the reporting burden for the 

ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431) 
CMS-1613-FC 980 

measure would be 18,005 hours and $540,150 (18,005 hours x $30.00 per hour) annually 

for the CY 2017 payment determination and for subsequent years. 

 For the reasons discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75173 through 75174), we estimate that the reporting burden for ASCs 

with a single case per ASC for the chart-abstracted ASC-9: Endoscopy/Polyp 

Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk 

Patients (NQF # 0658) and ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy 

Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate 

Use (NQF # 0659) measures would be 3,067 hours and $92,010 (3,067 hours x $30.00 

per hour) annually for the CY 2017 payment determination and for subsequent years. 

 In section XIV.E.3.c. of this final rule with comment period, we are finalizing our 

proposal that data collection and submission be voluntary for the CY 2017 payment 

determination and subsequent years for ASC-11: Cataracts: Improvement in Patient’s 

Visual Function within 90 Days Following Cataract Surgery (NQF # 1536), meaning we 

would not subject ASCs to a payment reduction with respect to this measure during the 

period of voluntary reporting. We continue to believe this measure addresses an 

important area of care, and anticipate that many facilities will report this measure on a 

voluntary basis. In the CY 2014 ASC/OPPS final rule with comment period 

(78 FR 75173), we estimated that each participating ASC would spend 35 minutes per 

case to collect and submit the data for this measure, making the total estimated burden for 

ASCs with a single case per ASC 3,067 hours (5,260 ASCs x 0.583 hours per case per 

ASC) annually. We expect that ASCs would vary greatly as to the number of cases per 

ASC due to ASC specialization. We estimate that approximately 20 percent of ASCs 
CMS-1613-FC 981 

would elect to report this measure on a voluntary basis; therefore, we estimate the total 

estimated burden for ASCs with a single case per ASC to be 613 hours (1,052 ASCs x 

0.583 hours per case per ASC) and $18,390 (613 hours x $30.00 per hour) annually for 

the CY 2017 payment determination and subsequent years. 

e. Extraordinary Circumstances Extension or Exemptions Process 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53642 

through 53643) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75140) for a complete discussion of our extraordinary circumstances extension or 

waiver process under the ASCQR Program. In the CY 2015 OPPS/ASC proposed rule, 

we did not propose to make any substantive changes to this process. However, in the 

future, we will refer to the process as the extraordinary circumstances extensions or 

exemptions process. In section XIV.E.7. of this final rule with comment period, we note 

that we intend to make certain changes to the form to ensure that the form is consistent 

across CMS quality reporting programs. We do not anticipate that these minor changes 

would affect the burden estimates for this process. 

f. Reconsideration 

 While there is burden associated with filing a reconsideration request, the 

regulations at 5 CFR 1320.4 for the PRA (44 U.S.C 3518(c)(1)(B)) exclude collection 

activities during the conduct of administrative actions such as reconsiderations. 

 We invited public comment on the burden associated with these information 

collection requirements. We did not receive any public comments on this burden. 
CMS-1613-FC 982 

XX. Waiver of Proposed Rulemaking and Response to Comments 

A. Waiver of Proposed Rulemaking 

 We ordinarily publish a notice of proposed rulemaking in the Federal Register

and invite public comment on a proposed rule. The notice of proposed rulemaking 

includes a reference to the legal authority under which the rule is proposed, and the terms 

and substance of the proposed rule or a description of the subjects and issues involved. 

This procedure can be waived, however, if an agency finds good cause that a notice-andcomment procedure is impracticable, unnecessary, or contrary to the public interest and 

incorporates a statement of the finding and its reasons in the rule issued. 

 We utilize HCPCS codes for Medicare payment purposes. The HCPCS is a 

national coding system comprised of Level I codes (CPT codes) and Level II codes that 

are intended to provide uniformity to coding procedures, services, and supplies across all 

types of medical providers and suppliers. CPT codes are copyrighted by the AMA and 

consist of several categories, including Category I codes which are 5-digit numeric codes, 

and Category III codes which are temporary codes to track emerging technology, 

services, and procedures. The AMA issues an annual update of the CPT code set each 

Fall, with January 1 as the effective date for implementing the updated CPT codes. The 

HCPCS, including both CPT codes and Level II codes, is similarly updated annually on a 

calendar year basis. Annual coding changes are not available to the public until the Fall 

immediately preceding the annual January update of the OPPS and the ASC payment 

system. Because of the timing of the release of these new codes, it is impracticable for us 

to provide prior notice and solicit comment on these codes and the payments assigned to 

them in advance of publication of the final rule that implements the OPPS and the ASC 
CMS-1613-FC 983 

payment system. However, it is imperative that these coding changes be accounted for 

and recognized timely under the OPPS and the ASC payment system for payment 

because services represented by these codes will be provided to Medicare beneficiaries in 

hospital outpatient departments and ASCs during the calendar year in which they become 

effective. Moreover, regulations implementing the HIPAA (42 CFR Parts 160 and 162) 

require that the HCPCS be used to report health care services, including services paid 

under the OPPS and the ASC payment system. We assign interim payment amounts and 

status indicators to any new codes according to our assessment of the most appropriate 

APC based on clinical and resource homogeneity with other procedures and services in 

the APC. If we did not assign payment amounts to new codes on an interim basis, the 

alternative would be to not pay for these services during the initial calendar year in which 

the codes become effective. We believe it would be contrary to the public interest to 

delay establishment of payment amounts for these codes. 

 Therefore, we find good cause to waive the notice of proposed rulemaking for the 

establishment of payment amounts for selected HCPCS codes identified with comment 

indicator “NI” in Addendum B and Addendum BB to this final rule with comment 

period. We are providing a 60-day public comment period. 

B. 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 final rule with comment period, and, when we proceed with a subsequent 

document(s), we will respond to those comments in the preamble to that document. 
CMS-1613-FC 984 

XXI. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

 We have examined the impacts of this final rule with comment period, as required 

by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), 

Executive Order 13563 on Improving Regulation and Regulatory Review 

(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, 

Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) (March 22, 1995, Pub. L. 104-4), Executive 

Order 13132 on Federalism (August 4, 1999), and the Contract with America 

Advancement Act of 1996 (Pub. L. 104-121) (5 U.S.C. 804(2)). This section of the final 

rule with comment period contains the impact and other economic analyses for the 

provisions that we are finalizing. 

 Executive Orders 12866 and 13563 direct 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). Executive Order 13563 

emphasizes the importance of quantifying both costs and benefits, of reducing costs, of 

harmonizing rules, and of promoting flexibility. This final rule with comment period has 

been designated as an economically significant rule under section 3(f)(1) of Executive 

Order 12866 and a major rule under the Contract with America Advancement Act of 

1996 (Pub. L. 104-121). Accordingly, this final rule with comment period has been 

reviewed by the Office of Management and Budget. We have prepared a regulatory 
CMS-1613-FC 985 

impact analysis that, to the best of our ability, presents the costs and benefits of this final 

rule with comment period. We solicited comments on the regulatory impact analysis in 

the proposed rule, and we address the public comments we received in this section below 

and in other sections of this final rule with comment period as appropriate. 

2. Statement of Need 

 This final rule with comment period is necessary to update the Medicare hospital 

OPPS rates. It is necessary to make changes to the payment policies and rates for 

outpatient services furnished by hospitals and CMHCs in CY 2015. We are required 

under section 1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion factor 

used to determine the payment rates for APCs. We also are required under 

section 1833(t)(9)(A) of the Act to review, not less often than annually, and revise the 

groups, the relative payment weights, and the wage and other adjustments described in 

section 1833(t)(2) of the Act. We must review the clinical integrity of payment groups 

and relative payment weights at least annually. We are revising the APC relative 

payment weights using claims data for services furnished on and after January 1, 2013, 

through and including December 31, 2013 and processed through June 30, 2014, and 

updated cost report information. 

 This final rule with comment period also is necessary to update the ASC payment 

rates for CY 2015, enabling CMS to make changes to payment policies and payment 

rates for covered surgical procedures and covered ancillary services that are performed in 

an ASC in CY 2015. Because ASC payment rates are based on the OPPS relative 

payment weights for the majority of the procedures performed in ASCs, the ASC 

payment rates are updated annually to reflect annual changes to the OPPS relative 
CMS-1613-FC 986 

payment weights. In addition, we are required under section 1833(i)(1) of the Act to 

review and update the list of surgical procedures that can be performed in an ASC not 

less frequently than every 2 years. 

3. Overall Impacts for the OPPS and ASC Payment Provisions 

 We estimate that the total increase in Federal government expenditures under the 

OPPS for CY 2015 compared to CY 2014 due to the changes in this final rule with 

comment period, will be approximately $900 million. Taking into account our estimated 

changes in enrollment, utilization, and case-mix, we estimate that the OPPS expenditures 

for CY 2015 will be approximately $5.135 billion higher relative to expenditures in 

CY 2014. Because this final rule with comment period is economically significant as 

measured by the threshold of an additional $100 million in expenditures in one year, we 

have prepared this regulatory impact analysis that, to the best of our ability, presents its 

costs and benefits. Table 49 displays the redistributional impact of the CY 2015 changes 

in OPPS payment to various groups of hospitals and for CMHCs. 

 We estimate that the update to the conversion factor and other adjustments (not 

including the effects of outlier payments, the pass-through estimates, and the application 

of the frontier State wage adjustment for CY 2015) will increase total OPPS payments by 

2.2 percent in CY 2015. The changes to the APC weights, the changes to the wage 

indexes, the continuation of a payment adjustment for rural SCHs, including EACHs, and 

the payment adjustment for cancer hospitals will not increase OPPS payments because 

these changes to the OPPS are budget neutral. However, these updates will change the 

distribution of payments within the budget neutral system. We estimate that the total 

change in payments between CY 2014 and CY 2015, considering all payments, including 
CMS-1613-FC 987 

changes in estimated total outlier payments, pass-through payments, and the application 

of the frontier State wage adjustment outside of budget neutrality, in addition to the 

application of the OPD fee schedule increase factor after all adjustments required by 

sections 1833(t)(3)(F), 1833(t)(3)(G), and 1833(t)(17) of the Act, will increase total 

estimated OPPS payments by 2.3 percent. 

 We estimate the total increase (from changes to the ASC provisions in this final 

rule with comment period as well as from enrollment, utilization, and case-mix changes) 

in Medicare expenditures under the ASC payment system for CY 2015 compared to 

CY 2014 to be approximately $236 million. Because the provisions for the ASC 

payment system are part of a final rule that is economically significant as measured by 

the $100 million threshold, we have prepared a regulatory impact analysis of the changes 

to the ASC payment system that, to the best of our ability, presents the costs and benefits 

of this portion of the final rule with comment period. Table 50 and Table 51 of this final 

rule with comment period display the redistributional impact of the CY 2015 changes on 

ASC payment, grouped by specialty area and then grouped by procedures with the 

greatest ASC expenditures, respectively. 

4. Detailed Economic Analyses 

a. Estimated Effects of OPPS Changes in this Final Rule with Comment Period 

(1) Limitations of Our Analysis 

 The distributional impacts presented here are the projected effects of the CY 2015 

policy changes on various hospital groups. As we did for the proposed rule, we post on 

the CMS Web site our hospital-specific estimated payments for CY 2015 with the other 

supporting documentation for this final rule with comment period. To view the 
CMS-1613-FC 988 

hospital-specific estimates, we refer readers to the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. At the Web site, select “regulations and 

notices” from the left side of the page and then select “CMS-1613-FC” from the list of 

regulations and notices. The hospital-specific file layout and the hospital-specific file are 

listed with the other supporting documentation for this final rule with comment period. 

We show hospital-specific data only for hospitals whose claims were used for modeling 

the impacts shown in Table 49 below. We do not show hospital-specific impacts for 

hospitals whose claims we were unable to use. We refer readers to section II.A. of this 

final rule with comment period for a discussion of the hospitals whose claims we do not 

use for ratesetting and impact purposes. 

 We estimate the effects of the individual policy changes by estimating payments 

per service, while holding all other payment policies constant. We use the best data 

available, but do not attempt to predict behavioral responses to our policy changes. In 

addition, we do not make adjustments for future changes in variables such as service 

volume, service-mix, or number of encounters. In the CY 2015 OPPS/ASC proposed 

rule (79 FR 41068), we solicited public comment and information about the anticipated 

effects of our proposed changes on providers and our methodology for estimating them. 

Any public comments that we received are addressed in the applicable sections of the 

final rule with comment period that discuss the specific policies. 

(2) Estimated Effects of OPPS Changes on Hospitals 

 Table 49 below shows the estimated impact of this final rule with comment period 

on hospitals. Historically, the first line of the impact table, which estimates the change in 
CMS-1613-FC 989 

payments to all facilities, has always included cancer and children’s hospitals, which are 

held harmless to their pre-BBA amount. We also include CMHCs in the first line that 

includes all providers. We now include a second line for all hospitals, excluding 

permanently held harmless hospitals and CMHCs. 

 We present separate impacts for CMHCs in Table 49, and we discuss them 

separately below, because CMHCs are paid only for partial hospitalization services under 

the OPPS and are a different provider type from hospitals. In CY 2015, we are 

continuing to pay CMHCs under APC 0172 (Level I Partial Hospitalization (3 services) 

for CMHCs) and APC 0173 (Level II Partial Hospitalization (4 or more services) for 

CMHCs), and we are paying hospitals for partial hospitalization services under 

APC 0175 (Level I Partial Hospitalization (3 services) for hospital-based PHPs) and 

APC 0176 (Level II Partial Hospitalization (4 or more services) for hospital-based PHPs). 

 The estimated increase in the total payments made under the OPPS is determined 

largely by the increase to the conversion factor under the statutory methodology. The 

distributional impacts presented do not include assumptions about changes in volume and 

service-mix. The conversion factor is updated annually by the OPD fee schedule increase 

factor as discussed in detail in section II.B. of this final rule with comment period. 

Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee schedule increase factor is 

equal to the market basket percentage increase applicable under section 1886(b)(3)(B)(iii) 

of the Act, which we refer to as the IPPS market basket percentage increase. The IPPS 

market basket percentage increase for FY 2015 is 2.9 percent (79 FR 49994). 

Section 1833(t)(3)(F)(i) of the Act reduces that 2.9 percent by the multifactor 

productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act, which is 
CMS-1613-FC 990 

0.5 percentage point for FY 2015 (which is also the MFP adjustment for FY 2015 in the 

FY 2015 IPPS/LTCH PPS final rule (79 FR 49994)); and sections 1833(t)(3)(F)(ii) and 

1833(t)(3)(G)(iv) of the Act further reduce the market basket percentage increase by 

0.2 percentage point, resulting in the OPD fee schedule increase factor of 2.2 percent. 

We are using the OPD fee schedule increase factor of 2.2 percent in the calculation of the 

CY 2015 OPPS conversion factor. Section 10324 of the Affordable Care Act, as 

amended by HCERA, further authorized additional expenditures outside budget neutrality 

for hospitals in certain frontier States that have a wage index less than 1.00. The amounts 

attributable to this frontier State wage index adjustment are incorporated in the CY 2015 

estimates in Table 49. 

 To illustrate the impact of the CY 2015 changes, our analysis begins with a 

baseline simulation model that uses the CY 2014 relative payment weights, the FY 2014 

final IPPS wage indexes that include reclassifications, and the final CY 2014 conversion 

factor. Table 49 shows the estimated redistribution of the increase in payments for 

CY 2015 over CY 2014 payments to hospitals and CMHCs as a result of the following 

factors: the impact of the APC reconfiguration and recalibration changes between 

CY 2014 and CY 2015 (Column 2); the wage indexes and the provider adjustments 

(Column 3); the combined impact of all the changes described in the preceding columns 

plus the 2.2 percent OPD fee schedule increase factor update to the conversion factor 

(Column 4); the combined impact shown in Column 4 plus the CY 2015 frontier State 

wage index adjustment (Column 5); and the estimated impact taking into account all 

payments for CY 2015 relative to all payments for CY 2014, including the impact of 
CMS-1613-FC 991 

changes in estimated outlier payments and changes to the pass-through payment estimate 

(Column 6). 

 We did not model an explicit budget neutrality adjustment for the rural adjustment 

for SCHs because we are finalizing our proposal to maintain the current adjustment 

percentage for CY 2015. Because the updates to the conversion factor (including the 

update of the OPD fee schedule increase factor), the estimated cost of the rural 

adjustment, and the estimated cost of projected pass-through payment for CY 2015 are 

applied uniformly across services, observed redistributions of payments in the impact 

table for hospitals largely depend on the mix of services furnished by a hospital (for 

example, how the APCs for the hospital’s most frequently furnished services will 

change), and the impact of the wage index changes on the hospital. However, total 

payments made under this system and the extent to which this final rule with comment 

period will redistribute money during implementation also will depend on changes in 

volume, practice patterns, and the mix of services billed between CY 2014 and CY 2015 

by various groups of hospitals, which CMS cannot forecast. 

 Overall, we estimate that the rates for CY 2015 will increase Medicare OPPS 

payments by an estimated 2.3 percent. Removing payments to cancer and children’s 

hospitals because their payments are held harmless to the pre-OPPS ratio between 

payment and cost and removing payments to CMHCs results in an estimated 2.3 percent 

increase in Medicare payments to all other hospitals. These estimated payments will not 

significantly impact other providers. 
CMS-1613-FC 992 

Column 1: Total Number of Hospitals 

 The first line in Column 1 in Table 49 shows the total number of facilities (4,006), 

including designated cancer and children’s hospitals and CMHCs, for which we were 

able to use CY 2013 hospital outpatient and CMHC claims data to model CY 2014 and 

CY 2015 payments, by classes of hospitals, for CMHCs and for dedicated cancer 

hospitals. We excluded all hospitals and CMHCs for which we could not plausibly 

estimate CY 2014 or CY 2015 payment and entities that are not paid under the OPPS. 

The latter entities include CAHs, all-inclusive hospitals, and hospitals located in Guam, 

the U.S. Virgin Islands, Northern Mariana Islands, American Samoa, and the State of 

Maryland. This process is discussed in greater detail in section II.A. of this final rule 

with comment period. At this time, we are unable to calculate a disproportionate share 

hospital (DSH) variable for hospitals not participating in the IPPS. Hospitals for which 

we do not have a DSH variable are grouped separately and generally include freestanding 

psychiatric hospitals, rehabilitation hospitals, and long-term care hospitals. We show the 

total number of OPPS hospitals (3,871), excluding the hold-harmless cancer and 

children’s hospitals and CMHCs, on the second line of the table. We excluded cancer 

and children’s hospitals because section 1833(t)(7)(D) of the Act permanently holds 

harmless cancer hospitals and children’s hospitals to their “pre-BBA amount” as 

specified under the terms of the statute, and therefore, we removed them from our impact 

analyses. We show the isolated impact on 72 CMHCs at the bottom of the impact table 

and discuss that impact separately below. 

Column 2: APC Recalibration – All Changes 
CMS-1613-FC 993 

 Column 2 shows the estimated effect of APC recalibration. Column 2 also 

reflects any changes in multiple procedure discount patterns or conditional packaging that 

occur as a result of the changes in the relative magnitude of payment weights. As a result 

of APC recalibration, we estimate that urban hospitals will experience no change, with 

the impact ranging from an increase of 0.3 percent to a decrease of -0.1 percent, 

depending on the number of beds. Rural hospitals will experience no change, with the 

impact ranging from an increase of 0.3 percent to a decrease of -0.4 percent, depending 

on the number of beds. Major teaching hospitals will experience an increase of 0.7 

percent overall. 

Column 3: New Wage Indexes and the Effect of the Provider Adjustments 

 Column 3 demonstrates the combined budget neutral impact of the APC 

recalibration; the updates for the wage indexes with the fiscal year (FY) 2015 IPPS 

post-reclassification wage indexes; and the rural adjustment. We modeled the 

independent effect of the budget neutrality adjustments and the OPD fee schedule 

increase factor by using the relative payment weights and wage indexes for each year, 

and using a CY 2014 conversion factor that included the OPD fee schedule increase and a 

budget neutrality adjustment for differences in wage indexes. 

 Column 3 reflects the independent effects of the updated wage indexes, including 

the application of budget neutrality for the rural floor policy on a nationwide basis. This 

column excludes the effects of the frontier State wage index adjustment, which is not 

budget neutral and is included in Column 5. We did not model a budget neutrality 

adjustment for the rural adjustment for SCHs because we are finalizing our proposal to 
CMS-1613-FC 994 

continue the rural payment adjustment of 7.1 percent to rural SCHs for CY 2015, as 

described in section II.E. of this final rule with comment period. 

 We modeled the independent effect of updating the wage indexes by varying only 

the wage indexes, holding APC relative payment weights, service-mix, and the rural 

adjustment constant and using the CY 2015 scaled weights and a CY 2014 conversion 

factor that included a budget neutrality adjustment for the effect of changing the wage 

indexes between CY 2014 and CY 2015. The FY 2015 wage policy results in modest 

redistributions. 

 There is no difference in impact between the CY 2014 cancer hospital payment 

adjustment and the CY 2015 cancer hospital payment adjustment because we are 

finalizing our proposal to use the same payment-to-cost ratio target in CY 2015 as in 

CY 2014. 

Column 4: All Budget Neutrality Changes Combined with the Market Basket Update 

 Column 4 demonstrates the combined impact of all the changes previously 

described and the update to the conversion factor of 2.2 percent. Overall, these changes 

will increase payments to urban hospitals by 2.3 percent and to rural hospitals by 1.9 

percent. Most classes of hospitals will receive an increase in line with the 2.2 percent 

overall increase after the update is applied to the budget neutrality adjustments. 

Column 5: All Adjustments with the Frontier State Wage Index Adjustment 

 This column shows the impact of all budget neutrality adjustments, application of 

the 2.2 percent OPD fee schedule increase factor, and the nonbudget-neutral impact of 

applying the CY 2015 frontier State wage adjustment. Rural hospitals in West North 

Central and Mountain States will experience estimated increases in payment of 3.4 and 
CMS-1613-FC 995 

4.2 percent, respectively, as a result of the frontier State wage index adjustment, while 

urban hospitals in those States will experience estimated increases of 3.2 and 2.5 percent, 

respectively. 

Column 6: All Changes for CY 2015 

 Column 6 depicts the full impact of the CY 2015 policies on each hospital group 

by including the effect of all of the changes for CY 2015 and comparing them to all 

estimated payments in CY 2014. Column 6 shows the combined budget neutral effects of 

Column 2 and 3; the OPD fee schedule increase; the impact of the frontier State wage 

index adjustment; the impact of estimated OPPS outlier payments as discussed in 

section II.G. of this final rule with comment period; the change in the Hospital OQR 

Program payment reduction for the small number of hospitals in our impact model that 

failed to meet the reporting requirements (discussed in section XIII. of this final rule with 

comment period); and the difference in total OPPS payments dedicated to transitional 

pass-through payments. 

 Of those hospitals that failed to meet the Hospital OQR Program reporting 

requirements for the full CY 2014 update (and assumed, for modeling purposes, to be the 

same number for CY 2015), we included 37 hospitals in our model because they had both 

CY 2013 claims data and recent cost report data. We estimate that the cumulative effect 

of all changes for CY 2015 will increase payments to all facilities by 2.3 percent for 

CY 2015. We modeled the independent effect of all changes in Column 6 using the final 

relative payment weights for CY 2014 and the relative payment weights for CY 2015. 

We used the final conversion factor for CY 2014 of $72.672 and the CY 2015 conversion 

factor of $74.144 discussed in section II.B. of this final rule with comment period. 
CMS-1613-FC 996 

 Column 6 contains simulated outlier payments for each year. We used the 1-year 

charge inflation factor used in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50379) of 

5.09 percent (1.0509) to increase individual costs on the CY 2013 claims, and we used 

the most recent overall CCR in the July 2014 Outpatient Provider-Specific File (OPSF) to 

estimate outlier payments for CY 2014. Using the CY 2013 claims and a 5.09 percent 

charge inflation factor, we currently estimate that outlier payments for CY 2014, using a 

multiple threshold of 1.75 and a fixed-dollar threshold of $2,900 will be approximately 

0.8 percent of total payments. The estimated current outlier payments of 0.8 percent are 

incorporated in the comparison in Column 6. We used the same set of claims and a 

charge inflation factor of 10.44 percent (1.1044) and the CCRs in the July 2014 OPSF, 

with an adjustment of 0.9821, to reflect relative changes in cost and charge inflation 

between CY 2013 and CY 2015, to model the CY 2015 outliers at 1.0 percent of 

estimated total payments using a multiple threshold of 1.75 and a fixed-dollar threshold 

of $2,775. The charge inflation and CCR inflation factors are discussed in detail in the 

FY 2015 IPPS/LTCH PPS final rule (79 FR 50379 through 50380). 

 We estimate that the anticipated change in payment between CY 2014 and 

CY 2015 for the hospitals failing to meet the Hospital OQR Program requirements will 

be negligible. Overall, we estimate that facilities will experience an increase of 

2.3 percent under this final rule with comment period in CY 2015 relative to total 

spending in CY 2014. This projected increase (shown in Column 6) of Table 49 reflects 

the 2.2 percent OPD fee schedule increase factor, less 0.13 percent for the change in the 

pass-through estimate between CY 2014 and CY 2015, plus 0.18 percent for the 

difference in estimated outlier payments between CY 2014 (0.82 percent) and CY 2015 
CMS-1613-FC 997 

(1.0 percent), less 0.1 percent due to the frontier State wage index adjustment in 

CY 2014, plus 0.1 percent due to the frontier State wage index adjustment in CY 2015. 

We estimate that the combined effect of all changes for CY 2015 will increase payments 

to urban hospitals by 2.3 percent. 

 Overall, we estimate that rural hospitals will experience a 1.9 percent increase as 

a result of the combined effects of all changes for CY 2015. We estimate that rural 

hospitals that bill less than 5,000 lines of OPPS services will experience a decrease 

of -2.0 percent and rural hospitals that bill 11,000 or more lines of OPPS services will 

experience adjustments ranging from 0.9 to 2.1 percent. 

 Among hospitals by teaching status, we estimate that the impacts resulting from 

the combined effects of all changes will include an increase of 3.1 percent for major 

teaching hospitals and 2.0 percent for nonteaching hospitals. Minor teaching hospitals 

will experience an estimated increase of 2.0 percent. 

 In our analysis, we also have categorized hospitals by type of ownership. Based 

on this analysis, we estimate that voluntary hospitals will experience an increase of 

2.4 percent, proprietary hospitals will experience an increase of 1.7 percent, and 

governmental hospitals will experience an increase of 2.1 percent. 
CMS-1613-FC 998 

TABLE 49.—ESTIMATED IMPACT OF THE CY 2015 CHANGES FOR THE 

HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM 

 (1) (2) (3) (4) (5) (6) 

 

Numbe

r of 

Hospit

als 

APC 

Recalibrat

ion (all 

changes) 

New 

Wage 

Index and 

Provider 

Adjustme

nts 

All 

Budget 

Neutral 

Change

s 

(combin

ed cols 

2,3) 

with 

Market 

Basket 

Update 

All 

Budget 

Neutral 

Changes 

and 

Update 

(Column 

4) with 

Frontier 

Wage 

Index 

Adjustm

ent 

All 

Chang

es 

 

ALL FACILITIES * 4,006 0.0 0.0 2.2 2.3 2.3

ALL HOSPITALS 3,871 0.0 0.0 2.2 2.3 2.3

(excludes hospitals 

permanently held 

harmless and CMHCs) 

 

 

URBAN HOSPITALS 3,008 0.0 0.0 2.3 2.4 2.3

 LARGE URBAN 1,646 0.1 0.2 2.5 2.5 2.5

 (GT 1 MILL.) 

 OTHER URBAN 1,362 0.0 -0.1 2.1 2.3 2.1

 (LE 1 MILL.) 

 

RURAL HOSPITALS 863 0.0 -0.3 1.9 2.2 1.9

 SOLE COMMUNITY 376 0.1 -0.2 2.2 2.6 2.2

 OTHER RURAL 487 -0.2 -0.3 1.6 1.7 1.6

 

BEDS (URBAN) 

 0 - 99 BEDS 1,067 0.0 0.0 2.3 2.4 2.3

 100-199 BEDS 856 0.0 0.0 2.2 2.3 2.2

 200-299 BEDS 458 -0.1 0.1 2.2 2.4 2.2

 300-499 BEDS 410 -0.1 0.1 2.2 2.4 2.3

 500 + BEDS 217 0.3 -0.1 2.4 2.4 2.5

 
CMS-1613-FC 999 

 (1) (2) (3) (4) (5) (6) 

 

Numbe

r of 

Hospit

als 

APC 

Recalibrat

ion (all 

changes) 

New 

Wage 

Index and 

Provider 

Adjustme

nts 

All 

Budget 

Neutral 

Change

s 

(combin

ed cols 

2,3) 

with 

Market 

Basket 

Update 

All 

Budget 

Neutral 

Changes 

and 

Update 

(Column 

4) with 

Frontier 

Wage 

Index 

Adjustm

ent 

All 

Chang

es 

 

BEDS (RURAL) 

 0 - 49 BEDS 345 0.1 -0.2 2.2 2.4 2.2

 50- 100 BEDS 315 0.3 -0.3 2.2 2.5 2.2

 101- 149 BEDS 116 -0.3 -0.1 1.8 2.1 1.8

 150- 199 BEDS 46 -0.4 -0.4 1.4 2.1 1.4

 200 + BEDS 41 -0.3 -0.4 1.5 1.5 1.5

 

VOLUME (URBAN) 

 LT 5,000 

Lines 544 -1.7 -0.3 0.2 0.4 0.4

 5,000 - 10,999 

Lines 135 -0.8 -0.2 1.3 1.3 1.4

 11,000 - 20,999 

Lines 117 -1.5 0.0 0.6 1.2 0.9

 21,000 - 42,999 

Lines 228 -0.7 0.0 1.5 1.5 1.6

 42,999 - 89,999 

Lines 526 -0.3 0.0 1.9 1.9 1.9

 GT 89,999 

Lines 1,458 0.1 0.0 2.3 2.4 2.4

 

VOLUME (RURAL) 

 LT 5,000 

Lines 34 -3.8 -0.3 -1.9 1.1 -2.0

 5,000 - 10,999 

Lines 27 -1.8 -0.5 -0.1 1.1 0.0

 11,000 - 20,999 

Lines 42 -1.1 -0.3 0.8 0.8 0.9

 21,000 - 42,999 

Lines 161 0.2 -0.3 2.1 2.7 2.1
CMS-1613-FC 1000 

 (1) (2) (3) (4) (5) (6) 

 

Numbe

r of 

Hospit

als 

APC 

Recalibrat

ion (all 

changes) 

New 

Wage 

Index and 

Provider 

Adjustme

nts 

All 

Budget 

Neutral 

Change

s 

(combin

ed cols 

2,3) 

with 

Market 

Basket 

Update 

All 

Budget 

Neutral 

Changes 

and 

Update 

(Column 

4) with 

Frontier 

Wage 

Index 

Adjustm

ent 

All 

Chang

es 

 

 GT 42,999 

Lines 599 0.0 -0.3 1.9 2.1 1.9

 

REGION (URBAN) 

 NEW ENGLAND 152 1.1 0.2 3.5 3.5 3.4

 MIDDLE ATLANTIC 361 0.5 0.5 3.2 3.2 3.2

 SOUTH ATLANTIC 482 -0.2 -0.3 1.7 1.7 1.7

 EAST NORTH 

CENT. 473 0.1 -0.1 2.2 2.1 2.2

 EAST SOUTH CENT. 179 -0.9 -0.5 0.9 0.9 0.9

 WEST NORTH 

CENT. 194 0.0 -0.2 2.0 3.2 2.0

 WEST SOUTH 

CENT. 527 -0.7 -0.5 1.0 1.0 1.1

 MOUNTAIN 203 0.0 -0.1 2.1 2.5 2.2

 PACIFIC 389 0.3 1.1 3.6 3.6 3.7

 PUERTO RICO 48 -0.4 0.3 2.1 2.1 1.9

 

REGION (RURAL) 

 NEW ENGLAND 23 1.6 -0.1 3.6 3.6 3.6

 MIDDLE ATLANTIC 58 0.8 0.2 3.2 3.2 3.2

 SOUTH ATLANTIC 130 -0.6 -0.5 1.0 1.0 1.0

 EAST NORTH 

CENT. 120 0.0 0.0 2.2 2.2 2.1

 EAST SOUTH CENT. 165 -0.8 -0.5 0.9 0.9 0.9

 WEST NORTH 

CENT. 101 0.2 -0.2 2.2 3.4 2.1

 WEST SOUTH 181 -0.7 -0.8 0.7 0.7 0.7
CMS-1613-FC 1001 

 (1) (2) (3) (4) (5) (6) 

 

Numbe

r of 

Hospit

als 

APC 

Recalibrat

ion (all 

changes) 

New 

Wage 

Index and 

Provider 

Adjustme

nts 

All 

Budget 

Neutral 

Change

s 

(combin

ed cols 

2,3) 

with 

Market 

Basket 

Update 

All 

Budget 

Neutral 

Changes 

and 

Update 

(Column 

4) with 

Frontier 

Wage 

Index 

Adjustm

ent 

All 

Chang

es 

 

CENT. 

 MOUNTAIN 61 0.7 -0.4 2.5 4.2 2.6

 PACIFIC 24 0.8 0.9 4.0 3.9 3.9

 

TEACHING STATUS 

 NON-TEACHING 2,839 -0.2 0.0 2.0 2.1 2.0

 MINOR 706 -0.2 -0.1 1.9 2.2 2.0

 MAJOR 326 0.7 0.1 3.1 3.0 3.1

 

DSH PATIENT 

PERCENT 

 0 21 0.0 0.3 2.5 2.5 2.5

 GT 0 - 0.10 328 0.3 0.2 2.7 2.8 2.7

 0.10 - 0.16 334 0.1 0.0 2.3 2.5 2.3

 0.16 - 0.23 680 0.1 0.0 2.2 2.3 2.2

 0.23 - 0.35 1,076 0.0 0.0 2.1 2.3 2.1

 GE 0.35 824 0.1 0.1 2.3 2.3 2.4

 DSH NOT 

AVAILABLE ** 608 -3.6 0.0 -1.4 -1.4 -1.5

 

URBAN 

TEACHING/DSH 

 TEACHING & DSH 938 0.2 0.0 2.4 2.6 2.5

 NO TEACHING/DSH 1,477 -0.2 0.1 2.1 2.1 2.1

 NO TEACHING/NO 

DSH 18 -0.1 0.4 2.5 2.5 2.5

 DSH NOT 575 -3.3 0.1 -1.0 -0.9 -1.0
CMS-1613-FC 1002 

 (1) (2) (3) (4) (5) (6) 

 

Numbe

r of 

Hospit

als 

APC 

Recalibrat

ion (all 

changes) 

New 

Wage 

Index and 

Provider 

Adjustme

nts 

All 

Budget 

Neutral 

Change

s 

(combin

ed cols 

2,3) 

with 

Market 

Basket 

Update 

All 

Budget 

Neutral 

Changes 

and 

Update 

(Column 

4) with 

Frontier 

Wage 

Index 

Adjustm

ent 

All 

Chang

es 

 

AVAILABLE** 

 

TYPE OF OWNERSHIP 

 VOLUNTARY 2,006 0.1 0.0 2.4 2.5 2.4

 PROPRIETARY 1,322 -0.4 -0.1 1.7 1.8 1.7

 GOVERNMENT 543 -0.1 -0.1 2.1 2.1 2.1

 

CMHCs 72 0.0 -0.5 1.7 1.7 1.3

Column (1) shows total hospitals and/or CMHCs. 

Column (2) includes all CY 2015 OPPS policies and compares those to the CY 2014 OPPS. 

Column (3) shows the budget neutral impact of updating the wage index by applying the FY 2015 hospital inpatient wage 

index, including all hold harmless policies and transitional wages. The rural adjustment continues our current policy of 7.1 

percent so the budget neutrality factor is 1. The budget neutrality adjustment for the cancer hospital adjustment is 1.000 

because the payment-to-cost ratio target remains the same as in CY 2014. 

Column (4) shows the impact of all budget neutrality adjustments and the addition of the 2.2 percent OPD fee schedule 

update factor (2.9 percent reduced by 0.5 percentage point for the final productivity adjustment and further reduced by 

0.2 percentage point in order to satisfy statutory requirements set forth in the Affordable Care Act). 

Column (5) shows the nonbudget neutral impact of applying the frontier State wage adjustment in CY 2015. 

Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, 

adding estimated outlier payments, and applying payment wage indexes. 

*These 4,006 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs. 

** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, 

psychiatric, and long-term care hospitals. 
CMS-1613-FC 1003 

(3) Estimated Effects of OPPS Changes on CMHCs 

 The last line of Table 49 demonstrates the isolated impact on CMHCs, which 

furnish only partial hospitalization services under the OPPS. In CY 2014, CMHCs are 

paid under two APCs for these services: APC 0172 (Level I Partial Hospitalization 

(3 services) for CMHCs) and APC 0173 (Level II Partial Hospitalization (4 or more 

services) for CMHCs). Hospitals are paid for partial hospitalization services under APC 

0175 (Level I Partial Hospitalization (3 services) for hospital-based PHPs) and APC 0176 

(Level II Partial Hospitalization (4 or more services) for hospital-based PHPs). We use 

our standard ratesetting methodology to derive the payment rates for each APC based on 

the cost data derived from claims and cost data for the provider-type-specific APC. For 

CY 2015, we are finalizing our proposal to continue the provider-type-specific APC 

structure that we adopted in CY 2011. We modeled the impact of this APC policy 

assuming that CMHCs will continue to provide the same number of days of PHP care, 

with each day having either 3 services or 4 or more services, as seen in the CY 2013 

claims data used for this final rule with comment period,. We excluded days with 1 or 2 

services because our policy only pays a per diem rate for partial hospitalization when 3 or 

more qualifying services are provided to the beneficiary. We estimate that CMHCs will 

experience an overall 1.3 percent increase in payments from CY 2014 (shown in 

Column 6). 

 Column 3 shows that the estimated impact of adopting the FY 2015 wage index 

values will result in a small decrease of -0.5 percent to CMHCs. We note that all 

providers paid under the OPPS, including CMHCs, will receive a 2.2 percent OPD fee 

schedule increase factor. Column 4 shows that combining this OPD fee schedule 
CMS-1613-FC 1004 

increase factor, along with changes in APC policy for CY 2015 and the FY 2015 wage 

index updates, will result in an estimated increase of 1.7 percent. Column 5 shows that 

adding the frontier State wage index adjustment will result in no change to the cumulative 

1.7 percent increase. Column 6 shows that adding the changes in outlier and pass-though 

payments will result in a -0.4 percent decrease in payment for CMHCs, for a total 

increase of 1.3 percent. This reflects all changes to CMHCs for CY 2015.. 

(4) Estimated Effect of OPPS Changes on Beneficiaries 

 For services for which the beneficiary pays a copayment of 20 percent of the 

payment rate, the beneficiary share of payment will increase for services for which the 

OPPS payments will rise and will decrease for services for which the OPPS payments 

will fall. For further discussion on the calculation of the national unadjusted copayments 

and minimum unadjusted copayments, we refer readers to section II.I. of this final rule 

with comment period. In all cases, section 1833(t)(8)(C)(i) of the Act limits beneficiary 

liability for copayment for a procedure performed in a year to the hospital inpatient 

deductible for the applicable year. 

 We estimate that the aggregate beneficiary coinsurance percentage will be 20.0 

percent for all services paid under the OPPS in CY 2015. The estimated aggregate 

beneficiary coinsurance reflects general system adjustments, including recalibration of 

the APC relative payment weights, change in the portion of OPPS payments dedicated to 

pass-through payments, and the CY 2015 comprehensive APC payment policy discussed 

in section II.A.2.e. of this final rule with comment period. 
CMS-1613-FC 1005 

(5) Estimated Effects of OPPS Changes on Other Providers 

 The relative payment weights and payment amounts established under the OPPS 

affect the payments made to ASCs as discussed in section XII. of this final rule with 

comment period. No types of providers or suppliers other than hospitals, CMHCs and 

ASCs will be affected by the proposed changes in this final rule with comment period. 

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

 The effect on the Medicare program is expected to be $900 million in additional 

program payments for OPPS services furnished in CY 2015. The effect on the Medicaid 

program is expected to be limited to increased copayments that Medicaid may make on 

behalf of Medicaid recipients who are also Medicare beneficiaries. We refer readers to 

our discussion of the impact on beneficiaries in section XXI.A. of this final rule with 

comment period. 

(7) Alternative OPPS Policies Considered 

 Alternatives to the OPPS changes we proposed and are finalizing and the reasons 

for our selected alternatives are discussed throughout this final rule with comment period. 

In this section, we discuss some of the major issues and the alternatives considered. 

● Alternatives Considered for the Establishment of Comprehensive APCs 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74861 through 74910 and 75184 through 75185) for a discussion of our policy to 

establish comprehensive APCs for CY 2015 and the alternatives we considered. We note 

that we published tables in that final rule with comment period to demonstrate how this 

policy would have been implemented in CY 2014, and stated that we would be 
CMS-1613-FC 1006 

considering any additional public comments we receive when we update the policy for 

CY 2015 to account for changes that may occur in the CY 2013 claims data. 

b. Estimated Effects of CY 2015 ASC Payment System Policies 

 Most ASC payment rates are calculated by multiplying the ASC conversion factor 

by the ASC relative payment weight. As discussed fully in section XII. of this final rule 

with comment period, we are setting the CY 2015 ASC relative payment weights by 

scaling the CY 2015 OPPS relative payment weights by the ASC scaler of 0.9225. The 

estimated effects of the updated relative payment weights on payment rates are varied 

and are reflected in the estimated payments displayed in Tables 50 and 51 below. 

 Beginning in CY 2011, section 3401 of the Affordable Care Act requires that the 

annual update to the ASC payment system (which currently is the CPI-U) after 

application of any quality reporting reduction be reduced by a productivity adjustment. 

The Affordable Care Act defines the productivity adjustment to be equal to the 10-year 

moving average of changes in annual economy-wide private nonfarm business 

multifactor productivity (MFP) (as projected by the Secretary for the 10-year period 

ending with the applicable fiscal year, year, cost reporting period, or other annual period). 

For ASCs that fail to meet their quality reporting requirements, the CY 2015 payment 

determinations will be based on the application of a 2.0 percentage point reduction to the 

annual update factor, which currently is the CPI-U. We calculated the CY 2015 ASC 

conversion factor by adjusting the CY 2014 ASC conversion factor by 0.9998 to account 

for changes in the pre-floor and pre-reclassified hospital wage indexes between CY 2014 

and CY 2015 and by applying the CY 2015 MFP-adjusted CPI-U update factor of 
CMS-1613-FC 1007 

1.4 percent (projected CPI-U update of 1.9 percent minus a projected productivity 

adjustment of 0.5 percentage point). The CY 2015 ASC conversion factor is $44.071. 

(1) Limitations of Our Analysis 

 Presented here are the projected effects of the changes for CY 2015 on Medicare 

payment to ASCs. A key limitation of our analysis is our inability to predict changes in 

ASC service-mix between CY 2013 and CY 2015 with precision. We believe that the net 

effect on Medicare expenditures resulting from the CY 2015 changes will be small in the 

aggregate for all ASCs. However, such changes may have differential effects across 

surgical specialty groups as ASCs continue to adjust to the payment rates based on the 

policies of the revised ASC payment system. We are unable to accurately project such 

changes at a disaggregated level. Clearly, individual ASCs will experience changes in 

payment that differ from the aggregated estimated impacts presented below. 

(2) Estimated Effects of ASC Payment System Policies on ASCs 

 Some ASCs are multispecialty facilities that perform the gamut of surgical 

procedures from excision of lesions to hernia repair to cataract extraction; others focus on 

a single specialty and perform only a limited range of surgical procedures, such as eye, 

digestive system, or orthopedic procedures. The combined effect on an individual ASC 

of the update to the CY 2015 payments will depend on a number of factors, including, but 

not limited to, the mix of services the ASC provides, the volume of specific services 

provided by the ASC, the percentage of its patients who are Medicare beneficiaries, and 

the extent to which an ASC provides different services in the coming year. The 

following discussion presents tables that display estimates of the impact of the CY 2015 

updates to the ASC payment system on Medicare payments to ASCs, assuming the same 
CMS-1613-FC 1008 

mix of services as reflected in our CY 2013 claims data. Table 50 depicts the estimated 

aggregate percent change in payment by surgical specialty or ancillary items and services 

group by comparing estimated CY 2014 payments to estimated CY 2015 payments and 

Table 51 shows a comparison of estimated CY 2014 payments to estimated CY 2015 

payments for procedures that we estimate will receive the most Medicare payment in 

CY 2014. 

 Table 50 shows the estimated effects on aggregate Medicare payments under the 

ASC payment system by surgical specialty or ancillary items and services group. We 

have aggregated the surgical HCPCS codes by specialty group, grouped all HCPCS codes 

for covered ancillary items and services into a single group, and then estimated the effect 

on aggregated payment for surgical specialty and ancillary items and services groups. 

The groups are sorted for display in descending order by estimated Medicare program 

payment to ASCs. The following is an explanation of the information presented in 

Table 50. 

● Column 1—Surgical Specialty or Ancillary Items and Services Group indicates 

the surgical specialty into which ASC procedures are grouped and the ancillary items and 

services group which includes all HCPCS codes for covered ancillary items and services. 

To group surgical procedures by surgical specialty, we used the CPT code range 

definitions and Level II HCPCS codes and Category III CPT codes as appropriate, to 

account for all surgical procedures to which the Medicare program payments are 

attributed. 

● Column 2—Estimated CY 2014 ASC Payments were calculated using 

CY 2013 ASC utilization (the most recent full year of ASC utilization) and CY 2014 
CMS-1613-FC 1009 

ASC payment rates. The surgical specialty and ancillary items and services groups are 

displayed in descending order based on estimated CY 2014 ASC payments. 

● Column 3—Estimated CY 2015 Percent Change is the aggregate percentage 

increase or decrease in Medicare program payment to ASCs for each surgical specialty or 

ancillary items and services group that are attributable to updates to ASC payment rates 

for CY 2015 compared to CY 2014. 

 As seen in Table 50, for the six specialty groups that account for the most ASC 

utilization and spending, we estimate that the update to ASC rates for CY 2015 will result 

in a 1-percent decrease in aggregate payment amounts for eye and ocular adnexa 

procedures, a 6-percent increase in aggregate payment amounts for digestive system 

procedures, a 1-percent increase in aggregate payment amounts for nervous system 

procedures, a 2-percent increase in aggregate payment amounts for musculoskeletal 

system procedures, a 3-percent increase in aggregate payment amounts for genitourinary 

system procedures, and a 5-percent increase in aggregate payment amounts for 

integumentary system procedures. 

 An estimated increase in aggregate payment for the specialty group does not mean 

that all procedures in the group will experience increased payment rates. For example, 

the estimated increase for CY 2015 for digestive system procedures is likely due to an 

increase in the ASC payment weight for some of the high volume procedures, such as 

CPT code 43239 (Upper GI endoscopy biopsy) where estimated payment will increase by 

9 percent for CY 2015. 

 Also displayed in Table 50 is a separate estimate of Medicare ASC payments for 

the group of separately payable covered ancillary items and services. The payment 
CMS-1613-FC 1010 

estimates for the covered surgical procedures include the costs of packaged ancillary 

items and services. We estimate that aggregate payments for these items and services 

will decrease by 4 percent for CY 2015. 

TABLE 50.—ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC 

PAYMENT SYSTEM ON AGGREGATE CY 2015 MEDICARE PROGRAM 

PAYMENTS BY SURGICAL SPECIALTY OR ANCILLARY ITEMS AND 

SERVICES GROUP 

Surgical Specialty Group 

(1) 

Estimated 

CY 2014 

ASC 

Payments 

(in Millions) 

(2) 

Estimated 

CY 2015 

Percent 

Change 

(3) 

Total $3,819 1% 

Eye and ocular adnexa $1,560 -1% 

Digestive system $781 6% 

Nervous system $568 1% 

Musculoskeletal system $472 2% 

Genitourinary system $165 3% 

Integumentary system $137 5% 

Respiratory system $53 3% 

Cardiovascular system $36 -1% 

Ancillary items and services $24 -4% 

Auditory system $14 1% 

Hematologic & lymphatic systems $6 14% 

 Table 51 below shows the estimated impact of the updates to the revised ASC 

payment system on aggregate ASC payments for selected surgical procedures during 

CY 2015. The table displays 30 of the procedures receiving the greatest estimated 

CY 2014 aggregate Medicare payments to ASCs. The HCPCS codes are sorted in 

descending order by estimated CY 2014 program payment. 

● Column 1–CPT/HCPCS code. 

● Column 2–Short Descriptor of the HCPCS code. 
CMS-1613-FC 1011 

● Column 3–Estimated CY 2014 ASC Payments were calculated using CY 2013 

ASC utilization (the most recent full year of ASC utilization) and the CY 2014 ASC 

payment rates. The estimated CY 2014 payments are expressed in millions of dollars. 

● Column 4–Estimated CY 2015 Percent Change reflects the percent differences 

between the estimated ASC payment for CY 2014 and the estimated payment for 

CY 2015 based on the update. 

TABLE 51.--ESTIMATED IMPACT OF THE CY 2015 UPDATE TO THE ASC 

PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR SELECTED 

PROCEDURES 

CPT/HCPCS 

Code 

(1) 

Short Descriptor 

(2) 

Estimated 

CY 2014 

ASC 

Payments 

(in millions) 

(3) 

Estimated 

CY 2015 

Percent 

Change 

(4) 

66984 Cataract surg w/iol, 1 stage $1,131 -1%

43239 Upper GI endoscopy, biopsy $170 10%

45380 Colonoscopy and biopsy $167 7%

45385 Lesion removal colonoscopy $107 6%

66982 Cataract surgery, complex $93 -1%

64483 Inj foramen epidural l/s $90 0%

62311 Inject spine l/s (cd) $79 0%

45378 Diagnostic colonoscopy $72 6%

66821 After cataract laser surgery $63 3%

64493 Inj paravert f jnt l/s 1 lev $47 0%

G0105 Colorectal scrn; hi risk ind $45 1%

64635 Destroy lumb/sac facet jnt $45 -5%

63650 Implant neuroelectrodes $41 4%

G0121 Colon ca scrn not hi rsk ind $41 1%

64590 Insrt/redo pn/gastr stimul $38 -1%

15823 Revision of upper eyelid $35 2%

63685 Insrt/redo spine n generator $34 29%

29827 Arthroscop rotator cuff repr $34 1%

64721 Carpal tunnel surgery $32 -1%

29881 Knee arthroscopy/surgery $30 -1%

29824 Shoulder arthroscopy/surgery $27 1%
CMS-1613-FC 1012 

CPT/HCPCS 

Code 

(1) 

Short Descriptor 

(2) 

Estimated 

CY 2014 

ASC 

Payments 

(in millions) 

(3) 

Estimated 

CY 2015 

Percent 

Change 

(4) 

29880 Knee arthroscopy/surgery $25 -1%

43235 Uppr gi endoscopy diagnosis $23 10%

62310 Inject spine c/t $23 0%

29823 Shoulder arthroscopy/surgery $22 1%

52000 Cystoscopy $22 1%

G0260 Inj for sacroiliac jt anesth $21 0%

45384 Lesion remove colonoscopy $21 7%

67042 Vit for macular hole $21 1%

26055 Incise finger tendon sheath $19 -2%

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

 We estimate that the CY 2015 update to the ASC payment system will be 

generally positive for beneficiaries with respect to the new procedures that we are adding 

to the ASC list of covered surgical procedures and for those that we are designating as 

office-based for CY 2015. First, other than certain preventive services where coinsurance 

and the Part B deductible is waived to comply with section 1833(a)(1) and (b) of the Act, 

the ASC coinsurance rate for all procedures is 20 percent. This contrasts with procedures 

performed in HOPDs under the OPPS, where the beneficiary is responsible for 

copayments that range from 20 percent to 40 percent of the procedure payment (other 

than for certain preventive services). Second, in almost all cases, the ASC payment rates 

under the ASC payment system are lower than payment rates for the same procedures 

under the OPPS. Therefore, the beneficiary coinsurance amount under the ASC payment 

system will almost always be less than the OPPS copayment amount for the same 

services. (The only exceptions would be if the ASC coinsurance amount exceeds the 
CMS-1613-FC 1013 

inpatient deductible. The statute requires that copayment amounts under the OPPS not 

exceed the inpatient deductible.) Beneficiary coinsurance for services migrating from 

physicians’ offices to ASCs may decrease or increase under the revised ASC payment 

system, depending on the particular service and the relative payment amounts under the 

MPFS compared to the ASC. However, for those additional procedures that we are 

designating as office-based in CY 2015, the beneficiary coinsurance amount under the 

ASC payment system generally will be no greater than the beneficiary coinsurance under 

the MPFS because the coinsurance under both payment systems generally is 20 percent 

(except for certain preventive services where the coinsurance is waived under both 

payment systems). 

(4) Alternative ASC Payment Policies Considered 

 Alternatives to the minor changes that we are making to the ASC payment system 

and the reasons that we have chosen specific options are discussed throughout this final 

rule with comment period. There are no major changes to ASC policies for CY 2015. 

c. Accounting Statements and Tables 

 As required by OMB Circular A-4 (available on the Office of Management and 

Budget Web Site at: 

http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a4.pdf), we have prepared two accounting statements to illustrate the impacts of this final 

rule with comment period. The first accounting statement, Table 52 below, illustrates the 

classification of expenditures for the CY 2015 estimated hospital OPPS incurred benefit 

impacts associated with the CY 2015 OPD fee schedule increase, based on the 

2014 Trustee’s Report. The second accounting statement, Table 53 below, illustrates the 
CMS-1613-FC 1014 

classification of expenditures associated with the 1.4 percent CY 2015 update to the ASC 

payment system, based on the provisions of this final rule with comment period and the 

baseline spending estimates for ASCs in the 2014 Trustee’s Report. Lastly, the tables 

classify most estimated impacts as transfers. 

TABLE 52.--ACCOUNTING STATEMENT: CY 2015 ESTIMATED HOSPITAL 

OPPS TRANSFERS FROM CY 2014 TO CY 2015 ASSOCIATED WITH THE 

CY 2015 HOSPITAL OUTPATIENT OPD FEE SCHEDULE INCREASE 

Category Transfers 

Annualized Monetized Transfers $900 million 

From Whom to Whom 

Federal Government to outpatient hospitals and 

other providers who receive payment under the 

hospital OPPS 

Total $900 million 

TABLE 53.--ACCOUNTING STATEMENT: CLASSIFICATION OF 

ESTIMATED TRANSFERS FROM CY 2014 TO CY 2015 AS A RESULT OF THE 

CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM 

Category Transfers 

Annualized Monetized Transfers $42 million 

From Whom to Whom Federal Government to Medicare Providers 

and Suppliers 

Total $42 million 

d. Effects of Requirements for the Hospital OQR Program 

 In section XIII. of this final rule with comment period, we are finalizing policies 

affecting the Hospital OQR Program. Of 3,325 hospitals that met eligibility requirements 

for the CY 2014 payment determination, we determined that 88 hospitals did not meet the 

requirements to receive the full OPD fee schedule increase factor. Most of these 

hospitals (70 of the 88) chose not to participate in the Hospital OQR Program for the 

CY 2014 payment determination. We estimate that approximately 90 hospitals will not 
CMS-1613-FC 1015 

receive the full OPD fee schedule increase factor for the CY 2017 payment determination 

and subsequent years. 

 In section XIII.E. of this final rule with comment period, we are finalizing our 

proposal to add one claims-based quality measure, OP-32: Facility 7-Day 

Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy, for the Hospital 

OQR Program for the CY 2018 payment determination and subsequent years, instead of 

the CY 2017 payment determination and subsequent years as proposed. Because this 

measure is claims-based, it will not require additional burden from data reporting or other 

action on the part of the hospitals. Therefore, we do not anticipate that this measure will 

cause any additional facilities to fail to meet requirements the Hospital OQR Program for 

the CY 2018 payment determination and subsequent years. 

 In section XIII.C.3. of this final rule with comment period, for the CY 2017 

payment determination and subsequent years, we are finalizing our proposal to remove 

OP-6 and OP-7 from the Hospital OQR Program. However, we are not finalizing our 

proposal to remove OP-4 and are retaining that measure in the Hospital OQR Program for 

reasons discussed in section XIII.C.3. In sections XIII.D.3.b. and c. of this final rule with 

comment period, we are also finalizing our proposal to exclude OP-31 from the CY 2016 

payment determination measure set and to change that measure from required to 

voluntary for the CY 2017 payment determination and subsequent years. Hospitals will 

not be subject to a payment reduction with respect to this measure for the CY 2016 

payment determination or during the period of voluntary reporting. 

 We anticipate a reduction in burden of approximately 840,517 hours or $25.2 

million across participating hospitals from the two measures we are removing and the 
CMS-1613-FC 1016 

measure we are making voluntary, as further detailed in sections XIII.C.3. and XIII.D.3.c. 

of this final rule with comment period, respectively, and the information collection 

requirements in section XIX.C.1. of this final rule with comment period. We refer 

readers to the information collection requirements section of this final rule with comment 

period (section XIX.C.1. of this final rule with comment period) for a detailed discussion 

of the financial burden of the requirements of the Hospital OQR Program. 

 The validation requirements that we are finalizing for the CY 2017 payment 

determination and subsequent years will result in medical record documentation of 

approximately 6,000 cases per quarter (up to 12 cases per quarter for 500 hospitals) 

submitted to the designated CMS contractor. In section XIII.H.3.e. of this final rule with 

comment period, we are finalizing our proposal to allow hospitals to submit medical 

record documentation for validation using either of two methods: (1) through paper 

medical records; or (2) by securely transmitting electronic versions of medical 

information by either (a) downloading or copying the digital image (that is, a PDF) of the 

patient chart onto CD, DVD, or flash drive and shipping the electronic media following 

instructions specified on the QualityNet Web site; or (b) securely submitting digital 

images (PDFs) of patient charts using a Secure File Transfer Portal on the QualityNet 

Web site. 

 As stated in prior rulemaking (76 FR 74577), we will pay for the cost of sending 

paper medical record documentation to the designated CMS contractor at the rate of 

12 cents per page for copying and approximately $1.00 per case for postage. For both 

new electronic methods, we are finalizing our proposal in the information collection 
CMS-1613-FC 1017 

requirements section of this final rule with comment period to reimburse hospitals for 

sending medical records electronically at a rate of $3.00 per patient chart. 

 As we stated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75192), we have found that an outpatient medical chart generally contains up to 

10 pages. However, because we do not yet know how many hospitals will choose to 

submit data electronically or through paper, we cannot estimate the total cost of 

expenditures and are unable to estimate the number of hospitals that will fail the 

validation documentation submission requirement for the CY 2017 payment 

determination. Because we will pay for the data collection effort, we believe that a 

requirement for medical record documentation for up to12 cases per quarter for 

500 hospitals for CY 2015 represents a minimal burden to Hospital OQR Program 

participating hospitals. 

e. Effects of CY 2015 Policies for the ASCQR Program 

 In section XIV. of this final rule with comment period, we are adopting policies 

affecting the ASCQR Program. Of 5,260 ASCs that met eligibility requirements for 

CY 2014, we determined that 116 ASCs did not meet the requirements to receive the full 

annual payment update. 

 In section XIV.B.5. of this final rule with comment period, we are finalizing the 

adoption of one claims-based quality measure, ASC-12: Facility Seven-Day 

Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy, for the ASCQR 

Program beginning with the CY 2018 payment determination, rather than beginning with 

the CY 2017 payment determination as proposed. The measure is claims-based and will 

not require additional data reporting or other action by ASCs. Therefore, we do not 
CMS-1613-FC 1018 

anticipate that this measure will cause any additional ASCs to fail to meet the ASCQR 

Program requirements. We present the time and burdens associated with our finalized 

policies and proposals in section XIX.C.2. of this final rule with comment period. 

 In section XIV.E.3.b. of this final rule with comment period, we noted the 

3-month delay in data collection for ASC-9 and ASC-10 for the CY 2016 payment 

determination. We do not believe that this 3-month delay in data collection will 

significantly affect the number of ASCs that meet the ASCQR Program requirements. 

 In section XIV.E.3.c. of this final rule with comment period, we are finalizing our 

proposal that ASC-11, which was to be first included in the CY 2016 payment 

determination, will not be included in the CY 2016 measure set, and that the measure will 

be voluntary for the CY 2017 payment determination and subsequent years. ASCs will 

not be subject to a payment reduction for the CY 2016 payment determination, nor will 

ASCs be subject to a payment reduction for the CY 2017 payment determination and 

subsequent years for failing to report this voluntary measure. Because this measure has 

not yet affected any payment determination, we do not believe that there will be any 

impact on the number of ASCs that meet the ASCQR Program requirements as a result of 

our decision not to include this measure in the measure set for the CY 2016 payment 

determination and to make this measure voluntary for the CY 2017 payment 

determination and subsequent years. 

 We do not believe that the other measures we previously adopted will cause any 

additional ASCs to fail to meet the ASCQR Program requirements. (We refer readers to 

the CY 2014 OPPS/ASC final rule with comment period for a list of these measures 

(78 FR 75130)). 
CMS-1613-FC 1019 

 Further, we do not believe that any of the other proposals we are finalizing in this 

final rule with comment period will significantly affect the number of ASCs that do not 

receive a full annual payment update for the CY 2017 payment determination. We are 

unable to estimate the number of ASCs that will not receive the full annual payment 

update based on the CY 2015 and CY 2016 payment determinations (78 FR 75192). For 

this reason, using the CY 2014 payment determination numbers as a baseline, we 

estimate that approximately 116 ASCs will not receive the full annual payment update in 

CY 2017 due to failure to meet the ASCQR Program requirements. 

 We invited public comment on the burden associated with these information 

collection requirements. We did not receive any public comments. 

f. Effects of Changes to the Rural Provider and Hospital Ownership Exceptions to the 

Physician Self-Referral Law 

 Section 6001(a) of the Affordable Care Act amended the rural provider and 

hospital ownership exceptions to the physician self-referral law (sections 1877(d)(2) and 

(d)(3) of the Act, respectively) to impose additional restrictions on physician ownership 

or investment in hospitals. The amended rural provider and hospital ownership 

exceptions provide that a hospital may not increase the number of operating rooms, 

procedure rooms, and beds beyond that for which the hospital was licensed on 

March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in 

effect as of this date, but did have a provider agreement in effect on December 31, 2010, 

the date of effect of such agreement). We issued regulations addressing the prohibition 

against facility expansion in the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72240). 
CMS-1613-FC 1020 

 Section 6001(a)(3) of the Affordable Care Act added section 1877(i)(3)(A)(i) of 

the Act to set forth that the Secretary shall establish and implement an exception process 

to the prohibition on expansion of facility capacity. We issued regulations that govern 

the expansion exception process in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74517) at 42 CFR 411.362(c). The regulations addressing the expansion 

exception process were issued by January 1, 2012, and the process was implemented on 

February 1, 2012. 

 As required by the statute, the expansion exception process provides that hospitals 

that qualify as an “applicable hospital” or a “high Medicaid facility” may request an 

exception to the prohibition on facility expansion. The existing expansion exception 

process requires the use of filed Medicare cost report data from the Healthcare Cost 

Report Information System (HCRIS) for hospitals to demonstrate that they satisfy the 

relevant eligibility criteria set forth in § 411.362(c)(2) for applicable hospitals and 

§ 411.362(c)(3) for high Medicaid facilities (76 FR 42350 through 42352). As discussed 

in section XV.C. of the CY 2015 OPPS/ASC proposed rule (79 FR 41054 through 

41056), we proposed to permit physician-owned hospitals to use certain non-HCRIS data 

sources to demonstrate satisfaction of the expansion exception process eligibility criteria. 

In section XV.C. of this final rule with comment period, we are finalizing our proposal 

with certain modifications. Under our policy, we will continue to require each hospital 

seeking to qualify for an expansion exception to access and utilize data for its estimations 

or determinations to demonstrate that the hospital meets the relevant criteria and to 

provide a detailed explanation regarding whether and how it satisfies each of the relevant 
CMS-1613-FC 1021 

criteria. We believe the impact of our modification on affected hospitals will be minimal, 

given that the use of data from a non-HCRIS data source is voluntary. 

 Our policy will require each requesting hospital also to provide actual notification 

that it is requesting an expansion exception directly to hospitals whose data are part of the 

comparisons set forth in § 411.362(c)(2)(ii) and (c)(3)(ii) of the regulations, in addition to 

performing the other methods of notification specified in our existing regulations. We 

are finalizing this policy, and we believe the impact of this additional requirement on 

physician-owned hospitals will be minimal. 

 We believe that our policy will affect a relatively small number of 

physician-owned hospitals. We estimate that there are approximately 265 

physician-owned hospitals in the country. Since the process was implemented in 

February 2012, we have received only four requests, only one of which has been 

considered sufficiently complete to continue with publication in the Federal Register, 

under the current regulations. We anticipate receiving a similar number of requests each 

year. We do not believe that we can use the four requests to estimate accurately the 

potential increase in operating rooms, procedure rooms, and beds pursuant to approved 

expansion exception requests, and we are not aware of any data that may indicate such an 

increase. At this time, we also have no data or projections that may help estimate the 

number of physicians that will be affected by these proposals as a result of their 

ownership interests in hospitals. 

 We believe that beneficiaries may be positively impacted by our policies. 

Specifically, an increase in operating rooms, procedure rooms, and beds may augment the 

volume or nature of services offered by physician-owned hospitals. An expansion in the 
CMS-1613-FC 1022 

number of hospital beds may also permit additional inpatient admissions and overnight 

stays. Increased operating rooms, procedure rooms, and beds may result in improved 

access to health care facilities and services. We believe that our policies are necessary to 

conform our regulations to the amendments to section 1877 of the Act. 

 We solicited public comments on each of the issues outlined above that contain 

estimates of the costs and benefits of the proposed rule. We specifically solicited 

comments on the potential impact on State governments, because we proposed to define 

external data sources as data sources generated, maintained, or under the control of a 

State Medicaid agency. We did not receive any public comments on our estimates. 

g. Effects of Policies Related to CMS-Identified Overpayments Associated with Payment 

Data Submitted by Medicare Advantage (MA) Organizations and Medicare Part D 

Sponsors 

 In section XVII. of this final rule with comment period, we discuss our final 

decisions to set forth in regulations a formal process, including appeals processes, that 

allows us to recoup overpayments in the limited set of circumstances where CMS makes 

a determination that an overpayment to an MA organization or Part D sponsor occurred 

because the organization or sponsor submitted erroneous payment data to CMS. It is 

difficult to predict how many times CMS will annually determine an overpayment due to 

erroneous payment data submitted to CMS by an MA organization or Part D sponsor and 

that, therefore, will be subject to the offset and appeals regulations. However, we predict 

that it will be highly unlikely to exceed 10 cases a year and will probably be fewer. 

Further, electing to appeal a CMS overpayment determination under the final regulations 

is completely at the discretion of the MA organization or Part D sponsor. The MA 
CMS-1613-FC 1023 

organization or Part D sponsor may agree that the data require correction and resubmit 

the data; MA organizations and Part D sponsors that receive notification of an 

overpayment are under no obligation to initiate the appeal process. If the MA 

organization or Part D sponsor chooses not to appeal, there are no costs or burden 

associated with the appeal. If the MA organization or Part D sponsor chooses to appeal 

the overpayment determination, there will be costs associated with preparing the appeal 

request. 

 We are establishing three levels of appeal (reconsideration, informal hearing, and 

Administrator review), each of which the MA organization or Part D sponsor will have to 

request. Once the appeal has been filed, however; there will be little or no cost 

experienced by the MA organization or Part D sponsor because the appeal process is on 

the record and will not involve oral testimony. The extent to which there will be costs 

associated with preparing the appeal request is subject to preference and choice. We 

estimate that it will take a plan 5 hours to prepare and file a reconsideration request. In 

terms of cost, it has been our experience that most appeals have been prepared by highlevel officials of the plan or lawyers. According to the most recent wage data provided 

by the Bureau of Labor Statistics (BLS) for May 2012, the mean hourly wage for the 

category of “Lawyers”—which we believe, considering the variety of officials who have 

submitted appeals, is the most appropriate category—is $62.93. Multiplying this figure 

by 50 hours (10 submissions x 5 hours) results in a projected annual cost burden of 

$3,147. We estimate the preparation and filing of a request for a hearing, or for 

Administrator’s review will take 2 hours, at most, because the MA organization or Part D 

sponsor cannot submit new evidence. The hearing officer or Administrator is limited to a 
CMS-1613-FC 1024 

review of the record. Multiplying this figure by 40 hours (10 submissions x 4 hours) 

results in a projected annual cost burden of $2,517. It is estimated that if the costs of 

benefits and overhead are included, the total annual costs for requests at the three levels 

will be approximately $11,000. 

B. Regulatory Flexibility Act (RFA) Analysis 

 The RFA requires agencies to analyze options for regulatory relief of small 

entities, if a rule has a significant impact on a substantial number of small entities. For 

purposes of the RFA, we estimate that most hospitals, ASCs and CMHCs are small 

entities as that term is used in the RFA. For purposes of the RFA, most hospitals are 

considered small businesses according to the Small Business Administration’s size 

standards with total revenues of $38.5 million or less in any single year. Most ASCs and 

most CMHCs are considered small businesses with total revenues of $15 million or less 

in any single year. We estimate that this final rule with comment period may have a 

significant impact on approximately 2,006 hospitals with voluntary ownership. For 

details, see the Small Business Administration’s “Table of Small Business Size 

Standards” at http://www.sba.gov/content/table-small-business-size-standards. 

 In addition, section 1102(b) of the Act requires us to prepare a regulatory impact 

analysis if a 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 603 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 100 or fewer 

beds. We estimate that this final rule with comment period may have a significant impact 

on approximately 709 small rural hospitals. 
CMS-1613-FC 1025 

 The analysis above, together with the remainder of this preamble, provides a 

regulatory flexibility analysis and a regulatory impact analysis. 

C. Unfunded Mandates Reform Act Analysis 

 Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 

requires that agencies assess anticipated costs and benefits before issuing any rule whose 

mandates require spending in any 1 year of $100 million in 1995 dollars, updated 

annually for inflation. That threshold level is currently approximately $141 million. This 

final rule with comment period does not mandate any requirements for State, local, or 

tribal governments, or for the private sector. 

D. Conclusion 

 The changes we are making in this final rule with comment period will affect all 

classes of hospitals paid under the OPPS and will affect both CMHCs and ASCs. We 

estimate that most classes of hospitals paid under the OPPS will experience a modest 

increase or a minimal decrease in payment for services furnished under the OPPS in 

CY 2015. Table 49 demonstrates the estimated distributional impact of the OPPS budget 

neutrality requirements that will result in a 2.3 percent increase in payments for all 

services paid under the OPPS in CY 2015, after considering all of the changes to APC 

reconfiguration and recalibration, as well as the OPD fee schedule increase factor, wage 

index changes, including the frontier State wage index adjustment, estimated payment for 

outliers, and changes to the pass-through payment estimate. However, some classes of 

providers that are paid under the OPPS will experience more significant gains and others 

will experience modest losses in OPPS payments in CY 2015. 
CMS-1613-FC 1026 

 The updates to the ASC payment system for CY 2015 will affect each of the 

approximately 5,300 ASCs currently approved for participation in the Medicare program. 

The effect on an individual ASC will depend on its mix of patients, the proportion of the 

ASC’s patients who are Medicare beneficiaries, the degree to which the payments for the 

procedures offered by the ASC are changed under the ASC payment system, and the 

extent to which the ASC provides a different set of procedures in the coming year. 

Table 50 demonstrates the estimated distributional impact among ASC surgical 

specialties of the MFP-adjusted CPI-U update factor of 1.4 percent for CY 2015. 

XXII. Federalism Analysis 

Executive Order 13132 establishes certain requirements that an agency must meet 

when it promulgates a proposed rule (and subsequent final rule) that imposes substantial 

direct costs on State and local governments, preempts State law, or otherwise has 

Federalism implications. We have examined the OPPS and ASC provisions included in 

this final rule with comment period in accordance with Executive Order 13132, 

Federalism, and have determined that they will not have a substantial direct effect on 

State, local or tribal governments, preempt State law, or otherwise have a Federalism 

implication. As reflected in Table 49 of this final rule with comment period, we estimate 

that OPPS payments to governmental hospitals (including State and local governmental 

hospitals) will increase by 2.1 percent under this final rule with comment period. While 

we do not know the number of ASCs or CMHCs with government ownership, we 

anticipate that it is small. The analyses we have provided in this section of this final rule 

with comment period, in conjunction with the remainder of this document, demonstrate 
CMS-1613-FC 1027 

that this final rule with comment period is consistent with the regulatory philosophy and 

principles identified in Executive Order 12866, the RFA, and section 1102(b) of the Act. 

 This final rule with comment period will affect payments to a substantial number 

of small rural hospitals and a small number of rural ASCs, as well as other classes of 

hospitals, CMHCs, and ASCs, and some effects may be significant. 
CMS-1613-FC 1028 

List of Subjects 

42 CFR Part 411 

 Kidney diseases, Medicare, Physician referral, Reporting and recordkeeping 

requirements. 

42 CFR Part 412 

 Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, 

Reporting and recordkeeping requirements. 

42 CFR Part 416 

 Health facilities, Health professions, Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 419

 Hospitals, Medicare, Reporting and recordkeeping requirements. 

42 CFR Part 422 

 Administrative practice and procedure, Health facilities, Health maintenance, 

organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping 

requirements. 

42 CFR Part 423 

 Administrative practice and procedure, Emergency medical services, Health 

facilities, Health maintenance organizations (HMO), Health professionals, Medicare, 

Penalties, Privacy, Reporting and recordkeeping requirements. 

42 CFR Part 424

 Emergency medical services, Health professions, Medicare. 
CMS-1613-FC 1029 

For reasons stated in the preamble of this document, the Centers for Medicare & 

Medicaid Services is amending 42 CFR Chapter IV as set forth below:

Part 411—EXCLUSIONS FROM MEDICARE AND LIMITATION ON 

MEDICARE PAYMENT 

 1. The authority citation for part 411 continues to read as follows: 

Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877 of the 

Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh, and 

1395nn). 

 2. Section 411.362 is amended by— 

 a. Under paragraph (a), adding a definition of “External data source” in 

alphabetical order. 

 b. Revising paragraphs (c)(2)(ii), (c)(2)(iv), (c)(2)(v), (c)(3)(ii), and (c)(5). 

 The addition and revisions read as follows: 

§ 411.362 Additional requirements concerning physician ownership and investment 

in hospitals. 

 (a) * * * 

 External data source means a data source that— 

 (1) Is generated, maintained, or under the control of a State Medicaid agency; 

 (2) Is reliable and transparent; 

 (3) Maintains data that, for purposes of the process described in paragraph (c) of 

this section, are readily available and accessible to the requesting hospital, comparison 

hospitals, and CMS; and 
CMS-1613-FC 1030 

 (4) Maintains or generates data that, for purposes of the process described in 

paragraph (c) of this section, are accurate, complete, and objectively verifiable. 

* * * * * 

 (c) * * * 

 (2) * * * 

 (ii) Medicaid inpatient admissions. Has an annual percent of total inpatient 

admissions under Medicaid that is equal to or greater than the average percent with 

respect to such admissions for all hospitals located in the county in which the hospital is 

located during the most recent 12-month period for which data are available as of the date 

that the hospital submits its request. For purposes of this paragraph, the most recent 

12-month period for which data are available means the most recent 12-month period for 

which the data source used contains all data from the requesting hospital and each 

hospital located in the same county as the requesting hospital. 

 (A) Until such time that the Healthcare Cost Report Information System (HCRIS) 

contains sufficiently complete inpatient Medicaid discharge data, a hospital may use filed 

Medicare hospital cost report data or data from an external data source (as defined in 

paragraph (a) of this section) to estimate its annual percent of total inpatient admissions 

under Medicaid and the average percent with respect to such admissions for all hospitals 

located in the county in which the hospital is located. 

 (B) On or after such date that the Secretary determines that HCRIS contains 

sufficiently complete inpatient Medicaid discharge data, a hospital may use only filed 

Medicare hospital cost report data to estimate its annual percent of total inpatient 
CMS-1613-FC 1031 

admissions under Medicaid and the average percent with respect to such admissions for 

all hospitals located in the county in which the hospital is located. 

* * * * * 

 (iv) Average bed capacity. Is located in a State in which the average bed 

capacity in the State is less than the national average bed capacity during the most recent 

fiscal year for which HCRIS, as of the date that the hospital submits its request, contains 

data from a sufficient number of hospitals to determine a State’s average bed capacity 

and the national average bed capacity. CMS will provide on its Web site State average 

bed capacities and the national average bed capacity. For purposes of this paragraph, 

“sufficient number” means the number of hospitals, as determined by CMS, that would 

ensure that the determination under this paragraph would not materially change after 

additional hospital data are reported. 

 (v) Average bed occupancy. Has an average bed occupancy rate that is greater 

than the average bed occupancy rate in the State in which the hospital is located during 

the most recent fiscal year for which HCRIS, as of the date that the hospital submits its 

request, contains data from a sufficient number of hospitals to determine the requesting 

hospital’s average bed occupancy rate and the relevant State’s average bed occupancy 

rate. A hospital must use filed hospital cost report data to determine its average bed 

occupancy rate. CMS will provide on its Web site State average bed occupancy rates. 

For purposes of this paragraph, “sufficient number” means the number of hospitals, as 

determined by CMS, that would ensure that the determination under this paragraph would 

not materially change after additional hospital data are reported. 

 (3) * * * 
CMS-1613-FC 1032 

 (ii) Medicaid inpatient admissions. With respect to each of the 3 most recent 

12-month periods for which data are available as of the date the hospital submits its 

request, has an annual percent of total inpatient admissions under Medicaid that is 

estimated to be greater than such percent with respect to such admissions for any other 

hospital located in the county in which the hospital is located. For purposes of this 

paragraph, the most recent 12-month period for which data are available means the most 

recent 12-month period for which the data source used contains all data from the 

requesting hospital and every hospital located in the same county as the requesting 

hospital. 

 (A) Until such time that the Healthcare Cost Report Information System (HCRIS) 

contains sufficiently complete inpatient Medicaid discharge data, a hospital may use filed 

Medicare hospital cost report data or data from an external data source (as defined in 

paragraph (a) of this section) to estimate its annual percentage of total inpatient 

admissions under Medicaid and the annual percentages of total inpatient admissions 

under Medicaid for every other hospital located in the county in which the hospital is 

located. 

 (B) On or after such date that the Secretary determines that HCRIS contains 

sufficiently complete inpatient Medicaid discharge data, a hospital may use only filed 

Medicare hospital cost report data to estimate its annual percentage of total inpatient 

admissions under Medicaid and the annual percentages of total inpatient admissions 

under Medicaid for every other hospital located in the county in which the hospital is 

located. 

* * * * * 
CMS-1613-FC 1033 

 (5) Community input and timing of complete request. Upon submitting a request 

for an exception and until the hospital receives a CMS decision, the hospital must 

disclose on any public Web site for the hospital that it is requesting an exception and 

must also provide actual notification that it is requesting an exception, in either electronic 

or hard copy form, directly to hospitals whose data are part of the comparisons in 

paragraphs (c)(2)(ii) and (c)(3)(ii) of this section. Individuals and entities in the 

hospital’s community may provide input with respect to the hospital’s request no later 

than 30 days after CMS publishes notice of the hospital’s request in the Federal 

Register. Such input must take the form of written comments. The written comments 

must be either mailed or submitted electronically to CMS. If CMS receives written 

comments from the community, the hospital has 30 days after CMS notifies the hospital 

of the written comments to submit a rebuttal statement. 

 (i) If only filed Medicare hospital cost report data are used in the hospital’s 

request, the written comments, and the hospital’s rebuttal statement— 

 (A) A request will be deemed complete at the end of the 30-day comment period 

if CMS does not receive written comments from the community. 

 (B) A request will be deemed complete at the end of the 30-day rebuttal period, 

regardless of whether the hospital submits a rebuttal statement, if CMS receives written 

comments from the community. 

 (ii) If data from an external data source are used in the hospital’s request, the 

written comments, or the hospital’s rebuttal statement— 

 (A) A request will be deemed complete no later than 180 days after the end of the 

30-day comment period if CMS does not receive written comments from the community. 
CMS-1613-FC 1034 

 (B) A request will be deemed complete no later than 180 days after the end of the 

30-day rebuttal period, regardless of whether the hospital submits a rebuttal statement, if 

CMS receives written comments from the community. 

* * * * * 

PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT 

HOSPITAL SERVICES 

 3. The authority citation for Part 412 continues to read as follows: 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh), sec. 124 of Pub. L. 106-113 (113 Stat. 1501A-332), sec. 1206 of Pub. L. 

113-67, and sec 112 of Pub. L. 113-93. 

§ 412.3 [Amended] 

 4. Section 412.3 is amended by— 

 a. Removing paragraph (c). 

 b. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d), respectively. 

 c. In redesignated paragraph (d)(1), removing the cross-reference “paragraph 

(e)(2)” and adding in its place the cross-reference “paragraph (d)(2)”. 

PART 416—AMBULATORY SURGICAL SERVICES 

 5. The authority citation for Part 416 continues to read as follows: 

 Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

 6. Section 416.164 is amended by revising paragraphs (a)(11) and (b)(5) to read 

as follows:

§ 416.164 Scope of ASC services. 
CMS-1613-FC 1035 

 (a) * * * 

 (11) Radiology services for which separate payment is not allowed under the 

OPPS and other diagnostic tests or interpretive services that are integral to a surgical 

procedure, except certain diagnostic tests for which separate payment is allowed under 

the OPPS; 

* * * * * 

 (b) * * * 

 (5) Certain radiology services and certain diagnostic tests for which separate 

payment is allowed under the OPPS. 

* * * * * 

 7. Section 416.171 is amended by revising paragraphs (b)(1), (b)(2), and (d) 

introductory text to read as follows:

§ 416.171 Determination of payment rates for ASC services. 

* * * * * 

 (b) * * * 

 (1) Covered ancillary services specified in § 416.164(b), with the exception of 

radiology services and certain diagnostic tests as provided in § 416.164(b)(5); 

 (2) The device portion of device-intensive procedures, which are procedures 

assigned to an APC with a device cost greater than 40 percent of the APC costs when 

calculated according to the standard OPPS APC ratesetting methodology. 

* * * * * 

 (d) Limitation on payment rates for office-based surgical procedures and covered 

ancillary radiology services and certain diagnostic tests. Notwithstanding the provisions 
CMS-1613-FC 1036 

of paragraph (a) of this section, for any covered surgical procedure under § 416.166 that 

CMS determines is commonly performed in physicians’ offices or for any covered 

ancillary radiology service or diagnostic test under § 416.164(b)(5), excluding those 

listed in paragraphs (d)(1) and (d)(2) of this section, the national unadjusted ASC 

payment rates for these procedures and services will be the lesser of the amount 

determined under paragraph (a) of this section or the amount calculated at the nonfacility 

practice expense relative value units under § 414.22(b)(5)(i)(B) of this chapter multiplied 

by the conversion factor described in § 414.20(a)(3) of this chapter. 

* * * * * 

PART 419—PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL 

OUTPATIENT DEPARTMENT SERVICES 

 8. The authority citation for Part 419 continues to read as follows:

 Authority: Secs. 1102, 1833(t), and 1871 of the Social Security Act (42 U.S.C. 

1302, 1395l(t), and 1395hh).

 9. Section 419.2 is amended by revising paragraphs (b)(7) and (b)(16) to read as 

follows: 

§ 419.2 Basis of payment. 

* * * * * 

 (b) * * * 

 (7) Ancillary services; 

* * * * * 
CMS-1613-FC 1037 

 (16) Drugs and biologicals that function as supplies when used in a surgical 

procedure (including, but not limited to, skin substitutes and similar products that aid 

wound healing and implantable biologicals); 

* * * * * 

 10. Section 419.22 is amended by revising paragraph (j) to read as follows: 

§ 419.22 Hospital services excluded from payment under the hospital outpatient 

prospective payment system. 

* * * * * 

 (j) Except as provided in § 419.2(b)(11), prosthetic devices and orthotic devices. 

* * * * * 

11. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(6) to read as 

follows: 

§ 419.32 Calculation of prospective payment rates for hospital outpatient services. 

* * * * * 

 (b) * * * 

 (1) * * * 

 (iv) * * * 

 (B) * * * 

 (6) For calendar year 2015, a multifactor productivity adjustment (as determined 

by CMS) and 0.2 percentage point. 

* * * * * 

§ 419.46 [Amended]

 12. Section 419.46 is amended by— 
CMS-1613-FC 1038 

 a. In paragraph (c)(1), removing the phrase “section 1833(17)(C)” and adding in 

its place the phrase “section 1833(t)(17)(C)”. 

 b. In paragraph (d) introductory text and paragraph (d)(1), removing the term 

“waiver” and adding in its place the term “exception” each time it appears. 

 c. In paragraph (d)(2), removing the term “waivers” and adding in its place the 

term “exceptions”. 

 d. In paragraph (e) introductory text, removing the phrase “section 1833(17)(C)” 

and adding in its place the phrase “section 1833(t)(17)(C)”. 

 13. Section 419.64 is amended by revising paragraph (a)(4)(iv) to read as 

follows: 

§ 419.64 Transitional pass-through payments: Drugs and biologicals. 

* * * * * 

 (a) * * * 

 (4) * * * 

 (iv) A biological that is not a skin substitute or similar product that aids wound 

healing. 

* * * * * 

 14. Section 419.66 is amended by revising paragraph (b)(3) and removing 

paragraph (b)(4)(iii) to read as follows: 

§ 419.66 Transitional pass-through payments: Medical devices. 

* * * * * 

 (b) * * * 
CMS-1613-FC 1039 

 (3) The device is an integral part of the service furnished, is used for one patient 

only, comes in contact with human tissue, and is surgically implanted or inserted (either 

permanently or temporarily) or applied in or on a wound or other skin lesion. 

* * * * * 

PART 422—MEDICARE ADVANTAGE PROGRAM 

 15. The authority citation for Part 422 continues to read as follows: 

 Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

 16. A new § 422.330 is added to subpart G to read as follows: 

§ 422.330 CMS-identified overpayments associated with payment data submitted 

by MA organizations. 

 (a) Definitions. For purposes of this section— 

 Applicable reconciliation date occurs on the date of the annual final deadline for 

risk adjustment data submission described at § 422.310(g)(2)(ii). 

 Erroneous payment data means payment data that should not have been submitted 

either because the data submitted are inaccurate or because the data are inconsistent with 

Medicare Part C requirements. 

 Payment data means data submitted by an MA organization to CMS and used for 

payment purposes, including enrollment data and data submitted under § 422.310. 

 (b) Request to correct payment data. (1) When CMS identifies erroneous 

payment data submitted by an MA organization (other than an error identified through 

the process described in § 422.311), CMS may send a data correction notice to the MA 

organization requesting that the MA organization correct the payment data. 
CMS-1613-FC 1040 

 (2) The notice will include or make reference to the specific payment data that 

need to be corrected, the reason why CMS believes that the payment data are erroneous, 

and the timeframe for correcting the payment data. 

 (c) Payment offset. (1) If the MA organization fails to submit the corrected 

payment data within the timeframe as requested in accordance with paragraph (b) of this 

section, CMS will conduct a payment offset against payments made to the MA 

organization if— 

 (i) The payment error affects payments for any of the 6 most recently completed 

payment years; and 

 (ii) The payment error for a particular payment year is identified after the 

applicable reconciliation date for that payment year. 

 (2) CMS will calculate the payment offset amount using the correct payment data 

and a payment algorithm that applies the payment rules for the applicable year. 

 (d) Payment offset notification. CMS will issue a payment offset notice to the 

MA organization that includes at least the following: 

 (1) The dollar amount of the offset from plan payments. 

 (2) An explanation of how the erroneous data were identified and used to 

calculate the payment offset amount. 

 (3) An explanation that, if the MA organization disagrees with the payment 

offset, it may request an appeal within 30 days of issuance of the payment offset 

notification. 
CMS-1613-FC 1041 

 (e) Appeals process. If an MA organization does not agree with the payment 

offset described in paragraph (c) of this section, it may appeal under the following 

three-level appeal process: 

 (1) Reconsideration. An MA organization may request reconsideration of the 

payment offset described in paragraph (c) of this section, according to the following 

process: 

 (i) Manner and timing of request. A written request for reconsideration must be 

filed within 30 days from the date that CMS issued the payment offset notice to the MA 

organization. 

 (ii) Content of request. The written request for reconsideration must specify the 

findings or issues with which the MA organization disagrees and the reasons for its 

disagreement. As part of its request for reconsideration, the MA organization may 

include any additional documentary evidence in support of its position. Any additional 

evidence must be submitted with the request for reconsideration. Additional information 

submitted after this time will be rejected as untimely. 

 (iii) Conduct of reconsideration. In conducting the reconsideration, the CMS 

reconsideration official reviews the underlying data that were used to determine the 

amount of the payment offset and any additional documentary evidence timely submitted 

by the MA organization. 

 (iv) Reconsideration decision. The CMS reconsideration official informs the MA 

organization of its decision on the reconsideration request. 
CMS-1613-FC 1042 

 (v) Effect of reconsideration decision. The decision of the CMS reconsideration 

official is final and binding unless a timely request for an informal hearing is filed in 

accordance with paragraph (e)(2) of this section. 

 (2) Informal hearing. An MA organization dissatisfied with CMS’ 

reconsideration decision made under paragraph (e)(1) of this section is entitled to an 

informal hearing as provided for under paragraphs (e)(2)(i) through (e)(2)(v) of this 

section. 

 (i) Manner and timing for request. A request for an informal hearing must be 

made in writing and filed with CMS within 30 days of the date of CMS’ reconsideration 

decision. 

 (ii) Content of request. The request for an informal hearing must include a copy 

of the reconsideration decision and must specify the findings or issues in the decision 

with which the MA organization disagrees and the reasons for its disagreement. 

 (iii) Informal hearing procedures. The informal hearing will be conducted in 

accordance with the following: 

 (A) CMS provides written notice of the time and place of the informal hearing at 

least 30 days before the scheduled date. 

 (B) The informal hearing is conducted by a CMS hearing officer who neither 

receives testimony nor accepts any new evidence that was not timely presented with the 

reconsideration request. The CMS hearing officer is limited to the review of the record 

that was before the CMS reconsideration official when CMS made its reconsideration 

determination. 
CMS-1613-FC 1043 

 (C) The CMS hearing officer will review the proceeding before the CMS 

reconsideration official on the record made before the CMS reconsideration official using 

the clearly erroneous standard of review. 

 (iv) Decision of the CMS hearing officer. The CMS hearing officer decides the 

case and sends a written decision to the MA organization explaining the basis for the 

decision. 

 (v) Effect of hearing officer’s decision. The hearing officer’s decision is final 

and binding, unless the decision is reversed or modified by the Administrator in 

accordance with paragraph (e)(3) of this section. 

 (3) Review by the Administrator. The Administrator review will be conducted in 

the following manner: 

 (i) An MA organization that has received a hearing officer’s decision may 

request review by the Administrator within 30 days of the date of issuance of the hearing 

officer’s decision under paragraph (e)(2)(iv) of this section. The MA organization may 

submit written arguments to the Administrator for review. 

 (ii) After receiving a request for review, the Administrator has the discretion to 

elect to review the hearing officer’s determination in accordance with paragraph 

(e)(3)(iv) of this section or to decline to review the hearing officer’s decision. 

 (iii) If the Administrator declines to review the hearing officer’s decision, the 

hearing officer’s decision is final and binding. 

 (iv) If the Administrator elects to review the hearing officer’s decision, the 

Administrator will review the hearing officer’s decision, as well as any information 

included in the record of the hearing officer’s decision and any written argument 
CMS-1613-FC 1044 

submitted by the MA organization, and determine whether to uphold, reverse, or modify 

the hearing officer’s decision. 

 (v) The Administrator’s determination is final and binding. 

 (f) Matters subject to appeal and burden of proof. (1) The MA organization’s 

appeal is limited to CMS’ finding that the payment data submitted by the MA 

organization are erroneous. 

 (2) The MA organization bears the burden of proof by a preponderance of the 

evidence in demonstrating that CMS’ finding that the payment data were erroneous was 

incorrect or otherwise inconsistent with applicable program requirements. 

 (g) Applicability of appeals process. The appeals process under paragraph (e) of 

this section applies only to payment offsets under paragraph (c) of this section. 

PART 423—VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT 

 17. The authority citation for Part 423 continues to read as follows: 

 Authority: Secs. 1102, 1106, 1860D–1 through 1860D–42, and 1871 of the 

Social Security Act (42 U.S.C. 1302, 1306, 1395w–101 through 1395w–152, and 

1395hh). 

 18. A new § 423.352 is added to read as follows: 

§ 423.352 CMS-identified overpayments associated with payment data submitted 

by Part D sponsors. 

 (a) Definitions. For purposes of this section-- 

 Applicable reconciliation date occurs on the later of either the annual deadline for 

submitting— 
CMS-1613-FC 1045 

 (1) Prescription drug event (PDE) data for the annual Part D payment 

reconciliations referred to in § 423.343(c) and (d); or 

 (2) Direct and indirect remuneration data. 

 Erroneous payment data means payment data that should not have been submitted 

either because the data submitted are inaccurate or because the data are inconsistent with 

Medicare Part D requirements. 

 Payment data means data submitted by a Part D sponsor to CMS and used for 

payment purposes, including enrollment data and data submitted under § 423.329(b)(3), 

§ 423.336(c)(1), and § 423.343, and data provided for purposes of supporting allowable 

reinsurance costs and allowable risk corridor costs as defined in § 423.308, including data 

submitted to CMS regarding direct and indirect remuneration. 

 (b) Request to correct payment data. (1) When CMS identifies erroneous 

payment data submitted by a Part D sponsor, CMS may send a data correction notice to 

the Part D sponsor requesting that the Part D sponsor correct the payment data. 

 (2) The notice will include or make reference to the specific payment data that 

need to be corrected, the reason why CMS believes that the payment data are erroneous, 

and the timeframe for correcting the payment data. 

 (c) Payment offset. (1) If the Part D sponsor fails to submit the corrected 

payment data within the timeframe as requested in accordance with paragraph (b) of this 

section, CMS will conduct a payment offset against payments made to the Part D sponsor 

if— 

 (i) The payment error affects payments for any of the 6 most recently completed 

payment years; and 
CMS-1613-FC 1046 

 (ii) The payment error for a particular payment year is identified after the 

applicable reconciliation date for that payment year. 

 (2) CMS will calculate the payment offset amount using the correct payment data 

and a payment algorithm that applies the payment rules for the applicable year. 

 (d) Payment offset notification. CMS will issue a payment offset notice to the 

Part D sponsor that includes at least the following: 

 (1) The dollar amount of the offset from plan payments. 

 (2) An explanation of how the erroneous data were identified and used to 

calculate the payment offset amount. 

 (3) An explanation that, if the Part D sponsor disagrees with the payment offset, 

it may request an appeal within 30 days of issuance of the payment offset notification. 

 (e) Appeals process. If a Part D sponsor does not agree with the payment offset 

described in paragraph (c) of this section, it may appeal under the following three-level 

appeal process: 

 (1) Reconsideration. A Part D sponsor may request reconsideration of the 

payment offset described in paragraph (c) of this section, according to the following 

process: 

 (i) Manner and timing of request. A written request for reconsideration must be 

filed within 30 days from the date that CMS issued the payment offset notice to the Part 

D sponsor. 

 (ii) Content of request. The written request for reconsideration must specify the 

findings or issues with which the Part D sponsor disagrees and the reasons for its 

disagreement. As part of its request for reconsideration, the Part D sponsor may include 
CMS-1613-FC 1047 

any additional documentary evidence in support of its position. Any additional evidence 

must be submitted with the request for reconsideration. Additional information submitted 

after this time will be rejected as untimely. 

 (iii) Conduct of reconsideration. In conducting the reconsideration, the CMS 

reconsideration official reviews the underlying data that were used to determine the 

amount of the payment offset and any additional documentary evidence timely submitted 

by the Part D sponsor. 

 (iv) Reconsideration decision. The CMS reconsideration official informs the Part 

D sponsor of its decision on the reconsideration request. 

 (v) Effect of reconsideration decision. The decision of the CMS reconsideration 

official is final and binding unless a timely request for an informal hearing is filed in 

accordance with paragraph (e)(2) of this section. 

 (2) Informal hearing. A Part D sponsor dissatisfied with CMS’ reconsideration 

decision made under paragraph (e)(1) of this section is entitled to an informal hearing as 

provided for under paragraphs (e)(2)(i) through (e)(2)(v) of this section. 

 (i) Manner and timing for request. A request for an informal hearing must be 

made in writing and filed with CMS within 30 days of the date of CMS’ reconsideration 

decision. 

 (ii) Content of request. The request for an informal hearing must include a copy 

of the reconsideration decision and must specify the findings or issues in the decision 

with which the Part D sponsor disagrees and the reasons for its disagreement. 

 (iii) Informal hearing procedures. The informal hearing will be conducted in 

accordance with the following: 
CMS-1613-FC 1048 

 (A) CMS provides written notice of the time and place of the informal hearing at 

least 30 days before the scheduled date. 

 (B) The informal hearing is conducted by a CMS hearing officer who neither 

receives testimony nor accepts any new evidence that was not timely presented with the 

reconsideration request. The CMS hearing officer is limited to the review of the record 

that was before the CMS reconsideration official when CMS made its reconsideration 

determination. 

 (C) The CMS hearing officer will review the proceeding before the CMS 

reconsideration official on the record made before the CMS reconsideration official using 

the clearly erroneous standard of review. 

 (iv) Decision of the CMS hearing officer. The CMS hearing officer decides the 

case and sends a written decision to the Part D sponsor explaining the basis for the 

decision. 

 (v) Effect of hearing officer’s decision. The hearing officer’s decision is final 

and binding, unless the decision is reversed or modified by the Administrator in 

accordance with paragraph (e)(3) of this section. 

 (3) Review by the Administrator. The Administrator review will be conducted in 

the following manner: 

 (i) A Part D sponsor that has received a hearing officer’s decision may request 

review by the Administrator within 30 days of the date of issuance of the hearing 

officer’s decision under paragraph (e)(2)(iv) of this section. The Part D sponsor may 

submit written arguments to the Administrator for review. 
CMS-1613-FC 1049 

 (ii) After receiving a request for review, the Administrator has the discretion to 

elect to review the hearing officer’s determination in accordance with paragraph 

(e)(3)(iv) of this section or to decline to review the hearing officer’s decision. 

 (iii) If the Administrator declines to review the hearing officer’s decision, the 

hearing officer’s decision is final and binding. 

 (iv) If the Administrator elects to review the hearing officer’s decision, the 

Administrator will review the hearing officer’s decision, as well as any information 

included in the record of the hearing officer’s decision and any written argument 

submitted by the Part D sponsor, and determine whether to uphold, reverse, or modify the 

hearing officer’s decision. 

 (v) The Administrator’s determination is final and binding. 

 (f) Matters subject to appeal and burden of proof. (1) The Part D sponsor’s 

appeal is limited to CMS’ finding that the payment data submitted by the Part D sponsor 

are erroneous. 

 (2) The Part D sponsor bears the burden of proof by a preponderance of the 

evidence in demonstrating that CMS’ finding that the payment data were erroneous was 

incorrect or otherwise inconsistent with applicable program requirements. 

 (g) Applicability of appeals process. The appeals process under paragraph (e) of 

this section applies only to payment offsets under paragraph (c) of this section. 

PART 424--CONDITIONS FOR MEDICARE PAYMENT 

 19. The authority citation for Part 424 continues to read as follows: 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 
CMS-1613-FC 1050 

 20. Section 424.13 is amended by— 

 a. Revising paragraph (a) introductory text. 

 b. Removing paragraph (a)(1). 

 c. Redesignating paragraphs (a)(2), (3), and (4) as paragraphs (a)(1), (2), and (3), 

respectively. 

 d. Revising redesignated paragraph (a)(1)(i). 

 e. Revising paragraph (b). 

 The revisions read as follows: 

§ 424.13 Requirements for inpatient services of hospitals other than inpatient 

psychiatric facilities. 

(a) Content of certification and recertification. Medicare Part A pays for 

inpatient hospital services (other than inpatient psychiatric facility services) for cases that 

are 20 inpatient days or more, or are outlier cases under subpart F of part 412 of this 

chapter, only if a physician certifies or recertifies the following: 

 (1) * * * 

 (i) Continued hospitalization of the patient for medical treatment or medically 

required diagnostic study; or 

* * * * * 

 (b) Timing of certification. For outlier cases under subpart F of Part 412 of this 

chapter, the certification must be signed and documented in the medical record and as 

specified in paragraphs (e) through (h) of this section. For all other cases, the 

certification must be signed and documented no later than 20 days into the hospital stay. 

* * * * *
Dated: October 22, 2014. 

 ______________________________ 

 Marilyn Tavenner, 

 Administrator, 

 Centers for Medicare & Medicaid 

 Services. 

Dated: October 26, 2014. 

 ___________________________ 

 Sylvia M. Burwell, 

 Secretary, 

 Department of Health and Human Services. 

BILLING CODE 4120-01-P
CMS-1613-FC 1052 

[FR Doc. 2014-26146 Filed 10/31/2014 at 4:15 pm; Publication Date: 11/10/2014]