```

[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Proposed Rules]
[Pages 40915-41083]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15939]

[[Page 40915]]

Vol. 79

Monday,

No. 134

July 14, 2014

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 411, 412, 416, et al.

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: Appeals Process 
for Overpayments Associated With Submitted Data; Proposed Rule

Federal Register / Vol. 79 , No. 134 / Monday, July 14, 2014 / 
Proposed Rules

[[Page 40916]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

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

[CMS-1613-P]
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: Appeals 
Process for Overpayments Associated With Submitted Data

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital 
outpatient prospective payment system (OPPS) and the Medicare 
ambulatory surgical center (ASC) payment system for CY 2015 to 
implement applicable statutory requirements and changes arising from 
our continuing experience with these systems. In this proposed rule, we 
describe the proposed changes to the amounts and factors used to 
determine the payment rates for Medicare services paid under the OPPS 
and those paid under the ASC payment system. In addition, this proposed 
rule would update and refine the requirements for the Hospital 
Outpatient Quality Reporting (OQR) Program and the ASC Quality 
Reporting (ASCQR) Program.
    In this document, we also are proposing changes to the data sources 
used 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 three-level appeals process for 
Medicare Advantage (MA) organizations and Part D sponsors that would be 
applicable to CMS-identified overpayments associated with data 
submitted by these organizations and sponsors.

DATES: Comment Period: To be assured consideration, comments on all 
sections of this proposed rule must be received at one of the addresses 
provided in the ADDRESSES section no later than 5 p.m. EST on September 
2, 2014.

ADDRESSES: In commenting, please refer to file code CMS-1613-P. 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-P, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments via 
express or overnight mail to the following address only: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-1613-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
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 SW., 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.
    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.
    Anita Bhatia, (410) 786-7236, for issues related to the Ambulatory 
Surgical Center Quality Reporting (ASCQR) Program--Program 
Administration and Reconsideration Issues, and for issues related to 
the Hospital Outpatient Quality Reporting--Program Administration, 
Validation, and Reconsideration Issues.
    Chuck Braver, (410) 786-9379, for issues related to the CMS web 
posting of the OPPS & ASC payment files.
    Erick Chuang, (410) 786-1816, for issues related to OPPS APC 
weights, OPPS data claims, geometric mean calculation, copayments, 
rural hospital payments, and wage index.
    Dexter Dickey, (410) 786-6856, or Dorothy Myrick, (410) 786-9671, 
for issues related to partial hospitalization and community mental 
health center (CMHC) issues.
    Eva Fung, (410) 786-7539, or Fiona Larbi, (410) 786-7224, or 
Felicia Diggs, (410) 786-1591, for issues related to HOQR and ASCQR 
measures issues and publication of HOQR program data issues.
    Julie Gover, (410) 786-0525, for issues related to Medicare 
Advantage (MA) organizations and Medicare Part D sponsor overpayments.
    Twi Jackson, (410) 786-1159, for issues related to device-dependent 
APCs, extended assessment and management composite APCs, 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.
    Barry Levi, (410) 786-4529, for issues related to OPPS pass-through 
devices, brachytherapy sources, brachytherapy composite APC, and 
multiple imaging composite APCs.
    John McInnes, (410) 786-0791, for issues related to comprehensive 
APCs, provider-based issues, packaged items/services, OPPS drugs/
radiopharmaceuticals/biologicals payments, new technology intraocular

[[Page 40917]]

lenses (NTIOLs), and ambulatory surgical center (ASC) payments.
    David Rice, (410) 786-6004, for issues related to blood and blood 
products, cancer hospital payments, conversion factor, cost-to-charge 
ratios (CCRs), and outlier payments.
    Daniel Schroder, (410) 786-7452, 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).
    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/.

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-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the 
ASC payment system are available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/index.html.

Alphabetical List of Acronyms Appearing in This Federal Register 
Document

AHA American Hospital Association
AMA American Medical Association
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
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
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
CCI Correct Coding Initiative
CCN CMS Certification Number
CCR Cost-to-charge ratio
CDC Centers for Disease Control and Prevention
CEO Chief executive officer
CERT Comprehensive Error Rate Testing
CFR Code of Federal Regulations
CLFS Clinical Laboratory Fee Schedule
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CPI-U Consumer Price Index for All Urban Consumers
CPT Current Procedural Terminology (copyrighted by the American 
Medical Association)
CQM Clinical quality measure
CR Change request
CSAC Consensus Standards Approval Committee
CY Calendar year
DFO Designated Federal Official
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DRG Diagnosis-Related Group
DSH Disproportionate share hospital
EACH Essential access community hospital
eCQM Electronically specified clinical quality measure
ECT Electroconvulsive therapy
ED Emergency department
E/M Evaluation and management
EHR Electronic health record
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FDA Food and Drug Administration
FFS [Medicare] Fee-for-service
FY Fiscal year
FFY Federal fiscal year
GAO Government Accountability Office
HAI Healthcare-associated infection
HCERA Health Care and Education Reconciliation Act of 2010, Pub. L. 
111-152
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HEU Highly enriched uranium
HIPAA Health Insurance Portability and Accountability Act of 1996, 
Pub. L. 104-191
HITECH Health Information Technology for Economic and Clinical 
Health [Act] (found in the American Recovery and Reinvestment Act of 
2009, Pub. L. 111-5)
HOP Hospital Outpatient Payment [Panel]
HOPD Hospital outpatient department
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD Implantable cardioverter defibrillator
ICU Intensive care unit
IHS Indian Health Service
IMRT Intensity Modulated Radiation Therapy
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IOM Institute of Medicine
IORT Intraoperative radiation treatment
IPPS [Hospital] Inpatient Prospective Payment System
IQR [Hospital] Inpatient Quality Reporting
LDR Low dose rate
LOS Length of stay
LTCH Long-term care hospital
MAC Medicare Administrative Contractor
MAP Measure Application Partnership
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
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
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
MRA Magnetic resonance angiography

[[Page 40918]]

MRI Magnetic resonance imaging
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NHSN National Healthcare Safety Network
NQF National Quality Forum
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
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
PCR Payment-to-cost ratio
PE Practice expense
PEPPER Program for Evaluating Payment Patterns Electronic Report
PHP Partial hospitalization program
PHS Public Health Service [Act], Pub. L. 96-88
PPI Producer Price Index
PPS Prospective payment system
PQRS Physician Quality Reporting System
PT Physical therapy
QDC Quality data code
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RTI Research Triangle Institute, International
RVU Relative value unit
SCH Sole community hospital
SCOD Specified covered outpatient drugs
SI Status indicator
SIR Standardized infection ratio
SLP Speech-language pathology
SNF Skilled nursing facility
SRS Stereotactic radiosurgery
TEP Technical Expert Panel
TMS Transcranial Magnetic Stimulation Therapy
TOPs Transitional Outpatient Payments
UR Utilization review
USPSTF United States Preventive Services Task Force
UTI Urinary tract infection
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
    C. Excluded OPPS Services and Hospitals
    D. Prior Rulemaking
    E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel 
or the Panel), Formerly Named the Advisory Panel on Ambulatory 
Payment Classification Groups (APC Panel)
    1. Authority of the Panel
    2. Establishment of the Panel
    3. Panel Meetings and Organizational Structure
    F. Public Comments Received in Response to the CY 2014 OPPS/ASC 
Final Rule With Comment Period
II. Proposed Updates Affecting OPPS Payments
    A. Proposed Recalibration of APC Relative Payment Weights
    1. Database Construction
    a. Database Source and Methodology
    b. Proposed Use of Single and Multiple Procedure Claims
    c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
    2. Proposed 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
    d. Proposed 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) Public Comments
    (3) Proposed CY 2015 Policy for Comprehensive APCs
    (4) Summary of Proposed CY 2015 Policies for Comprehensive APCs
    f. Proposed Calculation of Composite APC Criteria-Based Costs
    (1) Extended Assessment and Management Composite APCs (APCs 8002 
and 8003)
    (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. Proposed Changes to Packaged Items and Services
    a. Background and Rationale for Packaging in the OPPS
    b. Proposed Revision of a Packaging Policy Established in CY 
2014--Procedures Described by Add-On Codes
    c. Proposed Packaging Policies for CY 2015
    (1) Ancillary Services
    (2) Prosthetic Supplies
    4. Proposed Calculation of OPPS Scaled Payment Weights
    B. Proposed Conversion Factor Update
    C. Proposed Wage Index Changes
    D. Proposed Statewide Average Default CCRs
    E. Proposed Adjustment for Rural SCHs and EACHs Under Section 
1833(t)(13)(B) of the Act
    F. Proposed OPPS Payment to Certain Cancer Hospitals Described 
by Section 1886(d)(1)(B)(v) of the Act
    1. Background
    2. Proposed Payment Adjustment for Certain Cancer Hospitals for 
CY 2015
    G. Proposed Hospital Outpatient Outlier Payments
    1. Background
    2. Proposed Outlier Calculation
    H. Proposed Calculation of an Adjusted Medicare Payment From the 
National Unadjusted Medicare Payment
    I. Proposed Beneficiary Copayments
    1. Background
    2. Proposed OPPS Copayment Policy
    3. Proposed Calculation of an Adjusted Copayment Amount for an 
APC Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
    A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes
    1. Proposed Treatment of New CY 2014 Level II HCPCS and CPT 
Codes Effective April 1, 2014 and July 1, 2014 for Which We Are 
Soliciting Public Comments in This CY 2015 OPPS/ASC Proposed Rule
    2. Proposed 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 Will Solicit Public 
Comments in the CY 2015 OPPS/ASC Final Rule With Comment Period
    3. Proposed Process for Soliciting Public Comments for New and 
Revised CPT Codes That Would Be Released by AMA Before the January 1 
Effective Date
    a. Current Process for Accepting Comments on New and Revised CPT 
Codes That Are Effective January 1
    b. Proposal To Modify the Current Process for Accepting Comments 
on New and Revised CPT Codes That Are Effective January 1
    B. Proposed OPPS Changes--Variations Within APCs
    1. Background
    2. Application of the 2 Times Rule
    3. Proposed Exceptions to the 2 Times Rule
    C. Proposed OPPS APC-Specific Policies
    1. Ophthalmic Procedures and Services
    2. Female Reproductive Procedures (APCs 0188, 0189, 0192, 0193, 
and 0202)
    3. Image-Guided Breast Biopsy Procedures (APC 0005)
    4. Image-Guided Abscess Drainage Procedures (APCs 0005 and 0007)
    5. Cystourethroscopy and Other Genitourinary Procedures (APCs 
0160, 0161, 0162, and 0163)
    6. Wound Treatments and Services (APCs 0015 and 0327)
    a. Epidermal Autograft (APC 0327)
    b. Negative Pressure Wound Therapy (NPWT) (APC 0015)
    7. Endoscopic Retrograde Cholangiopancreatography (ERCP) With 
Stent (APC 0384)
    8. Radiation Therapy (APCs 0066, 0067, 0412, 0446, 0648, and 
0667)
IV. Proposed OPPS Payment for Devices
    A. Proposed Pass-Through Payments for Devices
    1. Expiration of Transitional Pass-Through Payments for Certain 
Devices
    a. Background
    b. Proposed CY 2015 Policy
    2. Provisions for Reducing Transitional Pass-Through Payments to 
Offset Costs Packaged Into APC Groups
    a. Background
    b. Proposed CY 2015 Policy

[[Page 40919]]

    B. Proposed Adjustment to OPPS Payment for No Cost/Full Credit 
and Partial Credit Devices
    1. Background
    2. Proposed Policy for CY 2015
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. Proposed OPPS Transitional Pass-Through Payment for 
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
    1. Background
    2. Proposed Drugs and Biologicals With Expiring Pass-Through 
Status in CY 2014
    3. Proposed Drugs, Biologicals, and Radiopharmaceuticals With 
New or Continuing Pass-Through Status in CY 2015
    4. Proposed Provisions for Reducing Transitional Pass-Through 
Payments for 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 To Offset Costs Packaged Into APC Groups
    a. Background
    b. Proposed Payment Offset Policy for Diagnostic 
Radiopharmaceuticals
    c. Proposed Payment Offset Policy for Contrast Agents
    d. Proposed Payment Offset Policy for Products Packaged 
According to the 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
    B. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals Without Pass-Through Status
    1. Background
    2. Proposed Criteria for Packaging Payment for Drugs, 
Biologicals, and Radiopharmaceuticals
    a. Background
    b. Proposed Cost Threshold for Packaging of Payment for HCPCS 
Codes That Describe Certain Drugs, Certain Biologicals, and 
Therapeutic Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    c. Proposed High/Low Cost Threshold for Packaged Skin 
Substitutes
    d. Proposed Pass-Through Evaluation Process for Skin Substitutes
    e. Proposed Packaging Determination for HCPCS Codes That 
Describe the Same Drug or Biological But Different Dosages
    3. Proposed Payment for Drugs and Biologicals Without Pass-
Through Status That Are Not Packaged
    a. Proposed Payment for Specified Covered Outpatient Drugs 
(SCODs) and Other Separately Payable and Packaged Drugs and 
Biologicals
    b. Proposed CY 2015 Payment Policy
    4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
    5. Proposed Payment for Blood Clotting Factors
    6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital 
Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
    A. Background
    B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Hospital Outpatient Visits
    A. Background
    B. Proposed Payment for Hospital Outpatient Clinic and Emergency 
Department Visits
    C. Proposed Payment for Critical Care Services
VIII. Proposed Payment for Partial Hospitalization Services
    A. Background
    B. Proposed PHP APC Update for CY 2015
    C. Proposed Separate Threshold for Outlier Payments to CMHCs
IX. Proposed Procedures That Would Be Paid Only as Inpatient 
Procedures
    A. Background
    B. Proposed Changes to the Inpatient List
X. Proposed Nonrecurring Policy Changes: Collecting Data on Services 
Furnished in Off-Campus Provider-Based Departments
XI. Proposed CY 2015 OPPS Payment Status and Comment Indicators
    A. Proposed CY 2015 OPPS Payment Status Indicator Definitions
    B. Proposed CY 2015 Comment Indicator Definitions
XII. Proposed 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. Proposed Treatment of New Codes
    1. Proposed Process for Recognizing New Category I and Category 
III CPT Codes and Level II HCPCS Codes
    2. Proposed Treatment of New Level II HCPCS Codes and Category 
III CPT Codes Implemented in April 2014 and July 2014 for Which We 
Are Soliciting Public Comments in This Proposed Rule
    3. Proposed Process for New Level II HCPCS Codes and Category I 
and Category III CPT Codes for Which We Will Be Soliciting Public 
Comments in the CY 2015 OPPS/ASC Final Rule With Comment Period
    C. Proposed Update to the Lists of ASC Covered Surgical 
Procedures and Covered Ancillary Services
    1. Covered Surgical Procedures
    a. Proposed Additions to the List of ASC Covered Surgical 
Procedures
    b. Proposed Covered Surgical Procedures Designated as Office-
Based
    (1) Background
    (2) Proposed Changes for CY 2015 to Covered Surgical Procedures 
Designated as Office-Based
    c. Proposed ASC Covered Surgical Procedures Designated as 
Device-Intensive
    (1) Background
    (2) Proposed Changes to List of Covered ASC Surgical Procedures 
Designated as Device-Intensive for CY 2015
    d. Proposed Adjustment to ASC Payments for No Cost/Full Credit 
and Partial Credit Devices
    e. ASC Treatment of Surgical Procedures Proposed for Removal 
From the OPPS Inpatient List for CY 2015
    2. Covered Ancillary Services
    D. Proposed ASC Payment for Covered Surgical Procedures and 
Covered Ancillary Services
    1. Proposed ASC Payment for Covered Surgical Procedures
    a. Background
    b. Proposed Update to ASC Covered Surgical Procedure Payment 
Rates for CY 2015
    c. Waiver of Coinsurance and Deductible for Certain Preventive 
Services
    d. Proposed Payment for Cardiac Resynchronization Therapy 
Services
    e. Proposed Payment for Low Dose Rate (LDR) Prostate 
Brachytherapy Composite
    2. Proposed Payment for Covered Ancillary Services
    a. Background
    b. Proposed Payment for Covered Ancillary Services for CY 2015
    E. New Technology Intraocular Lenses (NTIOLs)
    1. NTIOL Application Cycle
    2. Requests To Establish New NTIOL Classes for CY 2015
    3. Payment Adjustment
    F. Proposed ASC Payment and Comment Indicators
    1. Background
    2. Proposed ASC Payment and Comment Indicators
    G. Calculation of the Proposed ASC Conversion Factor and the 
Proposed ASC Payment Rates
    1. Background
    2. Proposed Calculation of the ASC Payment Rates
    a. Updating the ASC Relative Payment Weights for CY 2015 and 
Future Years
    b. Updating the ASC Conversion Factor
    3. Display of Proposed 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
    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. Proposed Criteria for Removal of ``Topped-Out'' Measures
    3. Proposed Removal of Measures From the Hospital OQR Program 
for the CY 2017 Payment Determination and Subsequent Years

[[Page 40920]]

    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 Proposed Exclusion From 
the CY 2016 Payment Determination Measure Set
    c. Proposed Voluntary Collection of Data for OP-31 for the CY 
2017 Payment Determination and Subsequent Years
    E. Proposed New Quality Measure for the CY 2017 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. Proposed 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. Proposed Reporting Ratio Application and Associated 
Adjustment Policy for CY 2015
    H. Proposed 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 is 
Submitted Directly to CMS for the CY 2017 Payment Determination and 
Subsequent Years
    c. Claims-Based Measure Data Requirements for the CY 2017 
Payment Determination and Subsequent Years
    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. Proposed 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. Proposed 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. Proposed 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
    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. Proposed Policy for Removal of Quality Measures From the 
ASCQR Program
    3. Proposed Criteria for Removal of ``Topped-Out'' Measures
    4. ASCQR Program Quality Measures Adopted in Previous Rulemaking
    5. Proposed New ASCQR Program Quality Measure for the CY 2017 
Payment Determination and Subsequent Years
    6. ASCQR Program Measures for Future Consideration
    a. ASCQR Program Measure Domains
    b. Accelerating Health Information Exchange
    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
    E. Form, Manner, and Timing of Data Submitted for the ASCQR 
Program
    1. Requirements Regarding Data Processing and Collection Periods 
for Claims-Based 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 Proposed Exclusion for ASC-11 for 
the CY 2016 Payment Determination and Proposed Voluntary Data 
Collection for ASC-11 for CY 2017 and Subsequent Payment 
Determination Years
    4. Claims-Based Measure Data Requirements for the Proposed New 
Measure for the CY 2017 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. Proposed Data Collection Timeframes for the CY 2017 Payment 
Determination and Subsequent Years and Proposed 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
    8. ASCQR Program Reconsideration Procedures for the CY 2017 
Payment Determination and Subsequent Years
XV. Proposed 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
    1. Medicaid Managed Care Data
    2. Hospitals That Lack Filed Cost Reports for the Relevant 
Fiscal Years
    C. Proposed Changes To Permit Supplemental Data Sources in the 
Expansion Exception Process
    D. Additional Considerations
XVI. Proposed 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 (Proposed Sec. Sec.  422.330 and 423.352)
    A. Background
    1. Medicare Part C Background
    2. Medicare Part D Background
    B. Provisions of our Proposals
    1. Proposed Definitions of ``Payment Data'' and ``Applicable 
Reconciliation Date''

[[Page 40921]]

    2. Request for Corrections of Payment Data
    3. Proposed Payment Offset
    a. Offset Amount
    b. Payment Offset Notification
    4. Proposed Appeals Process for MA Organizations and Part D 
Sponsors
    a. Reconsideration
    b. Informal Hearing
    c. Review by Administrator
    5. Matters Subject to Appeal and Burden of Proof
    6. Effective Date of Proposed 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: Proposed Changes to the 
Rural Provider and Hospital Ownership Exceptions to the Physician 
Self-Referral Law: Expansion Exception Process (Sec.  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
    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. Response to Comments
XXI. Economic Analyses
    A. Regulatory Impact Analysis
    1. Introduction
    2. Statement of Need
    3. Overall Impacts for the Proposed OPPS and ASC Payment 
Provisions
    4. Detailed Economic Analyses
    a. Estimated Effects of Proposed OPPS Changes in This Proposed 
Rule
    (1) Limitations of Our Analysis
    (2) Estimated Effects of Proposed OPPS Changes on Hospitals
    (3) Estimated Effects of Proposed OPPS Changes on CMHCs
    (4) Estimated Effect of Proposed OPPS Changes on Beneficiaries
    (5) Estimated Effects of Proposed OPPS Changes on Other 
Providers
    (6) Estimated Effects of Proposed OPPS Changes on the Medicare 
and Medicaid Programs
    (7) Alternative OPPS Policies Considered
    b. Estimated Effects of CY 2015 ASC Payment System Proposed 
Policies
    (1) Limitations of Our Analysis
    (2) Estimated Effects of CY 2015ASC Payment System Proposed 
Policies on ASCs
    (3) Estimated Effects of ASC Payment System Proposed Policies on 
Beneficiaries
    (4) Alternative ASC Payment Policies Considered
    c. Accounting Statements and Tables
    d. Effects of Proposed Requirements for the Hospital OQR Program
    e. Effects of CY 2014 Proposed Policies for the ASCQR Program
    f. Effects of Proposed Changes to the Rural Provider and 
Hospital Ownership Exceptions to the Physician Self-Referral Law
    g. Effects of Proposed 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

Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose
    In this proposed rule, we are proposing to update the payment 
policies and payment rates for services furnished to Medicare 
beneficiaries in hospital outpatient departments 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 proposed rule. In 
addition, this proposed rule would update and refine the requirements 
for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC 
Quality Reporting (ASCQR) Program.
    In this document, we also are proposing changes to the data sources 
used 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 three-level appeals process for 
Medicare Advantage (MA) organizations and Part D sponsors that would be 
applicable to CMS-identified overpayments associated with data 
submitted by these organizations and sponsors.
2. Summary of the Major Provisions
     OPPS Update: For CY 2015, we are proposing to 
increase the payment rates under the OPPS by an Outpatient Department 
(OPD) fee schedule increase factor of 2.1 percent. This proposed 
increase is based on the proposed hospital inpatient market basket 
percentage increase of 2.7 percent for inpatient services paid under 
the hospital inpatient prospective payment system (IPPS), minus the 
proposed multifactor productivity (MFP) adjustment of 0.4 percentage 
points, and minus a 0.2 percentage point adjustment required by the 
Affordable Care Act. Under this proposed rule, we estimate that 
proposed 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 $56.5 billion, an increase of approximately $5.2 billion 
compared to CY 2014 payments, or $800 million excluding our estimated 
changes in enrollment, utilization, and case-mix.
    We are proposing to continue to implement the statutory 2.0 
percentage point reduction in payments for hospitals failing to meet 
the hospital outpatient quality reporting requirements, by applying a 
reporting factor of 0.980 to the OPPS payments and copayments for all 
applicable services.
     Rural Adjustment: We are proposing to continue 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.
     Cancer Hospital Payment Adjustment: For CY 2015, we are 
proposing to continue to provide additional payments to cancer 
hospitals so that the cancer hospital's payment to-cost ratio (PCR) 
after the additional payments is equal to the weighted average PCR for 
the other OPPS

[[Page 40922]]

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 proposed CY 2015 cancer hospital payment adjustment to be 
paid at cost report settlement. That is, the proposed 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, proposed payment for the acquisition and pharmacy overhead 
costs of separately payable drugs and biologicals that do not have 
pass-through status would be set at the statutory default of average 
sales price (ASP) plus 6 percent.
     Packaging Policies: We are proposing to conditionally 
package certain ancillary services when they are integral, ancillary, 
supportive, dependent, or adjunctive to a primary service. The initial 
set of services proposed to be packaged under this ancillary service 
policy are the services assigned to APCs having a proposed APC 
geometric mean cost (prior to application of status indicator Q1) of 
less than or equal to $100. This proposed $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 would 
not be packaged, but as a basis for selecting an initial set of APCs 
that would likely be updated and expanded in future years.
     Implementation of Comprehensive APCs: For CY 2015, we are 
proposing to implement, with several modifications, the policy for 
comprehensive APCs that was finalized in the CY 2014 OPPS/ASC final 
rule with comment period effective January 1, 2015. We are proposing to 
continue to define the services assigned to comprehensive APCs as 
primary services, and to define a comprehensive 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 
would 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 would result 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 proposing a total of 28 comprehensive APCs for CY 2015, 
including all of the device-dependent APCs remaining after some 
restructuring and consolidation of these APCs and two comprehensive 
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 proposing to modify the complexity adjustment 
criteria finalized last year, proposing lower volume and cost threshold 
criteria for complexity adjustments. Finally, we are proposing to 
package 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 
would be being evaluated with a primary service for a potential 
complexity adjustment.
     Ambulatory Surgical Center Payment Update: For CY 2015, we 
are proposing to increase payment rates under the ASC payment system by 
1.2 percent. This proposed increase is based on a projected CPI-U 
update of 1.7 percent minus a multifactor productivity adjustment 
required by the Affordable Care Act that is projected to be 0.5 
percent. Based on this proposed update, we estimate that total payments 
to ASCs (including beneficiary cost-sharing and estimated changes in 
enrollment, utilization, and case-mix), for CY 2015 would be 
approximately $4.086 billion, an increase of approximately $243 million 
compared to estimated CY 2014 payments.
     Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are proposing to add one claims-based 
quality measure for the CY 2017 payment determination and subsequent 
years. We are proposing to refine the criteria for determining when to 
remove a measure because it is ``topped-out'' and we are proposing to 
remove three measures due to ``topped-out'' status. In addition, we are 
updating several previously adopted measures. We are proposing to 
exclude one previously adopted measure from the measure set for the CY 
2016 payment determination and to change this measure from required to 
voluntary for the CY 2017 payment determination and subsequent years. 
Hospitals would not be subject to payment reductions with respect to 
this measure. In addition, we are proposing to formalize a review and 
corrections period for chart-abstracted measures. We also are proposing 
updates to validation procedures and changes to regulation text to 
correct typographical errors. 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 proposing to adopt one new 
quality measure for the CY 2017 payment determination and subsequent 
years. The measure would be computed using Medicare claims data and 
would not impose any additional burden on ASC facilities. We also are 
proposing that one measure previously adopted for the CY 2016 and 
subsequent years' payment determinations be excluded from the CY 2016 
measure set and that this measure be voluntarily reported for the CY 
2017 payment determination and subsequent years, rather than 
mandatorily reported. We would 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 proposing 
to define the data collection timeframes and submission deadlines for 
one previously adopted measure, noting the delayed data collection of 
two measures for the CY 2016 payment determination, and clarifying how 
we refer to the extraordinary circumstances extensions or exemptions 
process.
3. Summary of Costs and Benefits
    In sections XXI. and XXII. of this proposed rule, we set forth a 
detailed analysis of the regulatory and federalism impacts that the 
proposed changes would have on affected entities and beneficiaries. Key 
estimated impacts are described below.
a. Impacts of the OPPS Update
(1) Impacts of All Proposed OPPS Changes
    Table 52 in section XXI. of this proposed rule displays the 
distributional impact all the proposed 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 proposed policies in this 
proposed rule would result in a 2.2 percent overall increase in OPPS 
payments to providers. We estimate that proposed 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 community mental 
health centers (CMHCs)), will be approximately $56.5 billion, an 
increase of approximately $5.2 billion compared to CY 2014 payments, or 
$800 million, excluding

[[Page 40923]]

our estimated changes in enrollment, utilization, and case-mix.
    We estimated the isolated impact of our proposed OPPS policies on 
CMHCs because CMHCs are only paid for partial hospitalization services 
under the OPPS. Continuing the provider-specific structure that we 
adopted beginning in CY 2011 and basing payment fully on the type of 
provider furnishing the service, we estimate a -1.6 percent decrease in 
CY 2015 payments to CMHCs relative to their CY 2014 payments.
(2) Impacts of the Proposed Updated Wage Indexes
    We estimate that our proposal to update the wage indexes and apply 
the frontier State wage index, including changes resulting from the 
proposed adoption of the new OMB labor market area delineations and the 
proposed transitional 1-year, 50/50 blended wage index, would have a 
positive impact on payments to hospitals.
(3) Impacts of the Proposed Rural Adjustment and the Cancer Hospital 
Payment Adjustment
    There are no significant impacts of our proposed CY 2015 payment 
policies for hospitals that are eligible for the rural adjustment or 
for the cancer hospital payment adjustment. We are not proposing to 
make any change in policies for determining the rural and cancer 
hospital payment adjustments, and the proposed adjustment amounts do 
not significantly impact the budget neutrality adjustments for these 
proposed policies.
(4) Impacts of the Proposed OPD Fee Schedule Increase Factor
    We estimate that, for most hospitals, the application of the 
proposed OPD fee schedule increase factor of 2.1 percent to the 
conversion factor for CY 2015 would 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 rural and urban hospitals would experience increases of 
approximately 2.1 percent for urban hospitals and 2.4 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 Proposed ASC Payment Update
    For impact purposes, the surgical procedures on the ASC list of 
covered procedures are aggregated into surgical specialty groups using 
CPT and HCPCS code range definitions. The proposed percentage change in 
estimated total payments by specialty groups under the proposed CY 2015 
payment rates compared to estimated CY 2014 payment rates ranges 
between -3.0 percent for cardiovascular system procedures and 12 
percent for hematologic and lymphatic system procedures.
c. Impacts of the Hospital OQR Program
    We do not expect our proposed 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 proposed 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 
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.
    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.

[[Page 40924]]

    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 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.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals include: Maryland hospitals, but only for services that are 
paid under a cost containment waiver in accordance with section 
1814(b)(3) of the Act; 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-Service-Payment/HospitalOutpatientPPS/index.html.

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

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 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 full-time, 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 
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_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. Panel Meetings and Organizational Structure
    The Panel has held multiple meetings, with the last meeting taking 
place on March 10, 2014. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations

[[Page 40925]]

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 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 March 2014 meeting that the subcommittees continue. 
We accepted this recommendation.
    Discussions of the other recommendations made by the Panel at the 
March 2014 Panel meeting are included in the sections of this proposed 
rule that are specific to each recommendation. For discussions of 
earlier Panel meetings and recommendations, we refer readers to 
previously published OPPS/ASC proposed and final rules, the CMS 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 2014 OPPS/ASC Final Rule With 
Comment Period

    We received 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 will be set forth in the CY 2015 
final rule with comment period under the appropriate subject-matter 
headings. However, we are summarizing the public comments on the CY 
2014 OPPS/ASC final rule with comment period regarding comprehensive 
APCs in this proposed rule rather than the CY 2015 final rule with 
comment period, as we are proposing several methodological changes in 
response to these public comments.

II. Proposed Updates Affecting OPPS Payments

A. Proposed Recalibration of APC Relative Payment Weights

1. Database Construction
a. Database Source and Methodology
    Section 1833(t)(9)(A) of the Act requires that the Secretary review 
not less often than annually and revise the relative payment weights 
for APCs. In the April 7, 2000 OPPS final rule with comment period (65 
FR 18482), we explained in detail how we calculated the relative 
payment weights that were implemented on August 1, 2000 for each APC 
group.
    For the CY 2015 OPPS, we are proposing 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 period. That is, we are proposing to recalibrate the relative 
payment weights for each APC based on claims and cost report data for 
hospital outpatient department (HOPD) services, using the most recent 
available data to construct a database for calculating APC group 
weights. 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 exact counts of claims used, we refer readers to 
the claims accounting narrative under supporting documentation for this 
CY 2015 OPPS/ASC proposed rule on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Of the approximately 149 million final action claims for services 
provided in hospital outpatient settings used to calculate the CY 2015 
OPPS payment rates for this proposed rule, approximately 119 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 119 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) or no HCPCS codes reported on 
the claim). From the remaining approximately 114 million claims, we 
created approximately 94 million single records, of which approximately 
46 million were ``pseudo'' single or ``single session'' claims (created 
from approximately 21 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 94 
million single bills for ratesetting. As described in section II.A.2. 
of this proposed rule, 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 proposed rule. 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 proposed APC relative weights and payments for CY 2015 in 
Addenda A and B to this proposed rule (which are available via the 
Internet on the CMS Web site) were calculated using claims from CY 2013 
that were processed through December 31, 2013. 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 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 are proposing to use this same methodology, basing payments on

[[Page 40926]]

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. Proposed Use of Single and Multiple Procedure Claims
    For CY 2015, in general, we are proposing to continue 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 proposing to continue 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 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 we are proposing to continue 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, we are proposing to 
establish additional packaging policies for the CY 2015 OPPS, as 
discussed in section II.A.3. of this proposed rule.
    We are proposing to continue 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 proposed rule, 
approximately 46 million ``pseudo'' single procedure claims, including 
multiple imaging composite ``single session'' bills (we refer readers 
to section II.A.2.f.(5) of this proposed rule for further discussion), 
to add to the approximately 48 million ``natural'' single procedure 
claims.
    For CY 2015, we are proposing to bypass 227 HCPCS codes that are 
identified in Addendum N to this 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 are proposing 
to continue to bypass all of the HCPCS codes on the CY 2014 OPPS bypass 
list, with the exception of HCPCS codes that we are proposing to delete 
for CY 2015, which are listed in Table 1 of this proposed rule. We also 
are proposing to remove HCPCS codes that are not separately paid under 
the OPPS because the purpose of the bypass list is to obtain more data 
for those codes relevant to ratesetting. Some of the codes we are 
proposing to remove from the CY 2015 bypass list are affected by the CY 
2015 proposed packaging policy, discussed in section II.A.3. of this 
proposed rule. In addition, we are proposing 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 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 are 
proposing 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) is open to 
public comment in this 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 proposed 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 
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

[[Page 40927]]

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 are proposing 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 are proposing 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 are proposing for CY 
2015 to continue to update the 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 are 
proposing 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 are proposing 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 are proposing 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 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 proposed rule 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 proposed multiple imaging composite APCs are identified 
by asterisks (*) in Addendum N to this proposed rule (which is 
available via the Internet on the CMS Web site).
    Addendum N to this proposed rule (which is available via the 
Internet on the CMS Web site) includes the proposed list of bypass 
codes for CY 2015. The proposed 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 
proposed 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 proposed multiple imaging 
composite APCs are identified by asterisks (*) in the third column of 
Addendum N to this proposed rule. HCPCS codes that we are proposing to 
add for CY 2015 are identified by asterisks (*) in the fourth column of 
Addendum N.
    Table 1 below contains the list of codes that we are proposing to 
remove from the 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 are not separately payable codes under the 
proposed CY 2015 OPPS because these codes are not used for ratesetting 
through the bypass process. The list of codes proposed for removal from 
the bypass list includes those that would be affected by the proposed 
CY 2015 OPPS packaging policy described in section II.A.3. of this 
proposed rule.

Table 1--HCPCS Codes Proposed To Be 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/ 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.

[[Page 40928]]

 
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.
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/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.
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.
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.

[[Page 40929]]

 
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.
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.
------------------------------------------------------------------------

c. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2015, we are proposing to continue to use the hospital-
specific overall ancillary and departmental cost-to-charge ratios 
(CCRs) to convert charges to estimated costs through application of a 
revenue code-to-cost center crosswalk. To calculate the APC costs on 
which the proposed CY 2015 APC payment rates are based, we calculated 
hospital-specific overall ancillary CCRs and hospital-specific 
departmental CCRs for each hospital for which we had CY 2013 claims 
data by comparing these claims data to the most recently available 
hospital cost reports, which, in most cases, are 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-Service-Payment/HospitalOutpatientPPS/index.html.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 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, 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 proposed rule.
    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 this 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 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 are proposing 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 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

[[Page 40930]]

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 are proposing to 
continue 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 (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 December 2013 HCRIS update which we used to estimate 
costs in the CY 2015 OPPS ratesetting process, we were able to 
calculate a valid implantable device CCR for 2,895 hospitals, a valid 
MRI CCR for 1,886 hospitals, a valid CT scan CCR for 1,976 hospitals, 
and a valid Cardiac Catheterization CCR for 1,364 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 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 are proposing 
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 XXIII. of this 
proposed rule includes the impacts of calculating the proposed CY 2015 
OPPS relative payment weights using these new standard cost centers.

                Table 2--CCR Statistical Values Based on Use of Different Cost Allocation Methods
----------------------------------------------------------------------------------------------------------------
                                                                CT                              MRI
             Cost allocation method              ---------------------------------------------------------------
                                                    Median CCR       Mean CCR       Median CCR       Mean CCR
----------------------------------------------------------------------------------------------------------------
All Providers...................................          0.0480          0.0620          0.0918          0.1164
Square Feet Only................................          0.0383          0.0503          0.0793          0.1036
Direct Assign...................................          0.0683          0.0761          0.1069          0.1312
Dollar Value....................................          0.0584          0.0739          0.1055          0.1299
Direct Assign and Dollar Value..................          0.0584          0.0738          0.1053          0.1294
----------------------------------------------------------------------------------------------------------------

    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. 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 cost allocation statistic, we stated 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 that 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.

[[Page 40931]]

  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
------------------------------------------------------------------------
                                Proposed CY 2015 APC
   Proposed CY 2015 APC              descriptor           Percent change
------------------------------------------------------------------------
0283.....................  Computed Tomography with                  9.3
                            Contrast.
0284.....................  Magnetic Resonance Imaging                4.2
                            and Magnetic Resonance
                            Angiography with Contrast.
0331.....................  Combined Abdomen and Pelvis              12.0
                            CT without Contrast.
0332.....................  Computed Tomography without              14.1
                            Contrast.
0333.....................  Computed Tomography without              12.1
                            Contrast followed by
                            Contrast.
0334.....................  Combined Abdomen and Pelvis              10.1
                            CT with Contrast.
0336.....................  Magnetic Resonance Imaging                7.4
                            and Magnetic Resonance
                            Angiography without Contrast.
0337.....................  Magnetic Resonance Imaging                6.0
                            and Magnetic Resonance
                            Angiography without Contrast
                            f.
0383.....................  Cardiac Computed Tomographic              4.3
                            Imaging.
0662.....................  CT Angiography...............            10.3
8005.....................  CT and CTA without Contrast              12.7
                            Composite.
8006.....................  CT and CTA with Contrast                  9.2
                            Composite.
8007.....................  MRI and MRA without Contrast              6.3
                            Composite.
8008.....................  MRI and MRA with Contrast                 6.3
                            Composite.
------------------------------------------------------------------------

    In summary, we are proposing to continue using 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 proposed rule, we are 
proposing to continue our policy of removing claims from cost modeling 
for those providers using ``square feet'' as the cost allocation 
statistic for the CY 2015 OPPS.
2. Proposed Data Development Process and Calculation of Costs Used for 
Ratesetting
    In this section of this proposed rule, we discuss the use of claims 
to calculate the proposed OPPS payment rates for CY 2015. The Hospital 
OPPS page on the CMS Web site on which this proposed rule is posted 
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used 
in the development of the proposed payment rates. That accounting 
provides additional detail regarding the number of claims derived at 
each stage of the process. In addition, below in this section we 
discuss the file of claims that comprises the data set that is 
available for purchase under a CMS data use agreement. The CMS Web 
site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/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 and revenue code payment amounts. 
This file is derived from the CY 2013 claims that were used to 
calculate the proposed 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, we are proposing to continue to 
use geometric mean costs to calculate the relative weights on which the 
proposed CY 2015 OPPS payments rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.f. of this proposed rule to calculate the costs we used to 
establish the proposed relative weights used in calculating the 
proposed OPPS payment rates for CY 2015 shown in Addenda A and B to 
this proposed rule (which are available via the Internet on the CMS Web 
site). We refer readers to section II.A.4. of this proposed rule for a 
discussion of the conversion of APC costs to scaled payment weights.
a. Claims Preparation
    For this proposed rule, we used the CY 2013 hospital outpatient 
claims processed through December 31, 2013, to calculate the geometric 
mean costs of APCs that underpin the proposed relative payment weights 
for CY 2015. To begin the calculation of the proposed 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 119 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.
    2. Claims that were bill types 12X, 13X or 14X. Claims with bill 
types 12X

[[Page 40932]]

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 proposed rule. 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 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-for-Service-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 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 
proposing to continue this payment policy for CY 2015. We refer readers 
to section V.B.3. of this proposed rule for a complete discussion of 
our CY 2015 proposed 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 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, we are proposing to continue 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 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.

[[Page 40933]]

    For the CY 2015 OPPS, as part of our proposal to continue packaging 
clinical diagnostic laboratory tests, we also are proposing to apply 
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 payments 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, 
we are proposing 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 proposed rule. We note 
that we also are proposing to create status indicator ``J1'' to reflect 
the comprehensive APCs discussed in section II.A.2.e. of this proposed 
rule. For CY 2015, we are proposing 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 are 
proposing to continue to assign status indicator ``R'' to blood and 
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. We are proposing to treat 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 proposed rule.
    Specifically, we are proposing to divide the remaining claims into 
the following five groups:
    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 comprehensive 
APCs, as discussed in section II.A.2.e. of this proposed rule; 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.
    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 proposed 
rule, depending on the specific composite calculation.
(2) Creation of ``Pseudo'' Single Procedure Claims
    To develop ``pseudo'' single procedure claims for this proposed 
rule, 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

[[Page 40934]]

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).
    We also are proposing to use the bypass codes listed in Addendum N 
to this proposed rule (which is available via the Internet on our Web 
site) and discussed in section II.A.1.b. of this proposed rule 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 proposed CY 2015 ``overlap 
bypass codes'' are listed in Addendum N to this proposed rule (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) 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 proposed criteria 
for the multiple imaging composite APCs, discussed in section 
II.A.2.f.(5) of this proposed rule, 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 proposed 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 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.
    We also are proposing to examine 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 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 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 proposed process for creating ``pseudo'' single 
procedure claims to the conditionally packaged codes that do not meet 
the

[[Page 40935]]

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 proposed 
rule.
    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 are proposing 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
    We then packaged the costs of packaged HCPCS codes (codes with 
status indicator ``N'' listed in Addendum B to this proposed rule 
(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 proposed 
CY 2015 OPPS packaging policy, we refer readers to section II.A.3. of 
this proposed rule.
    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, we are proposing to 
continue 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.
    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 would propose to package for CY 2015. We believe that the 
charges reported under the revenue codes listed in Table 4 below 
continue to reflect ancillary and supportive services for which 
hospitals report charges without HCPCS codes. Therefore, for CY 2015, 
we are proposing to continue to package the costs that we derive from 
the charges reported without HCPCS codes under the revenue codes 
displayed in Table 4 below for purposes of calculating the geometric 
mean costs on which the proposed CY 2015 OPPS/ASC payment rates are 
based.

            Table 4--Proposed CY 2015 Packaged Revenue Codes
------------------------------------------------------------------------
         Revenue code                          Description
------------------------------------------------------------------------
0250..........................  Pharmacy; General Classification.
0251..........................  Pharmacy; Generic Drugs.
0252..........................  Pharmacy; Non-Generic Drugs.
0254..........................  Pharmacy; Drugs Incident to Other
                                 Diagnostic Services.
0255..........................  Pharmacy; Drugs Incident to Radiology.
0257..........................  Pharmacy; Non-Prescription.
0258..........................  Pharmacy; IV Solutions.
0259..........................  Pharmacy; Other Pharmacy.
0260..........................  IV Therapy; General Classification.
0261..........................  IV Therapy; Infusion Pump.
0262..........................  IV Therapy; IV Therapy/Pharmacy Svcs.
0263..........................  IV Therapy; IV Therapy/Drug/Supply
                                 Delivery.
0264..........................  IV Therapy; IV Therapy/Supplies.
0269..........................  IV Therapy; Other IV Therapy.
0270..........................  Medical/Surgical Supplies and Devices;
                                 General Classification.
0271..........................  Medical/Surgical Supplies and Devices;
                                 Non-sterile Supply.
0272..........................  Medical/Surgical Supplies and Devices;
                                 Sterile Supply.
0275..........................  Medical/Surgical Supplies and Devices;
                                 Pacemaker.
0276..........................  Medical/Surgical Supplies and Devices;
                                 Intraocular Lens.
0278..........................  Medical/Surgical Supplies and Devices;
                                 Other Implants.
0279..........................  Medical/Surgical Supplies and Devices;
                                 Other.Supplies/Devices.
0280..........................  Oncology; General Classification.
0289..........................  Oncology; Other Oncology.
0343..........................  Nuclear Medicine; Diagnostic
                                 Radiopharmaceuticals.
0344..........................  Nuclear Medicine; Therapeutic
                                 Radiopharmaceuticals.
0370..........................  Anesthesia; General Classification.
0371..........................  Anesthesia; Anesthesia Incident to
                                 Radiology.
0372..........................  Anesthesia; Anesthesia Incident to Other
                                 DX Services.
0379..........................  Anesthesia; Other Anesthesia.
0390..........................  Administration, Processing and Storage
                                 for Blood and Blood Components; General
                                 Classification.
0392..........................  Administration, Processing and Storage
                                 for Blood and Blood Components;
                                 Processing and Storage.

[[Page 40936]]

 
0399..........................  Administration, Processing and Storage
                                 for Blood and Blood Components; Other
                                 Blood Handling.
0621..........................  Medical Surgical Supplies--Extension of
                                 027X; Supplies Incident to Radiology.
0622..........................  Medical Surgical Supplies--Extension of
                                 027X; Supplies Incident to Other DX
                                 Services.
0623..........................  Medical Supplies--Extension of 027X,
                                 Surgical Dressings.
0624..........................  Medical Surgical Supplies--Extension of
                                 027X; FDA Investigational Devices.
0630..........................  Pharmacy--Extension of 025X; Reserved.
0631..........................  Pharmacy--Extension of 025X; Single
                                 Source Drug.
0632..........................  Pharmacy--Extension of 025X; Multiple
                                 Source Drug
0633..........................  Pharmacy--Extension of 025X; Restrictive
                                 Prescription
0681..........................  Trauma Response; Level I Trauma.
0682..........................  Trauma Response; Level II Trauma.
0683..........................  Trauma Response; Level III Trauma.
0684..........................  Trauma Response; Level IV Trauma.
0689..........................  Trauma Response; Other.
0700..........................  Cast Room; General Classification.
0710..........................  Recovery Room; General Classification.
0720..........................  Labor Room/Delivery; General
                                 Classification.
0721..........................  Labor Room/Delivery; Labor.
0732..........................  EKG/ECG (Electrocardiogram); Telemetry.
0762..........................  Specialty services; Observation Hours.
0801..........................  Inpatient Renal Dialysis; Inpatient
                                 Hemodialysis.
0802..........................  Inpatient Renal Dialysis; Inpatient
                                 Peritoneal Dialysis (Non-CAPD).
0803..........................  Inpatient Renal Dialysis; Inpatient
                                 Continuous Ambulatory Peritoneal
                                 Dialysis (CAPD).
0804..........................  Inpatient Renal Dialysis; Inpatient
                                 Continuous Cycling Peritoneal Dialysis
                                 (CCPD).
0809..........................  Inpatient Renal Dialysis; Other
                                 Inpatient Dialysis.
0810..........................  Acquisition of Body Components; General
                                 Classification.
0819..........................  Acquisition of Body Components; Other
                                 Donor.
0821..........................  Hemodialysis--Outpatient or Home;
                                 Hemodialysis Composite or Other Rate.
0824..........................  Hemodialysis--Outpatient or Home;
                                 Maintenance--100%.
0825..........................  Hemodialysis--Outpatient or Home;
                                 Support Services.
0829..........................  Hemodialysis--Outpatient or Home; Other
                                 OP Hemodialysis.
0942..........................  Other Therapeutic Services (also see
                                 095X, an extension of 094x); Education/
                                 Training.
0943..........................  Other Therapeutic Services (also see
                                 095X, an extension of 094X), Cardiac
                                 Rehabilitation.
0948..........................  Other Therapeutic Services (also see
                                 095X, an extension of 094X), Pulmonary
                                 Rehabilitation.
------------------------------------------------------------------------

    In accordance with our longstanding policy, we are proposing 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 are proposing to continue 
these processes for the CY 2015 OPPS.
    For the remaining claims, we are proposing 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 
and final rule 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 are proposing 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 are proposing to use these pre-reclassified wage indices for 
standardization using the new OMB labor market area delineations 
described in section II.C. of this proposed rule.
    In accordance with our longstanding practice, we also are proposing 
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 114 million 
claims were left. Using these approximately 114 million claims, we 
created approximately 94 million single and ``pseudo'' single procedure 
claims, of which we used approximately 94 million single bills (after 
trimming out approximately 1 million claims as discussed in section 
II.A.1.a. of this proposed rule) 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

[[Page 40937]]

CY 2013 OPPS and the CY 2014 OPPS, we calculated the APC relative 
payment weights using geometric mean costs, and we are proposing to do 
the same 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 proposed rule.
    We are proposing 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 costs, we also applied 
the 2 times rule based on geometric mean costs. For the CY 2015 OPPS, 
we are proposing to continue 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 94 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 proposed 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 are proposing to pay 
separately under this proposed rule, and we reassigned HCPCS codes to 
different APCs where it was 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.
    As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this 
proposed rule, in some cases, APC geometric mean costs are calculated 
using variations of the process outlined above. Specifically, section 
II.A.2.d. of this proposed rule addresses the proposed calculation of 
single APC criteria-based geometric mean costs. Section II.A.2.f. of 
this proposed rule discusses the proposed calculation of composite APC 
criteria-based geometric mean costs. Section VIII.B. of this proposed 
rule addresses the methodology for calculating the proposed geometric 
mean costs for partial hospitalization services.

(2) Recommendations of the Panel Regarding Data Development

    At the March 2014 meeting of the Panel, we discussed the claims 
accounting process for the CY 2014 OPPS final rule, the final CY 2014 
policy of adopting the new standard cost centers for CT, MRI, and 
cardiac catheterization in the new Medicare cost report Form CMS-2552-
10, as well as the calculation of estimated cost for those APCs.
    At the March 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 CMS provide the Panel 
with a list of APCs for which costs fluctuate by more than 10 percent.
    CMS Response: We are accepting this recommendation.
    Recommendation: The Panel recommends that CMS provide the Panel 
with data on comprehensive APCs as well as the effect of conditional 
packaging on visit codes.
    CMS Response: We are accepting this recommendation.
d. Proposed 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 
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 that provide all-inclusive payments for those services, but we 
delayed

[[Page 40938]]

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 are converted to 
comprehensive 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 this policy was also delayed until CY 
2015.
    As proposed in the CY 2014 OPPS/ASC proposed rule (78 FR 43556 
through 43557), for CY 2015, we are proposing 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 748598), we believe that this 
is appropriate because of the experience hospitals now have had in 
coding and reporting these claims fully and, for the more costly 
devices, the comprehensive APCs will reliably reflect the cost of the 
device if it is included anywhere on the claim. 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 continued to 
be warranted. 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 proposed CY 2015 comprehensive APC policy consolidates and 
restructures the 39 current device-dependent APCs into 26 (of the total 
28) comprehensive APCs, which are listed below in Table 5. The 
comprehensive APC policy is discussed in section II.A.2.e. of this 
proposed rule. As a result of the proposed CY 2015 comprehensive APC 
policy, device-dependent APCs would no longer exist in CY 2015 because 
these APCs will have all been converted to comprehensive APCs. In 
conjunction with the proposed termination of device-dependent APCs and 
as discussed in the CY 2014 OPPS/ASC final rule with comment period (78 
FR 74857 through 74858), we are proposing 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 comprehensive APCs 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, we are proposing 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 1 of the 26 proposed 
comprehensive APCs (of a total of 28 proposed comprehensive APCs) 
listed below in Table 5 is reported on the claim to ensure that device 
costs are captured by hospitals. We 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.
    Table 5 below provides a list of the 26 proposed CY 2015 
comprehensive APCs, which we previously recognized as device-dependent 
APCs for CY 2014. This proposal would result in the term ``device-
dependent APC'' no longer being employed beginning in CY 2015.

 Table 5--Proposed APCs That Would 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.
------------------------------------------------------------------------

(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.
    For CY 2015, we are proposing to continue to establish payment 
rates for blood and blood products using our blood-specific CCR 
methodology, which utilizes actual or simulated CCRs from the most 
recently available hospital cost reports to convert hospital charges 
for blood and blood products to costs. This methodology has been our 
standard ratesetting methodology for blood and blood products since CY 
2005. It was developed in response to data analysis indicating that 
there was a significant difference in CCRs for those hospitals with and 
without blood-specific cost centers, and past public comments 
indicating that the former OPPS policy of defaulting to the overall 
hospital CCR for hospitals not reporting a blood-specific cost center 
often resulted in an underestimation of the true hospital costs for 
blood and blood products.

[[Page 40939]]

Specifically, in order to address the differences in CCRs and to better 
reflect hospitals' costs, we are proposing to continue to simulate 
blood CCRs for each hospital that does not report a blood cost center 
by calculating the ratio of the blood-specific CCRs to hospitals' 
overall CCRs for those hospitals that do report costs and charges for 
blood cost centers. We would apply this mean ratio to the overall CCRs 
of hospitals not reporting costs and charges for blood cost centers on 
their cost reports in order to simulate blood-specific CCRs for those 
hospitals. We are proposing to calculate the costs upon which the 
proposed CY 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.
    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.
    We note that, as discussed in section II.A.2.e. of the CY 2014 
OPPS/ASC final rule with comment period and this proposed rule, 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 are proposing to continue to 
apply the blood-specific CCR methodology described in this section when 
calculating the costs of the blood and blood products that appear on 
claims with services assigned to the comprehensive APCs. Because the 
costs of blood and blood products would be reflected in the overall 
costs of the comprehensive APCs (and, as a result, in the proposed 
payment rates of the comprehensive APCs), we are proposing not to make 
separate payments for blood and blood products when they appear on the 
same claims as services assigned to the comprehensive APCs.
    We refer readers to Addendum B to this proposed rule (which is 
available via the Internet on the CMS Web site) for the proposed 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 (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 cost. We believe that the OPPS prospective payment 
methodology, as opposed to payment based on hospitals' charges adjusted 
to cost, would also 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), and the CY 
2012 OPPS/ASC final rule with comment period (76 FR 74160 through 
74163) for further discussion of the history of OPPS payment for 
brachytherapy sources.
    For CY 2015, we are proposing to use the costs derived from CY 2013 
claims data to set the proposed CY 2015 payment rates for brachytherapy 
sources, as we are proposing 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 this proposed rule. We also are 
proposing to continue the other payment policies for brachytherapy 
sources that we finalized and first implemented in the CY 2010 OPPS/ASC 
final rule with comment period (74 FR 60537). We are proposing to pay 
for the stranded and 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 are proposing to continue 
the policy we first implemented in the CY 2010 OPPS/ASC final rule with 
comment period (74 FR 60537) regarding payment for new brachytherapy 
sources for which we have no claims data, based on the same reasons we 
discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66786; which was delayed until January 1, 2010 by section 142 of Pub. 
L. 110-275). That policy is intended to enable us to assign new HCPCS 
codes for new brachytherapy sources to their own APCs, with prospective 
payment rates set based on our consideration of external data and other 
relevant information regarding the expected costs of the sources to 
hospitals.
    We refer readers to Addendum B to this proposed rule (which is 
available via the Internet on the CMS Web site) for the proposed CY 
2015 payment rates for brachytherapy sources, which are identified with 
status indicator ``U.'' We are inviting public comments on this 
proposed policy and requesting recommendations for new HCPCS codes to 
describe new brachytherapy sources consisting of a radioactive isotope, 
including a detailed rationale to support recommended new sources. Such

[[Page 40940]]

recommendations should be directed to the Division of Outpatient Care, 
Mail Stop C4-05-17, Centers for Medicare and Medicaid Services, 7500 
Security Boulevard, Baltimore, MD 21244. We will continue to add new 
brachytherapy source codes and descriptors to our systems for payment 
on a quarterly basis through our program transmittals.
e. Establishment of Comprehensive APCs
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), effective January 1, 2015, we finalized a comprehensive 
payment policy that bundles or ``packages'' payment for the most costly 
medical device implantation procedures under the OPPS at the claim 
level. 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 comprehensive APCs to prospectively pay for 167 of the 
most costly device-dependent services beginning in CY 2015 (78 FR 
74910). Under this policy, we designated each service described by a 
HCPCS code assigned to a comprehensive APC as the primary service and, 
with few exceptions, consider all other services reported on a hospital 
Medicare Part B 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. 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, except in the context of 
comprehensive APC payments (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 dynamics of the policy as if 
we were implementing it for CY 2014, but delayed the effective date 
until January 1, 2015, to allow additional time for analysis, 
opportunity for public comment, and systems preparation. In this 
section of this CY 2015 OPPS/ASC proposed rule, we review the policies 
finalized in the CY 2014 OPPS/ASC final rule with comment period for 
comprehensive APCs. We then outline our proposed policy for CY 2015, 
which includes several clarifications and proposed modifications in 
response to public comments received. Finally, we summarize and respond 
to the public comments we received in response to the comprehensive APC 
policy outlined in the CY 2014 OPPS/ASC final rule with comment period. 
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, whereby we designated certain covered OPD services as 
``primary services'' (identified by a new OPPS status indicator of 
``J1'') assigned to comprehensive APCs. When such a primary service is 
reported on a hospital Medicare Part B claim, taking into account 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 not payable under 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; 
brachytherapy seeds, which must receive separate payment under section 
1833(t)(2)(H) of the Act; pass-through drugs and devices, which also 
require separate payment under section 1833(t)(6) of the Act; and 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 bundle 
policy is summarized as follows(78 FR 74887):
    APC assignment of primary (``J1'') services. During ratesetting, 
single claims reporting a single procedure described by a HCPCS code 
assigned to status indicator ``J1'' are used to establish an APC 
assignment for each procedure described by that HCPCS code. The 
geometric mean of the total estimated costs on each claim is used to 
establish resource similarity for each procedure code's APC assignment 
and is evaluated within the context of clinical similarity, with 
assignment starting from the APC assignments in effect for the current 
payment year. Claims reporting multiple procedures described by HCPCS 
codes assigned to status indicator ``J1'' are identified and the 
procedures are then assigned to a comprehensive 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 comprehensive 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 
geometric mean cost. When there is no claims data available upon which 
to establish a HCPCS-level comprehensive geometric mean cost, we model 
a HCPCS-level geometric mean cost for the sole purpose of appropriately 
assigning the primary service reported on a claim. The comprehensive 
APC assignment of each procedure described by HCPCS codes assigned to 
status indicator ``J1'' is then confirmed by verifying that the APC 
assignment remains appropriate when considering the clinical 
similarity, as well as the estimated cost of all claims reporting each 
procedure described by HCPCS codes assigned to status indicator ``J1,'' 
including simple and complex claims, with multiple device-related 
procedures (78 FR 74887).
    Complexity adjustments and determination of final comprehensive 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 combinations 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

[[Page 40941]]

has increased resource requirements relative to less complex subsets of 
that 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 was more than two times the 
comprehensive geometric mean cost of the single major claims reporting 
only the primary service;
     There were more than 100 claims in the data year reporting 
the specific code combination;
     The number of claims reporting the specific code 
combination exceeded 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 comprehensive APC (78 FR 74886).
    If a combination of procedure codes reported on claims is 
identified that meets these requirements, that is, commonly occurring 
and exhibiting materially greater resource requirements, the 
combination of procedure codes is further evaluated to confirm clinical 
validity as a complex subset of the primary procedure and the 
combination 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 combination of procedure 
codes does not meet the requirement for a materially greater resource 
requirement or does not occur commonly, the combination of procedure 
codes is not considered to be complex, and primary service claims with 
that combination of procedure codes are not reassigned. All 
combinations of procedures described by HCPCS codes assigned to status 
indicator ``J1'' for each primary service are similarly evaluated. Once 
all combinations 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 comprehensive APC within a clinical family 
of comprehensive APCs, that is, an APC with greater estimated resource 
requirements than the initially assigned comprehensive 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 data 
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. We will reevaluate our APC 
assignments and identification and APC placement of complex claims once 
claims data become available.
(2) Proposed CY 2015 Policy for Comprehensive APCs
(a) Proposed Methodology
    After consideration of the public comments we received, which are 
discussed in detail below, in this section we describe our proposed 
payment methodology for comprehensive APCs for CY 2015. The basic steps 
for calculating the comprehensive 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 are proposing 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 are proposing to package all 
add-on codes, but to allow certain add-on codes to qualify a procedure 
code combination for a complexity adjustment.
    Further, we are proposing to convert all current device-dependent 
APCs remaining after the proposed restructuring and consolidation of 
some of these APCs to comprehensive APCs. We also are proposing two new 
comprehensive APCs, C-APC 0067 for single-session cranial stereotactic 
radiosurgery (SRS) and C-APC 0351 for intraocular telescope 
implantation. In addition, we are proposing to reassign CPT codes 77424 
and 77425 that describe intraoperative radiation therapy treatment 
(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 comprehensive APCs. The 
steps are as follows:
    Step 1: Select primary (``J1'') services. We continue to believe 
that the comprehensive packaging of adjunctive services into a primary 
service will further improve cost validity, payment accuracy, 
beneficiary transparency, and hospital efficiency (78 FR 74861). As in 
CY 2014, for CY 2015, we are proposing that services assigned to 
comprehensive APCs be designated as primary services for comprehensive 
APCs, using new status indicator ``J1'' as listed in Addendum J and 
Addendum B to this proposed rule (which are available via the Internet 
on the CMS Web site). We also are proposing to package all add-on 
codes, as discussed in detail below, and that none of these add-on 
codes will be considered primary services assigned to status indicator 
``J1.''
    Treatment of add-on codes. We are proposing to assign all add-on 
codes status indicator ``N'' (unconditionally packaged). Therefore, 
under this proposal no add-on codes will be assigned to status 
indicator ``J1.'' However, we are proposing to evaluate a limited set 
of add-on codes assigned to the current device-dependent APCs, and to 
establish that when these add-on codes are reported in conjunction with 
a primary service a potential complexity adjustment under the proposed 
complexity adjustment criteria may be warranted (discussed further in 
Step 5 below).
    Step 2: Definition of the payment package (comprehensive service). 
We are proposing the following changes to the comprehensive APCs 
payment packaging policy for the services that are assigned to status 
indicator ``J1'' or designated as primary services assigned to a 
comprehensive APC:
     We are proposing to restructure and consolidate the 
current device-dependent APCs, including some procedure code 
reassignments to improve clinical and resource homogeneity;
     We are proposing to package all of the add-on procedure 
codes, after we review and evaluate add-on codes reported in 
conjunction with primary ``J1'' services under the proposed complexity 
adjustment criteria for a potential complexity adjustment;
     We are proposing to create more comprehensive APCs, 
including converting all device-dependent APCs (including those that 
were not included in the CY 2014 policy) and to create new 
comprehensive APCs for single session cranial stereotactic radiosurgery 
and intraocular telescope implantation.
    As stated in the CY 2014 OPPS/ASC final rule with comment period, 
we define the comprehensive APC payment packaging policy as including 
all covered OPD services on a hospital Medicare Part B claim reporting 
a primary service that is assigned to status

[[Page 40942]]

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 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; outpatient department 
services that are similar to therapy and delivered either by therapists 
or non-therapists as part of the comprehensive 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). 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 self-
administered (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 packaging 
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 this proposed rule 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 proposed policy is consistent with our policy to exclude 
preventive services from the proposed 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; 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 proposed rule. We 
note that one preventive service (HCPCS code G0102 (Prostate cancer 
screening; digital rectal examination)) is proposed for continued 
packaging under the OPPS in CY 2015, both broadly and in the context of 
comprehensive services. Currently, 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, 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 Addendum J to this proposed 
rule, we list the HCPCS codes that describe the services proposed for 
exclusion from the comprehensive APC payment bundling policy.
    As we discussed in the CY 2014 OPPS/ASC final rule with comment 
period, we did not model a budget neutrality adjustment for newly 
included services that would otherwise be paid under non-OPPS fee 
schedules (for example, therapy and DMEPOS) because the policy would 
not be implemented until CY 2015, and the estimated costs were very low 
(78 FR 74901). We reflect the inclusion of the proposed new costs 
(which remain very low) in our annual adjustment for CY 2015 budget 
neutrality (we refer readers to section XXI. of this proposed rule).

 Table 6--Proposed Comprehensive APC Payment Bundling Policy Exclusions
                               for CY 2015
------------------------------------------------------------------------
 
---------------------------------------------------------------------------
Ambulance services.
------------------------------------------------------------------------
Brachytherapy.
------------------------------------------------------------------------
Diagnostic and mammography screenings.
------------------------------------------------------------------------

[[Page 40943]]

 
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.
     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).
------------------------------------------------------------------------

    Step 3: Ranking of primary services initial comprehensive APC 
assignments. We are proposing to continue to define each hospital 
Medicare Part B claim reporting a single unit of a single primary 
service assigned to status indicator ``J1'' (approximately 80 percent 
of the CY 2013 claims) as a single major procedure claim (78 FR 74871). 
We would sum all line item charges for services included in the 
comprehensive 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 
comprehensive APC, inclusive of all of the items and services in the 
comprehensive APC payment bundle). Charges for services that would 
otherwise have been separately payable subject to longstanding 
adjustments, including the multiple procedure reduction (for example, 
HCPCS codes assigned to status indicators ``A,'' ``S,'' ``T,'' or 
``V'') would be 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 would apply our standard data trim, 
excluding claims with extremely high primary units or extreme costs.
    The comprehensive geometric mean costs are used to establish 
resource similarity and, along with clinical similarity, dictate the 
assignment of the primary services to the comprehensive APCs. We are 
proposing to establish a ranking of each primary service (single unit 
only) assigned to status indicator ``J1'' according to their 
comprehensive geometric mean costs. For CY 2015, we are proposing not 
to assign any add-on codes to status indicator ``J1'' because they are 
proposed to be packaged.
    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 are proposing 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 comprehensive APC to which the service 
designated as the primary service is assigned. If the reported ``J1'' 
services reported on a claim map to different comprehensive APCs, we 
designate the ``J1'' service assigned to the comprehensive 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 comprehensive APC, we designate the most costly service 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 comprehensive APCs based on 
both single and multiple procedure claims reporting these services and 
clinical and resource homogeneity.
    Step 4--Complexity adjustments and determination of final 
comprehensive APC groupings. We are proposing to use the proposed 
complexity adjustments to provide increased payment for certain 
comprehensive services. We are proposing to apply a complexity 
adjustment by promoting qualifying ``J1'' service code combinations or 
code combinations of a ``J1'' services and certain add-on codes (as 
described further below) from the originating comprehensive APC (the 
comprehensive APC to which the designated primary service is first 
assigned) to a higher paying comprehensive APC in the same clinical 
family of comprehensive APCs, if reassignment is clinically appropriate 
and the reassignment would not create a 2 times rule violation in the 
receiving APC (the higher paying comprehensive APC in the same clinical 
family of comprehensive APCs). We are proposing to implement this type 
of complexity adjustment when the code combination represents a 
complex, costly form or version of the primary

[[Page 40944]]

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, that is, the comprehensive 
geometric mean cost of the complex code combination exceeds the 
comprehensive geometric mean cost of the lowest significant HCPCS code 
assigned to the comprehensive APC (cost threshold).
    After designating a single primary service for a claim, we are 
proposing 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 are 
proposing to determine initial comprehensive APC assignments and 
complexity adjustments using the best data available, mapping 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 
criteria described above, we are proposing to promote the complex 
version of the primary service as described by the code combination to 
the next higher cost comprehensive APC within the clinical family, 
unless the APC reassignment is not clinically appropriate, the 
reassignment would create a 2 times rule violation in the receiving 
APC, or the primary service is already assigned to the highest cost APC 
within the comprehensive APC clinical family. We are not proposing to 
create new APCs with a geometric mean cost that is higher than the 
highest cost comprehensive APC in a clinical family just to accommodate 
potential complexity adjustments. Therefore, the highest payment for 
any code combination for services assigned to a comprehensive APC will 
be the highest paying comprehensive APC in the clinical family.
    As discussed below, we are proposing 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 (>=25 claims with 
the code combination and no violations of the 2 times rule). 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 comprehensive APC within the same 
clinical family of comprehensive APCs. We are providing the proposed 
list of qualifying code combinations (including add-on codes) in 
Addendum J to this proposed rule (which is available via the Internet 
on the CMS Web site).
    Complexity Test for Eligible Add-On Codes. We are proposing to 
package all add-on codes into the payment for the comprehensive APC. 
However, add-on codes that are assigned to the current device-dependent 
APCs listed in Table 5 of this proposed rule will be evaluated for a 
possible complexity adjustment when they are reported in conjunction 
with a designated primary service assigned to status indicator ``J1.'' 
We are proposing to only evaluate the add-on codes that are assigned to 
the current device-dependent APCs 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 are 
proposing to apply the proposed frequency and cost criteria discussed 
above (25 or more claims and no ``2 times'' rule violations), 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 
are met, and reassignment to the next higher cost APC in the clinical 
family is appropriate, we are proposing to make a complexity adjustment 
for the code combination; that is, we are proposing to reassign the 
primary service code reported in conjunction with the add-on code 
combination to a higher cost comprehensive APC within the same clinical 
family of comprehensive APCs. If any add-on code combination reported 
in conjunction with the primary service code does not qualify for a 
complexity adjustment, payment for these services will be packaged. We 
are listing 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 this 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 is not being proposed for a 
complexity adjustment because we believe that these claims are 
miscoded. Of the 35 qualifying claims reporting this code combination, 
only three claims contained the appropriate base code (CPT code 37228) 
for CPT add-on code 37233.
    We note that, in response to public comments received, we are 
providing in Addendum J to this 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 this proposed rule also contains 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 includes all code 
combinations that are proposed to be reassigned to C-APC 0655 when CPT 
code 33208 is the primary code. Providing the information contained in 
Addendum J in this proposed rule will allow 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 Proposed Comprehensive APCs
    Several commenters to the CY 2014 OPPS/ASC proposed rule questioned 
why we only converted a subset of the device-dependent APCs to 
comprehensive APCs (78 FR 74864). We responded that while we were 
initially adopting a subset of the most costly device-dependent 
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 believe that the entire set of the 
currently device-dependent APCs (after the proposed reorganization and 
consolidation of the current device-dependent APCs) are appropriate 
candidates for comprehensive APC payment because the device-dependent 
APCs not included in last year's

[[Page 40945]]

comprehensive APC payment proposal are similar to the original 29 
device-dependent APCs that were proposed as comprehensive 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 are 
being proposed for conversion to C-APCs contain comprehensive services 
primarily intended for the implantation of costly medical devices. 
Therefore, we are proposing 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 comprehensive APC payment. 
Stakeholders recommended that we create comprehensive APCs for these 
procedures and technologies or assign them to a previously proposed 
comprehensive APC. We agree with the stakeholders. Similar to the other 
services designated as C-APCs in CY 2014, these procedures are 
comprehensive single-session services with high-cost implantable 
devices or high-cost equipment. For CY 2015, we are proposing to 
convert the following existing APCs into comprehensive APCs: APC 0067 
(Single Session Cranial Stereotactic Radiosurgery) and APC 0351 (Level 
V Intraocular Surgery)). APC 0351 only contains one procedure--0308T 
(Insertion of ocular telescope prosthesis including removal of 
crystalline lens). We also are proposing 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 with a special type of radiation 
therapy that is delivered inside the surgical cavity but is not 
technically brachytherapy. The HCPCS codes that we are proposing to 
assign to these APCs in CY 2015 would be assigned to status indicator 
``J1.''
(c) Proposed Reconfiguration and Restructuring of the Comprehensive 
APCs
    Based on further examination of the structure of the comprehensive 
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), we are proposing to reorganize, 
combine, and restructure some of the comprehensive APCs. The purpose of 
this APC restructuring is to improve resource and clinical homogeneity 
among the services assigned to certain comprehensive APCs and to 
eliminate APCs for clinically similar services, but with overlapping 
geometric mean costs. The services we are proposing to assign to each 
of the comprehensive APCs for CY 2015, along with the relevant cost 
statistics, are provided in Addendum J to this proposed rule. Addendum 
J is available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. 
Table 7 below lists the additional 28 APCs proposed under the CY 2015 
comprehensive APC policy.
    In summary, our proposal to reorganize, combine, and restructure 
some of the comprehensive APCs includes the following proposed changes:
     Endovascular clinical family (renamed Vascular Procedures, 
VASCX). We are proposing 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 are proposing to combine C-APCs 0089, 
0090, 0106, 0654, 0655, and 0680 as illustrated for CY 2014 to form 
three proposed levels of comprehensive 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 are proposing to delete the clinical family for Event 
Monitoring, which only had one comprehensive APC (C-APC 0680 (Insertion 
of Patient Activated Event)) with a single CPT code 33282 as 
illustrated for CY 2014. We also are proposing to reassign CPT code 
33282 to C-APC 0090, which contains clinically similar procedures.
     In the urogenital family, we are proposing 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 are proposing to rename the arthroplasty family of APCs 
to Orthopedic Surgery. We also are proposing to reassign several codes 
from APC 0052 to C-APC 0425, which we are proposing to rename ``Level V 
Musculoskeletal Procedures Except Hand and Foot.''
     We are proposing 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 renaming APC 0086 ``Level III Electrophysiologic Procedures.'' In 
addition, we are proposing 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).
    We also are proposing 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
    We received nine public comments in response to the CY 2014 OPPS/
ASC final rule with comment period regarding our policy for 
comprehensive APCs from device manufacturers, the hospital community, 
and others. The commenters generally supported broader payment bundles, 
as long as the payment bundles are appropriately and accurately 
structured and provide adequate payment. Commenters expressed continued 
concern regarding the data provided in support of the comprehensive APC 
policy, the ability to replicate the methodology, and the ability of 
comprehensive APCs to adequately pay for complex services for patients. 
The comments, which were largely provided in the context of specific 
devices or drugs, or in regard to a specific clinical family of 
comprehensive APCs, are summarized below and accompanied by our 
responses.
Endovascular Family
    Comment: Several commenters addressed the endovascular family of 
comprehensive APCs. The commenters expressed difficulty replicating 
CMS' methodology, especially complexity reassignments for procedures in 
this family of services that is historically component-based and 
include many new codes and add-on codes. The commenters requested 
clarification of how CMS determined comprehensive APC assignments and 
complexity adjustments associated with add-on codes and other 
procedures.
    One commenter expressed concern regarding payment levels for 
vascular

[[Page 40946]]

procedures involving multiple vessels. The commenter recommended 
changes to the complexity adjustment criteria in order to allow for 
adjustments and to provide adequate payment for seven code combinations 
of lower extremity endovascular revascularization procedures assigned 
to C-APCs 0083 (Level I Endovascular Procedures), 0229 (Level II 
Endovascular Procedures) and 0445 (Level III Endovascular Procedures). 
The code combinations identified by the commenter were CPT code 37221 
and 37222; 37229 and 37232; 37230 and 37232; 37231 and 37232; 37229 and 
37234; 37231 and 37233; and 37231 and 37234. Procedures described by 
add-on codes (CPT codes 37222, 37232, 37233 and 37234) are furnished in 
conjunction with each of these code combinations. The commenter stated 
that each of the code combinations failed to meet the CY 2014 finalized 
cost threshold for a complexity adjustment (for example, the 
comprehensive geometric mean cost of the code combination was more than 
two times the comprehensive geometric mean cost of the single major 
claims reporting only the primary ``J1'' service), but that some of the 
code combinations met the CY 2014 frequency of >=100 claims and >=5 
percent of the total claims volume for the primary service, including 
CPT codes 37221 and 37222 (Iliac artery revascularization (multiple 
vessels) with stent), 37229 and 37232 (Tibial/peroneal artery 
revascularization (multiple vessels) with atherectomy), and 37230 and 
37232 (Tibial/peroneal artery revascularization (multiple vessels) with 
stent). The other four code combinations met the >=5 percent volume 
threshold for the claims reporting the primary service, but in the 
relevant data year the frequency of these code combinations ranged from 
13 to 22 cases, including CPT codes 37231 and 37232 (Tibial/peroneal 
artery revascularization (multiple vessels) with stent and 
atherectomy), 37229 and 37234 (Tibial/peroneal artery revascularization 
with atherectomy (multiple vessels) and with stent (multiple vessels)), 
37231 and 37233 (Tibial/peroneal artery revascularization with stent 
and atherectomy (multiple vessels)), and 37231 and 37234 (Tibial/
peroneal artery revascularization with stent (multiple vessels) and 
atherectomy). In no case did the geometric mean cost of the code 
combinations exceed the geometric mean cost of the single ``J1'' claims 
for the primary service alone by at least two times.
    To qualify these code combinations for a complexity adjustment, the 
commenter recommended using a 1.5 instead of 2 times rule, patterned 
after the 50 percent multiple procedure reduction and based on the 
inability of hospitals to garner 100 percent efficiency when performing 
multiple procedures. The commenter stated that this slightly lower cost 
threshold would still be significant and, therefore, would 
appropriately allow complexity reassignment only for cases that are 
meaningfully underpaid under the threshold. (We received similar 
inquiries from other commenters regarding our application of the 
statutory ``2 times'' rule that are discussed below.)
    In addition, the commenter recommended that CMS omit the CY 2014 
required claim frequency threshold of greater than 100 claims with the 
specific combination of procedure codes. The commenter believed that 
the frequency threshold requiring that complex claims for a particular 
procedure code combination exceed 5 percent of the total volume of 
claims reporting the primary service alone is sufficient to ensure 
additional payment for only higher volume cases, and that an additional 
frequency threshold is not necessary. The commenter believed that the 
threshold should not depend on the procedures' frequency in prior 
years, which can fluctuate significantly.
    The commenter asked for clarification regarding our treatment of 
add-on codes, recommending that all add-on codes assigned to the 
endovascular comprehensive APCs be equally eligible for complexity 
adjustments. The commenter noted that Table 10 of the CY OPPS/ASC 2014 
final rule with comment period (78 FR 74889 through 74900) listed 
complexity adjustments for only a small number of add-on codes (for 
example, certain drug-eluting stent codes), and did not list complexity 
adjustments for any of the add-on codes for peripheral artery 
revascularization associated with procedures assigned to C-APCs 0083, 
0229 and 0445. The commenter could not assess whether only some add-on 
code combinations were considered for complexity adjustments, or 
whether all combinations were considered but eliminated due to not 
meeting the cost or frequency criteria.
    Similarly, another commenter requested additional information 
regarding application of the complexity criteria to all of the 
percutaneous coronary intervention (PCI) related code combinations in 
Table 10 of the CY 2014 OPPS/ASC final rule with comment period. In 
particular, the commenter was not sure whether the C9600-C9602 code 
combination required intervention in an additional vessel, whether a 
second stent in a new vessel is required, or whether one stent and 
rotational atherectomy together with an additional stent in the same 
vessel would qualify the procedure(s) for a complexity adjustment. The 
commenter believed that it would not be appropriate to apply an 
adjustment only when the second intervention was in a separate vessel, 
where a procedure involving placement of a stent in one vessel and a 
second stent in a branch of the same vessel would not be eligible for 
complexity adjustment, but placement of two stents in two separate 
vessels would be eligible because the resources required are 
potentially very similar. Regarding claims with more than one unit of 
HCPCS code C9606, the commenter was not sure whether the second 
revascularization procedure must involve a second episode of acute 
myocardial infarction (AMI) in the same outpatient encounter, or 
whether the complexity adjustment would apply when there is a single 
episode of AMI in two separate vessels or in the same vessel. 
Regardless of CMS' intent, the commenter questioned why interventions 
involving patients with AMI or total chronic occlusions are mapped to 
the same APCs as those that involve patients with lower levels of 
complexity.
    Response: We begin by clarifying how we treated add-on codes, which 
are particularly common in the vascular family of comprehensive APCs, 
in modeling the CY 2014 payments for comprehensive APCs. The CPT 
Editorial Panel defines add-on codes as codes that describe procedures 
that are commonly carried out in addition to the primary procedure 
performed, listing add-on codes in Appendix D of the CPT codebook (2014 
CPT Codebook Professional Edition, page xiv). The CPT codebook states 
that add-on codes are always performed in addition to the primary or 
``base'' service or procedure and must never be reported as a stand-
alone code. Add-on codes can also be Level II HCPCS codes, such as 
HCPCS codes C9601, C9603, C9605 and C9608, which are the drug-eluting 
stent insertion add-on codes that parallel the non-drug eluting stent 
insertion add-on CPT codes 92929, 92934, 92938 and 92944, respectively. 
In Table 15 of the CY 2014 OPPS/ASC final rule with comment period, we 
listed all add-on codes that are currently assigned to device-dependent 
APCs (78 FR 74944).
    Historically and in most cases, the OPPS assigned add-on codes to 
the same APC as the base code and applied a multiple procedure 
reduction when

[[Page 40947]]

these codes were reported with the base code. Because add-on codes 
represent an extension or continuation of or are adjunctive to a 
primary service, beginning in CY 2014, we unconditionally packaged add-
on codes, except for drug administration services, and add-on codes 
assigned to device-dependent APCs due to the delayed implementation of 
the comprehensive APC policy until CY 2015 (78 FR 74943). We discussed 
in that same final rule with comment period how this policy will 
improve the accuracy of OPPS ratesetting, as we would no longer be 
reliant on incorrectly coded single add-on code claims to set OPPS 
payment rates for add-on codes (78 FR 74942).
    In the CY 2014 OPPS/ASC proposed rule, we proposed to 
unconditionally package add-on codes assigned to comprehensive APCs and 
to assign the procedures to status indicator ``N'' (78 FR 43559). They 
were not proposed as primary services assigned to status indicator 
``J1'' because they would always be furnished adjunctive to another 
primary service assigned status indicator ``J1.'' We had not proposed a 
complexity adjustment, so there was no need to consider whether the 
multiple procedure claims that correctly report an add-on code should 
be promoted to a higher comprehensive APC.
    In the CY 2014 OPPS/ASC final rule with comment period, we 
designated certain especially costly add-on codes as primary services 
assigned to status indicator ``J1.'' (We refer readers to Table 9 in 
the 2014 OPPS final rule with comment period (78 FR 74873 through 
74883), which provided the APC assignments for HCPCS codes proposed to 
be assigned to status indicator ``J1'' for CY 2014 and were displayed 
for illustration.) Other add-on codes assigned to the device-dependent 
APCs illustrated as comprehensive APCs were packaged because of the CY 
2014 policy to package most add-on codes under the OPPS. Because these 
packaged add-on codes were not sufficiently costly, they were not 
designated as primary ``J1'' services. As a result, for example, CPT 
codes 37222, 37232, 37233, and 37234 were not assigned status indicator 
``J1'' in the CY 2014 OPPS/ASC final rule with comment period and 
instead were packaged similar to almost all of the other add-on codes. 
However, for CY 2014, because the implementation of the comprehensive 
APC policy was delayed until CY 2015, payment for services described by 
add-on codes assigned to a device-dependent APC are paid separately 
under the OPPS (78 FR 74943).
    In response to the comments we received on the CY 2014 OPPS/ASC 
final rule with comment period, we considered ways to refine and 
simplify the complexity test when add-on codes that are currently 
assigned to the device-dependent APCs are reported with primary 
services proposed to be assigned to comprehensive APCs for CY 2015 in 
this proposed rule. Because services described by add-on codes are by 
definition adjunctive and furnished in addition to primary services 
assigned status indicator ``J1,'' we believe that the add-on codes 
should not be classified as primary services themselves because they 
cannot serve as the primary service provided to a patient. However, we 
continue to believe that we should recognize the additional cost and 
complexity of certain cases involving procedures described by certain 
especially costly add-on codes that are currently assigned to a device-
dependent APC in CY 2014 because like certain combinations of ``J1'' 
procedure codes, primary service code and add-on code combinations can 
represent more complex and significantly more costly variations of the 
primary service. Therefore, we are proposing to revert to our original 
CY 2014 proposal for comprehensive APCs in which we would not consider 
any add-on codes that are currently assigned to device-dependent APCs 
as primary services assigned to status indicator ``J1'' (78 FR 43559). 
For CY 2015, we are proposing to allow certain combinations of primary 
service codes and especially costly add-on codes representing a more 
costly, complex variation of a procedure to trigger a complexity 
adjustment. We refer readers to section II.A.2.e.(3)(a) of this 
proposed rule for a detailed description of our proposed new 
methodology of evaluating primary service procedures reported in 
conjunction with add-on codes for complexity adjustments.
    Also, in evaluating the comprehensive APC assignments based on CY 
2013 claims data, we are proposing to consolidate and restructure the 
vascular comprehensive APCs, in addition to other APCs. We refer 
readers to section II.A.2.e.(3)(c) of this proposed rule for a 
discussion of the proposed reconfiguration, and to Addendum J to this 
proposed rule for the updated cost statistics and proposed complexity 
adjustments for the services to address the commenters' concerns. We 
are proposing complexity adjustments for several of the services 
indicated by the commenters, although some of the services continue to 
fail one or both of the proposed complexity criteria even under the 
proposed relaxed frequency and cost thresholds.
    We agree with the commenters that we should revise the criteria for 
complexity adjustments. The delay in implementation afforded additional 
time for CMS and commenters to further analyze and consider the cost 
data. After further analysis and consideration of the public comments 
in response to the CY 2014 OPPS/ASC final rule with comment period, we 
believe that the complexity adjustment criteria in that final rule with 
comment period were too restrictive. None of the code combinations 
illustrated as qualifying for complexity adjustments in the CY 2014 
OPPS/ASC final rule with comment period met all of the frequency and 
cost thresholds set forth in the CY 2014 OPPS/ASC final rule with 
comment period, and no code combinations would qualify under those 
criteria in CY 2015 using the CY 2013 cost data. However, we believe 
that especially costly and sufficiently frequent code combinations 
should qualify for a complexity adjustment.
    In calculating the geometric mean costs for comprehensive APC 
services using the claims data for CY 2013, we noted that many of the 
comprehensive APCs in the same clinical family illustrated in the CY 
2014 OPPS/ASC final rule with comment period had similar or overlapping 
comprehensive geometric mean costs, meaning that the geometric mean 
costs were close to one another or that the range of costs for 
procedures assigned to one comprehensive APC significantly overlapped 
the range of costs for procedures assigned to another comprehensive APC 
in the same clinical family. We are proposing to restructure and 
consolidate these comprehensive APCs, as further described in section 
II.A.2.e.(3)(c) of this proposed rule, in order to better distinguish 
service groups having different resource requirements. The proposed 
restructuring and consolidation eliminates the need for many of the 
complexity adjustments illustrated in the CY 2014 OPPS/ASC final rule 
with comment period because we are proposing to promote the primary 
service to a higher cost comprehensive APC for CY 2015 as compared to 
its illustrated comprehensive APC assignment for CY 2014. For example, 
for CY 2014, we illustrated complexity adjustments for the CPT code 
combinations 37228 and 35476, 37228 and 37220, 37228 and 37224, and 
multiple units of CPT code 37228 from C-APC 0083, the primary service 
CPT code 37228 was assigned with a comprehensive geometric mean cost of

[[Page 40948]]

$4,230 to C-APC 0104 with a comprehensive geometric mean cost of 
$8,554. For CY 2015, we are proposing to consolidate C-APCs 0104 and 
0229, and to retain C-APC 0229. Considering our proposed initial 
assignment of CPT code 37228 to C-APC 0229, CPT code 37228 has a 
proposed CY 2015 geometric mean cost of $7,250 and C-APC 0229 has a CY 
2015 proposed comprehensive geometric mean cost of approximately 
$9,998.
    We agree with the commenters that complexity adjustments should be 
based upon criteria that demonstrate that the complex combination is 
both sufficiently frequent and sufficiently costly such that a payment 
adjustment is warranted within a similar clinical family, if possible. 
Our reliance on clinical comparisons of each code combination in 
determining the complexity adjustments illustrated for CY 2014 likely 
contributed to the difficulty experienced by commenters in reproducing 
the results of the policy. Accordingly, we further analyzed the cost 
data in order to identify viable alternatives for complexity adjustment 
criteria. For CY 2015, we are proposing the following new complexity 
adjustment criteria to evaluate HCPCS code combinations for complexity 
adjustments:
     Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
     Violation of the ``2 times'' rule; that is, the 
comprehensive geometric mean cost of the ``complex'' code combination 
exceeds the comprehensive geometric mean cost of the lowest significant 
HCPCS code assigned to the originating comprehensive APC by at least 2 
times (cost threshold). (``Significant'' means frequency >1000 claims, 
or frequency >99 claims and contributing at least 2 percent of the 
single major claims used to establish the originating comprehensive 
APC's geometric mean cost, including the claims reporting the complex 
code pair).
    To illustrate how this second criterion is applied, for example, 
consider CPT code 33208 as the primary service reported in conjunction 
with HCPCS code C9600. CPT code 33208 is assigned to APC 0089. The 
lowest cost significant procedure assigned to APC 0089 is CPT code 
33228, with a geometric mean cost of $8,669. There are 43 instances of 
the code combination of CPT code 33208 and HCPCS code C9600 in the CY 
2013 claims data with a geometric mean cost of $21,914, which exceeds 
the geometric mean cost of CPT code 33228 ($8,669) by greater than two 
times ($21,914 > $17,338). Therefore, the code combination of CPT code 
33208 and HCPCS code C9600 is assigned through a complexity adjustment 
to APC 0655, which is the next higher cost APC in the AIDCP clinical 
family of comprehensive APCs.
    Whereas the criteria finalized in the CY 2014 OPPS/ASC final rule 
with comment period evaluated the marginal cost contribution of the 
additional procedure in comparison to the designated primary service 
alone (78 FR 74886), the proposed complexity adjustment criterion would 
employ our standard ``2 times'' rule (discussed in section III.B.2. of 
this proposed rule), comparing the costs associated with the code 
combination to the cost of other services assigned to the same 
comprehensive APC. We are proposing to make a complexity adjustment by 
reassigning a particular code combination to a higher cost 
comprehensive APC if there are 25 or more claims reporting the code 
combination in the data year and their comprehensive geometric mean 
cost exceeds the geometric mean cost of the lowest significant HCPCS 
code in the initial comprehensive APC by more than two times according 
to our standard ``2 times'' rule comparison. By ``significant HCPCS 
code,'' we mean our standard threshold for volume significance of the 
other codes being compared to the complex code combinations requiring a 
frequency >1000; or frequency >99 and contributing at least 2 percent 
of the single major claims used to establish the comprehensive APC 
geometric mean cost, including the claims reporting the complex code 
pair). We are proposing to apply the same test in assessing whether the 
complexity reassignment would create a ``2 times'' rule violation in 
the newly assigned comprehensive APC. However, if the claims comprise 
significant volume and violate the ``2 times'' rule cost differential, 
we are proposing to consider alternative comprehensive APC assignments, 
such as not making a complexity adjustment for the code combination, or 
not assigning the case to a higher cost APC within the same clinical 
family. In doing so, we also would require the complex code combination 
to be clinically similar to other procedures assigned to the 
comprehensive APC to which the complex code combination is reassigned. 
This is usually the case because complexity adjustments are confined to 
higher cost APCs within the same clinical family.
    Comment: One commenter questioned the assignment of procedures 
within C-APCs 0083 (Level I Endovascular Procedures), 0229 (Level II 
Endovascular Procedures) and 0319 (Level IV Endovascular Procedures). 
The commenters believed that some of the procedures assigned to C-APC 
0083 should be assigned to C-APC 0229, and stated that the adjunctive 
service rather than the primary service appeared to be driving the 
comprehensive APC mapping, specifically CPT code combinations 35476 and 
37205, 35475 and 37205, 35471 and 37205, and 37220 and 37205.
    Response: CPT code 37205 was deleted for CY 2014, and we are 
proposing to cross-walk CPT code 37205 to CPT code 37236 for CY 2015 
based on the code descriptors. Until claims data are available for new 
codes, we are proposing to continue to make comprehensive APC 
assignments based on our best assessment of clinical and resource 
similarity (as we do for standard APC assignments), including examining 
the historical cost data for any predecessor code(s). Applying our 
proposed CY 2015 complexity adjustment criteria (significant volume of 
25 or more complex claims and a ``2 times'' rule violation assessment 
relative to the lowest service within the originating comprehensive 
APC) would result in several complexity adjustments related to CPT code 
37205, which are listed in Addendum J to this proposed rule (which is 
available via the Internet on the CMS Web site). We are proposing to 
provide these complexity adjustments when CPT code 37236 is reported in 
lieu of CPT code 37205 for each of these code combinations.
    Comment: One commenter expressed concern regarding payment for 
certain anticoagulant and other drugs that are commonly furnished with 
services assigned to the endovascular family of comprehensive APCs, 
particularly Angiomax, Cleviprex, Recothrom and Agratroban. The 
commenter asked CMS to clarify that the proposed definition of a 
comprehensive APC includes adjunctive supplies, as well as adjunctive 
services. The commenter asserted that the proposed comprehensive APC 
payment methodology violates the OPPS statutory requirements for 
separate payment of specified covered outpatient drugs (SCODs) and the 
``2 times'' rule. The commenter stated that CMS did not discuss 
application of the ``2 times'' rule in the statutory context, and noted 
that by design CMS selected primary procedures that were far more 
costly than the other services included in the comprehensive APC 
payment bundle. The commenter also asserted that the comprehensive APC 
policy is premature because it lacks clinical quality metrics and other 
safeguards for quality of outpatient care. The commenter

[[Page 40949]]

recommended alternative policies to incentivize cost-effectiveness, 
such as required data submission on hospital treatment decisions and 
making hospitals whole for use of cost-effective items and services 
including drugs. The commenter did not believe that Medicare's three 
hospital inpatient quality incentive programs include measures that are 
relevant for the comprehensive device-dependent procedures when they 
are furnished on an outpatient basis.
    Response: In finalizing our CY 2014 policy to package drugs and 
biologicals that function as surgical supplies, we explained that CMS 
has the statutory authority to package the payment of any drugs, 
biologicals, and radiopharmaceuticals, including those that meet the 
statutory definition of a SCOD (78 FR 74931). Also, in finalizing our 
CY 2008 policy packaging all diagnostic radiopharmaceuticals and 
contrast agents, except those with pass-through status, we explained 
that CMS has the statutory authority to package the payment of any 
drugs, biologicals, and radiopharmaceuticals, including those that meet 
the statutory definition of a SCOD (72 FR 66766).
    Our proposed definition of a comprehensive APC includes adjunctive 
supplies, as well as adjunctive services. In the CY 2014 OPPS/ASC final 
rule with comment period, we packaged all drugs, biologicals, and 
radiopharmaceuticals into the comprehensive APC payment, with the 
exception of certain drugs that are usually self-administered (SADs) 
and, therefore, not covered under Medicare Part B. We applied our 
existing policy that defines certain SADs as hospital supplies paid 
under the OPPS, such that these SADs would be included in the 
comprehensive APC payment bundle (78 FR 74868). For CY 2015, we are 
proposing to retain these aspects of our comprehensive APC policy. We 
are proposing to continue to package all drugs, biologicals, and 
radiopharmaceuticals into the comprehensive APC payment, including 
those SADs defined as hospital supplies, which are packaged in the OPPS 
(Medicare Benefit Policy Manual Chapter 15, Section 50.2.M, available 
at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf). Therefore, beginning in CY 2015, Angiomax, 
Cleviprex, Recothrom, Agratroban, and any other drugs, biologicals, and 
radiopharmaceuticals (except for SADs that are not considered hospital 
supplies) would be packaged when administered to a patient receiving a 
comprehensive service. There would be no separate payment for these 
non-pass-through drugs under the OPPS regardless of cost or any other 
factors.
    We appreciate the commenters' concerns regarding ensuring the 
quality of hospital outpatient care. In section XIII. of this proposed 
rule, we discuss the Hospital OQR Program for CY 2015. To the extent 
that inpatient quality measures would not apply to the comprehensive 
services proposed for CY 2015, stakeholders should suggest specific 
measures that would be relevant in response to the section of the 
proposed rule dealing with hospital outpatient quality measures.
Automatic Implantable Cardiac Defibrillators and Pacemakers and Related 
Devices (AICDP)
    Comment: One commenter asked CMS to create a comprehensive APC for 
Cardiac Resynchronization Therapy Pacemaker (CRT-P) in the absence of 
defibrillation (CPT code 33225) because the comprehensive APC packaging 
policy decreases payment relative to the multiple procedure reduction 
policy. The commenter requested a complexity adjustment when CPT code 
33225 is reported in combination with CPT code 33206, 33207, 33208, or 
33214 because of their high mean cost relative to all other pacemaker 
insertion procedures assigned to C-APC 0089 (Level III Insertion/
replacement of Permanent Pacemaker) and C-APC 0655 (Insertion/
Replacement/Conversion of a Permanent Dual Chamber Pacemaker or Pacing 
Electrode).
    Response: CPT code 33225 is an add-on code that was not assigned to 
status indicator ``J1'' in the CY 2014 OPPS/ASC final rule with comment 
period. For CY 2015, we are proposing to continue packaging this 
service, but to provide a complexity adjustment when the service is 
furnished in conjunction with CPT code 33207, 33208, or 33228 from C-
APC 0089 to C-APC 0655 because these code combinations meet the 
proposed complexity adjustment criteria. The code combinations of CPT 
33206 and 33225 and 33214 and 33225 meet the proposed cost threshold, 
but not the proposed frequency threshold and, therefore, we do not 
believe that we should provide complexity adjustments for these code 
combinations. Services that are reported fewer than 25 times a year do 
not comprise significant volume and are not sufficiently frequent 
service combinations in the context of the proposed comprehensive APC 
policy and proposed complexity adjustment criteria and, therefore, do 
not qualify for a complexity adjustment.
Neurostimulators
    Comment: One commenter recommended splitting C-APC 0318 (Level II 
Implantation of Neurostimulator) to achieve a narrower cost range, 
placing vagal nerve and spinal cord stimulation in its own 
comprehensive APC and creating a separate comprehensive APC for other 
neurostimulator devices. The commenter also recommended reassigning CPT 
code 61886 to C-APC 0039 (Level I Implantation of Neurostimulator) to 
place all single generator procedures in the lower APC. In contrast, 
another commenter supported the complexity adjustments and the final 
comprehensive APC structure proposed for the neurostimulator family. 
The commenter stated in response to the CY 2014 OPPS/ASC final rule 
with comment period that appropriately differentiating payment rates 
for less-intensive pulse generator replacements from the more intensive 
initial system implants, which include placement of lead array(s), and 
also appropriately distinguishing payment rates between simpler less 
resource-intensive nerve stimulation procedures (for example, sacral 
nerve stimulation) and more complex resource-intensive nerve 
stimulation procedures (for example, spinal cord stimulation) is most 
appropriate. This commenter supported mapping the spinal cord 
stimulation system implants into C-APC 0318 because these implants have 
similar procedural complexity and resource utilization with the other 
procedures assigned to C-APC 0318.
    Response: Some of the procedure codes assigned to the different 
neurostimulator comprehensive APCs illustrated for CY 2014 had similar 
or overlapping costs, in particular C-APCs 0040 and 0061, which had 
comprehensive geometric mean costs of $4,715 and $6,567 respectively. 
Having also updated the APCs based on CY 2013 cost data, for CY 2015, 
we are proposing to restructure the neurostimulator comprehensive APCs 
from four comprehensive APCs to three comprehensive APCs within a 
single series of APCs titled ``Neurostimulator and Related 
Procedures.'' We are proposing to begin this series with the non-
comprehensive APC 0688 followed by the three levels of comprehensive 
APCs for neurostimulator procedures as follows: C-APC 0061 (Level II 
Neurostimulator and Related Procedures); C-APC 0039 (Level III 
Neurostimulator and Related Procedures); and C-APC 0318 (Level IV 
Neurostimulator and Related

[[Page 40950]]

Procedures). This proposed reconfiguration would establish groups of 
neurostimulator device-related services that have different and 
nonoverlapping cost ranges while applying the ``2 times'' rule, 
including several complexity adjustments for complex code combinations. 
We believe that the procedures proposed for assignment to C-APC 0318 
for CY 2015 are clinically similar and similar in associated resources 
and, therefore, should be assigned to the same comprehensive APC. We 
also believe that CPT code 61886 more appropriately belongs in the 
higher level C-APC 0318 rather than C-APC 0039 based on its cost and 
complexity because it describes implantation of a cranial 
neurostimulator with connection to two or more electrode arrays. We do 
not believe that CPT code 61886 should be assigned to C-APC 0039 with 
less complex procedures.
Urogenital
    Comment: Several commenters addressed the urogenital clinical 
family of comprehensive APCs. One commenter recommended that CMS exempt 
C-APC 0202 (Level VII Female Reproductive Procedures) from the 
comprehensive APC policy, due to the variability in geometric mean 
costs between cases with a single ``J1'' procedure and cases with 
multiple procedures furnished during the same surgical session (not 
otherwise specified). Alternatively, the commenter recommended 
different complexity criteria that would reassign the claims assigned 
to C-APC 0202 (Level VII Female Reproductive Procedures) to C-APC 0385 
(Level I Urogenital Procedures) or C-APC 0386 (Level II Urogenital 
Procedures). The commenter suggested that we make a complexity 
adjustment for any claim with a service assigned to status indicator 
``J1'' and at least two additional surgical procedures. The commenter 
also suggested the following possible alternative cost criteria: (1) 
Using percent of total device costs reported on a claim instead of the 
presence of a second service assigned status indicator ``J1'' to assess 
costliness; or (2) using a cost threshold of 1.5 instead of 2 times the 
cost of single claims for the primary service. The commenter also 
suggested a volume threshold of 50 instead of 100 claims. Finally, the 
commenter asked CMS to clarify how it determined uncommon clinical 
scenarios or extreme resource values for the complexity adjustment, and 
what data or information qualifies code combinations for reassignment.
    Response: The commenter was not clear regarding which surgical 
procedures we should count or consider in determining complexity 
adjustments, for example specific services assigned status indicator 
``J1'' that do not meet our proposed complexity criteria or surgical 
procedures that are not assigned to a comprehensive APC. It was not 
clear whether the commenters' recommendations were mutually exclusive, 
or recommended in some combination with one another. Also, it was not 
clear whether the commenter was suggesting that any two surgical 
procedures, even those not assigned to a comprehensive APC, should 
qualify a claim for complexity adjustment. As discussed above, for CY 
2015, we are proposing different complexity adjustment criteria than 
those that were discussed in the CY 2014 OPPS/ASC final rule with 
comment period. As discussed above, for CY 2015, we are proposing less 
stringent complexity adjustment criteria--codes combinations, either 
two ``J1'' service codes or a ``J1'' service code and an add-on code 
that is eligible for a complexity adjustment must appear at least 25 
times in the claims data and violate the 2 times rule. Extremely few 
claims involve the provision of more than two surgical procedures. 
Therefore, we do not believe that it is necessary or appropriate to 
complicate our proposed methodology by attempting to isolate marginal 
costs associated with other packaged surgical procedures. The 
complexity adjustment (both in the CY 2014 OPPS/ASC final rule with 
comment period and proposed in this CY 2015 OPPS/ASC proposed rule) 
would reassign all claims reporting a qualifying code combination, 
whether or not additional (third, fourth, or subsequent) services 
assigned to a comprehensive APC appear on the claim.
Stem Cell Transplant
    Comment: One commenter recommended that CMS apply the comprehensive 
service concept to outpatient stem cell transplant (SCT) because the 
procedures occur in small volume and, due to their clinical nature, are 
almost always multiple procedure claims that are unusable under the 
standard ratesetting methodology. Specifically, the commenter requested 
that CMS create three comprehensive APCs for autologous outpatient SCT, 
where donor and recipient are the same; allogeneic-related outpatient 
SCT, where donor and recipient are biologically related; and 
allogeneic-unrelated transplants, where donor and recipient are 
biologically unrelated. The commenter stated that the costs associated 
with these three types of outpatient SCT vary significantly according 
to the donor search and acquisition costs, which are relatively modest 
for autologous outpatient SCT, $5,000 to $20,000 for allogeneic-related 
outpatient SCT, and $30,000 to $80,000 for allogeneic unrelated 
outpatient SCT. The commenter discussed how the low CCR associated with 
revenue code 0819 (Blood and Blood Products), which must be used to 
report donor search and acquisition charges, makes providers hesitant 
to report high donor charges and contributes to incorrectly coded 
claims.
    Due to inaccuracies in cost reporting and exclusion of certain 
multiple procedure claims from ratesetting, the commenter believed that 
outpatient SCT payment is based on only a handful of incorrectly and 
incompletely coded single procedure claims. The commenter also believed 
that comprehensive APCs would improve payment adequacy by allowing the 
use of multiple procedure claims, provided CMS also create a separate 
and distinct CCR for donor search and acquisition charges so that they 
are not diluted by lower cost services. Alternatively, the commenter 
suggested that CMS require transplant centers to report their actual 
costs on outpatient claims for allogeneic SCT, and apply a default CCR 
of 1.0 for claims reporting the outpatient allogeneic procedure CPT 
code.
    Response: For CY 2015, we are proposing to continue to pay 
separately for allogeneic transplantation procedures under APC 0111 
(Blood Product Exchange) and APC 0112 (Apheresis and Stem Cell 
Procedures), with proposed rule geometric mean costs of approximately 
$1,127 and $3,064, respectively. Allogeneic harvesting procedures, 
which are performed not on the beneficiary but on a donor, cannot be 
paid separately under the OPPS because hospitals may bill and receive 
payment only for services provided to the Medicare beneficiary who is 
the recipient of the SCT and whose illness is being treated with the 
transplant. We stated in the CY 2010 OPPS/ASC final rule with comment 
period (74 FR 60575) and in section 231.11 of Chapter 4 of the Medicare 
Claims Processing Manual (Pub. 100-04) that payment for allogeneic stem 
cell acquisition services (such as harvesting procedures and donor 
evaluation) is packaged into the payment for the transplant procedure 
(either the Medicare Severity--Diagnosis Related Group (MS-DRG) when 
the transplant is performed inpatient, or the APC when the transplant 
is performed outpatient). Hospitals should report all allogeneic

[[Page 40951]]

outpatient SCT acquisition charges on the recipient's outpatient claim 
as uncoded charges under revenue code 0819.
    While converting the outpatient SCT APCs to comprehensive APCs 
would reduce to small degree the differential between the OPPS payment 
rate and the costs as represented in the public comment we received, it 
would only provide a relatively modest increase in payment, consistent 
with our previous data studies on this issue. We believe that we need 
to further examine the costs associated with this service and how they 
could best be captured for payment ratesetting purposes in the OPPS. 
This service remains low volume in the HOPD, but we will continue to 
monitor this issue and the volume of outpatient allogeneic transplant 
services.
General Comments on Comprehensive APCs
    We also received several general comments that were not related to 
specific comprehensive APCs, as described below.
    Comment: Many of the commenters recommended continued refinement of 
the comprehensive APC payment methodology to better identify and 
recognize the costs associated with complex services and patients. Some 
commenters suggested developing a list similar to the IPPS listing of 
complications and comorbidities (CCs) and major complications and 
comorbidities (MCCs) to identify complications and comorbidities 
associated with higher acuity patients in the outpatient setting. Other 
commenters suggested additional reimbursement when additional services, 
testing, or drugs are needed for patients with certain diagnoses (for 
example, end stage renal disease), or patients needing extended 
recovery time following a procedure in order to assess or treat 
comorbidities and ensure safe discharge. One commenter asserted that 
there is a critical difference between ``complex'' patients and 
``complex'' procedures. The commenter stated that because the CY 2014 
complexity adjustment test is multiple procedure-based rather than 
patient severity-based similar to the MS-DRG system, it is incredibly 
difficult for two procedures to meet the complexity test, particularly 
the 2 times rule requirement. The commenter believed that the cost 
threshold for the complexity test is not commensurate with the marginal 
payment increase.
    Response: We believe that some of these commenters misunderstood 
the complexity adjustment criteria described in the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74886). The complexity adjustment 
criteria for the illustrated CY 2014 payment rates compared the 
comprehensive cost of the complex claims to the comprehensive cost of 
the single major claims for the primary service, not the comprehensive 
geometric mean cost of the initial comprehensive APC (78 FR 74886). 
However, for CY 2015, we believe that it would be more appropriate to 
use the 2 times rule, which compares the geometric mean cost of the 
code combination to the geometric mean cost of the lowest cost service 
assigned to the comprehensive APC with significant claims volume (>1000 
single claims or >99 single and at least 2 percent of the total volume 
of single claims assigned to the APC). For further description of the 2 
times rule, we refer readers to section III.B of this proposed rule. We 
agree with the commenter that the CY 2014 complexity adjustment cost 
criterion was too high of a threshold. Therefore, we are proposing to 
change the cost criterion for the complexity adjustment to twice the 
geometric mean cost of the lowest cost service having significant 
claims volume (as described above) in the APC.
    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 under the IPPS. The 
complexity adjustment test is procedure-based because the current OPPS 
payment methodology is procedure-based.
    Comment: Several commenters recommended alternative complexity 
adjustment criteria, including a cost threshold of 1.5 instead of 2 
times; a numeric volume test of 50 claims instead of 100, or omitting 
the numeric test; or basing the complexity adjustment on the number of 
surgical procedures on a claim (any claim with a service assigned to 
status indicator ``J1'' and at least two additional surgical 
procedures). Some commenters asserted generally that there should be 
tests other than the presence of two or more ``J1'' services on a 
claim. In addition, most of the commenters requested further 
information regarding how CMS determined complexity reassignments, 
including treatment of add-on codes. The commenters requested that CMS 
provide an addendum to the OPPS rule containing this information.
    Response: As discussed above, for CY 2015, we are proposing less 
stringent frequency and cost thresholds for complexity adjustments. In 
addition, in response to public comments, we are presenting the 
proposed complexity adjustment cost information in a more detailed 
format in Addendum J to this proposed rule, rather than in long tables 
within the preamble text.
    Comment: Several commenters requested that CMS maintain the device-
dependent edits to ensure accurate cost reporting and attribution. One 
commenter requested in particular that CMS maintain the device-
dependent edits for prostate cryoablation (CPT code 55873), 
percutaneous renal cryoablation, and other urogenital services to 
ensure accurate coding and payment. The commenter believed that 
comprehensive groupings will exacerbate reporting error if CMS 
discontinued the edits.
    Response: We appreciate the commenters' concerns regarding accurate 
coding, and we understand that providers sometimes fail to itemize 
costs for packaged services separately on claims for the primary 
service(s). Our policy for comprehensive APCs reduces the need for 
separate itemization of packaged services by establishing clear 
packaging allocation rules at the hospital claim level. However, as we 
have observed in attempting to assess the marginal cost attributable to 
add-on codes and other packaged services, it is best if CMS can 
reliably identify and isolate these costs using claims data. Therefore, 
we are continuing to require hospitals to report all charges, including 
packaged charges, on claims to ensure all costs are reported and enable 
reliable cost estimation for packaged items and services. It is 
important that hospitals report all HCPCS codes consistent with their 
descriptors, CPT and/or CMS instructions, and correct coding 
principles, and that they report all charges for all services they 
furnish. We are proposing to package all device-dependent add-on codes, 
although we would evaluate their additional cost for purposes of 
applying the proposed complexity adjustment criteria.
    Instead of eliminating all device-dependent edits, beginning in CY 
2015, we are proposing to continue to require the reporting of a device 
code for all procedures that are currently assigned to a device-
dependent APC in CY 2014. However to reduce hospitals' administrative 
burden, we are proposing that the device claims edit would be satisfied 
by the reporting of any medical device C-code currently listed among 
the device edits for the CY 2014 device-dependent APCs. A particular 
device C-code or codes would no longer be required for a particular 
procedure. We

[[Page 40952]]

refer readers to section IV.B. of this proposed rule for a detailed 
discussion of this proposed policy.
    Comment: Several commenters recommended that CMS conduct a 
demonstration to confirm estimated savings, or delay the comprehensive 
APC payment policy pending further study.
    Response: The comprehensive APC payment policy was finalized in the 
CY 2014 OPPS/ASC final rule with comment period with delayed 
implementation until CY 2015, and we do not believe that further delay 
is necessary. We also do not believe that a demonstration is necessary. 
We delayed implementation until CY 2015, and the public comments we 
received on the CY 2014 OPPS/ASC final rule with comment period do not 
reflect a need for fundamental changes to the policy or further delay 
in implementing the policy. The comprehensive APC policy is another 
step towards making the OPPS more of a prospective payment system and 
less of a fee schedule-type payment system with separate payment for 
each individually coded service. The rationale and statutory authority 
for the comprehensive APC policy was fully explained in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 74861). The public 
comments were largely supportive of the comprehensive APC payment 
methodology, provided we improve the transparency and reproducibility 
of the methodology and refine the complexity adjustments for the most 
costly, complex cases. These complex cases are mostly confined to three 
clinical families (endovascular, pacemaker/defibrillator, and 
neurostimulator). In response to comments and additional analysis 
including the new CY 2013 claims data, we are proposing to refine the 
complexity adjustment criteria discussed in section II.A.2.e.(3)(a) of 
this proposed rule.
(4) Proposed List of CY 2015 Comprehensive APCs and Summary of Proposed 
Policies
    In summary, we are proposing 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 would include 
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 are proposing to continue to define a clinical family of 
comprehensive APCs as a set of clinically related comprehensive APCs 
that represent different resource levels of clinically comparable 
services. We are proposing a total of 28 comprehensive APCs within 13 
clinical families for CY 2015, as described below.

                                  Table 7--CY 2015 Proposed Comprehensive APCs
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
                                           Proposed CY                                               2015 APC
            Clinical family                2015 C-APC                   APC Title                 geometric mean
                                                                                                       cost
----------------------------------------------------------------------------------------------------------------
AICDP..................................            0090  Level II Pacemaker and Similar                $6,961.45
                                                          Procedures.
AICDP..................................            0089  Level III Pacemaker and Similar                9,923.94
                                                          Procedures.
AICDP..................................            0655  Level IV Pacemaker and Similar                17,313.08
                                                          Procedures.
AICDP..................................            0107  Level I ICD and Similar Procedures.....       24,167.80
AICDP..................................            0108  Level II ICD and Similar Procedures....       32,085.90
BREAS..................................            0648  Level IV Breast and Skin Surgery.......        7,674.20
CATHX..................................            0427  Level II Tube or Catheter Changes or           1,522.15
                                                          Repositioning.
CATHX..................................            0652  Insertion of Intraperitoneal and               2,764.85
                                                          Pleural Catheters.
ENTXX..................................            0259  Level VII ENT Procedures...............       31,273.34
EPHYS..................................            0084  Level I Electrophysiologic Procedures..          922.84
EPHYS..................................            0085  Level II Electrophysiologic Procedures.        4,807.69
EPHYS..................................            0086  Level III Electrophysiologic Procedures       14,835.04
EYEXX..................................            0293  Level IV Intraocular Procedures........        9,049.66
EYEXX..................................            0351  Level V Intraocular Procedures.........       21,056.40
GIXXX..................................            0384  GI Procedures with Stents..............        3,307.90
NSTIM..................................            0061  Level II Neurostimulator & Related             5,582.10
                                                          Procedures.
NSTIM..................................            0039  Level III Neurostimulator & Related           17,697.46
                                                          Procedures.
NSTIM..................................            0318  Level IV Neurostimulator & Related            27,283.10
                                                          Procedures.
ORTHO..................................            0425  Level V Musculoskeletal Procedures            10,846.49
                                                          Except Hand and Foot.
PUMPS..................................            0227  Implantation of Drug Infusion Device...       16,419.95
RADTX..................................            0067  Single Session Cranial Stereotactic           10,227.12
                                                          Radiosurgery.
UROGN..................................            0202  Level V Female Reproductive Procedures.        4,571.06
UROGN..................................            0385  Level I Urogenital Procedures..........        8,019.38
UROGN..................................            0386  Level II Urogenital Procedures.........       14,549.04
VASCX..................................            0083  Level I Endovascular Procedures........        4,537.95
VASCX..................................            0229  Level II Endovascular Procedures.......        9,997.53
VASCX..................................            0319  Level III Endovascular Procedures......       15,452.77
VASCX..................................            0622  Level II Vascular Access Procedures....        2,635.35
----------------------------------------------------------------------------------------------------------------
Clinical Family Descriptor Key:
AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices
BREAS = Breast Surgery
CATHX = Tube/Catheter Changes
ENTXX = ENT Procedures
EPHYS = Cardiac Electrophysiology
EYEXX = Ophthalmic Surgery
GIXXX = Gastrointestinal Procedures
NSTIM = Neurostimulators

[[Page 40953]]

 
ORTHO = Orthopedic Surgery
PUMPS = Implantable Drug Delivery Systems
RADTX = Radiation Oncology
UROGN = Urogenital Procedures
VASCX = Vascular Procedures

    We are proposing 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 proposed 
changes for CY 2015:
     We are proposing to reorganize and consolidate several of 
the current device-dependent APCs and CY 2014 comprehensive APCs;
     We are proposing to expand the comprehensive APC policy to 
include all device-dependent APCs and to create two other new 
comprehensive APCs (C-APC 0067 and C-APC 0351);
     We are proposing 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; that is, the 
comprehensive geometric mean cost of the complex code combination 
exceeds the comprehensive geometric mean cost of the lowest significant 
HCPCS code assigned to the comprehensive APC by more than 2 times (the 
cost threshold).
    We are proposing to package all add-on codes, although we would 
evaluate claims reporting a single primary service code reported in 
combination with an applicable add-on code (we refer readers to Table 9 
in this proposed rule for the list of applicable add-on codes) for 
complexity adjustments. We believe that the proposed criteria would 
improve transparency, reduce subjectivity in complexity assignments, 
reduce the beneficiary copayment for some cases, and reduce burden on 
other stakeholders in analyzing the comprehensive APC assignments. The 
proposed policies would result in 52 complexity adjustments listed in 
Addendum J to this proposed rule (which is available via the Internet 
on the CMS Web site).
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 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.
    For CY 2015, we are proposing 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 note 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. For CY 
2015, we are proposing to pay for qualifying extended assessment and 
management services through composite APC 8009. For CY 2015, we also 
are proposing to discontinue our composite APC payment policies for 
cardiac electrophysiologic 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 this proposed rule. As such, we are 
proposing to delete APC 8000 for CY 2015.
    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, we are proposing 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 this 
proposed rule.
(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, 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 and is an integral 
part of a

[[Page 40954]]

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 
codes 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.
    For CY 2015, we are proposing to continue our CY 2014 finalized 
policy to provide payment for all qualifying extended assessment and 
management encounters through composite APC 8009. As we did for CY 
2014, for CY 2015, we are proposing 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 are proposing 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 are proposing 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 the EAM 
composite APC 8009 using 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 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; or 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 are proposing 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 ``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 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)); or HCPCS code G0384 (Type B 
emergency department visit (Level 5)); 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 is approximately $1,287.
(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

[[Page 40955]]

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), 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.
    For CY 2015, we are proposing 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 are 
proposing 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, we are proposing not to use the 
claims that meet these criteria in the calculation of the geometric 
mean costs of procedures or services 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 are proposing 
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 geometric 
mean cost of these procedures upon which the proposed CY 2015 payment 
rate for composite APC 8001 is based. The proposed geometric mean cost 
for composite APC 8001 for CY 2015 is approximately $3,669.
(3) Mental Health Services Composite APC (APC 0034)
    For CY 2015, we are proposing to continue our longstanding policy 
of limiting the aggregate payment for specified less resource-intensive 
mental health services furnished on the same date to the payment for a 
day of partial hospitalization services provided by a hospital, which 
we consider to be the most resource-intensive of all outpatient mental 
health services. We refer readers to the April 7, 2000 OPPS final rule 
with comment period (65 FR 18452 through 18455) for the initial 
discussion of this longstanding policy and the CY 2012 OPPS/ASC final 
rule with comment period (76 FR 74168) for more recent background.
    Specifically, we are proposing 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 are 
proposing to continue to set the payment rate for APC 0034 at the same 
payment rate that we are proposing 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. 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.
(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);
     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

[[Page 40956]]

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).
    For CY 2015, we are proposing to continue to pay for all multiple 
imaging procedures within an imaging family performed on the same date 
of service using the multiple imaging composite APC payment 
methodology. We continue to believe that this policy 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) are based on 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 this 
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 this proposed 
rule.
    For this 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 below lists 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.

 Table 8--Proposed 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 = $299
------------------------------------------------------------------------
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       CY 2015 approximate APC
          contrast composite)*              geometric mean cost = $335
------------------------------------------------------------------------
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         CY 2015 Approximate APC
          contrast composite)               geometric mean cost = $558
------------------------------------------------------------------------
70487..................................  Ct maxillofacial w/dye.
70460..................................  Ct head/brain w/dye.
70470..................................  Ct head/brain w/o & w/dye.
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.

[[Page 40957]]

 
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       CY 2015 approximate APC
         contrast composite) *              geometric mean cost = $640
------------------------------------------------------------------------
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        CY 2015 Approximate APC
          contrast composite)               geometric mean cost = $958
------------------------------------------------------------------------
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.
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.

[[Page 40958]]

 
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.
------------------------------------------------------------------------

3. Proposed Changes to Packaged Items and Services
a. Background and Rationale for Packaging in the OPPS
    Like other prospective payment systems, the OPPS relies on the 
concept of averaging to establish a payment rate for services. The 
payment may be more or less than the estimated cost of providing a 
specific service or 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 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 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 this CY 2015 
OPPS/ASC proposed rule, we are proposing 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

[[Page 40959]]

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 are proposing 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. Proposed 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 are discussed in section II.A.2.e. of this 
proposed rule. In the CY 2014 OPPS/ASC final rule with comment period, 
we discussed the comprehensive APC policy, which we adopted, with 
modification, but delayed the implementation of, until CY 2015 (78 FR 
74864). 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 
proposed rule, we are proposing 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 are proposing to package in CY 2015 are listed below in Table 9.

Table 9--Add-On Codes Assigned to Device-Dependent APCS for CY 2014 That
                 Are Proposed To Be Packaged in CY 2015
------------------------------------------------------------------------
    CY 2014 Add-on code            Short descriptor         CY 2014 APC
------------------------------------------------------------------------
19297......................  Place breast cath for rad..            0648
33225......................  L ventric pacing lead add-             0655
                              on.
37222......................  Iliac revasc add-on........            0083
37223......................  Iliac revasc w/stent add-on            0083
37232......................  Tib/per revasc add-on......            0083
37233......................  Tib/per revasc w/ather add-            0229
                              on.
37234......................  Revsc opn/prq tib/pero                 0083
                              stent.
37235......................  Tib/per revasc stnt & ather            0083
37237......................  Open/perq place stent ea               0083
                              add.
37239......................  Open/perq place stent ea               0083
                              add.
49435......................  Insert subq exten to ip                0427
                              cath.
92921......................  Prq cardiac angio addl art.            0083
92925......................  Prq card angio/athrect addl            0082
92929......................  Prq card stent w/angio addl            0104
92934......................  Prq card stent/ath/angio...            0104
92938......................  Prq revasc byp graft addl..            0104
92944......................  Prq card revasc chronic                0104
                              addl.
92998......................  Pul art balloon repr precut            0083
C9601......................  Perc drug-el cor stent bran            0656
C9603......................  Perc d-e cor stent ather br            0656
C9605......................  Perc d-e cor revasc t cabg             0656
                              b.
C9608......................  Perc d-e cor revasc chro               0656
                              add.
------------------------------------------------------------------------

c. Proposed 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 ``S.'' 
We reviewed all of the covered HOPD 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 have 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 proposed rule, 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

[[Page 40960]]

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).
    In this proposed rule, we are proposing to conditionally package 
certain ancillary services for CY 2015. Specifically, we are proposing 
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 are limiting 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 note 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 code G0463, which is a single payment 
rate for clinic visits beginning in CY 2014, and has a CY 2015 OPPS/ASC 
proposed rule geometric mean cost of $102.68. 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. A change in the 
geometric mean cost of any of the proposed APCs above $100 in future 
years would not change the conditionally packaged status of services 
assigned to the APCs selected in 2015 in a future year. We will 
continue to consider these APCs to be conditionally packaged. However, 
we will review the conditionally packaged status of ancillary services 
annually.
    We are proposing to exclude certain services from this packaging 
policy even though they are assigned to APCs with a geometric mean cost 
of peripheral            0260
G0117......................  Glaucoma scrn hgh risk                 0260
                              direc.
G0118......................  Glaucoma scrn hgh risk                 0230
                              direc.
G0130......................  Single energy x-ray study..            0230
G0389......................  Ultrasound exam aaa screen.            0265
G0404......................  Ekg tracing for initial                0450
                              prev.
Q0091......................  Obtaining screen pap smear.            0450
------------------------------------------------------------------------

    In addition, we are not proposing to package certain psychiatry and 
counseling-related services as we see similarities to a visit and, at 
this time, do not consider them to be ancillary services. We also are 
not proposing 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 are proposing to delete status indicator ``X'' 
(Ancillary Services) because the majority of the services assigned to 
status indicator ``X'' are proposed to be assigned to status indicator 
``Q1'' (STV-Packaged Codes). For the services that are currently 
assigned status indicator ``X'' that are not proposed to be 
conditionally packaged under this policy, we will 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 are 
proposing for conditional packaging as ancillary services in CY 2015 
are listed below in Table 11.

                Table 11--APCs for Proposed Conditionally Packaged Ancillary Services for CY 2015
----------------------------------------------------------------------------------------------------------------
                                           Proposed CY
                                            2015 OPPS      Proposed CY
                  APC                    geometric mean   2015 OPPS SI                 Group title
                                              cost
----------------------------------------------------------------------------------------------------------------
0012...................................          $76.29              Q1  Level I Debridement & Destruction.
0060...................................           20.64              Q1  Manipulation Therapy.
0077...................................           52.08              Q1  Level I Pulmonary Treatment.
0099...................................           81.27              Q1  Electrocardiograms/Cardiography.
0215...................................          104.63              Q1  Level I Nerve and Muscle Services.
0230...................................           55.00              Q1  Level I Eye Tests & Treatments.
0260...................................           62.43              Q1  Level I Plain Film Including Bone
                                                                          Density Measurement.
0261...................................           99.85              Q1  Level II Plain Film Including Bone
                                                                          Density Measurement.
0265...................................           96.51              Q1  Level I Diagnostic and Screening
                                                                          Ultrasound.
0340...................................           64.78              Q1  Level II Minor Procedures.

[[Page 40961]]

 
0342...................................           56.99              Q1  Level I Pathology.
0345...................................           78.83              Q1  Level I Transfusion Laboratory
                                                                          Procedures.
0364...................................           42.69              Q1  Level I Audiometry.
0365...................................          123.21              Q1  Level II Audiometry.
0367...................................          166.31              Q1  Level I Pulmonary Tests.
0420...................................          130.93              Q1  Level III Minor Procedures.
0433...................................          190.21              Q1  Level II Pathology.
0450...................................           29.91              Q1  Level I Minor Procedures.
0624...................................           83.61              Q1  Phlebotomy and Minor Vascular Access
                                                                          Device Procedures.
0690...................................           37.25              Q1  Level I Electronic Analysis of Devices.
0698...................................          106.17              Q1  Level II Eye Tests & Treatments.
----------------------------------------------------------------------------------------------------------------

    The HCPCS codes that we are proposing to conditionally package as 
ancillary services for CY 2015 are displayed in Addendum B to this CY 
2015 OPPS/ASC proposed rule. The supporting documents for the proposed 
rule are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    We also are proposing 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.
    We are inviting public comments on these proposals.
(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 clarified that medical and 
surgical supplies under Sec.  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, 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 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 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 Sec.  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), we are proposing 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 are proposing to delete ``prosthetic supplies'' from 
the regulations at Sec.  419.22(j) because we are proposing 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 Sec.  419.2(b)(4). The HCPCS codes for 
prosthetic supplies that we are proposing to package for CY 2015 are 
displayed in Addendum B to this CY 2015 OPPS/ASC proposed rule. The 
supporting documents for the proposed rule, including but not limited 
to these Addenda, are available at the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    We are inviting public comments on these proposals.
4. Proposed Calculation of OPPS Scaled Payment Weights
    For CY 2015, we are proposing to calculate the relative payment 
weights for each APC shown in Addenda A and B to this 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 this proposed 
rule. Prior to CY 2007, we standardized all the relative payment 
weights to APC 0601 (Mid-Level Clinic Visit) because mid-level clinic 
visits

[[Page 40962]]

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 are proposing 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 this 
proposed rule. For CY 2015, we are proposing to continue this policy to 
maintain consistency in calculating unscaled weights that represent the 
cost of some of the most frequently provided services. We are proposing 
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.
    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 are proposing 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.
    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 
are proposing to apply the same process using the proposed CY 2015 
unscaled relative payment weights rather than scaled relative payment 
weights. We are proposing to calculate the weight scaler by dividing 
the CY 2014 estimated aggregate weight by the proposed CY 2015 
estimated aggregate weight. The service-mix is the same in the current 
and prospective years because we use the same 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-Service-Payment/HospitalOutpatientPPS/index.html.
    We are proposing 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 adjusted 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 section V.B.3. of this proposed rule) 
is included in the budget neutrality calculations for the CY 2015 OPPS.
    The proposed CY 2015 unscaled relative payment weights listed in 
Addenda A and B to this proposed rule (which are available via the 
Internet on the CMS Web site) incorporate the proposed recalibration 
adjustments discussed in sections II.A.1. and II.A.2. of this proposed 
rule.

B. Proposed Conversion Factor Update

    Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to 
update the conversion factor used to determine the payment rates under 
the OPPS on an annual basis by applying the OPD fee schedule increase 
factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject 
to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee 
schedule increase factor is equal to the hospital inpatient market 
basket percentage increase applicable to hospital discharges under 
section 1886(b)(3)(B)(iii) of the Act. In the FY 2015 IPPS/LTCH PPS 
proposed rule (79 FR 28087), consistent with current law, based on IHS 
Global Insight, Inc.'s first quarter 2014 forecast of the FY 2015 
market basket increase, the proposed FY 2015 IPPS market basket update 
is 2.7 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 proposed rule 
(79 FR 28087), we discussed the calculation of the proposed MFP 
adjustment for FY 2015, which is 0.4 percentage point.
    We are proposing that if more recent data become subsequently 
available after the publication of this proposed rule (for example, a 
more recent estimate of the market basket increase and the MFP 
adjustment), we would use such data, if appropriate, to determine the 
CY 2015 market basket update and the MFP adjustment, components in

[[Page 40963]]

calculating the OPD fee schedule increase factor under sections 
1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in the CY 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, we are proposing to 
apply 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 proposing to apply an OPD fee schedule increase factor of 
2.1 percent for the CY 2015 OPPS (which is 2.7 percent, the proposed 
estimate of the hospital inpatient market basket percentage increase, 
less the proposed 0.4 percentage point MFP adjustment, and less the 0.2 
percentage point additional adjustment).
    Hospitals that fail to meet the Hospital OQR Program reporting 
requirements are subject to an additional reduction of 2.0 percentage 
points from the OPD fee schedule increase factor adjustment to the 
conversion factor that would be used to calculate the OPPS payment 
rates for their services, as required by section 1833(t)(17) of the 
Act. For further discussion of the Hospital OQR Program, we refer 
readers to section XIII. of this proposed rule.
    In this proposed rule, we are proposing 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.
    To set the OPPS conversion factor for CY 2015, we are proposing 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 are proposing to 
further adjust the conversion factor for CY 2015 to ensure that any 
revisions made to the wage index and rural adjustment are made on a 
budget neutral basis. We are proposing to calculate an overall proposed 
budget neutrality factor of 0.9998 for wage index changes by comparing 
proposed total estimated payments from our simulation model using the 
proposed 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 are proposing to maintain the current rural 
adjustment policy, as discussed in section II.E. of this proposed rule. 
Therefore, the proposed budget neutrality factor for the rural 
adjustment is 1.0000.
    For CY 2015, we are proposing to continue previously established 
policies for implementing the cancer hospital payment adjustment 
described in section 1833(t)(18) of the Act, as discussed in section 
II.F. of this proposed rule. We are proposing to calculate a CY 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 proposed 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 
proposed CY 2015 cancer hospital payment adjustment are identical to 
estimated payments applying the CY 2014 final cancer hospital payment 
adjustment. Therefore, we are proposing to apply a budget neutrality 
adjustment factor of 1.0000 to the conversion factor for the cancer 
hospital payment adjustment.
    For this proposed rule, we estimate that pass-through spending for 
drugs, biologicals, and devices for CY 2015 would equal approximately 
$15.5 million, which represents 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 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.
    The proposed OPD fee schedule increase factor of 2.1 percent for CY 
2015 (that is, the estimate of the hospital inpatient market basket 
percentage increase of 2.7 percent less the proposed 0.4 percentage 
point MFP adjustment and less the 0.2 percentage point required under 
section 1833(t)(3)(F)(ii) of the Act), the required proposed wage index 
budget neutrality adjustment of approximately 0.9998, the proposed 
cancer hospital payment adjustment of 1.0000, and the proposed 
adjustment of 0.01 percent of projected OPPS spending for the 
difference in the pass-through spending result in a proposed conversion 
factor for CY 2015 of $74.176.
    Hospitals that fail to meet the reporting requirements of the 
Hospital OQR Program would continue to be subject to a further 
reduction of 2.0 percentage points to the OPD fee schedule increase 
factor. For hospitals that fail to meet the requirements of the 
Hospital OQR Program, we are proposing to make all other adjustments 
discussed above, but using a reduced OPD fee schedule update factor of 
0.1 percent (that is, the proposed OPD fee schedule increase factor of 
2.1 percent further reduced by 2.0 percentage points). This results 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).
    In summary, for CY 2015, we are proposing to use a conversion 
factor of $74.176 in the calculation of the national unadjusted payment 
rates for those items and services for which payment rates are 
calculated using geometric mean costs. We are proposing to amend Sec.  
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 proposing to use a 
reduced conversion factor of $72.692 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements.

C. Proposed Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
``determine a wage adjustment factor to adjust the portion of payment 
and coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner'' (codified at 42 CFR 419.43(a)). This 
portion of the

[[Page 40964]]

OPPS payment rate is called the OPPS labor-related share. Budget 
neutrality is discussed in section II.B. of this proposed rule.
    The OPPS labor-related share is 60 percent of the national OPPS 
payment. This labor-related share is based on a regression analysis 
that determined that, for all hospitals, approximately 60 percent of 
the costs of services paid under the OPPS were attributable to wage 
costs. We confirmed that this labor-related share for outpatient 
services is appropriate during our regression analysis for the payment 
adjustment for rural hospitals in the CY 2006 OPPS final rule with 
comment period (70 FR 68553). Therefore, we are proposing to continue 
this policy for the CY 2015 OPPS. We refer readers to section II.H. of 
this proposed rule 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 proposed rule, for 
estimating APC costs, we standardize 60 percent of estimated claims 
costs for geographic area wage variation using the same proposed 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. Thus, the wage index that applies 
to a particular acute care short-stay hospital under the IPPS also 
applies to that hospital under the OPPS. As initially explained in the 
September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that 
using the IPPS wage index as the source of an adjustment factor for the 
OPPS is reasonable and logical, given the inseparable, subordinate 
status of the HOPD within the hospital overall. In accordance with 
section 1886(d)(3)(E) of the Act, the IPPS wage index is updated 
annually.
    The Affordable Care Act contained several provisions affecting the 
wage index. These provisions were discussed in the CY 2012 OPPS/ASC 
final rule with comment period (76 FR 74191). 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 Sec.  419.43(c)(2) and (c)(3) of our regulations. For 
the CY 2015 OPPS, we are proposing 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 multi-campus hospital 
systems, 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 
would also apply for the affiliated HOPD. We refer readers to the 
following sections in the FY 2011 through FY 2014 IPPS/LTCH PPS final 
rules for discussions regarding this provision, including our 
methodology for identifying which areas meet the definition of frontier 
States as provided for in section 1886(d)(3)(E)(iii)(II) of the Act: 
For FY 2011, 75 FR 50160 through 50161; for FY 2012, 76 FR 51793, 
51795, and 51825; for FY 2013, 77 FR 53369 through 53370; and for FY 
2014, 78 FR 50590 through 50591. We also refer readers to the FY 2015 
IPPS/LTCH PPS proposed rule (79 FR 28069) for discussion regarding this 
provision.
    In addition to the changes required by the Affordable Care Act, we 
note that the proposed 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 (79 FR 28054 
through 28084) for a detailed discussion of all proposed changes to the 
FY 2015 IPPS wage indices. 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 (79 FR 
28054 through 28055), 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 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 this 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.
    In this proposed rule, we are proposing to use the proposed 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 proposed rule (79 FR 28054) 
and the proposed FY 2015 hospital wage index files posted on the CMS 
Web site.) We note that the proposed FY 2015 IPPS wage indexes reflect 
a number of proposed changes as a result of the new OMB delineations as 
well as a proposed 1-year extension of the imputed rural floor. 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 proposed adjustments, 
including the adjustments related to the new OMB delineations, that are 
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. Therefore, we are not 
proposing to

[[Page 40965]]

change our current 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 are 
proposing to adopt the proposed wage index changes from the FY 2015 
IPPS/LTCH PPS proposed rule for these hospitals. The following is a 
brief summary of the major proposed changes in the FY 2015 IPPS wage 
indexes and any adjustments that we are proposing to apply to these 
hospitals under the OPPS for CY 2015. We refer the reader to the FY 
2015 IPPS/LTCH PPS proposed rule (79 FR 28054 through 28084) for a 
detailed discussion of the proposed changes to the wage indexes.
    For CY 2015, we are proposing to continue our policy of allowing 
non-IPPS hospitals paid under the OPPS to qualify for the out-migration 
adjustment if they are located in a section 505 out-migration county 
(section 505 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173)). 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 are eligible for the out-
migration wage adjustment if they are located in a section 505 out-
migration county. This is the same proposed out-migration adjustment 
policy that would apply if the hospital were paid under the IPPS. Table 
4J from the FY 2015 IPPS/LTCH PPS proposed rule (available via the 
Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) identifies 
counties eligible for the out-migration adjustment and IPPS hospitals 
that would receive the adjustment for FY 2015.
    As we have done in prior years, we are including Table 4J from the 
FY 2015 IPPS/LTCH PPS proposed rule as Addendum L to this proposed rule 
with the addition of non-IPPS hospitals that would receive the section 
505 out-migration adjustment under the CY 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. 
For IPPS wage index purposes, for hospitals that would be designated as 
rural under the new OMB labor market area delineations that currently 
are located in urban CBSAs, we generally proposed to assign 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). 
To be consistent, we are proposing to apply the same policy to 
hospitals paid under the OPPS but not under the IPPS so that such 
hospitals would maintain the wage index of the CBSA in which they are 
physically located for FY 2014 for the next 3 calendar years. This 
proposed policy would impact six hospitals for purposes of OPPS 
payment.
    We believe that adopting the new OMB labor market area delineations 
would create 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 proposed rule (79 FR 28062), we proposed a 1-year blended 
wage index for all hospitals that would experience any decrease in 
their actual payment wage index exclusively due to the proposed 
implementation of the new OMB delineations. We proposed that a post-
reclassified wage index with the rural and imputed floors applied would 
be 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 would be computed based 
on the hospital's new FY 2015 CBSA (that is, the FY 2015 constituent 
county/ies). We proposed to compare these two wage indexes. If the 
proposed FY 2015 wage index with FY 2015 CBSAs would be lower than the 
proposed FY 2015 wage index with FY 2014 CBSAs, we proposed that a 
blended wage index would be computed, consisting of 50 percent of each 
of the two wage indexes added together. We proposed that this blended 
wage index would be the hospital's wage index for FY 2015. For purposes 
of the OPPS, we also are proposing to apply this 50-percent transition 
blend to hospitals paid under the OPPS but not under the IPPS. We 
believe a 1-year, 50/50 blended wage index would mitigate the short-
term instability and negative payment impacts due to the proposed 
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 
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 proposed to continue the 
extension of the imputed floor policy (both the original methodology 
and alternative methodology) for another year, through September 30, 
2015 (79 FR 28068 through 28069). For purposes of the CY 2015 OPPS, we 
are also proposing to apply the imputed floor policy to hospitals paid 
under the OPPS but not under the IPPS.
    For CMHCs, we are proposing to continue to calculate the wage index 
by using the post-reclassification IPPS wage index based on the CBSA 
where the CMHC is located. As with OPPS hospitals and for the same 
reasons, we are proposing 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 would be 
designated as rural under the new OMB labor market area delineations, 
we are proposing 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 proposed out-migration wage adjustment 
table (Addendum L to this proposed rule, 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 proposed FY 2015 IPPS wage 
indexes referenced in this discussion of the wage index. We refer 
readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the proposed FY 
2015 IPPS wage index tables.

[[Page 40966]]

D. Proposed 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 this 
proposed rule, we are proposing 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 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 are proposing 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 proposed CY 2015 OPPS relative payment 
weights. Table 12 below lists the proposed CY 2015 default urban and 
rural CCRs by State and compares them to last year's default CCRs. 
These proposed CCRs represent 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 are proposing 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 are proposing 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.
    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 12 below lists the proposed statewide average default CCRs 
for OPPS services furnished on or after January 1, 2015.

                                Table 12--Proposed CY 2015 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                    Proposed CY     default CCR
                     State                                 Urban/rural             2015 default    (CY 2014 OPPS
                                                                                        CCR         final rule)
----------------------------------------------------------------------------------------------------------------
ALASKA........................................  RURAL...........................           0.463           0.473
ALASKA........................................  URBAN...........................           0.301           0.302
ALABAMA.......................................  RURAL...........................           0.246           0.229
ALABAMA.......................................  URBAN...........................           0.189           0.188
ARKANSAS......................................  RURAL...........................           0.233           0.244
ARKANSAS......................................  URBAN...........................           0.237           0.220
ARIZONA.......................................  RURAL...........................           0.232           0.254
ARIZONA.......................................  URBAN...........................           0.186           0.182
CALIFORNIA....................................  RURAL...........................           0.192           0.190
CALIFORNIA....................................  URBAN...........................           0.203           0.206
COLORADO......................................  RURAL...........................           0.426           0.393
COLORADO......................................  URBAN...........................           0.223           0.221
CONNECTICUT...................................  RURAL...........................           0.356           0.343
CONNECTICUT...................................  URBAN...........................           0.277           0.276
DISTRICT OF COLUMBIA..........................  URBAN...........................           0.295           0.279
DELAWARE......................................  URBAN...........................           0.314           0.356
FLORIDA.......................................  RURAL...........................           0.185           0.160
FLORIDA.......................................  URBAN...........................           0.160           0.160
GEORGIA.......................................  RURAL...........................           0.254           0.260
GEORGIA.......................................  URBAN...........................           0.211           0.205
HAWAII........................................  RURAL...........................           0.341           0.345
HAWAII........................................  URBAN...........................           0.300           0.298
IOWA..........................................  RURAL...........................           0.323           0.308
IOWA..........................................  URBAN...........................           0.270           0.266
IDAHO.........................................  RURAL...........................           0.361           0.359

[[Page 40967]]

 
IDAHO.........................................  URBAN...........................           0.488           0.478
ILLINOIS......................................  RURAL...........................           0.259           0.252
ILLINOIS......................................  URBAN...........................           0.218           0.222
INDIANA.......................................  RURAL...........................           0.348           0.326
INDIANA.......................................  URBAN...........................           0.284           0.288
KANSAS........................................  RURAL...........................           0.308           0.313
KANSAS........................................  URBAN...........................           0.233           0.239
KENTUCKY......................................  RURAL...........................           0.231           0.221
KENTUCKY......................................  URBAN...........................           0.220           0.225
LOUISIANA.....................................  RURAL...........................           0.271           0.257
LOUISIANA.....................................  URBAN...........................           0.212           0.222
MARYLAND......................................  RURAL...........................           0.292           0.283
MARYLAND......................................  URBAN...........................           0.249           0.248
MASSACHUSETTS.................................  RURAL...........................           0.300           0.395
MASSACHUSETTS.................................  URBAN...........................           0.330           0.336
MAINE.........................................  RURAL...........................           0.434           0.452
MAINE.........................................  URBAN...........................           0.426           0.438
MICHIGAN......................................  RURAL...........................           0.339           0.341
MICHIGAN......................................  URBAN...........................           0.322           0.322
MINNESOTA.....................................  RURAL...........................           0.469           0.462
MINNESOTA.....................................  URBAN...........................           0.357           0.349
MISSOURI......................................  RURAL...........................           0.277           0.263
MISSOURI......................................  URBAN...........................           0.274           0.280
MISSISSIPPI...................................  RURAL...........................           0.237           0.233
MISSISSIPPI...................................  URBAN...........................           0.188           0.200
MONTANA.......................................  RURAL...........................           0.520           0.481
MONTANA.......................................  URBAN...........................           0.379           0.384
NORTH CAROLINA................................  RURAL...........................           0.255           0.258
NORTH CAROLINA................................  URBAN...........................           0.256           0.256
NORTH DAKOTA..................................  RURAL...........................           0.660           0.661
NORTH DAKOTA..................................  URBAN...........................           0.400           0.400
NEBRASKA......................................  RURAL...........................           0.308           0.323
NEBRASKA......................................  URBAN...........................           0.257           0.243
NEW HAMPSHIRE.................................  RURAL...........................           0.272           0.326
NEW HAMPSHIRE.................................  URBAN...........................           0.288           0.287
NEW JERSEY....................................  URBAN...........................           0.207           0.213
NEW MEXICO....................................  RURAL...........................           0.307           0.291
NEW MEXICO....................................  URBAN...........................           0.300           0.304
NEVADA........................................  RURAL...........................           0.244           0.220
NEVADA........................................  URBAN...........................           0.172           0.154
NEW YORK......................................  RURAL...........................           0.332           0.345
NEW YORK......................................  URBAN...........................           0.348           0.351
OHIO..........................................  RURAL...........................           0.317           0.327
OHIO..........................................  URBAN...........................           0.227           0.232
OKLAHOMA......................................  RURAL...........................           0.281           0.258
OKLAHOMA......................................  URBAN...........................           0.210           0.205
OREGON........................................  RURAL...........................           0.299           0.311
OREGON........................................  URBAN...........................           0.358           0.357
PENNSYLVANIA..................................  RURAL...........................           0.285           0.257
PENNSYLVANIA..................................  URBAN...........................           0.198           0.198
PUERTO RICO...................................  URBAN...........................           0.583           0.614
RHODE ISLAND..................................  URBAN...........................           0.292           0.295
SOUTH CAROLINA................................  RURAL...........................           0.195           0.190
SOUTH CAROLINA................................  URBAN...........................           0.199           0.203
SOUTH DAKOTA..................................  RURAL...........................           0.288           0.287
SOUTH DAKOTA..................................  URBAN...........................           0.214           0.219
TENNESSEE.....................................  RURAL...........................           0.207           0.207
TENNESSEE.....................................  URBAN...........................           0.189           0.190
TEXAS.........................................  RURAL...........................           0.247           0.235
TEXAS.........................................  URBAN...........................           0.206           0.197
UTAH..........................................  RURAL...........................           0.474           0.474
UTAH..........................................  URBAN...........................           0.340           0.334
VIRGINIA......................................  RURAL...........................           0.216           0.226
VIRGINIA......................................  URBAN...........................           0.241           0.238
VERMONT.......................................  RURAL...........................           0.446           0.456
VERMONT.......................................  URBAN...........................           0.401           0.397
WASHINGTON....................................  RURAL...........................           0.300           0.330
WASHINGTON....................................  URBAN...........................           0.365           0.360

[[Page 40968]]

 
WISCONSIN.....................................  RURAL...........................           0.335           0.344
WISCONSIN.....................................  URBAN...........................           0.298           0.291
WEST VIRGINIA.................................  RURAL...........................           0.320           0.283
WEST VIRGINIA.................................  URBAN...........................           0.319           0.319
WYOMING.......................................  RURAL...........................           0.403           0.400
WYOMING.......................................  URBAN...........................           0.262           0.269
----------------------------------------------------------------------------------------------------------------

E. Proposed 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 
Sec.  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 
Public Law 105-33, a hospital can no longer become newly classified as 
an EACH.
    This adjustment for rural SCHs is budget neutral and applied before 
calculating outlier payments and copayments. We stated in the CY 2006 
OPPS final rule with comment period (70 FR 68560) that we would not 
reestablish the adjustment amount on an annual basis, but we may review 
the adjustment in the future and, if appropriate, would revise the 
adjustment. We provided the same 7.1 percent adjustment to rural SCHs, 
including EACHs, again in CYs 2008 through 2014. Further, in the CY 
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated 
the regulations at Sec.  419.43(g)(4) to specify, in general terms, 
that items paid at charges adjusted to costs by application of a 
hospital-specific CCR are excluded from the 7.1 percent payment 
adjustment.
    For the CY 2015 OPPS, we are proposing 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. Proposed 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 cancer and children's hospitals OPPS 
payments based on their pre-BBA payment amount (often referred to as 
``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held harmless to 
their ``pre-BBA amount,'' and they receive transitional outpatient 
payments (TOPs) or hold harmless payments to ensure that they do not 
receive a payment that is lower 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

[[Page 40969]]

appropriate adjustment under section 1833(t)(2)(E) of the Act to 
reflect these higher costs. In 2011, after conducting the study 
required by section 1833(t)(18)(A) of the Act, we determined that 
outpatient costs incurred by the 11 specified cancer hospitals were 
greater than the costs incurred by other OPPS hospitals. For a complete 
discussion regarding the cancer hospital cost study, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 
through 74201).
    Based on these findings, we finalized a policy to provide a payment 
adjustment to the 11 specified cancer hospitals that reflects their 
higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule 
with comment period (76 FR 74202 through 74206). Specifically, we 
adopted a policy to provide additional payments to the cancer hospitals 
so that each cancer hospital's final PCR for services provided in a 
given calendar year is equal to the weighted average PCR (which we 
refer to as the ``target PCR'') for other hospitals paid under the 
OPPS. The target PCR is set in advance of the calendar year and is 
calculated using the most 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. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2015
    For CY 2015, we are proposing to continue our policy to provide 
additional payments to cancer hospitals so that each cancer hospital's 
final PCR is equal to the weighted average PCR (or ``target PCR'') for 
the other OPPS hospitals using the most recent submitted or settled 
cost report data that are available at the time of the development of 
this proposed rule. 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 this 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 are using 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 are approximately 89 percent of reasonable cost 
(weighted average PCR of 0.89). Therefore, we are proposing that the 
payment amount associated with the cancer hospital payment adjustment 
to be determined at cost report settlement would be the additional 
payment needed to result in a proposed target PCR equal to 0.89 for 
each cancer hospital.
    Table 13 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 13--Estimated CY 2015 Hospital-Specific Payment Adjustment for
        Cancer Hospitals To Be Provided at Cost Report Settlement
------------------------------------------------------------------------
                                                             Estimated
                                                            percentage
        Provider No.                Hospital name           increase in
                                                           OPPS payments
                                                            for CY 2015
------------------------------------------------------------------------
050146.....................  City of Hope Comprehensive             15.5
                              Cancer Center.
050660.....................  USC Norris Cancer Hospital.            22.0
100079.....................  Sylvester Comprehensive                15.8
                              Cancer Center.
100271.....................  H. Lee Moffitt Cancer                  19.9
                              Center & Research
                              Institute.
220162.....................  Dana-Farber Cancer                     47.6
                              Institute.
330154.....................  Memorial Sloan-Kettering               45.7
                              Cancer Center.
330354.....................  Roswell Park Cancer                    16.6
                              Institute.
360242.....................  James Cancer Hospital &                35.1
                              Solove Research Institute.
390196.....................  Fox Chase Cancer Center....            18.5
450076.....................  M.D. Anderson Cancer Center            60.1
500138.....................  Seattle Cancer Care                    53.3
                              Alliance.
------------------------------------------------------------------------

[[Page 40970]]

G. Proposed Hospital Outpatient Outlier Payments

1. Background
    The OPPS provides outlier payments to hospitals to help mitigate 
the financial risk associated with high-cost and complex procedures, 
where a very costly service could present a hospital with significant 
financial loss. As explained in the CY 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 proposed OPPS. Our current estimate of 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, is approximately 1.2 percent of the total 
aggregated OPPS payments. Therefore, for CY 2013, we estimate that we 
paid 0.2 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 0.9 percent of the total CY 2014 OPPS payments. The 
difference between 0.9 percent and the 1.0 percent target is reflected 
in the regulatory impact analysis in section XXII. of this proposed 
rule. 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-Service-Payment/HospitalOutpatientPPS/index.html.
2. Proposed Outlier Calculation
    For CY 2015, we are proposing to continue our policy of estimating 
outlier payments to be 1.0 percent of the estimated aggregate total 
payments under the OPPS. We are proposing that a portion of that 1.0 
percent, an amount equal to 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 this proposed rule, for CMHCs, we are proposing to continue 
our 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 this proposed rule.
    To ensure that the estimated CY 2015 aggregate outlier payments 
would equal 1.0 percent of estimated aggregate total payments under the 
OPPS, we are proposing that the hospital outlier threshold be set so 
that outlier payments would be triggered when a hospital's cost of 
furnishing a service exceeds 1.75 times the APC payment amount and 
exceeds the APC payment amount plus $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 this 
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 Medicare contractors 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 this 
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 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). As 
we stated in the CY 2005 OPPS final rule with comment period (69 FR 
65845), we believe that the use of these charge inflation factors are 
appropriate for the OPPS because, with the exception of the inpatient 
routine service cost centers, hospitals use the same ancillary and 
outpatient cost centers to capture costs and charges for inpatient and 
outpatient services.
    As noted in the CY 2007 OPPS/ASC final rule with comment period (71 
FR 68011), we are concerned that we could systematically overestimate 
the OPPS hospital outlier threshold if we did not apply a CCR inflation 
adjustment factor. Therefore, we are proposing to apply the same CCR 
inflation adjustment factor that we are proposing 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 are proposing 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).
    To model hospital outlier payments for this 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 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

[[Page 40971]]

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 are proposing 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 Hospital OQR Program requirements, we are proposing to 
continue the policy that we implemented in CY 2010 that the hospitals' 
costs will be compared to the reduced payments for purposes of outlier 
eligibility and payment calculation. For more information on the 
Hospital OQR Program, we refer readers to section XIII. of this 
proposed rule.

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

    The basic methodology for determining prospective payment rates for 
HOPD services under the OPPS is set forth in existing regulations at 42 
CFR Part 419, Subparts C and D. For this CY 2015 OPPS/ASC proposed 
rule, 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 proposed rule and 
the relative payment weight determined under section II.A. of this 
proposed rule. Therefore, the proposed national unadjusted payment rate 
for most APCs contained in Addendum A to this proposed rule (which is 
available via the Internet on the CMS Web site) and for most HCPCS 
codes to which separate payment under the OPPS has been assigned in 
Addendum B to this proposed rule (which is available via the Internet 
on the CMS Web site) was calculated by multiplying the proposed CY 2015 
scaled weight for the APC by the proposed 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 proposed rule.
    We demonstrate in the steps below 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 this 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 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 also proposing 
to create new status indicator ``J1'' to reflect the proposed 
comprehensive APCs discussed in section II.A.2.e. of this proposed 
rule. We also note that we are proposing to delete status indicator 
``X'' as part of the CY 2015 packaging proposal for ancillary services, 
discussed in section II.A.3. of this proposed rule.
    Individual providers interested in calculating the payment amount 
that they would receive for a specific service from the national 
unadjusted payment rates presented in Addenda A and B to this proposed 
rule (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 proposed national 
unadjusted payment rate for hospitals that meet the requirements of the 
Hospital OQR Program as the ``full'' national unadjusted payment rate. 
We refer to the proposed national unadjusted payment rate for hospitals 
that fail to meet the requirements of the Hospital OQR Program as the 
``reduced'' national unadjusted payment rate. The reduced national 
unadjusted payment rate is calculated by multiplying the proposed 
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 proposed full CY 2015 OPPS fee schedule increase factor of 2.1 
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.
    X is the labor-related portion of the national unadjusted payment 
rate.
    X = .60 * (national unadjusted payment rate).
    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. We note that under the proposed CY 2015 OPPS policy for 
transitioning wage indexes

[[Page 40972]]

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 
proposed rule. 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 Sec.  412.103 of the regulations, and hospitals designated 
as urban under section 601(g) of Pub. L. 98-21. (For further discussion 
of the proposed changes to the FY 2015 IPPS wage indices, as applied to 
the CY 2015 OPPS, we refer readers to section II.C. of this proposed 
rule.) We are proposing to continue to apply a wage index floor of 1.00 
to frontier States, in accordance with section 10324 of the Affordable 
Care Act of 2010.
    Step 3. Adjust the wage index of hospitals located in certain 
qualifying counties that have a relatively high percentage of hospital 
employees who reside in the county, but who work in a different county 
with a higher wage index, in accordance with section 505 of Public Law 
108-173. Addendum L to this proposed rule (which is available via the 
Internet on the CMS Web site) contains the qualifying counties and the 
proposed associated wage index increase developed for the FY 2015 IPPS 
and listed as Table 4J in the FY 2015 IPPS/LTCH PPS proposed rule and 
available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/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, set forth in the regulations at 
Sec.  412.92, or an EACH, which is considered to be an SCH under 
section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural 
area, as defined in Sec.  412.64(b), or is treated as being located in 
a rural area under Sec.  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 have provided examples below of the calculation of both the 
proposed full and reduced national unadjusted payment rates that would 
apply to certain outpatient items and services performed by hospitals 
that meet and that fail to meet the Hospital OQR Program requirements, 
using the steps outlined above. For purposes of this example, we used a 
provider that is located in Brooklyn, New York that is assigned to CBSA 
35614. This provider bills one service that is assigned to APC 0019 
(Level I Excision/Biopsy). The proposed CY 2015 full national 
unadjusted payment rate for APC 0019 is approximately $380.32. The 
proposed reduced national unadjusted payment rate for APC 0019 for a 
hospital that fails to meet the Hospital OQR Program requirements is 
approximately $372.71. This proposed reduced rate is calculated by 
multiplying the proposed reporting ratio of 0.980 by the full 
unadjusted payment rate for APC 0019.
    The proposed FY 2015 wage index for a provider located in CBSA 
35614 in New York is 1.3014. This is based on the proposed 1-year 50/50 
transition blend between the wage index under the old CBSA 35644 
(1.3147) and the wage index under the new CBSA 35614 (1.2881). The 
labor-related portion of the proposed full national unadjusted payment 
is approximately $296.97 (.60 * $380.32 * 1.3014). The labor-related 
portion of the proposed reduced national unadjusted payment is 
approximately $291.03 (.60 * $372.71 * 1.3014). The nonlabor-related 
portion of the proposed full national unadjusted payment is 
approximately $152.13 (.40 * $380.32). The nonlabor-related portion of 
the proposed reduced national unadjusted payment is approximately 
$149.08 (40 * $372.71). The sum of the labor-related and nonlabor-
related portions of the proposed full national adjusted payment is 
approximately $449.10 ($296.97 + $152.13). The sum of the proposed 
reduced national adjusted payment is approximately $440.11 ($291.03 + 
$149.08).

I. Proposed Beneficiary Copayments

1. Background
    Section 1833(t)(3)(B) of the Act requires the Secretary to set 
rules for determining the unadjusted copayment amounts to be paid by 
beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of 
the Act specifies that the Secretary must reduce the national 
unadjusted copayment amount for a covered OPD service (or group of such 
services) furnished in a year in a manner so that the effective 
copayment rate (determined on a national unadjusted basis) for that 
service in the year does not exceed a specified percentage. As 
specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 
copayment rate for a covered OPD service paid under the OPPS in CY 
2006, and in calendar years thereafter, shall not exceed 40 percent of 
the APC payment rate.
    Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered 
OPD service (or group of such services) furnished in a year, the 
national unadjusted copayment amount cannot be less than 20 percent of 
the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the 
Act limits the amount of beneficiary copayment that may be collected 
for a procedure performed in a year to the amount of the inpatient 
hospital deductible for that year.
    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).

[[Page 40973]]

2. Proposed OPPS Copayment Policy
    For CY 2015, we are proposing to determine copayment amounts for 
new and revised APCs using the same methodology that we implemented 
beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS 
final rule with comment period (68 FR 63458).) In addition, we are 
proposing to use the same standard rounding principles that we have 
historically used in instances where the application of our standard 
copayment methodology would result in a copayment amount that is less 
than 20 percent and cannot be rounded, under standard rounding 
principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66687) in which we discuss our 
rationale for applying these rounding principles.) The proposed 
national unadjusted copayment amounts for services payable under the 
OPPS that would be effective January 1, 2015, are shown in Addenda A 
and B to this proposed rule (which are available via the Internet on 
the CMS Web site). As discussed in section XII.G. of this proposed 
rule, for CY 2015, the proposed Medicare beneficiary's minimum 
unadjusted copayment and national unadjusted copayment for a service to 
which a reduced national unadjusted payment rate applies will equal the 
product of the reporting ratio and the national unadjusted copayment, 
or the product of the reporting ratio and the minimum unadjusted 
copayment, respectively, for the service.
    We note that OPPS copayments may increase or decrease each year 
based on changes in the calculated APC payment rates due to updated 
cost report and claims data, and any changes to the OPPS cost modeling 
process. However, as described in the CY 2004 OPPS/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).
3. Proposed Calculation of an Adjusted Copayment Amount for an APC 
Group
    Individuals interested in calculating the national copayment 
liability for a Medicare beneficiary for a given service provided by a 
hospital that met or failed to meet its Hospital OQR Program 
requirements should follow the formulas presented in the following 
steps.
    Step 1. Calculate the beneficiary payment percentage for the APC by 
dividing the APC's national unadjusted copayment by its payment rate. 
For example, using APC 0019, approximately $76.07 is 20 percent of the 
proposed full national unadjusted payment rate of approximately 
$380.32. For APCs with only a minimum unadjusted copayment in Addenda A 
and B to this proposed rule (which are available via the Internet on 
the CMS 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 proposed rule. Calculate the rural 
adjustment for eligible providers as indicated in Step 6 under section 
II.H. of this proposed rule.
    Step 3. Multiply the percentage calculated in Step 1 by the payment 
rate calculated in Step 2. The result is the wage-adjusted copayment 
amount for the APC.
    The formula below is a mathematical representation of Step 3 and 
applies the beneficiary payment percentage to the adjusted payment rate 
for a service calculated under section II.H. of this proposed rule, 
with and without the rural adjustment, to calculate the adjusted 
beneficiary copayment for a given service.

Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment 
* B.
Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted 
Medicare Payment * 1.071) * B.

    Step 4. For a hospital that failed to meet its Hospital OQR Program 
requirements, multiply the copayment calculated in Step 3 by the 
proposed reporting ratio of 0.980.
    The proposed unadjusted copayments for services payable under the 
OPPS that would be effective January 1, 2015, are shown in Addenda A 
and B to this proposed rule (which are available via the Internet on 
the CMS Web site). We note that the proposed national unadjusted 
payment rates and copayment rates shown in Addenda A and B to this 
proposed rule reflect the proposed full CY 2015 OPD fee schedule 
increase factor discussed in section II.B. of this proposed rule.
    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. Proposed 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 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 provides payment or 
more accurate payment for these items or services in a timelier manner 
than if we waited for the annual rulemaking process. We solicit public 
comments on these new codes and finalize our proposals related to these 
codes through our annual rulemaking process.
    We note that, under the OPPS, the APC assignment determines the 
payment rate for an item, procedure, or service. For those items, 
procedures, or services not paid separately under the hospital OPPS, 
they are assigned to appropriate status indicators. Section XI. of this 
proposed rule provides a

[[Page 40974]]

discussion of the various status indicators used under the OPPS. 
Certain payment indicators provide separate payment while others do 
not.
    In Table 14 below, we summarize our current process for updating 
codes through our OPPS quarterly update CRs, seeking public comments, 
and finalizing the treatment of these new codes under the OPPS. We note 
that because the payment rates associated with codes that are effective 
July 1 are not available to us in time for incorporation into the 
Addenda of this proposed rule, the Level II HCPCS codes and the 
Category III CPT codes implemented through the July 2014 OPPS quarterly 
update CR could not be included in Addendum B to this proposed rule 
(which is available via the Internet on the CMS Web site). New and 
revised codes that were implemented through the April 2014 OPPS 
quarterly update are included in Addendum B. Nevertheless, we are 
requesting public comments on the codes included in the July 2014 OPPS 
quarterly update and including these codes in the preamble of this 
proposed rule (we refer readers to Table 16 for the July 2014 HCPCS 
codes).

                           Table 14--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      April 1, 2014.....  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
July 1, 2014....................  Level II HCPCS      July 1, 2014......  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   Codes.                                  proposed rule.      final rule with
                                                                                               comment period.
                                  Category I          July 1, 2014......  CY 2015 OPPS/ASC    CY 2015 OPPS/ASC
                                   (certain vaccine                        proposed rule.      final rule with
                                   codes) and III                                              comment period.
                                   CPT codes.
October 1, 2014.................  Level II HCPCS      October 1, 2014...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2015.................  Level II HCPCS      January 1, 2015...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   Codes.                                  final rule with     final rule with
                                                                           comment period.     comment period.
                                  Category I and III  January 1, 2015...  CY 2015 OPPS/ASC    CY 2016 OPPS/ASC
                                   CPT Codes.                              final rule with     final rule with
                                                                           comment period.     comment period.
----------------------------------------------------------------------------------------------------------------

    This process is discussed in detail below. We have separated our 
discussion into two sections based on whether we are soliciting public 
comments in this CY 2015 OPPS/ASC proposed rule or whether we will be 
soliciting public comments in the CY 2015 OPPS/ASC final rule with 
comment period. We note 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 CPT and Level II HCPCS codes that were effective 
January 1, 2014. We also 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. 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 will respond 
to public comments and finalize our interim OPPS treatment of these 
codes in the CY 2015 OPPS/ASC final rule with comment period.
1. Proposed Treatment of New CY 2014 Level II HCPCS and CPT Codes 
Effective April 1, 2014 and July 1, 2014 for Which We Are Soliciting 
Public Comments in This 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 below, we provided 
separate payment for HCPCS codes C9021, C9739, and C9740. HCPCS code 
Q2052 was assigned to status indicator ``N'' to indicate that this 
service is packaged under the OPPS.

                          Table 15--New Level II HCPCS Codes Implemented in April 2014
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY
           CY 2014 HCPCS Code                    CY 2014 Long descriptor           2015 status      Proposed CY
                                                                                    indicator        2015 APC
----------------------------------------------------------------------------------------------------------------
C9021*.................................  Injection, obinutuzumab, 10 mg........               G             1476
C9739..................................  Cystourethroscopy, with insertion of                 T             0162
                                          transprostatic implant; 1 to 3
                                          implants.
C9740..................................  Cystourethroscopy, with insertion of                 T             1564
                                          transprostatic implant; 4 or more
                                          implants.

[[Page 40975]]

 
Q2052..................................  Services, supplies and accessories                   N              N/A
                                          used in the home under the Medicare
                                          intravenous immune globulin (ivig)
                                          demonstration.
----------------------------------------------------------------------------------------------------------------
* The proposed payment rate for HCPCS code C9021 is based on published wholesale acquisition cost (PWAC) +6
  percent.

    In this CY 2015 OPPS/ASC proposed rule, we are soliciting public 
comments on the proposed APC and status indicator assignments, where 
applicable, for the Level II HCPCS codes listed in Table 15 of this 
proposed rule. The proposed payment rates for these codes, where 
applicable, can be found in Addendum B to this proposed rule (which is 
available via the Internet on the CMS Web site).
    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 below, 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, we are proposing 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. Specifically, we are proposing 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, we 
are proposing to continue to assign HCPCS code Q9974 to the same status 
indicator as its predecessor HCPCS J-codes. Specifically, we are 
proposing to assign HCPCS code Q9974 to status indicator ``N,'' 
effective July 1, 2014.
    We are proposing 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 this proposed rule. This table, presented below, includes 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, do not appear 
in Addendum B to this proposed rule, and as a result, the proposed 
payment rates along with the proposed status indicators and proposed 
APC assignments, where applicable, for CY 2015 are provided in Table 
16.

                           Table 16--New Level II HCPCS Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                                   Proposed CY                      Proposed CY
        CY 2014 HCPCS Code            CY 2014 Long descriptor      2015 status      Proposed CY    2015 payment
                                                                    indicator        2015 APC          rate
----------------------------------------------------------------------------------------------------------------
C2644............................  Brachytherapy source, cesium-              U             2644          $18.97
                                    131 chloride solution, per
                                    millicurie.
C9022 *..........................  Injection, elosulfase alfa,                G             1480          226.42
                                    1 mg.
C9134 *..........................  Factor XIII (antihemophilic                G             1481           14.10
                                    factor, recombinant),
                                    Tretten, per 10 i.u.
Q9970 **.........................  Injection, ferric                          G             9441            1.06
                                    carboxymaltose, 1 mg.
Q9974 ***........................  Injection, morphine sulfate,               N              N/A             N/A
                                    preservative-free for
                                    epidural or intrathecal
                                    use, 10 mg.
----------------------------------------------------------------------------------------------------------------
* The proposed payment rates for HCPCS code C9022 and C9134 are based on ASP+6 percent.
** HCPCS code C9441 (Injection, ferric carboxymaltose, 1 mg) was deleted June 30, 2014, and replaced with HCPCS
  code Q9970, effective July 1, 2014.
*** HCPCS codes J2271 (Injection, morphine sulfate, 100mg) and J2275 (Injection, morphine sulfate (preservative-
  free sterile solution), per 10 mg) were replaced with HCPCS code Q9974, effective July 1, 2014. Consequently,
  the payment indicator assignment for HCPCS codes J2271 and J2275 was changed to ``E'' (Not Payable by
  Medicare), effective July 1, 2014.

    For CY 2015, we are proposing 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 27 new Category III CPT codes that 
were made effective July 1, 2014. Specifically, as displayed in Table 
17 below, we made interim OPPS status indicators and APC assignments 
for Category III CPT codes 0347T, 0348T, 0349T, 0350T, 0355T, 0356T, 
0358T, 0359T, 0360T, 0362T, 0364T,

[[Page 40976]]

0366T, 0368T, 0370T, 0371T, 0372T, and 0373T. Table 17 below lists 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.

                          Table 17--New Category III CPT Codes Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                                   Proposed CY                      Proposed CY
         CY 2014 CPT Code             CY 2014 Long descriptor      2015 status      Proposed CY    2015 payment
                                                                    indicator        2015 APC          rate
----------------------------------------------------------------------------------------------------------------
0347T............................  Placement of interstitial                 Q2             0420         $125.05
                                    device(s) in bone for
                                    radiostereometric analysis
                                    (RSA).
0348T............................  Radiologic examination,                    S             0261           95.36
                                    radiostereometric analysis
                                    (RSA); spine, (includes,
                                    cervical, thoracic and
                                    lumbosacral, when
                                    performed).
0349T............................  Radiologic examination,                    S             0261           95.36
                                    radiostereometric analysis
                                    (RSA); upper
                                    extremity(ies), (includes
                                    shoulder, elbow and wrist,
                                    when performed).
0350T............................  Radiologic examination,                    S             0261           95.36
                                    radiostereometric analysis
                                    (RSA); lower
                                    extremity(ies), (includes
                                    hip, proximal femur, knee
                                    and ankle, when performed).
0351T............................  Optical coherence tomography               N              N/A             N/A
                                    of breast or axillary lymph
                                    node, excised tissue, each
                                    specimen; real time
                                    intraoperative.
0352T............................  Optical coherence tomography               B              N/A             N/A
                                    of breast or axillary lymph
                                    node, excised tissue, each
                                    specimen; interpretation
                                    and report, real time or
                                    referred.
0353T............................  Optical coherence tomography               N              N/A             N/A
                                    of breast, surgical cavity;
                                    real time intraoperative.
0354T............................  Optical coherence tomography               B              N/A             N/A
                                    of breast, surgical cavity;
                                    interpretation and report,
                                    real time or referred.
0355T............................  Gastrointestinal tract                     T             0142          857.73
                                    imaging, intraluminal (eg,
                                    capsule endoscopy), colon,
                                    with interpretation and
                                    report.
0356T............................  Insertion of drug-eluting                 Q1             0698          101.41
                                    implant (including punctal
                                    dilation and implant
                                    removal when performed)
                                    into lacrimal canaliculus,
                                    each.
0358T............................  Bioelectrical impedance                   Q1             0340           61.88
                                    analysis whole body
                                    composition assessment,
                                    supine position, with
                                    interpretation and report.
0359T............................  Behavior identification                    V             0632          107.98
                                    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.
0360T............................  Observational behavioral                   V             0632          107.98
                                    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.
0361T............................  Observational behavioral                   N              N/A             N/A
                                    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).
0362T............................  Exposure behavioral follow-                V             0632          107.98
                                    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.
0363T............................  Exposure behavioral follow-                N              N/A             N/A
                                    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).
0364T............................  Adaptive behavior treatment                S             0322           92.61
                                    by protocol, administered
                                    by technician, face-to-face
                                    with one patient; first 30
                                    minutes of technician time.
0365T............................  Adaptive behavior treatment                N              N/A             N/A
                                    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).
0366T............................  Group adaptive behavior                    S             0325           65.91
                                    treatment by protocol,
                                    administered by technician,
                                    face-to-face with two or
                                    more patients; first 30
                                    minutes of technician time.
0367T............................  Group adaptive behavior                    N              N/A             N/A
                                    treatment by protocol,
                                    administered by technician,
                                    face-to-face with two or
                                    more patients; each
                                    additional 30 minutes of
                                    technician time (List
                                    separately in addition to
                                    code for primary procedure).
0368T............................  Adaptive behavior treatment                S             0322           92.61
                                    with protocol modification
                                    administered by physician
                                    or other qualified health
                                    care professional with one
                                    patient; first 30 minutes
                                    of patient face-to-face
                                    time.

[[Page 40977]]

 
0369T............................  Adaptive behavior treatment                N              N/A             N/A
                                    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).
0370T............................  Family adaptive behavior                   S             0324          130.28
                                    treatment guidance,
                                    administered by physician
                                    or other qualified health
                                    care professional (without
                                    the patient present).
0371T............................  Multiple-family group                      S             0324          130.28
                                    adaptive behavior treatment
                                    guidance, administered by
                                    physician or other
                                    qualified health care
                                    professional (without the
                                    patient present).
0372T............................  Adaptive behavior treatment                S             0325           65.91
                                    social skills group,
                                    administered by physician
                                    or other qualified health
                                    care professional face-to-
                                    face with multiple patients.
0373T............................  Exposure adaptive behavior                 S             0323          117.36
                                    treatment with protocol
                                    modification requiring two
                                    or more technicians for
                                    severe maladaptive
                                    behavior(s); first 60
                                    minutes of technicians'
                                    time, face-to-face with
                                    patient.
0374T............................  Exposure adaptive behavior                 N              N/A             N/A
                                    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).
----------------------------------------------------------------------------------------------------------------

    We are soliciting 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 are listed in Tables 15, 16, and 17 
of this proposed rule. We also are proposing to finalize the status 
indicator and APC assignments and payment rates for these codes, if 
applicable, in the CY 2015 OPPS/ASC final rule with comment period. 
Because the new Category III CPT and Level II HCPCS codes that become 
effective for July are not available to us in time for incorporation 
into the Addenda to this proposed rule, our policy is to include the 
codes, the proposed status indicators, proposed APCs (where 
applicable), and proposed payment rates (where applicable) in the 
preamble of the proposed rule, but not in the Addenda to this proposed 
rule. These codes are listed in Tables 16 and 17, respectively, of this 
proposed rule. We are proposing to incorporate these codes into 
Addendum B to the 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 are included in Addendum B to this 
proposed rule (which is available via the Internet on the CMS Web 
site), where the proposed CY 2015 payment rates for these codes are 
also shown.
2. Proposed 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 Will Be Soliciting Public 
Comments in the 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 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 will be flagged with comment indicator ``NI'' in Addendum B 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. In addition, the CPT and Level II HCPCS codes that will be 
effective January 1, 2015, will be flagged with comment indicator 
``NI'' in Addendum B to the 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 the final rule with 
comment period, and we respond to these public comments in the OPPS/ASC 
final rule with comment period for the next calendar year's OPPS/ASC 
update. We are proposing to continue this process for CY 2015. 
Specifically, for CY 2015, we are proposing 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.
    As stated above, the October 1, 2014 and January 1, 2015 codes 
would be flagged with comment indicator ``NI'' in Addendum B to the 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 will 
be inviting public comments on the proposed status indicator and APC 
assignments and payment rates for these codes, if applicable, that 
would be finalized in the CY 2016 OPPS/ASC final rule with comment 
period.
3. Proposed Process for Soliciting Public Comments for New and Revised 
CPT Codes That Would Be Released by AMA Before the January 1 Effective 
Date
    We generally incorporate the new CPT codes that are effective 
January 1 in the OPPS/ASC final rule with comment

[[Page 40978]]

period. We establish interim APC and status indicator assignments for 
the coming year, and request comments on the interim assignments. 
Similarly, in the OPPS/ASC final rule with comment period, we establish 
interim APC and status indicator assignments for existing CPT codes 
that have substantial revision to their code descriptors, which may 
include grammatical changes to the code descriptors that necessitate a 
change in the current APC assignments. 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.
a. Current Process for Accepting Comments on New and Revised CPT Codes 
That Are Effective January 1
    Currently, under the hospital OPPS, new CPT codes that are 
effective January 1 are flagged 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 treatment of these new codes. We address public 
comments in the next year's OPPS/ASC final rule with comment period and 
finalize the APC and status indicator assignments for the codes. For 
example, the new CPT codes that were effective January 1, 2013, were 
assigned to comment indicator ``NI'' in Addendum B to the CY 2013 OPPS/
ASC final rule with comment period. We responded to public comments 
received on the CY 2013 OPPS/ASC final rule with comment period and 
finalized the APC and status indicator assignments for these codes in 
the CY 2014 OPPS/ASC final rule with comment period; and we included 
the final APC and status indicator assignments in Addendum B to that 
rule.
    Similarly, existing CPT codes with substantial revisions to the 
code descriptors are flagged with comment indicator ``NI'' in Addendum 
B to the OPPS/ASC final rule with comment period to indicate that these 
codes are assigned interim APC and status indicators on which we are 
accepting public comments. Public comments regarding these revised CPT 
codes are also addressed, and APC and status indicator assignments 
finalized, in the next year's OPPS/ASC final rule with comment period.
    Several stakeholders, including consultants, device manufacturers, 
drug manufacturers, as well as specialty societies and hospitals, have 
expressed concern with the process we use to recognize new and revised 
CPT codes. They believe that CMS should publish proposed APCs and 
status indicators for the new and revised CPT codes that will be 
effective January 1 in the OPPS/ASC proposed rule, and request public 
comments prior to finalizing them for the January 1 implementation 
date. Further, the stakeholders believe that seeking public input on 
the APC and status indicator assignments for these new and revised 
codes would assist CMS in assigning the CPT codes to appropriate APCs. 
We have been informed of similar concerns regarding our process for 
assigning interim payment values for revalued, and new and revised 
codes, under the Medicare Physician Fee Schedule (MPFS), and include 
proposed policies to address those concerns in the CY 2015 MPFS 
proposed rule.
    Like the MPFS, the OPPS and the ASC payment system rely principally 
upon the Current Procedural Terminology (CPT[supreg]) coding system 
maintained by the AMA for billing. CPT[supreg] 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. The OPPS/ASC proposed 
rules are published prior to the publication of the CPT codes that are 
generally 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 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.
b. Proposal To Modify the Current Process for Accepting Comments on New 
and Revised CPT Codes That Are Effective January 1
    In this CY 2015 OPPS/ASC proposed rule, we are proposing to make 
changes in the process we use to establish APC assignments and status 
indicators for new and revised codes. We are proposing to make similar 
revisions under the MPFS to our current process for establishing values 
(work and malpractice relative value units and practice expense inputs) 
for new and revised CPT codes that take effect each January 1.
    For instance, we are proposing that, for new and revised CPT codes 
that we receive from the AMA 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 are proposing 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 are 
proposing 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. However, if certain CPT codes are revised in a manner that 
would not affect the cost of inputs (for example, a grammatical 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 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 not use those two new CPT codes to bill Medicare 
for outpatient services the first year after the 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 that code during the year. 
We would propose status indicator and APC assignments for the two new 
CPT codes during rulemaking in CY 2016 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

[[Page 40979]]

would make every effort to work with the AMA 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. We 
are proposing to establish the initial APC and status indicator 
assignments for 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. We are hopeful that the AMA 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. We are proposing to implement the 
revised CMS process for establishing APC and status indicator 
assignments for new and revised codes for CY 2016. However, we will 
consider alternative implementation dates to allow time for the AMA 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, we are 
proposing to include in the OPPS/ASC proposed rule for a year proposed 
APC and status indicator assignments for the new and revised CPT codes 
that are effective January 1. We would follow this revised process 
except in the case of a 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 new services, we 
would 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 new and revised CPT 
codes that take effect on January 1 each year. Instead, when we do not 
receive new and revised codes early enough in our ratesetting process 
to propose APC and status indicator assignments in the OPPS/ASC 
proposed rule for a year, we would 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 could include proposed 
assignments in the following year's proposed rule. After proposing APC 
and status indicator assignments for the new and revised codes in a 
proposed rule, we would accept comments on the proposed assignments, 
and respond to the comments and assign the final APC and status 
indicator assignments in the OPPS/ASC final rules with comment period. 
We are inviting public comments on this proposal. We are 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?
     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?

B. Proposed OPPS Changes--Variations Within APCs

1. Background
    Section 1833(t)(2)(A) of the Act requires the Secretary to develop 
a classification system for covered hospital outpatient department 
services. Section 1833(t)(2)(B) of the Act provides that the Secretary 
may establish groups of covered OPD services within this classification 
system, so that services classified within each group are comparable 
clinically and with respect to the use of resources. In accordance with 
these provisions, we developed a grouping classification system, 
referred to as Ambulatory Payment Classifications (APCs), as set forth 
in Sec.  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 regulations. Further discussion of 
packaged services is included in section II.A.3. of this proposed rule.
    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 proposed rule.
    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 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

[[Page 40980]]

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, 
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. 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 proposed rule).
    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).
2. Application of the 2 Times Rule
    In accordance with section 1833(t)(2) of the Act and Sec.  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 this proposed rule, for CY 2015, 
we are proposing 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.
    We have identified the APCs with 2 times rule violations for CY 
2015. Therefore, we are proposing changes to the procedure codes 
assigned to these APCs assignments in Addendum B to this proposed rule. 
We note that Addendum B does not appear in the printed version of the 
Federal Register as part of the CY 2015 OPPS/ASC proposed rule. Rather, 
it is published and made available via the Internet on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a 2 
times rule violation or to improve clinical and resource homogeneity, 
we are proposing to reassign these procedure codes to new APCs that 
contain services that are similar with regard to both their clinical 
and resource characteristics. In many cases, the proposed procedure 
code reassignments and associated APC reconfigurations for CY 2015 
included in this 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 are proposing changes to the status 
indicators for some procedure codes that are not specifically and 
separately discussed in this proposed rule. In these cases, we are 
proposing 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 are proposing for CY 2015. In addition, we are 
proposing to rename existing APCs or create new clinical APCs to 
complement the proposed procedure code reassignments. Addendum B to 
this CY 2015 OPPS/ASC proposed rule identifies with a comment indicator 
``CH'' those procedure codes for which we are proposing a change to the 
APC assignment or status indicator, or both, that were initially 
assigned in the April 2014 Addendum B Update (available via the 
Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html).
3. Proposed 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 are proposing 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 this proposed rule, 
we found 9 APCs with 2 times rule violations. We applied the criteria 
as described above to identify the APCs that we are proposing 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 this proposed rule. We have 
not included in this 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 have only identified 
those APCs, including those with criteria-based costs, such as device-
dependent APCs, with 2 times rule violations. For a detailed discussion 
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,

[[Page 40981]]

and the quality of the claims data used to determine the APC payment 
rates.
    Table 18 of this proposed rule lists the 9 APCs that we are 
proposing to make exceptions for under the 2 times rule for CY 2015 
based on the criteria cited above and claims data processed from 
January 1, 2013, through December 31, 2013. For the final rule with 
comment period, 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.

    Table 18--Proposed APC Exceptions to the 2 Times Rule for CY 2015
------------------------------------------------------------------------
         Proposed CY 2015 APC              Proposed CY 2015 APC title
------------------------------------------------------------------------
0012.................................  Level I Debridement &
                                        Destruction.
0015.................................  Level II Debridement &
                                        Destruction.
0057.................................  Bunion Procedures.
0066.................................  Level V Radiation Therapy.
0330.................................  Dental Procedures.
0433.................................  Level II Pathology.
0450.................................  Level I Minor Procedures.
0634.................................  Hospital Clinic Visits.
0661.................................  Level III Pathology.
------------------------------------------------------------------------

    The proposed costs for hospital outpatient services for these and 
all other APCs that were used in the development of this proposed rule 
can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

C. Proposed OPPS APC-Specific Policies

    Section 1833(t)(9) of the Act requires that we annually review and 
revise, if necessary, the APCs and the procedure code assignments. 
Therefore, every year we evaluate and revise, if necessary, the APC 
assignments for procedure codes based on evaluation of the latest 
hospital outpatient claims data. Although we do not discuss every APC 
revision and procedure code reassignment in the proposed and final 
rules with comment period, these revisions and/or reassignments are 
listed in the OPPS Addendum B to the proposed and final rules with 
comment period. Specifically, procedure codes proposed for reassignment 
to new APCs and/or status indicators 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 the OPPS 
Addendum B to the proposed and final rules with comment period.
    In accordance with section 1833(t)(2) of the Act, we annually 
review all APC assignments to determine if any 2 times rule violations 
exist. That is, we 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 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.
    As stated in section III.B. of this proposed rule, for purposes of 
identifying significant procedure codes for examination of possible 2 
times rule violations within an APC, we consider procedure codes that 
have either more than 1,000 single major claims, or (if less than 1,000 
single major claims) procedure codes that have more than 99 single 
major claims and contribute at least 2 percent of the single major 
claims. This longstanding criterion to determine when a procedure code 
is significant for purposes of evaluation of a possible 2 times rule 
violation was established 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 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.
1. Ophthalmic Procedures and Services
    For the CY 2015 OPPS update, based on our evaluation of the latest 
hospital outpatient claims data available for this proposed rule, we 
are proposing to restructure all of the ophthalmic-related APCs to 
better reflect the costs and clinical characteristics of the procedures 
within each APC. This proposed restructuring results 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 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 below show the current CY 2014 and 
proposed CY 2015 ophthalmology-related APCs. Specifically, Table 19 
shows the ophthalmology-related APCs and status indicator assignments 
used for CY 2014, while Table 20 shows the proposed ophthalmology-
related APCs and their status indicator assignments for CY 2015. The 
proposed payment rates for the ophthalmology-related procedure codes 
can be found in Addendum B to this proposed rule (which is available 
via the Internet on the CMS Web site).

              Table 19--CY 2014 Ophthalmology-Related APCs
------------------------------------------------------------------------
                                                         CY 2014  status
        CY 2014 APC             APC Title description        indicator
------------------------------------------------------------------------
0035.......................  Vascular Puncture and                    X
                              Minor Diagnostic
                              Procedures.
0230.......................  Level I Eye Tests &                      S
                              Treatments.
0231.......................  Level III Eye Tests &                    S
                              Treatments.
0232.......................  Level I Anterior Segment                 T
                              Eye Procedures.
0233.......................  Level III Anterior Segment               T
                              Eye Procedures.
0234.......................  Level IV Anterior Segment                T
                              Eye Procedures.
0235.......................  Level I Posterior Segment                T
                              Eye Procedures.
0237.......................  Level II Posterior Segment               T
                              Eye Procedures.
0238.......................  Level I Repair and Plastic               T
                              Eye Procedures.
0239.......................  Level II Repair and                      T
                              Plastic Eye Procedures.
0240.......................  Level III Repair and                     T
                              Plastic Eye Procedures.
0241.......................  Level IV Repair and                      T
                              Plastic Eye Procedures.
0242.......................  Level V Repair and Plastic               T
                              Eye Procedures.
0243.......................  Strabismus/Muscle                        T
                              Procedures.
0244.......................  Corneal and Amniotic                     T
                              Membrane Transplant.
0246.......................  Cataract Procedures with                 T
                              IOL Insert.

[[Page 40982]]

 
0247.......................  Laser Eye Procedures......               T
0249.......................  Cataract Procedures                      T
                              without IOL Insert.
0255.......................  Level II Anterior Segment                T
                              Eye Procedures.
0293.......................  Level VI Anterior Segment                T
                              Eye Procedures.
0672.......................  Level III Posterior                      T
                              Segment Eye Procedures.
0673.......................  Level V Anterior Segment                 T
                              Eye Procedures.
0698.......................  Level II Eye Tests &                     S
                              Treatments.
0699.......................  Level IV Eye Tests &                     T
                              Treatments.
------------------------------------------------------------------------

          Table 20--Proposed CY 2015 Ophthalmology-Related APCs
------------------------------------------------------------------------
                                                           Proposed  CY
    Proposed CY 2015 APC        APC Title description      2015  status
                                                            indicator
------------------------------------------------------------------------
0230.......................  Level I Eye Tests &                      S
                              Treatments.
0231.......................  Level III Eye Tests &                    S
                              Treatments.
0233.......................  Level II Intraocular                     T
                              Procedures.
0238.......................  Level I Extraocular,                     T
                              Repair, and Plastic Eye
                              Procedures.
0239.......................  Level II Extraocular,                    T
                              Repair, and Plastic Eye
                              Procedures.
0240.......................  Level III Extraocular,                   T
                              Repair, and Plastic Eye
                              Procedures.
0242.......................  Level IV Extraocular,                    T
                              Repair, and Plastic Eye
                              Procedures.
0247.......................  Laser Eye Procedures......               T
0255.......................  Level I Intraocular                      T
                              Procedures.
0293.......................  Level IV Intraocular                    J1
                              Procedures.
0351.......................  Level V Intraocular                     J1
                              Procedures.
0673.......................  Level III Intraocular                    T
                              Procedures.
0698.......................  Level II Eye Tests &                     S
                              Treatments.
------------------------------------------------------------------------

    We intend to propose similar major restructures of the APC and 
procedure code assignments for other clinical areas in future 
rulemakings. We are inviting public comments on this proposal.
2. Female Reproductive Procedures (APCs 0188, 0189, 0192, 0193, and 
0202)
    At the Panel's March 10, 2014 meeting, a 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 were made effective for 
the CY 2014 OPPS update, and stated that the changes would compromise 
beneficiary access to pelvic floor repair procedures. The commenter 
urged the Panel to request that CMS revisit its packaging policy for 
APCs 0193 and 0195 and allow stakeholders the opportunity to work with 
CMS to appropriately reassign these procedures in a manner that better 
accounts for clinical complexity. In addition, this presenter requested 
that CMS postpone converting existing APC 0202 (Level VII Female 
Reproductive Procedures) into a comprehensive APC to allow for further 
study of the complexity of pelvic floor repair procedures. After review 
of the information provided by the presenter and examination of the 
latest hospital outpatient claims data available for this proposed 
rule, the Panel made no recommendation for any of the female 
reproductive APCs.
    For the CY 2014 OPPS update, we made several APC changes, which 
included changes to the female reproductive APCs 0192, 0193, and 0195. 
These changes were listed in Addendum B to the CY 2014 OPPS/ASC 
proposed rule. Of these three APCs, only APC 0193 showed a 2 times rule 
violation. 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 APC 0193 for the CY 2014 OPPS update because this APC 
sufficiently reflected the clinical and resource coherence of the Level 
V female reproductive procedures.
    For the CY 2015 OPPS update, based on our review of the latest 
hospital outpatient claims data available for this proposed rule, there 
are no 2 times rule violations for any of the female reproductive APCs. 
In addition, based on our evaluation of the latest hospital outpatient 
claims data, we are proposing to restructure the female reproductive 
APCs to more appropriately reflect the resource and clinical 
characteristics of the procedures within each APC. This proposed 
restructuring results 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 this proposed five-level APC structure will provide 
more accurate payments for the female reproductive procedures furnished 
to Medicare beneficiaries.
    In summary, we are proposing to restructure the female reproductive 
APCs based on a review of our latest hospital outpatient claims data 
available for this proposed rule, which results in the use of five 
levels of APCs for CY 2015, as compared to the seven APCs used in CY 
2014. Tables 21 and 22 below show the current CY 2014 and proposed CY 
2015 female reproductive APCs. Specifically, Table 21 shows the female 
reproductive APCs, APC titles, and their status indicator assignments 
for CY 2014, while Table 22 shows the proposed female reproductive 
APCs, APC titles, and their status indicator assignments for CY 2015. 
The proposed payment rates for the female

[[Page 40983]]

reproductive procedure codes can be found in Addendum B to this 
proposed rule (which is available via the Internet on the CMS Web 
site). We note that one of the five levels of the female reproductive 
APCs, APC 0202, is a comprehensive APC. We refer readers to section 
II.A.2.e. of this proposed rule for further discussion of our 
comprehensive APC policy.

               Table 21--CY 2014 Female Reproductive APCs
------------------------------------------------------------------------
                                                          CY 2014 Status
        CY 2014 APC             APC Title description       indicator
------------------------------------------------------------------------
0188.......................  Level II Female                          T
                              Reproductive Proc.
0189.......................  Level III Female                         T
                              Reproductive Proc.
0191.......................  Level I Female                           T
                              Reproductive Proc.
0192.......................  Level IV Female                          T
                              Reproductive Proc.
0193.......................  Level V Female                           T
                              Reproductive Proc.
0195.......................  Level VI Female                          T
                              Reproductive Procedures.
0202.......................  Level VII Female                         T
                              Reproductive Procedures.
------------------------------------------------------------------------

           Table 22--Proposed CY 2015 Female Reproductive APCs
------------------------------------------------------------------------
                                                           Proposed CY
    Proposed CY 2015 APC        APC Title description      2015 status
                                                            indicator
------------------------------------------------------------------------
0188.......................  Level I Female                           T
                              Reproductive Procedures.
0189.......................  Level II Female                          T
                              Reproductive Procedures.
0192.......................  Level III Female                         T
                              Reproductive Procedures.
0193.......................  Level IV Female                          T
                              Reproductive Procedures.
0202.......................  Level V Female                          J1
                              Reproductive Procedures.
------------------------------------------------------------------------

3. Image-Guided Breast Biopsy Procedures (APC 0005)
    For the CY 2014 OPPS update, the AMA CPT Editorial Panel deleted 
the image-guided breast biopsy CPT codes 19102 and 19103 and replaced 
these specific procedure codes with six new CPT codes that ``bundled'' 
associated imaging services, effective January 1, 2014. As shown in 
Table 23 below, 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 procedure code for 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 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 
below shows how image-guided breast biopsy procedures were reported 
prior to CY 2014. Table 23 also shows 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.

                  Table 23--How Image-Guided Breast Biopsy Procedures Were Reported in CY 2013
----------------------------------------------------------------------------------------------------------------
                                                                                                      CY 2013
        CY 2013 CPT code                 Long descriptor            CY 2013 SI      CY 2013 APC       Payment
----------------------------------------------------------------------------------------------------------------
                                     Device-Related Breast Biopsy CPT Codes
----------------------------------------------------------------------------------------------------------------
19102..........................  Biopsy of breast;                            T             0005         $625.24
                                  percutaneous, needle core,
                                  using imaging guidance.
19103..........................  Biopsy of breast;                            T             0037        1,118.54
                                  percutaneous, automated
                                  vacuum assisted or rotating
                                  biopsy device, using imaging
                                  guidance.
----------------------------------------------------------------------------------------------------------------
                      Localization Device CPT Codes Reported with CPT Codes 19102 and 19103
----------------------------------------------------------------------------------------------------------------
19290..........................  Preoperative placement of                   Q1             0340           49.64
                                  needle localization wire,
                                  breast.
19291..........................  Preoperative placement of                    N              N/A             N/A
                                  needle localization wire,
                                  breast; each additional
                                  lesion (List separately in
                                  addition to code for primary
                                  procedure).
19295..........................  Image guided placement,                     Q1             0340           49.64
                                  metallic localization clip,
                                  percutaneous, during breast
                                  biopsy/aspiration (List
                                  separately in addition to
                                  code for primary procedure).
----------------------------------------------------------------------------------------------------------------
                        Image Guidance CPT Codes Reported with CPT Codes 19102 and 19103
----------------------------------------------------------------------------------------------------------------
76942..........................  Ultrasonic guidance for needle               N              N/A             N/A
                                  placement (eg, biopsy,
                                  aspiration, injection,
                                  localization device), imaging
                                  supervision and
                                  interpretation.

[[Page 40984]]

 
77021..........................  Magnetic resonance guidance                  N              N/A             N/A
                                  for needle placement (eg, for
                                  biopsy, needle aspiration,
                                  injection, or placement of
                                  localization device)
                                  radiological supervision and
                                  interpretation.
77031..........................  Stereotactic localization                    N              N/A             N/A
                                  guidance for breast biopsy or
                                  needle placement (eg, for
                                  wire localization or for
                                  injection), each lesion,
                                  radiological supervision and
                                  interpretation.
77032..........................  Mammographic guidance for                    N              N/A             N/A
                                  needle placement, breast (eg,
                                  for wire localization or for
                                  injection), each lesion,
                                  radiological supervision and
                                  interpretation.
----------------------------------------------------------------------------------------------------------------

    For the CY 2014 OPPS update, the AMA CPT Editorial Panel grouped 
these multiple procedures that describe these imaging services into 
single comprehensive service codes; specifically, CPT codes 19081, 
19082, 19083, 19084, 19085, and 19086. Table 24 below shows 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 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. 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. 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, were packaged for CY 2014.
    In addition, consistent with our longstanding policy for the 
treatment of new codes, we assigned these new replacement CPT codes to 
interim APCs for CY 2014. Specifically, 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.
    At the Panel's March 10, 2014 meeting, a presenter requested the 
reassignment of 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 one 
APC without regard for the imaging modality or device used to perform 
the procedure. This same presenter also requested that CMS maintain the 
historic assignment of the predecessor CPT codes cost data.
    The Panel recommended that CMS reassign the APC assignments for the 
new replacement CPT codes. Specifically, the Panel recommended the 
reassignment of CPT codes 19081, 19083, and 19085 from APC 0005 to APC 
0037.
    In light of the public presentation and 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. For this CY 2015 OPPS/ASC proposed rule, based on 
our review of the latest hospital outpatient claims data available for 
the proposed rule, we are proposing 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. With this proposed revision, there 
would be no procedures assigned to APCs 0685 or 0037. Therefore, we are 
proposing to delete APCs 0685 and 0037 for CY 2015. Consequently, for 
the CY 2015 OPPS update, we are proposing to use only two needle biopsy 
APCs, specifically, APCs 0004 and 0005. The proposed reassignment of 
the procedures assigned to APCs 0685 and 0037 would result in increased 
payment rates for both APCs 0004 and 0005. For CY 2015, the proposed 
payment rate for APC 0004 is 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. With this proposed reassignment, CPT codes 19081, 
19083, and 19085 will continue to be assigned to APC 0005.
    In summary, we are proposing to continue to assign CPT codes 19081, 
19083, and 19085 to APC 0005, which has a proposed payment rate of 
approximately $1,062. In addition, we are proposing 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 are proposing to 
delete APC 0037 as obsolete for CY 2015, 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 proposed status indicators, APC assignments, 
and payment rates for the image-guided breast biopsy CPT codes 19081 
through 19086 for the CY 2015 OPPS update.

[[Page 40985]]

                        Table 24--Proposed APCs To Which Image-Guided Breast Biopsy Procedure Codes Would Be Assigned for CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Proposed CY
                                                                                                       CY 2014     Proposed CY  Proposed CY      2015
         CY 2014 CPT code                     Long descriptor              CY 2014 SI   CY 2014 APC    payment       2015 SI      2015 APC     payment
                                                                                                         rate                                    rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
19081............................  Biopsy, breast, with placement of                T          0005      $702.08            T          0005    $1,062.28
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including stereotactic guidance.
19082............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    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).
19083............................  Biopsy, breast, with placement of                T          0005       702.08            T          0005     1,062.28
                                    breast localization device(s) (eg,
                                    clip, metallic pellet), when
                                    performed, and imaging of the biopsy
                                    specimen, when performed,
                                    percutaneous; first lesion,
                                    including ultrasound guidance.
19084............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    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).
19085............................  Biopsy, breast, with placement of                T          0005       702.08            T          0005     1,062.28
                                    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.
19086............................  Biopsy, breast, with placement of                N           N/A          N/A            N           N/A          N/A
                                    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
                                    guidance (List separately in
                                    addition to code for primary
                                    procedure).
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Image-Guided Abscess Drainage Procedures (APCs 0005 and 0007)
    For the CY 2014 OPPS update, the AMA 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 image-
guided fluid collection drainage by catheter for peritoneal, 
retroperitoneal, transvaginal or transrectal collections, effective 
January 1, 2014. As shown in Table 25, which shows 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 (Level I Incision & Drainage), with a payment rate of 
$159.66, and assigned CPT code 49407 to APC 0685 (Level III Needle 
Biopsy/Aspiration Except Bone Marrow), with a payment rate of $757.76. 
In addition, 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 
comment.
    At the Panel's March 10, 2014 meeting, a presenter requested the 
reassignment of both CPT codes 10030 and 49407 to APC 0037 (Level IV 
Needle Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS 
payment rate of $1,223.25 and where similar procedures are assigned. 
Specifically, the presenter indicated that all the image-guided fluid 
collection drainage procedures should be treated as one clinically 
cohesive group and should be assigned to APC 0037.
    Based on the request, 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 reassignment of CPT code 10030 to APC 
0037. Rather, the Panel

[[Page 40986]]

believed that CPT code 10030 would be more appropriately assigned to 
APC 0007 (Level II Incision and Drainage).
    We agree with the Panel's recommendation to reassign CPT code 10030 
to APC 007. Therefore, we are proposing 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 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, specifically, APCs 0004 (Level I Needle Biopsy/Aspiration 
Except Bone Marrow), 0005, 0685 (Level III Needle Biopsy/Aspiration 
Except Bone Marrow), and 0037. Based on our review of the latest 
hospital outpatient claims data available for the proposed rule, we are 
proposing to reassign the procedures assigned to APCs 0685 and 0037 to 
either APC 0004 or APC 0005 based on clinical and resource homogeneity. 
With this proposed revision, there would be no procedures assigned to 
APCs 0685 or 0037. Therefore, we are proposing to delete APCs 0685 and 
0037 for CY 2015. Consequently, for the CY 2015 OPPS update, we are 
proposing to use only two levels of needle biopsy APCs, specifically, 
APCs 0004 and 0005. Based on the proposal to reassign all of the 
procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 
0005, we are proposing to reassign CPT code 49407 from APC 0685 to APC 
0005 for CY 2015. Table 25 below shows the long descriptors for CPT 
codes 10030 and 49407, and their proposed status indicator and APC 
assignments for the CY 2015 OPPS update. The 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).

                    Table 25--Proposed CY 2015 APC Assignments for CPT Codes 10030 and 49407
----------------------------------------------------------------------------------------------------------------
                                                                  CY 2014 OPPS     Proposed CY      Proposed CY
       CPT Code             Long descriptor     CY 2014 OPPS SI        APC         2015 OPPS SI    2015 OPPS APC
----------------------------------------------------------------------------------------------------------------
10030.................  Image-guided fluid                   T             0006               T             0007
                         collection drainage
                         by catheter (eg,
                         abscess, hematoma,
                         seroma, lymphocele,
                         cyst), soft tissue
                         (eg, extremity,
                         abdominal wall,
                         neck), percutaneous.
49407.................  Image-guided fluid                   T             0685               T             0005
                         collection drainage
                         by catheter (eg,
                         abscess, hematoma,
                         seroma, lymphocele,
                         cyst); peritoneal or
                         retroperitoneal,
                         transvaginal or
                         transrectal.
----------------------------------------------------------------------------------------------------------------

5. Cystourethroscopy and Other Genitourinary Procedures (APCs 0160, 
0161, 0162, and 0163)
    Every year we revise, if necessary, the APC assignments for 
procedure codes based on our analysis of the latest hospital outpatient 
claims data. 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 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 this 
proposed rule.
    For the CY 2014 OPPS update, there are five levels of APCs that 
contain cystourethroscopy and genitourinary procedures. These APCs are 
listed in Table 26, along with their status indicator assignments for 
CY 2014.

  Table 26--CY 2014 APCs Containing Cystourethroscopy and Genitourinary
                               Procedures
------------------------------------------------------------------------
                                                          CY 2014 Status
        CY 2014 APC             APC Title description       indicator
------------------------------------------------------------------------
0160.......................  Level I Cystourethroscopy                T
                              and other Genitourinary
                              Procedures.
0161.......................  Level II Cystourethroscopy               T
                              and other Genitourinary
                              Procedures.
0162.......................  Level III                                T
                              Cystourethroscopy and
                              other Genitourinary
                              Procedures.
0163.......................  Level IV Cystourethroscopy               T
                              and other Genitourinary
                              Procedures.
0429.......................  Level V Cystourethroscopy                T
                              and other Genitourinary
                              Procedures.
------------------------------------------------------------------------

    For the CY 2015 OPPS update, based on our review of the latest 
hospital outpatient claims data available for this proposed rule, we 
are proposing to restructure the APCs containing cystourethroscopy and 
other genitourinary procedures to better reflect the resource costs and 
clinical characteristics of the procedures within each APC. This 
proposed restructuring results 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, we are proposing to delete APC 0429 (Level V 
Cystourethroscopy and Other Genitourinary Procedures). We are proposing 
to reassign the procedures that were previously assigned to APC 0429 to 
either APC 0161 (Level I Cystourethroscopy and Other Genitourinary 
Procedures) or APC 0163 (Level IV Cystourethroscopy and other 
Genitourinary Procedures) for the CY 2015 OPPS update because we 
believe that these procedures would be more appropriately assigned to 
either APC based on their geometric mean costs. Further, we believe 
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. In addition, we are proposing to delete APC 0169 (Lithotripsy) 
because the one

[[Page 40987]]

procedure, specifically the procedure described by CPT code 50590 
(Lithotripsy, extracorporeal shock wave) that was assigned to this APC 
is proposed for reassignment to APC 0163.
    In summary, we are proposing to restructure the APCs containing 
cystourethroscopy 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 proposed rule. In addition, we are proposing to delete APC 0169 
and reassign CPT code 50590 to APC 0163 where it is more appropriately 
assigned based on resource costs and the similarity to the other 
procedures assigned to APC 0163. Table 27 shows the proposed APCs that 
contain cystourethroscopy and other genitourinary procedures, the APC 
titles, and the status indicator assignments for CY 2015. The proposed 
payment rates for the specific APCs listed in Table 27 can be found in 
Addendum A to this proposed rule, while the proposed payment rates for 
the specific cystourethroscopy and other genitourinary procedure codes 
can be found in Addendum B to this proposed rule (which are available 
via the Internet on the CMS Web site).

    Table 27--Proposed CY 2015 APCs Containing Cystourethroscopy and
                        Genitourinary Procedures
------------------------------------------------------------------------
                                                           Proposed CY
    Proposed CY 2015 APC        APC Title description      2015 Status
                                                            indicator
------------------------------------------------------------------------
0160.......................  Level I Cystourethroscopy                T
                              and other Genitourinary
                              Procedures.
0161.......................  Level II Cystourethroscopy               T
                              and other Genitourinary
                              Procedures.
0162.......................  Level III                                T
                              Cystourethroscopy and
                              other Genitourinary
                              Procedures.
0163.......................  Level IV Cystourethroscopy               T
                              and other Genitourinary
                              Procedures.
------------------------------------------------------------------------

6. Wound Treatments and Services (APCs 0015 and 0327)
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 $2,260. This payment rate was derived from the latest 
hospital outpatient claims data used for CY 2014 ratesetting, which 
showed a geometric mean cost of approximately $2,174 based on 10 single 
claims (out of 29 total claims) for CPT code 15110.
    As stated in section III.B. of this proposed rule, 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 this CY 2015 proposed rule showed a geometric mean cost 
of approximately $774 based on 90 single claims (out of 122 total 
claims) for CPT code 15110. Based on these recent data, we are 
proposing 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 assignment for 
CPT code 15110 when considering its similarity to the other procedures 
in this APC.
    In addition, we are proposing to revise the APC titles for the four 
skin repair APCs. Specifically, we are proposing 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 below shows 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 this proposed rule (which is available via the Internet 
on the CMS Web site).

                      Table 28-Proposed CY 2015 APC and Status Indicator for CPT Code 15110
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY      Proposed CY
    Procedure code          Long descriptor        CY 2014 SI      CY 2014 APC       2015 SI         2015 APC
----------------------------------------------------------------------------------------------------------------
15110.................  Epidermal autograft,                 T             0329               T             0327
                         trunk, arms, legs;
                         first 100 sq cm or
                         less, or 1% of body
                         area of infants and
                         children.
----------------------------------------------------------------------------------------------------------------

b. Negative Pressure Wound Therapy (NPWT) (APC 0015)
    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, specifically within the 
range of $450 to $500 because this range in amounts would adequately 
pay for the cost of providing negative pressure wound therapy (NPWT). 
We further stated in that same final rule with comment period 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 cycle, and at which time we would 
reevaluate the APC assignments for these services in preparation for 
the CY 2015 rulemaking cycle.
    We established HCPCS code G0456 and HCPCS code G0457 effective 
January 1, 2013, to provide a payment mechanism for NPWT services 
furnished through a disposable device. For the CY 2013 OPPS update, we 
assigned these services to APC 0016 (Level IV Debridement & 
Destruction), which had a CY 2013 payment rate of approximately $210. 
For the CY 2014 OPPS update, we continued to assign HCPCS codes G0456 
and G0457 to APC 0016, which has a payment rate of approximately $275.
    For the CY 2015 OPPS update, our analysis of the latest hospital 
outpatient claims data available for this proposed rule, which is based 
on claims submitted from January 1, 2013 through December 31, 2013, 
indicates that the geometric mean cost of APC 0013 is close to the 
geometric mean cost of APC 0015. Therefore, we are proposing to

[[Page 40988]]

combine these APCs by deleting APC 0013 and reassigning all of the 
procedures from APC 0013 to APC 0015, thereby retaining APC 0015. We 
are proposing to retitle the Debridement and Destruction APC series 
(excluding the title of 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). The 
CY 2013 claims data available for this proposed rule also indicate that 
the resource costs for the services described by HCPCS codes G0456 and 
G0457 range between $152 and $193. Specifically, the geometric mean 
cost for HCPCS code G0456 is 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). Based 
on our most recent claims data, we believe that a reassignment of HCPCS 
codes G0456 and G0457 from APC 0016 to APC 0015 (Level III Debridement 
& Destruction), which has a geometric mean cost of approximately $148, 
is most appropriate. Therefore, we are proposing to reassign HCPCS 
codes G0456 and G0457 from APC 0016 to APC 0015 for the CY 2015 OPPS 
update. Table 29 below shows the long descriptors as well as the 
proposed CY 2015 APC and status indicator assignments for HCPCS codes 
G0456 and G0457. The proposed CY 2015 payment rates for HCPCS codes 
G0456 and G0457 can be found in Addendum B to this proposed rule (which 
is available via the Internet on the CMS Web site).

                                  Table 29--Proposed CY 2015 APCs and Status Indicator for HCPCS Codes G0456 and G0457
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Proposed CY      Proposed CY
              HCPCS Code                               Long descriptor                     CY 2014 SI      CY 2014 APC       2015 SI         2015 APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
G0456................................  Negative pressure wound therapy, (eg, vacuum                  T             0016               T             0015
                                        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.
G0457................................  Negative pressure wound therapy, (eg, vacuum                  T             0016               T             0015
                                        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 greater than 50
                                        square centimeters.
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Endoscopic Retrograde Cholangiopancreatography (ERCP) With Stent 
(APC 0384)
    For the CY 2014 OPPS update, the AMA CPT Editorial Panel deleted 
CPT codes 43268 and 43269 describing an endoscopic retrograde 
cholangiopancreatography (ERCP) with stent placement into the biliary 
or pancreatic duct. New CPT codes 43274 and 43276 replaced deleted CPT 
codes 43268 and 43269, effective January 1, 2014. New CPT codes 43274 
and 43276 describe an ERCP with stent placement into the biliary or 
pancreatic duct including dilation, guide wire passage, and 
sphincterotomy, when performed. As shown in Table 30, and as listed in 
Addendum B to the CY 2014 OPPS/ASC final rule with comment period, we 
assigned CPT codes 43274 and 43276 to APC 0151 (Endoscopic Retrograde 
Cholangio-Pancreatography (ERCP)), with a payment rate of $1,933.69 for 
CY 2014. In addition, as listed in Addendum B, both procedure codes 
were assigned to comment indicator ``NI'' to indicate that these codes 
were assigned interim APC and status indicator assignments that were 
subject to comment.
    At the Panel's March 10, 2014 meeting, the Panel recommended that 
CMS reassign CPT codes 43274 and 43276 to APC 0384 (GI Procedures with 
Stents) at the earliest opportunity. We agree with the Panel's 
recommendation that CPT codes 43274 and 43276 should be reassigned to 
APC 0384. Therefore, we are proposing to reassign CPT codes 43274 and 
43276 from APC 0151 to APC 0384 for the CY 2015 OPPS update. Table 30 
below shows the long descriptors for CPT codes 43274 and 43276, and 
their proposed APC and status indicator assignments for the CY 2015 
OPPS update. We note that APC 0384 is proposed as a comprehensive APC 
for CY 2015. We refer readers to section II.A.2.e. of this proposed 
rule for additional information on our comprehensive APC policy. The 
proposed CY 2015 payment rate for CPT codes 43274 and 43276 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).

                              Table 30--Proposed CY 2015 APC and Status Indicator Assignments for CPT Codes 43274 and 43276
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          CY 2014 OPPS     Proposed CY      Proposed CY
               CPT code                                Long descriptor                  CY 2014 OPPS SI        APC         2015 OPPS SI    2015 OPPS APC
--------------------------------------------------------------------------------------------------------------------------------------------------------
43274................................  Endoscopic retrograde cholangiopancreatography                T             0151              J1             0384
                                        (ERCP); with placement of endoscopic stent
                                        into biliary or pancreatic duct, including pre-
                                         and post-dilation and guide wire passage,
                                        when performed, including sphincterotomy, when
                                        performed, each stent.

[[Page 40989]]

 
43276................................  Endoscopic retrograde cholangiopancreatography                T             0151              J1             0384
                                        (ERCP); with removal and exchange of stent(s),
                                        biliary or pancreatic duct, including pre- and
                                        post-dilation and guide wire passage, when
                                        performed, including sphincterotomy, when
                                        performed, each stent exchanged.
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Radiation Therapy (APCs 0066, 0067, 0412, 0446, 0648, and 0667)
    We are proposing 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 are proposing 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 are proposing 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 are proposing to delete APC 0664 for CY 2015. In addition, we are 
proposing 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 are proposing to reassign the following three services to proposed 
newly renamed APC 0667 for CY 2015: CPT codes 77522, 77523, and 77525.
    We also are proposing to delete APC 0065 (IORT, MRgFUS, and MEG) 
because we are proposing to reassign the services assigned to this APC 
to more appropriate APCs based on clinical similarities and comparable 
geometric mean cost. Specifically, we are proposing to reassign the 
Magnetoencephalography (MEG) CPT codes 95965 and 95966 from APC 0065 to 
APC 0446 (Level IV Nerve and Muscle Services), which would only contain 
MEG services. We are proposing to reassign Intraoperative Radiation 
Therapy (IORT) CPT codes 77424 and 77425 to comprehensive APC 0648 
(Level IV Breast and Skin Surgery). We refer readers to section 
II.A.2.e. of this proposed rule for a discussion of comprehensive APCs 
and the APC assignment of IORT services. In addition, we are proposing 
to reassign the Magnetic Resonance-Guided Focused Ultrasound Surgery 
(MRgFUS) HCPCS codes C9734, 0071T, and 0072T, and CPT code 0301T from 
APC 0065 to APC 0066, which we are proposing to rename ``Level V 
Radiation Therapy.'' We understand that the MRgFUS services are not the 
same as radiation therapy, but assigning these services to APC 0066 
aligns with the assignment of certain stereotactic radiosurgery 
services (namely the procedure described by HCPCS code G0339 and 
successor CPT code 77373) that were grouped with MRgFUS services prior 
to CY 2014. Finally, we are proposing to rename APC 0067 from ``Level 
II Stereotactic Radiosurgery'' to ``Single Session Cranial Stereotactic 
Radiosurgery'', which we are proposing as a comprehensive APC. For a 
further discussion regarding the services assigned to APC 0067, we 
refer readers to section II.A.2.e. of this proposed rule.

IV. Proposed OPPS Payment for Devices

A. Proposed 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 requires that, under the 
OPPS, a category of devices be eligible for transitional pass-through 
payments for at least 2, but not more than 3 years. This pass-through 
payment eligibility period begins with the first date on which 
transitional pass-through payments may be made for any medical device 
that is described by the category. We may establish a new device 
category for pass-through payment in any quarter. 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, which is the first date on which pass-through payment may be 
made for any medical device that is described by such category. 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.
    There currently is one device category eligible for pass-through 
payment. This device category is described by HCPCS code C1841 (Retinal 
prosthesis, includes all internal and external components), which we 
made effective for pass-through payment as of October 1, 2013.
b. Proposed CY 2015 Policy
    As indicated earlier, a category of devices may be eligible for 
transitional pass-through payments for at least 2 years, but not more 
than 3 years. There is one device category eligible for pass-through 
payment at this time, described by HCPCS code C1841, which we made 
effective for pass-through payment as of October 1, 2013. At the end of 
CY 2015, the device category described by HCPCS code C1841 will have 
been eligible for pass-through payment for more than 2 years. 
Therefore, we are proposing an expiration date for pass-through payment 
for HCPCS code C1841 of December 31, 2015. We are proposing that, 
effective January 1, 2016, HCPCS code C1841 will no longer be eligible 
for pass-through payment status. In accordance with our established 
policy, we are proposing to package the cost of HCPCS code C1841 after 
December 31, 2015, into the costs related to the

[[Page 40990]]

procedures with which it is reported in our claims data.
    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 the statutory requirement 
that they be eligible for pass-through payments for at least 2 years, 
but not more than 3 years, from the date on which pass-through payment 
for any medical device described by the category may first be made.
2. Proposed 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 eligible device's pass-through payment amount. 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 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 newly eligible pass-through 
device categories through the transmittals that implement the quarterly 
OPPS updates.
    Currently, we have published a list of all procedural APCs with the 
CY 2014 portions (both percentages and dollar amounts) of the APC 
payment 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-Service-Payment/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 related APCs 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 Sec.  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 pass-through status beginning on or after 
January 1, 2010, be the device pass-through process and payment 
methodology only (74 FR 60476).
b. Proposed CY 2015 Policy
    We are proposing 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 are proposing to continue our policy, for CY 2015, 
that the pass-through 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 beginning on or after 
January 1, 2010, 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 are proposing 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 are 
proposing to continue our established policy 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 are proposing 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 (Sec.  419.66(d)).
    For CY 2015, we also are proposing to continue our policy 
established in CY 2010 to include implantable biologicals in our 
calculation of the device APC offset amounts. In addition, we are 
proposing 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 (78 FR 43596).
    In addition, we are proposing to update 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 devices on the CMS Web site 
at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/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.

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

1. Background
    To ensure equitable payment when the hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to reduce the payment for specified device-dependent APCs by the 
estimated portion of the APC payment attributable to device costs (that 
is, the device offset) when the hospital receives a specified device at 
no cost or with full credit (71 FR 68071 through 68077). Hospitals are 
instructed to report no cost/full credit cases 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

[[Page 40991]]

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 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 reduce 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 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 limit 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. Proposed Policy for CY 2015
    For CY 2015, we are proposing 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 are proposing to continue to reduce the 
OPPS payment, for the applicable APCs listed below in Table 31, 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 
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 
that is 50 percent or greater than the cost of the device.
    For CY 2015, we also are proposing to continue using the three 
criteria established in the CY 2007 OPPS/ASC final 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 are 
proposing 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 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.
    We examined the offset amounts calculated from the CY 2015 proposed 
rule data and the clinical characteristics of the proposed CY 2015 APCs 
to determine which APCs meet the criteria for CY 2015. Table 31 below 
lists the proposed APCs to which the proposed payment adjustment policy 
for no cost/full credit and partial credit devices would apply in CY 
2015. Table 32 below lists the proposed devices to which the proposed 
payment adjustment policy for no cost/full credit and partial credit 
devices would apply in CY 2015.
    We are proposing to update the lists of APCs and devices to which 
the proposed no cost/full credit and partial credit device adjustment 
policy would apply for CY 2015, consistent with the three criteria 
discussed earlier in this section, based on the final CY 2013 claims 
data available for the CY 2015 OPPS/ASC final rule with comment period.

  Table 31--Proposed APCs to Which the Proposed No Cost/Full Credit and
 Partial Credit Device Payment Adjustment Policy Would Apply in CY 2015
------------------------------------------------------------------------
      Proposed  CY 2015  APC             Proposed CY 2015 APC title
------------------------------------------------------------------------
0039..............................  Level III Neurostimulator & Related
                                     Procedures.
0061..............................  Level II Neurostimulator & Related
                                     Procedures.
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.
0434..............................  Cardiac Defect Repair.
0655..............................  Level IV Pacemaker and Similar
                                     Procedures.
------------------------------------------------------------------------

Table 32--Proposed Devices to Which the Proposed No Cost/Full Credit and
 Partial Credit Device Payment Adjustment Policy Would Apply in CY 2015
------------------------------------------------------------------------
Proposed CY 2015 device HCPCS code    Proposed 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.

[[Page 40992]]

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout this proposed rule, the term ``biological'' 
is used because this is the term that appears in section 1861(t) of the 
Act. ``Biological'' as used in this proposed rule includes ``biological 
product'' or ``biologic'' as defined in the Public Health Service Act. 
As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this 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; urrent 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 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. Proposed CY 2015 pass-through drugs and 
biologicals and their designated APCs are assigned status indicator 
``G'' in Addenda A and B to this proposed rule, which are available via 
the Internet on the CMS 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 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 proposed rule, 
the term ``ASP methodology'' and ``ASP-based'' are inclusive of all 
data sources and methodologies described therein. Additional 
information on the ASP methodology can be found on the CMS Web site at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Proposed Drugs and Biologicals With Expiring Pass-Through Status in 
CY 2014
    We are proposing that the pass-through status of 9 drugs and 
biologicals would expire on December 31, 2014, as listed in Table 33 
below. All of these drugs and biologicals will have received OPPS pass-
through payment for at least 2 years and no more than 3 years by 
December 31, 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 proposed 
at $90 for CY 2015), as discussed further in section V.B.2. of this 
proposed rule. 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 separate payment at the 
applicable

[[Page 40993]]

relative ASP-based payment amount (which is proposed at ASP+6 percent 
for CY 2015, as discussed further in section V.B.3. of this proposed 
rule).

      Table 33--Proposed Drugs and Biologicals for Which Pass-Through Status Will Expire December 31, 2014
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY      Proposed CY
      Proposed CY 2015 HCPCS Code           Proposed CY 2015 long descriptor         2015 SI         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)                   K             1431
                                          immune f(ab)2, up to 120 milligrams.
J9019..................................  Injection, asparaginase (erwinaze),                  K             9289
                                          1,000 iu.
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. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Status in CY 2015
    We are proposing to continue pass-through 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, are listed in Table 34 below. The APCs and HCPCS codes for 
these drugs and biologicals approved for pass-through status through 
April 1, 2014 are assigned status indicator ``G'' in Addenda A and B to 
this proposed rule. Addenda A and B to this proposed rule are available 
via the Internet on the CMS Web site.
    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 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 are proposing 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 are proposing 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 are 
proposing that their pass-through payment amount would be equal to 
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 are proposing 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 are proposing to provide 
payment for both diagnostic and therapeutic radiopharmaceuticals that 
are granted pass-through 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 
status during CY 2015, we are proposing to follow the standard ASP 
methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is ASP+6 percent. If 
ASP data are not available for a radiopharmaceutical, we are proposing 
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 is also not available, we are proposing 
to 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 proposed 
rule, we implemented a policy whereby payment for the following 
nonpass-through items is packaged into payment for the associated 
procedure: 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. We are proposing to continue the packaging of these items, 
regardless of their per day cost, in CY 2015. 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 
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

[[Page 40994]]

utilized. The proposed calculation of the policy-packaged drug APC 
offset amounts is described in more detail in section V.A.4. of this 
proposed rule. 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 would, therefore, 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, we are proposing 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 status.
    The 22 drugs and biologicals that we are proposing to continue to 
have pass-through status for CY 2015 or have been granted pass-through 
status as of July 2014 are shown in Table 34 below.

                  Table 34--Proposed Drugs and Biologicals With Pass-Through Status in CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY      Proposed CY
      Proposed CY 2015 HCPCS code                CY 2015 Long descriptor             2015 SI         2015 APC
----------------------------------------------------------------------------------------------------------------
A9520..................................  Technetium Tc 99m tilmanocept,                       G             1463
                                          diagnostic, up to 0.5 millicuries.
C9021..................................  Injection, obinutuzumab, 10 mg........               G             1476
C9022..................................  Injection, elosulfase alfa, 1mg.......               G             1480
C9132..................................  Prothrombin complex concentrate                      G             9132
                                          (human), Kcentra, per i.u. of Factor
                                          IX activity.
C9133..................................  Factor ix (antihemophilic factor,                    G             1467
                                          recombinant), Rixubus, per i.u..
C9134..................................  Injection, Factor XIII A-subunit,                    G             1481
                                          (recombinant), per 10 i.u..
C9441..................................  Injection, ferric carboxymaltose, 1 mg               G             9441
C9497..................................  Loxapine, inhalation powder, 10 mg....               G             9497
J1446..................................  Injection, tbo-filgrastim, 5                         G             1447
                                          micrograms.
J1556..................................  Injection, immune globulin (Bivigam),                G             9130
                                          500 mg.
J3060..................................  Injection, taliglucerase alfa, 10                    G             9294
                                          units.
J7315..................................  Mitomycin, ophthalmic, 0.2 mg.........               G             1448
J7316..................................  Injection, Ocriplasmin, 0.125mg.......               G             9298
J7508..................................  Tacrolimus, Extended Release, Oral,                  G             1465
                                          0.1 mg.
J9047..................................  Injection, carfilzomib, 1 mg..........               G             9295
J9262..................................  Injection, omacetaxine mepesuccinate,                G             9297
                                          0.01 mg.
J9354..................................  Injection, ado-trastuzumab emtansine,                G             9131
                                          1 mg.
J9371..................................  Injection, Vincristine Sulfate                       G             1466
                                          Liposome, 1 mg.
J9400..................................  Injection, Ziv-Aflibercept, 1 mg......               G             9296
Q4121..................................  Theraskin, per square centimeter......               G             1479
Q4122..................................  Dermacell, per square centimeter......               G             1419
Q4127..................................  Talymed, per square centimeter........               G             1449
----------------------------------------------------------------------------------------------------------------
Note: Because the payment rates associated with these codes effective July 1, 2014, are not available to us in
  time for incorporation into the Addenda to this proposed rule, the Level II HCPCS codes and the Category III
  CPT codes implemented through the July 2014 OPPS quarterly update CR could not be included in Addendum B to
  this proposed rule.

4. Proposed 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.
    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 
were codified at 42 CFR 419.2(b) in CY 2014.
b. Proposed 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

[[Page 40995]]

nuclear medicine procedures, 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 are proposing 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 status beginning October 1, 2013. We currently apply the 
established radiopharmaceutical payment offset policy to pass-through 
payment for this product.
    Table 35 below displays 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.

Table 35--Proposed APCs to Which a Diagnostic Radiopharmaceutical Offset
                      May Be Applicable in CY 2015
------------------------------------------------------------------------
       Proposed CY 2015 APC              Proposed CY 2015 APC title
------------------------------------------------------------------------
0308..............................  Positron Emission Tomography (PET)
                                     Imaging.
0377..............................  Level II Cardiac Imaging.
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. Proposed 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). 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, we are proposing 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 are proposing to continue 
to apply our standard contrast agents offset policy to payment for 
pass-through contrast agents (78 FR 75017).
    Although there are currently no contrast agents with pass-through 
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 are proposing 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 above, and these 
APCs are displayed in Table 36 below. The methodology used to determine 
a proposed threshold cost for application of a contrast 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 are 
proposing to continue to recognize that when a contrast agent with 
pass-through status is billed with any procedural APC listed in Table 
36 of this proposed rule, 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.

     Table 36--Proposed APCs to Which a Contrast Agent Offset May Be
                         Applicable for CY 2015
------------------------------------------------------------------------
       Proposed CY 2015 APC              Proposed CY 2015 APC title
------------------------------------------------------------------------
0080..............................  Diagnostic Cardiac Catheterization.
0082..............................  Coronary or Non-Coronary
                                     Atherectomy.
0083..............................  Coronary Angioplasty, Valvuloplasty,
                                     and Level I Endovascular
                                     Revascularization.
0093..............................  Vascular Reconstruction/Fistula
                                     Repair.
0104..............................  Transcatheter Placement of
                                     Intracoronary Stents.
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.

[[Page 40996]]

 
0284..............................  Magnetic Resonance Imaging and
                                     Magnetic Resonance Angiography with
                                     Contrast.
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.
0653..............................  Vascular Reconstruction/Fistula
                                     Repair with Device.
0656..............................  Transcatheter Placement of
                                     Intracoronary Drug-Eluting Stents.
0662..............................  CT Angiography.
0668..............................  Level I Angiography and Venography.
8006..............................  CT and CTA with Contrast Composite.
8008..............................  MRI and MRA with Contrast Composite.
------------------------------------------------------------------------

d. Proposed 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 
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 the separate OPPS payment for the pass-through skin substitute 
or pass-through stress agent by this amount (78 FR 75019). For CY 2015, 
as we did in CY 2014, we are proposing 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 status under the 
OPPS. We currently apply the established skin substitute payment offset 
policy to pass-through payment for these products. Table 37 below 
displays 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 below displays 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 are proposing to continue to post annually on the CMS Web site 
at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-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.

    Table 37--Proposed APCs to Which a Skin Substitute Offset May Be
                         Applicable for CY 2015
------------------------------------------------------------------------
       Proposed CY 2015 APC              Proposed CY 2015 APC Title
------------------------------------------------------------------------
0328..............................  Level III Skin Repair.
0329..............................  Level IV Skin Repair.
------------------------------------------------------------------------

TABLE 38--Proposed APCs to Which a Stress Agent Offset May Be Applicable
                               for CY 2015
------------------------------------------------------------------------
       Proposed CY 2015 APC              Proposed CY 2015 APC Title
------------------------------------------------------------------------
0100..............................  Cardiac Stress Tests.
0377..............................  Level II Cardiac Imaging.
------------------------------------------------------------------------

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

1. Background
    Under the CY 2013 OPPS, we currently pay for drugs, biologicals, 
and

[[Page 40997]]

radiopharmaceuticals that do not have pass-through 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 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. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Background
    As indicated in section V.B.1. of this proposed rule, 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 this CY 2015 OPPS/ASC 
proposed rule, we used the most recently available four quarter moving 
average PPI levels to trend the $50 threshold forward from the third 
quarter of CY 2005 to the third quarter of CY 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 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 are proposing 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).)
b. Proposed Cost Threshold for Packaging of Payment for HCPCS Codes 
That Describe Certain Drugs, Certain Biologicals, and Therapeutic 
Radiopharmaceuticals (``Threshold-Packaged Drugs'')
    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 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 this proposed rule, or for 
the following policy-packaged items that we are proposing 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 70 FR 68638). For each drug and biological HCPCS code, we 
used an estimated payment rate of ASP+6 percent (which is the payment 
rate we are proposing for separately payable drugs and biologicals for 
CY 2015, as discussed in more detail in section V.B.3.b. of this 
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.
    As is our standard methodology, for CY 2015, we are proposing 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 this proposed rule 
(which are available via the Internet on the CMS Web site) because 
these are the most recent data available for use at the time of 
development of this proposed rule. These data also were the basis for 
drug payments in the physician's office setting, effective April 1, 
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 are proposing 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 display in 
Addendum B to this proposed rule (which is available via the Internet 
on the CMS Web site) for payment in CY 2015.
    Our policy during previous cycles of the OPPS has been to use 
updated ASP and claims data to make final determinations of the 
packaging status of HCPCS codes for drugs, biologicals, and therapeutic 
radiopharmaceuticals for the OPPS/ASC final rule with comment period. 
We note that it is also our policy to make an annual packaging 
determination for a HCPCS code only when we develop the OPPS/ASC final 
rule with comment period for the update year. Only HCPCS codes that are 
identified as separately payable in the final rule with comment period 
are subject to quarterly updates. For our calculation of per day costs 
of HCPCS codes for drugs and biologicals in the CY 2015 OPPS/ASC final 
rule with comment period, we are proposing to use ASP data from the 
first quarter of

[[Page 40998]]

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 are proposing to use these data 
for budget neutrality estimates and impact analyses for the 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 the final rule with comment 
period will be based on ASP data from the second quarter of CY 2014. 
These data will be 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 would 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 are proposing to recalculate their mean unit cost from 
all of the CY 2013 claims data and updated cost report information 
available for the 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 this CY 2015 OPPS/
ASC proposed rule may be different from the same drug HCPCS code's 
packaging status determined based on the data used for the CY 2015 
OPPS/ASC final rule with comment period. Under such circumstances, we 
are proposing to continue to follow the established policies initially 
adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably 
pay for those drugs whose cost fluctuates relative to the proposed CY 
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 are proposing to apply the 
following policies to these HCPCS codes for drugs, biologicals, and 
therapeutic radiopharmaceuticals whose relationship to the drug 
packaging threshold changes based on the updated drug packaging 
threshold and on the final updated data:
     HCPCS codes for drugs and biologicals that were paid 
separately in CY 2014 and that are 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 are 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 are 
proposing 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.
c. Proposed High/Low Cost Threshold for Packaged Skin Substitutes
    In the CY 2014 OPPS/ASC final rule, we unconditionally packaged 
skin substitute products into their associated surgical procedures as 
part of a broader policy to package drugs and biologicals that function 
as supplies when used in a surgical procedure (78 FR 74938). We also 
finalized a methodology that divides the skin substitutes into a high 
cost group and a low cost group, for packaging purposes, in order to 
ensure adequate resource homogeneity among APC assignments for the skin 
substitute application procedures (78 FR 74933). For CY 2014, 
assignment to the high cost or low cost skin substitute group depended 
upon a comparison of the July 2013 ASP + 6 percent payment amount for 
each skin substitute to the weighted average payment per unit for all 
skin substitutes (weighted average was calculated using the skin 
substitute utilization from the CY 2012 claims data and the July 2013 
ASP + 6 percent payment amounts, which are also the payment amounts in 
Addendum B to the CY 2014 OPPS/ASC final rule with comment period). The 
high/low cost skin substitute threshold for CY 2014 is $32 per cm\2\. 
Skin substitutes that had a July 2013 ASP + 6 percent amount above $32 
per cm\2\ were classified in the high cost group and those with a July 
2013 ASP + 6 percent amount at or below $32 per cm\2\ 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 cm\2\ threshold for 
CY 2014. Skin substitutes with pass-through status are assigned to the 
high cost category, with an offset applied as described in section 
II.C.6. of this proposed rule.
    After the effective date of the CY 2014 packaging policy, some skin 
substitute manufacturers brought the following issues to our attention 
regarding the current 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 cm\2\). Large size skin substitute products are primarily used for 
burns that are treated on an inpatient basis. These manufacturers 
contend that non-linear pricing for skin substitute products sold in 
both large and small sizes results in lower per cm\2\ 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 
significant inpatient use of the large, lower-priced (per cm\2\) 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 current policy manufacturers 
with products on pass-through 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/
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.
    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/low cost categories. As an alternative to using ASP data, we 
believe that establishing the high/low cost threshold using 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 outpatient claims only. The threshold would be 
based on costs from outpatient claims data instead of manufacturer

[[Page 40999]]

reported sales prices that would not include larger sizes primarily 
used for inpatient burn cases.
    Therefore, we are proposing to maintain the high/low cost APC 
structure for skin substitute procedures in CY 2015 but we are 
proposing to revise the current methodology used to establish the high/
low cost threshold. For CY 2015, we are proposing to establish the 
high/low cost threshold based on the weighted average MUC for all skin 
substitutes using CY 2013 claims (which is proposed to be $27 per 
cm\2\). Skin substitutes with a MUC above $27 per cm\2\ using CY 2013 
claims are proposed to be classified in the high cost group and those 
with a MUC at or below $27 per cm\2\ are proposed to be classified in 
the low cost group. Table 39 below shows the current high/low cost 
status for each skin substitute product and the proposed 2015 high/low 
cost status based on the weighted average MUC threshold of $27. We are 
proposing to continue the current policy that skin substitutes with 
pass-through status will be assigned to the high cost category for CY 
2015. Skin substitutes with pricing information but without claims data 
to calculate a MUC will 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 then we will use WAC + 6 percent or 95 percent of AWP to 
assign a product to either the high or low cost category. We are also 
proposing that any new skin substitute without pricing information be 
assigned to the low cost category until pricing information is 
available to compare to the proposed $27 per cm\2\ threshold for CY 
2015.

                 Table 39--Proposed Skin Substitute Assignments to High Cost and Low Cost Groups
----------------------------------------------------------------------------------------------------------------
                                                                                              Proposed CY 2015
                                                       Proposed  CY     CY 2014 High/low       High/low status
    CY 2014 HCPCS Code     CY 2014 Short descriptor      2015  SI       status based  on      based on weighted
                                                                          weighted  ASP              MUC
----------------------------------------------------------------------------------------------------------------
C9358....................  SurgiMend, fetal........               N   Low.................  Low
C9360....................  SurgiMend, neonatal.....               N   Low.................  Low
C9363....................  Integra Meshed Bil Wound               N   Low.................  High
                            Mat.
Q4101....................  Apligraf................               N   High................  High
Q4102....................  Oasis wound matrix......               N   Low.................  Low
Q4103....................  Oasis burn matrix.......               N   Low.................  Low
Q4104....................  Integra BMWD............               N   Low.................  High
Q4105....................  Integra DRT.............               N   Low.................  High
Q4106....................  Dermagraft..............               N   High................  High
Q4107....................  Graftjacket.............               N   High................  High
Q4108....................  Integra matrix..........               N   Low.................  High
Q4110....................  Primatrix...............               N   High................  High
Q4111....................  Gammagraft..............               N   Low.................  Low
Q4115....................  Alloskin................               N   Low.................  Low
Q4116....................  Alloderm................               N   High................  High
Q4117....................  Hyalomatrix.............               N   Low.................  Low
Q4119....................  Matristem wound matrix..               N   Low.................  Low
Q4120....................  Matristem burn matrix...               N   Low.................  Low
Q4121....................  Theraskin...............               G   High................  High
Q4122....................  Dermacell...............               G   High................  High
Q4123....................  Alloskin................               N   Low.................  Low
Q4124....................  Oasis tri-layer wound                  N   Low.................  Low
                            matrix.
Q4125....................  Arthroflex..............               N   High................  High
Q4126....................  Memoderm/derma/tranz/                  N   High................  High
                            integup.
Q4127....................  Talymed.................               G   High................  High
Q4128....................  Flexhd/Allopatchhd/                    N   Low.................  High
                            matrixhd.
Q4129....................  Unite biomatrix.........               N   Low.................  Low
Q4131....................  Epifix..................               N   High................  High
Q4132....................  Grafix core.............               N   High................  High
Q4133....................  Grafix prime............               N   High................  High
Q4134....................  hMatrix.................               N   High................  High
Q4135....................  Mediskin................               N   Low.................  High
Q4136....................  EZderm..................               N   Low.................  Low
Q4137....................  Amnioexcel or biodexcel,               N   Low.................  Low
                            1cm.
Q4138....................  BioDfence DryFlex, 1cm..               N   Low.................  Low
Q4140....................  Biodfence 1cm...........               N   Low.................  Low
Q4141....................  Alloskin ac, 1 cm.......               N   Low.................  Low
Q4142....................  Xcm biologic tiss matrix               N   Low.................  Low
                            1cm.
Q4143....................  Repriza, 1cm............               N   Low.................  Low
Q4146....................  Tensix, 1cm.............               N   Low.................  Low
Q4147....................  Architect ecm, 1cm......               N   High................  High
Q4148....................  Neox 1k, 1cm............               N   High................  High
----------------------------------------------------------------------------------------------------------------

d. Proposed 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. Since 2001, skin substitutes have been evaluated for pass-
through status through the drug, biological, and radiopharmaceutical 
pass-through process. There are currently 50 distinct HCPCS codes 
describing skin

[[Page 41000]]

substitutes, and of these 50 products 17 products that are listed in 
Table 40 have had or currently have pass-through status.

 Table 40--Skin Substitutes That Have Had or Currently Have Pass-Through
                                 Status
------------------------------------------------------------------------
                                                           Pass- through
       CY 2014 HCPCS           CY 2014 Short descriptor     expiration
                                                               date
------------------------------------------------------------------------
C9358......................  SurgiMend, fetal...........      12/31/2010
C9360......................  SurgiMend, neonatal........      12/31/2011
C9363......................  Integra Meshed Bil Wound         12/31/2011
                              Mat.
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            12/31/2013
                              matrix.
Q4127......................  Talymed....................      12/31/2015
Q4131......................  Epifix.....................      12/31/2014
Q4132......................  Grafix core................      12/31/2014
Q4133......................  Grafix prime...............      12/31/2014
------------------------------------------------------------------------

    As discussed above, in CY 2014 we packaged all skin substitutes 
under the policy that packages all drugs and biologicals that function 
as supplies when used in a surgical procedure (78 FR 74938). Therefore, 
we consider skin substitutes to be a type of surgical supply in the 
HOPD. This packaging policy was partly based on a comparison to 
implantable biologicals, which are similar in composition and clinical 
use to skin substitutes (78 FR 74931). In CY 2009, we finalized a 
policy to package payment for implantable biologicals into the payment 
for the associated surgical procedure (73 FR 68635). In CY 2010, 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, as implantable biologicals function as 
implantable devices (74 FR 60473). Implantable devices are considered 
supplies in the OPPS (65 FR 18443), and as noted above, we finalized a 
packaging policy in the CY 2014 OPPS/ASC final rule with comment period 
that considers skin substitutes a type of surgical supply. Many skin 
substitutes are FDA-approved or cleared as devices. 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). These similarities between these classes of products 
also support similar treatment under the OPPS device pass-through 
process, which has been the evaluation methodology for implantable 
biologicals since 2010.
    In view of these considerations, we are proposing 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 are proposing that the last skin substitute 
pass-through applications evaluated using the drug and biological 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 would 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 in effect as of 
January 1, 2015. We believe that this approach is more appropriate 
because, although skin substitutes have characteristics of both 
surgical supplies and biologicals, we believe that, for pass-through 
purposes, 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 
supplies, including implantable biologicals. Thus, if this proposal is 
finalized, beginning on and after January 1, 2015, new skin substitutes 
would no longer be eligible to submit biological pass-through 
applications; rather, such applications for pass-through payment would 
be evaluated using the medical device pass-through 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/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/ to view the 
device pass-through application requirements and review criteria that 
would apply to the evaluation of all skin substitute product 
applications for pass-through status beginning on or after January 1, 
2015. Those skin substitutes that are approved for pass-through status 
as biologicals effective on or before January 1, 2015, would continue 
to be considered pass-through biologicals for the duration of their 
period of pass-through payment.
    We also are proposing to revise our regulations at Sec. Sec.  
419.64 and 419.66 to reflect this proposed new policy. Specifically, we 
are proposing to revise Sec.  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 unless pass-through payment 
for a product as a biological is made on or before January 1, 2015, to 
allow these products to complete their period of pass-through payment 
as biologicals. We are proposing to modify the regulation at Sec.  
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 are simplifying the language that

[[Page 41001]]

``whether or not it remains with the patient when the patient is 
released from the hospital'' to read ``either permanently or 
temporarily.'' We also are proposing to delete the current example in 
Sec.  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 invite public comment on these proposals.
e. Proposed 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, we are proposing 
to continue our policy to make packaging determinations on a drug-
specific basis, rather than a HCPCS code-specific basis, for those 
HCPCS codes that describe the same drug or biological but different 
dosages in CY 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 proposed rule and, as is our current policy for 
determining the packaging status of other drugs, we used the mean unit 
cost available from the CY 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 $90 (so that all HCPCS codes for the same drug or 
biological would be packaged) or greater than $90 (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 is displayed in Table 41 
below.

    Table 41--Proposed HCPCS Codes to Which the CY 2015 Drug-Specific
             Packaging Determination Methodology Would Apply
------------------------------------------------------------------------
                                Proposed CY 2015 long      Proposed CY
Proposed CY 2015 HCPCS code          descriptor              2015 SI
------------------------------------------------------------------------
C9257......................  Injection, bevacizumab,                  K
                              0.25 mg.
J9035......................  Injection, bevacizumab, 10               K
                              mg.
J1020......................  Injection,                               N
                              methylprednisolone
                              acetate, 20 mg.
J1030......................  Injection,                               N
                              methylprednisolone
                              acetate, 40 mg.
J1040......................  Injection,                               N
                              methylprednisolone
                              acetate, 80 mg.
J1070......................  Injection, testosterone                  N
                              cypionate, up to 100 mg.
J1080......................  Injection, testosterone                  N
                              cypionate, 1 cc, 200 mg.
J1460......................  Injection, gamma globulin,               N
                              intramuscular, 1 cc.
J1560......................  Injection, gamma globulin,               N
                              intramuscular over 10 cc.
J1642......................  Injection, heparin sodium,               N
                              (heparin lock flush), per
                              10 units.
J1644......................  Injection, heparin sodium,               N
                              per 1000 units.
J1850......................  Injection, kanamycin                     N
                              sulfate, up to 75 mg.
J1840......................  Injection, kanamycin                     N
                              sulfate, up to 500 mg.
J2270......................  Injection, morphine                      N
                              sulfate, up to 10 mg.
J2271......................  Injection, morphine                      N
                              sulfate, 100 mg.
J2788......................  Injection, rho d immune                  N
                              globulin, human,
                              minidose, 50 micrograms
                              (250 i.u.).
J2790......................  Injection, rho d immune                  N
                              globulin, human, full
                              dose, 300 micrograms
                              (1500 i.u.).
J2920......................  Injection,                               N
                              methylprednisolone sodium
                              succinate, up to 40 mg.
J2930......................  Injection,                               N
                              methylprednisolone sodium
                              succinate, up to 125 mg.
J3120......................  Injection, testosterone                  N
                              enanthate, up to 100 mg.
J3130......................  Injection, testosterone                  N
                              enanthate, up to 200 mg.
J3471......................  Injection, hyaluronidase,                N
                              ovine, preservative free,
                              per 1 usp unit (up to 999
                              usp units).
J3472......................  Injection, hyaluronidase,                N
                              ovine, preservative free,
                              per 1000 usp units.
J7050......................  Infusion, normal saline                  N
                              solution, 250 cc.
J7040......................  Infusion, normal saline                  N
                              solution, sterile (500 ml
                              = 1 unit).
J7030......................  Infusion, normal saline                  N
                              solution, 1000 cc.

[[Page 41002]]

 
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. Proposed Payment for Drugs and Biologicals Without Pass-Through 
Status That Are Not Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs (SCODs) and 
Other Separately Payable and Packaged Drugs and Biologicals
    Section 1833(t)(14) of the Act defines certain separately payable 
radiopharmaceuticals, drugs, and biologicals and mandates specific 
payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a 
``specified covered outpatient drug'' (known as a SCOD) is defined as a 
covered outpatient drug, as defined in section 1927(k)(2) of the Act, 
for which a separate APC has been established and that either is a 
radiopharmaceutical agent or is a drug or biological for which payment 
was made on a pass-through basis on or before December 31, 2002.
    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and 
biologicals are designated as exceptions and are not included in the 
definition of SCODs. These exceptions are--
     A drug or biological for which payment is first made on or 
after January 1, 2003, under the transitional pass-through payment 
provision in section 1833(t)(6) of the Act.
     A drug or biological for which a temporary HCPCS code has 
not been assigned.
     During CYs 2004 and 2005, an orphan drug (as designated by 
the Secretary).
    Section 1833(t)(14)(A)(iii) of the Act requires that payment for 
SCODs in CY 2006 and subsequent years be equal to the average 
acquisition cost for the drug for that year as determined by the 
Secretary, subject to any adjustment for overhead costs and taking into 
account the hospital acquisition cost survey data collected by the 
Government Accountability Office (GAO) in CYs 2004 and 2005, and later 
periodic surveys conducted by the Secretary as set forth in the 
statute. If hospital acquisition cost data are not available, the law 
requires that payment be equal to payment rates established under the 
methodology described in section 1842(o), section 1847A, or section 
1847B of the Act, as calculated and adjusted by the Secretary as 
necessary. Most physician Part B drugs are paid at ASP+6 percent 
pursuant to section 1842(o) and section 1847A of the Act.
    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in 
OPPS payment rates for SCODs to take into account overhead and related 
expenses, such as pharmacy services and handling costs. Section 
1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead 
and related expenses and to make recommendations to the Secretary 
regarding whether, and if so how, a payment adjustment should be made 
to compensate hospitals for overhead and related expenses. Section 
1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the 
weights for ambulatory procedure classifications for SCODs to take into 
account the findings of the MedPAC study.
    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 this CY 2015 
OPPS/ASC proposed rule, we are proposing to apply section 
1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 
biologicals, including SCODs. Although we do not distinguish SCODs in 
this discussion, we note that we are required to apply section 
1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying 
this provision to other separately payable drugs and biologicals, 
consistent with our history of using the same payment methodology for 
all separately payable drugs and biologicals.
    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 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 ration 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

[[Page 41003]]

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 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, referred to as 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 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. Proposed CY 2015 Payment Policy
    For CY 2015, we are proposing 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, referred to as 
the ``statutory default.'' We are proposing 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 are proposing that 
payments for separately payable drugs and biologicals are included in 
the budget neutrality adjustments, under the requirements in section 
1833(t)(9)(B) of the Act, and that the budget neutral weight scaler is 
not applied in determining payments for these separately paid drugs and 
biologicals.
4. Proposed 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 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, we are 
proposing 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 are 
proposing 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 are included in Addenda A and 
B to this proposed rule (which are available via the Internet on the 
CMS Web site).
5. Proposed 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.
    For CY 2015, we are proposing to pay for blood clotting factors at 
ASP+6 percent, consistent with our proposed payment policy for other 
nonpass-through separately payable drugs and biologicals, and to 
continue our policy for payment of the furnishing fee using an updated 
amount. Our policy to pay for a furnishing fee for blood clotting 
factors under the OPPS is consistent with the methodology applied in 
the physician office and inpatient hospital setting, and first 
articulated in the CY 2006 OPPS final rule with comment period (70 FR 
68661) and later discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66765). The proposed furnishing fee update is 
based on the percentage increase in the Consumer Price Index (CPI) for 
medical care for the 12-month period ending with June of the previous 
year. Because the Bureau of Labor Statistics releases the applicable 
CPI data after the MPFS and OPPS/ASC proposed rules are published, we 
are not able to include the actual updated furnishing fee in the 
proposed rules. Therefore, in accordance with our policy, as finalized 
in the CY 2008 OPPS/ASC final rule with comment

[[Page 41004]]

period (72 FR 66765), we are proposing 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-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
6. Proposed 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 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.
    For CY 2015, we are proposing 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 is 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 also are proposing 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 
proposed policy packaging 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 proposed rule.
    In accordance with the OPPS ASP methodology, in the absence of ASP 
data, for CY 2015, we are proposing 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 are proposing 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 are proposing 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 are proposing 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 are also 
unavailable, we are proposing to make payment for new therapeutic 
radiopharmaceuticals at 95 percent of the products' most recent AWP 
because we would not have mean costs from hospital claims data upon 
which to base payment. As we are proposing with new drugs and 
biologicals, we are proposing 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 are 
proposing to announce any changes to the payment amounts for new drugs 
and biologicals in the 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 this proposed rule. However, these agents 
will be included in Addendum B to the CY 2015 OPPS/ASC final rule with 
comment period (which will be available via the Internet on the CMS Web 
site), where they will be assigned comment indicator ``NI.'' This 
comment indicator reflects that their interim final OPPS treatment will 
be open to public comment in the 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

[[Page 41005]]

claims data available for this 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 for the ASP methodology. In 
order to determine the packaging status of these products for CY 2015, 
we are proposing 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 are proposing to package items for which we estimated the per 
day administration cost to be less than or equal to $90 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 are 
proposing to continue to package regardless of cost) in CY 2015. We 
also are proposing 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 are 
proposing 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 status indicators for these items are displayed in 
Table 42 of this proposed rule.
    Finally, there are 35 drugs and biologicals, shown in Table 43 of 
this proposed rule 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 this 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 are 
proposing 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 are assigned 
status indicator ``E'' on this basis at the time of this proposed rule 
for CY 2015 are displayed in Table 43 of this proposed rule. We also 
are proposing 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.

                           Table 42--Drugs and Biologicals Without CY 2013 Claims Data
----------------------------------------------------------------------------------------------------------------
                                                                    Estimated
                                                                     average       Proposed  CY    Proposed  CY
        CY 2015 HCPCS Code            CY 2015 Long descriptor      number  of        2015 SI         2015  APC
                                                                 units  per day
----------------------------------------------------------------------------------------------------------------
90581............................  Anthrax vaccine, for                       1               K             1422
                                    subcutaneous or
                                    intramuscular use.
J0215............................  Injection, alefacept, 0.5 mg              29               K             1633
J0364............................  Injection, apomorphine                     1               N              N/A
                                    hydrochloride, 1 mg.
J0630............................  Injection, calcitonin                      2               K             1433
                                    salmon, up to 400 units.
J0638............................  Injection, canakinumab, 1 mg             180               K             1311
J3355............................  Injection, urofollitropin,                 2               K             1741
                                    75 iu.
J7196............................  Injection, antithrombin                  268               K             1332
                                    recombinant, 50 i. U..
J8650............................  Nabilone, oral, 1 mg........               4               K             1424
J9151............................  Injection, daunorubicin                   10               K             0821
                                    citrate, liposomal
                                    formulation, 10 mg.
J9215............................  Injection, interferon, alfa-               1               N              N/A
                                    n3, (human leukocyte
                                    derived), 250,000 iu.
J9300............................  Injection, gemtuzumab                      1               K             9004
                                    ozogamicin, 5 mg.
----------------------------------------------------------------------------------------------------------------

 Table 43--Drugs and Biologicals Without CY 2013 Claims Data and Without
               Pricing Information for the ASP Methodology
------------------------------------------------------------------------
                                                           Proposed  CY
     CY 2015 HCPCS Code        CY 2015 Long descriptor       2015  SI
------------------------------------------------------------------------
90296......................  Diphtheria antitoxin,                    E
                              equine, any route.
90393......................  Vaccina immune globulin,                 E
                              human, for intramuscular
                              use.
90477......................  Adenovirus vaccine, type                 E
                              7, live, for oral use.
90644......................  Meningococcal conjugate                  E
                              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.
90681......................  Rotavirus vaccine, human,                E
                              attenuated, 2 dose
                              schedule, live, for oral
                              use.
90727......................  Plague vaccine, for                      E
                              intramuscular use.
J0190......................  Injection, biperiden                     E
                              lactate, per 5 mg.
J0205......................  Injection, alglucerase,                  E
                              per 10 units.
J0350......................  Injection, anistreplase,                 E
                              per 30 units.
J0365......................  Injection, aprotonin,                    E
                              10,000 kiu.
J0395......................  Injection, arbutamine hcl,               E
                              1 mg.

[[Page 41006]]

 
J0710......................  Injection, cephapirin                    E
                              sodium, up to 1 gm.
J1180......................  Injection, dyphylline, up                E
                              to 500 mg.
J1435......................  Injection estrone per 1 MG               E
J1562......................  Injection, immune globulin               E
                              (vivaglobin), 100 mg.
J1620......................  Injection, gonadorelin                   E
                              hydrochloride, per 100
                              mcg.
J1655......................  Injection, tinzaparin                    E
                              sodium, 1000 iu.
J1730......................  Injection, diazoxide, up                 E
                              to 300 mg.
J1835......................  Injection, itraconazole,                 E
                              50 mg.
J2460......................  Injection, oxytetracycline               E
                              hcl, up to 50 mg.
J2513......................  Injection, pentastarch,                  E
                              10% solution, 100 ml.
J2670......................  Injection, tolazoline hcl,               E
                              up to 25 mg.
J2725......................  Injection, protirelin, per               E
                              250 mcg.
J2940......................  Injection, somatrem, 1 mg.               E
J3305......................  Injection, trimetrexate                  E
                              glucuronate, per 25 mg.
J3365......................  Injection, iv, urokinase,                E
                              250,000 i.u. vial.
J3400......................  Injection, triflupromazine               E
                              hcl, up to 20 mg.
J7505......................  Muromonab-cd3, parenteral,               E
                              5 mg.
J7513......................  Daclizumab, parenteral, 25               E
                              mg.
J8562......................  Fludarabine phosphate,                   E
                              oral, 10 mg.
J9165......................  Injection,                               E
                              diethylstilbestrol
                              diphosphate, 250 mg.
J9212......................  Injection, interferon                    E
                              alfacon-1, recombinant, 1
                              microgram.
J9219......................  Leuprolide acetate                       E
                              implant, 65 mg.
Q0174......................  Thiethylperazine maleate,                E
                              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.
Q0515......................  Injection, sermorelin                    E
                              acetate, 1 microgram.
------------------------------------------------------------------------

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

A. Background

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payments for drugs, biologicals, 
radiopharmaceuticals, and categories of devices for a given year to an 
``applicable percentage,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget neutral, as required by 
section 1833(t)(6)(E) of the Act.
    For devices, developing 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 were recently made 
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 in the remaining quarters of CY 2014 or 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), 
for CY 2015, we are proposing to include an estimate of any implantable 
biologicals eligible for pass-through payment in our estimate of pass-
through spending for devices. We also are proposing that, beginning in 
CY 2015, applications for pass-through payment for skin substitutes and 
similar products be evaluated using the medical device pass-through 
process and payment methodology. As a result of this proposal, we are 
proposing 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 would 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

[[Page 41007]]

the new policies and procedures in effect as of January 1, 2015. We 
refer readers to section V.B.2.d of this proposed rule for further 
discussion of our proposal to change the pass-through evaluation 
process for skin substitutes. If we finalize this proposal, beginning 
in CY 2015 and in future years we would include an estimate of any skin 
substitutes eligible for pass-through payment in our estimate of pass-
through spending for devices. We refer readers to section V.B.2.d of 
this proposed rule for details of the proposal to apply the device 
pass-through evaluation process and payment methodology to skin 
substitutes and similar products for applications submitted on or after 
January 1.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount by which the amount authorized under 
section 1842(o) of the Act (or, if the drug or biological is covered 
under a competitive acquisition contract under section 1847B of the 
Act, an amount determined by the Secretary equal to the average price 
for the drug or biological for all competitive acquisition areas and 
year established under such section as calculated and adjusted by the 
Secretary) exceeds the portion of the otherwise applicable fee schedule 
amount that the Secretary determines is associated with the drug or 
biological. We note that the Part B drug CAP program has been postponed 
since CY 2009, and such a program has not been proposed to be 
reinstated for CY 2015. Because we are proposing to pay for most 
nonpass-through separately payable drugs and biologicals under the CY 
2015 OPPS at ASP+6 percent, as we discussed in section V.B.3. of this 
proposed rule, which represents the otherwise applicable fee schedule 
amount associated with most pass-through drugs and biologicals, and 
because we are proposing to pay for CY 2015 pass-through drugs and 
biologicals at ASP+6 percent, as we discussed in section V.A. of this 
proposed rule, 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 proposed rule. We are proposing 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 proposed rule, we 
discuss our 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 are 
proposing to offset the amount of pass-through payment for the policy-
packaged drug or biological. For these drugs or biologicals, the APC 
offset amount is the portion of the APC payment for the specific 
procedure performed with the pass-through drug or biological, which we 
refer to as the policy-packaged drug APC offset amount. If we determine 
that an offset is appropriate for a specific policy-packaged drug or 
biological receiving pass-through payment, we are proposing to reduce 
our estimate of pass-through payments for these drugs or biologicals by 
this amount.
    Similar to pass-through 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, in 
the remaining quarters of CY 2014 or beginning in CY 2015. The sum of 
the CY 2015 pass-through estimates for these two groups of drugs and 
biologicals equals the total CY 2015 pass-through spending estimate for 
drugs and biologicals with pass-through status.

B. Proposed Estimate of Pass-Through Spending

    We are proposing to set the applicable pass-through payment 
percentage limit at 2.0 percent of the total projected OPPS payments 
for CY 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. We estimate that CY 2015 pass-through 
expenditures for the first group of pass-through device categories to 
be $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 this proposed rule will 
be newly eligible for pass-through payment in CY 2015 (of which there 
are none); additional device categories that we estimate could be 
approved for pass-through status subsequent to the development of the 
proposed rule and before January 1, 2015; and contingent projections 
for new device categories established in the second through fourth 
quarters of CY 2015. We are proposing to use the general methodology 
described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 
66778), while also taking into account recent OPPS experience in 
approving new pass-through device categories. For this proposed rule, 
the estimate of CY 2015 pass-through spending for this second group of 
device categories is $10.0 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 
status for CY 2015, we are proposing to utilize the most recent 
Medicare physician's office 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 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

[[Page 41008]]

paid at ASP+6 percent, which is zero for this group of drugs. Because 
payment for policy-packaged drugs and biologicals is packaged if the 
product was not paid separately due to its pass-through status, we are 
proposing 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 this 
proposed rule, using the proposed methodology described above, we 
calculated a CY 2015 proposed spending estimate for this first group of 
drugs and biologicals of approximately $2.8 million.
    To estimate proposed CY 2015 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
knew at the time of development of this proposed rule are newly 
eligible for pass-through payment in CY 2015, additional drugs and 
biologicals that we estimate could be approved for pass-through status 
subsequent to the development of the proposed rule and before January 
1, 2015, and projections for new drugs and biologicals that could be 
initially eligible for pass-through payment in the second through 
fourth quarters of CY 2015), we are proposing to use utilization 
estimates from pass-through applicants, pharmaceutical industry data, 
clinical information, recent trends in the per unit ASPs of hospital 
outpatient drugs, and projected annual changes in service volume and 
intensity as our basis for making the CY 2015 pass-through payment 
estimate. We also are proposing to consider the most recent OPPS 
experience in approving new pass-through drugs and biologicals. Using 
our proposed methodology for estimating CY 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.
    As discussed in section V.A. of this proposed rule, 
radiopharmaceuticals are considered drugs for pass-through payment 
purposes. Therefore, we include radiopharmaceuticals in our proposed CY 
2015 pass-through spending estimate for drugs and biologicals. Our 
proposed CY 2015 estimate for total pass-through spending for drugs and 
biologicals (spending for the first group of drugs and biologicals 
($2.8 million) plus spending for the second group of drugs and 
biologicals ($2.2 million)) equals $5.0 million.
    In summary, in accordance with the methodology described above in 
this section, for this proposed rule, we estimate that total pass-
through spending for the device categories and the drugs and 
biologicals that are continuing to receive pass-through payment in CY 
2015 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2015 would be 
approximately $15.5 million (approximately $10.5 million for device 
categories and approximately $5.0 million for drugs and biologicals), 
which represents 0.03 percent of total projected OPPS payments for CY 
2015. Therefore, we estimate that pass-through spending in CY 2015 
would not amount to 2.0 percent of total projected OPPS CY 2015 program 
spending.

VII. Proposed OPPS Payment for Hospital Outpatient Visits

A. Proposed 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.
    After consideration of public comments we received on the CY 2014 
OPPS/ASC proposed rule, 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, 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 (78 
FR 75036 through 75043). 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.
    For CY 2015, we are proposing 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 are proposing to continue to assign HCPCS code G0463 to APC 
0634. We are proposing to use CY 2013 claims data to develop the 
proposed 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). 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.

[[Page 41009]]

    At the time of publication of the CY 2014 OPPS/ASC final rule with 
comment period, 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 (78 FR 75040). At this time, we 
continue to believe that additional study is needed to assess the most 
suitable payment structure for ED visits. We are not proposing any 
change in ED visit coding, but rather, for CY 2015, we are proposing to 
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 intend to further 
explore the issues described above related to ED visits, including 
concerns about excessively costly patients, such as trauma patients. We 
may propose changes to the coding and APC assignments for ED visits in 
future rulemaking.

B. Proposed 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)).
    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 support any significant change in hospital billing practices for 
critical care services, we continue to believe that it would be 
inappropriate to pay separately the ancillary services that hospitals 
typically report in addition to CPT codes for critical care services. 
Therefore, for CY 2015, we are proposing 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 are proposing 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 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.

VIII. Proposed 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 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 
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

[[Page 41010]]

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 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.
    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 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 and then adding that number to the CY 
2011 final CMHC median. A 2-year transition under this methodology 
moved us in the direction of our goal, which is to pay appropriately 
for 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

[[Page 41011]]

Court of Appeals for the Fifth Circuit. On June 15, 2012, the Court of 
Appeals affirmed the 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 Sec.  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, 
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] 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 means 
rather than on the medians. 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 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. Proposed PHP APC Update for CY 2015

    For CY 2015, we are proposing to apply our established policies to 
calculate the four PHP APC per diem payment rates based on geometric 
mean per diem costs using the most recent claims data for each provider 
type. 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 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. These proposed geometric mean per diem costs are shown in Table 
44 below.

  TABLE 44--Proposed CY 2015 Geometric Mean per Diem Costs for CMHC and
        Hospital-Based PHP Services, Based on CY 2013 Claims Data
------------------------------------------------------------------------
                                                             Proposed
            APC                      Group title          geometric mean
                                                          per diem costs
------------------------------------------------------------------------
0172.......................  Level I Partial                      $97.43
                              Hospitalization (3
                              services) for CMHCs.
0173.......................  Level II Partial                     114.93
                              Hospitalization (4 or more
                              services) for CMHCs.
0175.......................  Level I Partial                      177.32
                              Hospitalization (3
                              services) for hospital-
                              based PHPs.
0176.......................  Level II Partial                     190.21
                              Hospitalization (4 or more
                              services) for hospital-
                              based PHPs.
------------------------------------------------------------------------

[[Page 41012]]

    For CY 2015, the proposed geometric mean per diem costs for days 
with 3 services (Level I) is 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) is 
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 have 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 show 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 amounts 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 amounts, including 
direct changes to the PHP APC per diem payment rate (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 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 are inviting public comments 
on what causes PHP costs to fluctuate from year to year.
    The proposed CY 2015 geometric mean per diem costs for the CMHC and 
hospital-based PHP APCs are shown in Table 44 of this proposed rule. We 
are inviting public comments on these proposals.

C. Proposed 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 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.
    We are proposing 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 are proposing 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, we are proposing 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)). 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 are proposing to 
continue to apply the same outlier payment percentage that applies to 
hospitals. Therefore, for CY 2015, we are proposing to continue to pay 
50 percent of CMHC per diem costs over the threshold. In section II.G. 
of this proposed rule, for the hospital outpatient outlier payment 
policy, we are proposing to set a dollar threshold in addition to an 
APC multiplier threshold. Because the PHP APCs are the only APCs for 
which CMHCs may receive payment under the OPPS, we would not expect to 
redirect outlier payments by imposing a dollar threshold. Therefore, we 
are not proposing to set a dollar threshold for CMHC outlier payments.
    In summary, we are proposing 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 are inviting 
public comments on these proposals.

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

A. Background

    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74352 through 74353) for a full historical discussion of 
our longstanding policies on how we identify procedures that are 
typically provided only in an inpatient setting (referred to as the 
inpatient 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.

[[Page 41013]]

B. Proposed Changes to the Inpatient List

    For the CY 2015 OPPS, we are proposing 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 list.
    4. A determination is made that the procedure is being performed 
in numerous hospitals on an outpatient basis.
    5. A determination is made that the procedure can be 
appropriately and safely performed in an ASC, and is on the list of 
approved ASC procedures or has been proposed by us for addition to 
the ASC list.

    Using this methodology, we did not identify any procedures that 
potentially could be removed from the inpatient list for CY 2015. 
Therefore, we are proposing 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 are proposing 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 are proposing to be paid by 
Medicare in CY 2015 only as inpatient procedures is included as 
Addendum E to this proposed rule (which is available via the Internet 
on the CMS Web site).

X. Proposed Nonrecurring Policy Changes: Collecting Data on Services 
Furnished in Off-Campus Provider-Based Departments

    As we discussed in the CY 2014 OPPS/ASC proposed rule and final 
rule with comment period (78 FR 43626 and 78 FR 75061, respectively) 
and in the CY 2014 Medicare Physician Fee Schedule (MPFS) proposed rule 
(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 
physician's office.
    We continue to seek a better understanding of how the growing trend 
toward hospital acquisition of physician offices and subsequent 
treatment of those locations as off-campus provider-based outpatient 
departments affects payments under the MPFS and OPPS, as well as 
beneficiary cost-sharing obligations. MedPAC continues to question the 
appropriateness of increased Medicare payment and beneficiary cost-
sharing when physician 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 provider-based hospital outpatient departments (78 FR 75061 
through 75062 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 the options we 
presented in last year's proposed rule. Based on our analysis of the 
public comments we received, we believe 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 provider-based department 
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 
note 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) 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. We are seeking 
more information on the frequency and type of services furnished in 
provider-based departments under this authority to improve the accuracy 
of MPFS practice expense payments for services furnished in off-campus 
provider-based departments. We discuss this issue in more detail in the 
CY 2015 MPFS proposed rule (CMS-1612-P). In that discussion, we note 
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 provider-based departments, 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 need to develop data to 
assess the extent to which this shift toward hospital-based physician 
practices is occurring. Therefore, we are proposing to collect 
information on the type and frequency of physicians' services and 
outpatient hospital services furnished in off-campus provider-based 
departments beginning January 1, 2015, in accordance with our authority 
under section 1834(c)(2)(M) of the Act (as added by section 220(a) of 
Pub. L. 113-93). As noted above, we would create a HCPCS modifier that 
is to be reported with every code for physicians' services and 
outpatient hospital services furnished in an off-campus provider-based 
department of a hospital. 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. We are seeking additional 
public comment on whether or not the

[[Page 41014]]

use of a modifier code is the best mechanism for collecting this 
service-level data in the hospital outpatient department.

XI. Proposed CY 2015 OPPS Payment Status and Comment Indicators

A. Proposed 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 
proposed CY 2015 payment status indicators and their definitions is 
displayed in Addendum D1 on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The proposed CY 2015 payment status indicator assignments 
for APCs and HCPCS codes are shown in Addendum A and Addendum B, 
respectively, on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The 
proposed 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 
proposed rule for a discussion of implementation of the new 
comprehensive APC policy.
    For CY 2015, we are proposing to delete payment status indicator 
``X,'' and assign ancillary services that are currently assigned 
payment status indicator ``X'' to either payment status indicator 
``Q1'' or ``S.'' We also are proposing to revise the definition 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'' is proposed for deletion. These 
proposed changes are discussed in greater detail in section 
II.A.3.c.(1) of this proposed rule.
    In addition, for CY 2015, we are proposing to clarify the 
definition of payment status indicator ``E'' to state that status 
indicator ``E'' applies to items, codes, and services--
     For which pricing is not available;
     Not covered by any Medicare outpatient benefit category;
     Statutorily excluded by Medicare; and
     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 are administered 
infrequently in conjunction with emergency dialysis for patients with 
ESRD, but when administered in the HOPD, they would be 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 proposed rule for additional discussion of these 
drugs and their status indicators. Based on this proposed change to the 
status indicators for these drugs, for CY 2015, we are proposing to 
remove the phrase ``EPO for ESRD Patients'' from the list of examples 
for status indicator ``A.'' In addition, we are proposing to clarify 
the definition of payment status indicator ``A'' by adding the phrase 
``separately payable'' to nonimplantable prosthetic and orthotic 
devices.

B. Proposed CY 2015 Comment Indicator Definitions

    For the CY 2015 OPPS, we are proposing to use the same two comment 
indicators that are in effect for the CY 2014 OPPS.
     ``CH''--Active HCPCS codes 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 are proposing to use the ``CH'' comment indicator in this CY 
2015 OPPS/ASC proposed rule 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 believe 
that using the ``CH'' indicator in this proposed rule will facilitate 
the public's review of the changes that we are proposing for CY 2015. 
Use of the comment indicator ``CH'' in association with a composite APC 
indicates that the configuration of the composite APC is proposed to be 
changed in the CY 2015 OPPS/ASC final rule with comment period.
    We are proposing 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.
    In addition, we are proposing that any existing HCPCS codes with 
substantial revisions to the code descriptors for CY 2015 compared to 
the CY 2014 descriptors 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 this CY 2015 OPPS/ASC final rule with 
comment period. Like all codes labeled with comment indicator ``NI,'' 
we will 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 are proposing 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.
    Only HCPCS codes with comment indicator ``NI'' in the CY 2015 OPPS/
ASC final rule with comment period are subject to comment. HCPCS codes 
that do not appear with comment indicator ``NI'' in the CY 2015 OPPS/
ASC final rule with comment period will not be open to public comment, 
unless we specifically request additional comments elsewhere in the 
final rule with comment period.
    We believe that the CY 2014 definitions of the OPPS comment

[[Page 41015]]

indicators continue to be appropriate for CY 2015. Therefore, we are 
proposing to continue to use those definitions without modification for 
CY 2015. The proposed definitions of the OPPS comment indicators are 
listed in Addendum D2 on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

XII. Proposed 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 ASCs, 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 Sec.  416.2 and Sec.  416.166 of the 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 that would not be expected to require active 
medical 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 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 Sec.  
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 rulemaking process to update the OPPS and 
the ASC payment system (Sec.  416.173; 72 FR 42535). In addition, as 
discussed in detail in section XII.B. of this proposed rule, because we 
base ASC payment policies for covered surgical procedures, drugs, 
biologicals, and certain other covered ancillary services on the OPPS 
payment policies, 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, therefore, 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 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. Proposed Treatment of New Codes

1. Proposed 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 codes as ASC covered ancillary services based upon the final 
payment policies of the revised ASC payment system.

[[Page 41016]]

    We have separated our discussion below into two sections based on 
whether we are proposing to solicit public comments in this CY 2015 
OPPS/ASC proposed rule (and respond to those comments in the CY 2015 
OPPS/ASC final rule with comment period) or whether we will be 
soliciting public comments in the 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. We will respond to public comments and finalize the 
treatment of these codes under the ASC payment system in the CY 2015 
OPPS/ASC final rule with comment period.
2. Proposed Treatment of New Level II HCPCS Codes and Category III CPT 
Codes Implemented in April 2014 and July 2014 for Which We Are 
Soliciting Public Comments in This 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 below lists 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 below lists 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 are listed in Table 47 below, along with their proposed 
payment indicators and proposed payment rates for CY 2015.
    The HCPCS codes listed in Table 45 are included in Addenda AA or BB 
to this 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 this proposed rule) are not 
available to us in time for incorporation into the Addenda to this 
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 will be included in 
the appropriate Addendum to the CY 2015 OPPS/ASC final rule with 
comment period. Thus, the codes implemented by the July 2014 ASC 
quarterly update CR and their proposed CY 2015 payment indicators and 
rates that are displayed in Table 46 and Table 47 are not included in 
Addenda AA or BB to this 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 will be included in Addenda AA or BB to 
the CY 2015 OPPS/ASC final rule with comment period, consistent with 
our annual update policy.
    We invite 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 services in April 2014 and July 2014 
through the quarterly update CRs, as listed in Tables 45, 46, and 47 
below. We are proposing to finalize their payment indicators and their 
payment rates in the CY 2015 OPPS/ASC final rule with comment period.

  Table 45--New Level II HCPCS Codes for Covered Surgical Procedures or
          Covered Ancillary Services Implemented in April 2014
------------------------------------------------------------------------
                                                           Proposed CY
     CY 2014 HCPCS Code        CY 2014 Long descriptor     2015 payment
                                                            indicator
------------------------------------------------------------------------
C9739......................  Cystourethroscopy, with                 G2
                              insertion of
                              transprostatic implant; 1
                              to 3 implants.
C9740......................  Cystourethroscopy, with                 G2
                              insertion of
                              transprostatic implant; 4
                              or more implants.
C9021......................  Injection, obinutuzumab,                K2
                              10 mg.
------------------------------------------------------------------------
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 46--New Level II HCPCS Codes for Covered Ancillary Services Implemented in July 2014
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY      Proposed CY
           CY 2014 HCPCS Code                    CY 2014 Long descriptor           2015 payment    2015 payment
                                                                                    indicator          rate
----------------------------------------------------------------------------------------------------------------
C2644..................................  Brachytherapy source, cesium-131                    H2           $18.97
                                          chloride solution, per millicurie.
C9022..................................  Injection, elosulfase alfa, 1mg.......              K2           226.42
C9134..................................  Factor XIII (antihemophilic factor,                 K2            14.10
                                          recombinant), Tretten, per 10 i.u..

[[Page 41017]]

 
Q9970*.................................  Injection, ferric carboxymaltose, 1 mg              K2             1.06
----------------------------------------------------------------------------------------------------------------
* HCPCS code Q9970 replaces 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.

 Table 47--New Category III CPT Codes for Covered Surgical Procedures or Covered Ancillary Services Implemented
                                                  in July 2014
----------------------------------------------------------------------------------------------------------------
                                                                                   Proposed CY      Proposed CY
            CY 2014 CPT Code                     CY 2014 Long descriptor           2015 payment    2015 payment
                                                                                    indicator          rate
----------------------------------------------------------------------------------------------------------------
0348T..................................  Radiologic examination,                             Z2           $50.21
                                          radiostereometric analysis (RSA);
                                          spine, (includes, cervical, thoracic
                                          and lumbosacral, when performed).
0349T..................................  Radiologic examination,                             Z2           $50.21
                                          radiostereometric analysis (RSA);
                                          upper extremity(ies), (includes
                                          shoulder, elbow and wrist, when
                                          performed).
0350T..................................  Radiologic examination,                             Z2            50.21
                                          radiostereometric analysis (RSA);
                                          lower extremity(ies), (includes hip,
                                          proximal femur, knee and ankle, when
                                          performed).
0356T..................................  Insertion of drug-eluting implant                   R2            42.81
                                          (including punctal dilation and
                                          implant removal when performed) into
                                          lacrimal canaliculus, each.
----------------------------------------------------------------------------------------------------------------
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.
Z2 = Radiology service paid separately when provided integral to a surgical procedure on ASC list; payment based
  on MPFS nonfacility PE RVUs.

3. Proposed Process for New Level II HCPCS Codes and Category I and 
Category III CPT Codes for Which We Will Be Soliciting Public Comments 
in the 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 
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.
    We are proposing to continue this process for CY 2015. 
Specifically, for CY 2015, we are proposing to include in Addenda AA 
and BB to the CY 2015 OPPS/ASC final rule with comment period the new 
Category I and III CPT codes effective January 1, 2015, that would be 
incorporated in the January 2015 ASC quarterly update CR and the 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. These codes would be flagged with comment 
indicator ``NI'' in Addenda AA and BB to the CY 2015 OPPS/ASC final 
rule with comment period to indicate that we have assigned them an 
interim payment status. Their payment indicators and payment rates, if 
applicable, would be open to public comment in the CY 2015 OPPS/ASC 
final rule with comment period and would be finalized in the CY 2016 
OPPS/ASC final rule with comment period.

C. Proposed 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
    We are proposing 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 pose a 
significant safety risk to Medicare beneficiaries or would require an 
overnight stay if performed in ASCs. 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 could be safely performed in the ASC setting 
and would not require an overnight stay if performed in an ASC and, 
therefore, we are proposing to include them on the list of ASC covered 
surgical procedures for CY 2015.
    The 10 procedures that we are proposing to add to the ASC list of 
covered surgical procedures, including their HCPCS code long 
descriptors and proposed CY 2015 payment indicators, are displayed in 
Table 48 below.

[[Page 41018]]

    Table 48--Proposed Additions to the List of ASC Covered Surgical
                         Procedures for CY 2015
------------------------------------------------------------------------
                                                           Proposed CY
                                                             2015 ASC
     CY 2014 HCPCS Code        CY 2014 Long descriptor       payment
                                                            indicator
------------------------------------------------------------------------
22551......................  Arthrodesis, anterior                   G2
                              interbody, including disc
                              space preparation,
                              discectomy,
                              osteophytectomy and
                              decompression of spinal
                              cord and/or nerve roots;
                              cervical below c2.
22554......................  Arthrodesis, anterior                   G2
                              interbody technique,
                              including minimal
                              discectomy to prepare
                              interspace (other than
                              for decompression);
                              cervical below c2.
22612......................  Arthrodesis, posterior or               G2
                              posterolateral technique,
                              single level; lumbar
                              (with lateral transverse
                              technique, when
                              performed).
22614......................  Arthrodesis, posterior or               N1
                              posterolateral technique,
                              single level; each
                              additional vertebral
                              segment (list separately
                              in addition to code for
                              primary procedure).
63020......................  Laminotomy                              G2
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc; 1
                              interspace, cervical.
63030......................  Laminotomy                              G2
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc; 1
                              interspace, lumbar.
63042......................  Laminotomy                              G2
                              (hemilaminectomy), with
                              decompression of nerve
                              root(s), including
                              partial facetectomy,
                              foraminotomy and/or
                              excision of herniated
                              intervertebral disc,
                              reexploration, single
                              interspace; lumbar.
63045......................  Laminectomy, facetectomy                G2
                              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.
63047......................  Laminectomy, facetectomy                G2
                              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.
63056......................  Transpedicular approach                 G2
                              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).
------------------------------------------------------------------------

b. Proposed 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 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 it 
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 without utilization data which our Medical 
Officers have determined are clinically similar to other procedures 
that are permanently office-based), permanently office-based, or non-
office-based, after taking into account updated volume and utilization 
data.
(2) Proposed Changes for CY 2015 to Covered Surgical Procedures 
Designated as Office-Based
    In developing this 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*,'' 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 that we believe 
meet the criteria for designation as office-based. The data indicate 
that these procedures are performed more than 50 percent of the time in 
physicians' offices and that 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 are proposing to 
permanently designate as office-based are listed in Table 49 below.

[[Page 41019]]

   Table 49--ASC Covered Surgical Procedures Newly Proposed for Permanent Office-Based Designation for CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                                  CY 2014 ASC        2015 ASC
           CY 2014 CPT Code                     CY 2014 Long descriptor             payment          payment
                                                                                   indicator       indicator *
----------------------------------------------------------------------------------------------------------------
10022.................................  Fine needle aspiration; with imaging                G2               P3
                                         guidance.
19296.................................  Placement of radiotherapy afterloading              G2               P2
                                         expandable catheter (single or
                                         multichannel) into the breast for
                                         interstitial radioelement application
                                         following partial mastectomy,
                                         includes imaging guidance; on date
                                         separate from partial mastectomy.
----------------------------------------------------------------------------------------------------------------
* Proposed payment indicators are based on a comparison of the proposed rates according to the ASC standard
  ratesetting methodology and the MPFS proposed rates. According to the statutory formula, current law requires
  a negative update to the MPFS payment rates for CY 2015. For a discussion of those rates, we refer readers to
  the CY 2015 MPFS proposed rule.

    We invite public comment on this proposal.
    We also reviewed CY 2013 volume and utilization data and other 
information for the 8 procedures finalized for temporary office-based 
status in Table 52 and Table 53 in the CY 2014 OPPS/ASC final rule with 
comment period (78 FR 75074 through 75075). Among these 8 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 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 are proposing to maintain their temporary office-based 
designations for CY 2015.
    We are proposing 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 are 
proposing 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 are displayed in Table 50 below. The procedures for which 
the proposed office-based designations for CY 2015 are temporary also 
are indicated by asterisks in Addendum AA to this proposed rule (which 
is available via the Internet on the CMS Web site).

   Table 50--Proposed 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
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                                  CY 2014 ASC        2015 ASC
           CY 2014 CPT Code                     CY 2014 Long descriptor             Payment          payment
                                                                                   indicator       indicator **
----------------------------------------------------------------------------------------------------------------
0099T.................................  Implantation of intrastromal corneal               R2*              R2*
                                         ring segments.
0226T.................................  Anoscopy, high resolution (HRA) (with              R2*               N1
                                         magnification and chemical agent
                                         enhancement); diagnostic, including
                                         collection of specimen(s) by brushing
                                         or washing when performed.
0299T.................................  Extracorporeal shock wave for                      R2*              R2*
                                         integumentary wound healing, high
                                         energy, including topical application
                                         and dressing care; initial wound.
C9800.................................  Dermal injection procedure(s) for                  R2*              R2*
                                         facial lipodystrophy syndrome (LDS)
                                         and provision of Radiesse or Sculptra
                                         dermal filler, including all items
                                         and supplies.
10030.................................  Image-guided fluid collection drainage             P2*              P2*
                                         by catheter (eg, abscess, hematoma,
                                         seroma, lymphocele, cyst), soft
                                         tissue (eg, extremity, abdominal
                                         wall, neck), percutaneous.
64617.................................  Chemodenervation of muscle(s); larynx,             P3*              P3*
                                         unilateral, percutaneous (eg, for
                                         spasmodic dysphonia), includes
                                         guidance by needle electromyography,
                                         when performed.
67229.................................  Treatment of extensive or progressive              R2*              R2*
                                         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.
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Proposed payment indicators are based on a comparison of the proposed rates according to the ASC standard
  ratesetting methodology and the MPFS proposed rates. According to the statutory formula, current law requires
  a negative update to the MPFS payment rates for CY 2015. For a discussion of those rates, we refer readers to
  the CY 2015 MPFS proposed rule.

[[Page 41020]]

    We invite public comment on these proposals.
c. Proposed 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) Proposed Changes To List of ASC Covered Surgical Procedures 
Designated as Device-Intensive for CY 2015
    As discussed in section II.A.2.e of this proposed rule, for CY 
2015, we are proposing to create 28 comprehensive APCs to replace the 
current device dependent APCs and a few non-device dependent APCs under 
the OPPS; thus, there would be no device dependent APCs. We are 
proposing 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 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 are proposing 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 so 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 
are proposing 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 are proposing 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 APC cost under the OPPS. Because we are proposing 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 are proposing 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 are 
proposing changes to Sec.  416.171(b)(2) to reflect this proposal.
    We also are proposing 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 proposed rule.
    The ASC covered surgical procedures that we are proposing to 
designate as device-intensive and that would be subject to the device-
intensive procedure payment methodology for CY 2015 are listed in Table 
51 below. 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 are also listed in Table 51 below. All of 
these procedures are included in Addendum AA to this proposed rule 
(which is available via the Internet on the CMS Web site).
    We invite public comment on these proposals.
d. Proposed 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 Sec.  
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 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

[[Page 41021]]

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 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 
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 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.
    We are proposing 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 cost/full credit and partial 
credit device adjustment policy for CY 2015. Table 51 below displays 
the ASC covered device-intensive procedures that we are proposing 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 are proposing to reduce the payment for 
implantation procedures listed in Table 51 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 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 of the cost of a device. In order to 
report that they received a partial credit of 50 percent or more of the 
cost of a new device, ASCs would have the option of either: (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 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 policy to device-intensive procedures 
that involve devices that would be amenable to removal and replacement 
in a device recall or warranty situation. We are proposing to apply the 
FB/FC 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 are proposing to apply our FB/FC policy to all device-
intensive procedures.

 Table 51--ASC Covered Surgical Procedures Proposed for Device-Intensive Designation for CY 2015, Including ASC
  Covered Surgical Procedures for Which We Are Proposing That the No Cost/Full Credit or Partial Credit Device
                                          Adjustment Policy Would Apply
----------------------------------------------------------------------------------------------------------------
                                                                                Proposed CY
       HCPCS Code         Short descriptor     Proposed CY      Proposed CY     2015 device     Proposed FB/FC
                                               2015 ASC PI     2015 OPPS APC  offset percent  policy would apply
----------------------------------------------------------------------------------------------------------------
19298..................  Place breast rad                J8             0648          0.4415  Yes.
                          tube/caths.
19325..................  Enlarge breast                  J8             0648          0.4415  Yes.
                          with implant.
19342..................  Delayed breast                  J8             0648          0.4415  Yes.
                          prosthesis.
19357..................  Breast                          J8             0648          0.4415  Yes.
                          reconstruction.
23515..................  Treat clavicle                  J8             0064          0.4308  Yes.
                          fracture.
23585..................  Treat scapula                   J8             0064          0.4308  Yes.
                          fracture.
23615..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
23616..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
23630..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
23670..................  Treat dislocation/              J8             0064          0.4308  Yes.
                          fracture.
24361..................  Reconstruct elbow               J8             0425          0.5661  Yes.
                          joint.
24363..................  Replace elbow                   J8             0425          0.5661  Yes.
                          joint.
24365..................  Reconstruct head                J8             0425          0.5661  Yes.
                          of radius.
24366..................  Reconstruct head                J8             0425          0.5661  Yes.
                          of radius.
24370..................  Revise reconst                  J8             0425          0.5661  Yes.
                          elbow joint.
24371..................  Revise reconst                  J8             0425          0.5661  Yes.
                          elbow joint.
24435..................  Repair humerus                  J8             0425          0.5661  Yes.
                          with graft.
24498..................  Reinforce humerus.              J8             0425          0.5661  Yes.

[[Page 41022]]

 
24515..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
24516..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
24545..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
24546..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
24575..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
24579..................  Treat humerus                   J8             0064          0.4308  Yes.
                          fracture.
24586..................  Treat elbow                     J8             0064          0.4308  Yes.
                          fracture.
24587..................  Treat elbow                     J8             0064          0.4308  Yes.
                          fracture.
24615..................  Treat elbow                     J8             0064          0.4308  Yes.
                          dislocation.
24635..................  Treat elbow                     J8             0064          0.4308  Yes.
                          fracture.
24666..................  Treat radius                    J8             0064          0.4308  Yes.
                          fracture.
25441..................  Reconstruct wrist               J8             0425          0.5661  Yes.
                          joint.
25442..................  Reconstruct wrist               J8             0425          0.5661  Yes.
                          joint.
25444..................  Reconstruct wrist               J8             0425          0.5661  Yes.
                          joint.
25446..................  Wrist replacement.              J8             0425          0.5661  Yes.
25574..................  Treat fracture                  J8             0064          0.4308  Yes.
                          radius & ulna.
25575..................  Treat fracture                  J8             0064          0.4308  Yes.
                          radius/ulna.
25607..................  Treat fx rad extra-             J8             0064          0.4308  Yes.
                          articul.
25608..................  Treat fx rad intra-             J8             0064          0.4308  Yes.
                          articul.
25609..................  Treat fx radial 3+              J8             0064          0.4308  Yes.
                          frag.
26686..................  Treat hand                      J8             0064          0.4308  Yes.
                          dislocation.
27415..................  Osteochondral knee              J8             0425          0.5661  Yes.
                          allograft.
27428..................  Reconstruction                  J8             0425          0.5661  Yes.
                          knee.
27438..................  Revise kneecap                  J8             0425          0.5661  Yes.
                          with implant.
27440..................  Revision of knee                J8             0425          0.5661  Yes.
                          joint.
27442..................  Revision of knee                J8             0425          0.5661  Yes.
                          joint.
27443..................  Revision of knee                J8             0425          0.5661  Yes.
                          joint.
27446..................  Revision of knee                J8             0425          0.5661  Yes.
                          joint.
27745..................  Reinforce tibia...              J8             0425          0.5661  Yes.
27759..................  Treatment of tibia              J8             0064          0.4308  Yes.
                          fracture.
27823..................  Treatment of ankle              J8             0064          0.4308  Yes.
                          fracture.
27827..................  Treat lower leg                 J8             0064          0.4308  Yes.
                          fracture.
27828..................  Treat lower leg                 J8             0064          0.4308  Yes.
                          fracture.
28415..................  Treat heel                      J8             0064          0.4308  Yes.
                          fracture.
28715..................  Fusion of foot                  J8             0425          0.5661  Yes.
                          bones.
33206..................  Insert heart pm                 J8             0089          0.6940  Yes.
                          atrial.
33207..................  Insert heart pm                 J8             0089          0.6940  Yes.
                          ventricular.
33208..................  Insrt heart pm                  J8             0089          0.6940  Yes.
                          atrial & vent.
33210..................  Insert electrd/pm               J8             0090          0.6828  Yes.
                          cath sngl.
33211..................  Insert card                     J8             0090          0.6828  Yes.
                          electrodes dual.
33212..................  Insert pulse gen                J8             0090          0.6828  Yes.
                          sngl lead.
33213..................  Insert pulse gen                J8             0089          0.6940  Yes.
                          dual leads.
33214..................  Upgrade of                      J8             0089          0.6940  Yes.
                          pacemaker system.
33216..................  Insert 1 electrode              J8             0090          0.6828  Yes.
                          pm-defib.
33217..................  Insert 2 electrode              J8             0090          0.6828  Yes.
                          pm-defib.
33221..................  Insert pulse gen                J8             0655          0.7504  Yes.
                          mult leads.
33224..................  Insert pacing lead              J8             0089          0.6940  Yes.
                          & connect.
33227..................  Remove&replace pm               J8             0090          0.6828  Yes.
                          gen singl.
33228..................  Remv&replc pm gen               J8             0089          0.6940  Yes.
                          dual lead.
33229..................  Remv&replc pm gen               J8             0655          0.7504  Yes.
                          mult leads.
33230..................  Insrt pulse gen w/              J8             0107          0.7807  Yes.
                          dual leads.
33231..................  Insrt pulse gen w/              J8             0108          0.8095  Yes.
                          mult leads.
33233..................  Removal of pm                   J8             0090          0.6828  Yes.
                          generator.
33240..................  Insrt pulse gen w/              J8             0107          0.7807  Yes.
                          singl lead.
33249..................  Nsert pace-defib w/             J8             0108          0.8095  Yes.
                          lead.
33262..................  Remv&replc cvd gen              J8             0107          0.7807  Yes.
                          sing lead.
33263..................  Remv&replc cvd gen              J8             0107          0.7807  Yes.
                          dual lead.
33264..................  Remv&replc cvd gen              J8             0108          0.8095  Yes.
                          mult lead.
33282..................  Implant pat-active              J8             0090          0.6828  Yes.
                          ht record.
37221..................  Iliac revasc w/                 J8             0229          0.4981  Yes.
                          stent.
37225..................  Fem/popl revas w/               J8             0229          0.4981  Yes.
                          ather.
37226..................  Fem/popl revasc w/              J8             0229          0.4981  Yes.
                          stent.
37227..................  Fem/popl revasc                 J8             0319          0.5796  Yes.
                          stnt & ather.
37228..................  Tib/per revasc w/               J8             0229          0.4981  Yes.
                          tla.
37229..................  Tib/per revasc w/               J8             0319          0.5796  Yes.
                          ather.
37230..................  Tib/per revasc w/               J8             0319          0.5796  Yes.
                          stent.
37231..................  Tib/per revasc                  J8             0319          0.5796  Yes.
                          stent & ather.
37236..................  Open/perq place                 J8             0229          0.4981  Yes.
                          stent 1st.

[[Page 41023]]

 
37238..................  Open/perq place                 J8             0229          0.4981  Yes.
                          stent same.
53440..................  Male sling                      J8             0385          0.5944  Yes.
                          procedure.
53444..................  Insert tandem cuff              J8             0385          0.5944  Yes.
53445..................  Insert uro/ves nck              J8             0386          0.6919  Yes.
                          sphincter.
53447..................  Remove/replace ur               J8             0386          0.6919  Yes.
                          sphincter.
54400..................  Insert semi-rigid               J8             0385          0.5944  Yes.
                          prosthesis.
54401..................  Insert self-contd               J8             0386          0.6919  Yes.
                          prosthesis.
54405..................  Insert multi-comp               J8             0386          0.6919  Yes.
                          penis pros.
54410..................  Remove/replace                  J8             0386          0.6919  Yes.
                          penis prosth.
54416..................  Remv/repl penis                 J8             0386          0.6919  Yes.
                          contain pros.
55873..................  Cryoablate                      J8             0385          0.5944  Yes.
                          prostate.
61885..................  Insrt/redo                      J8             0039          0.8612  Yes.
                          neurostim 1 array.
61886..................  Implant neurostim               J8             0318          0.8658  Yes.
                          arrays.
61888..................  Revise/remove                   J8             0061          0.5642  Yes.
                          neuroreceiver.
62361..................  Implant spine                   J8             0227          0.8060  Yes.
                          infusion pump.
62362..................  Implant spine                   J8             0227          0.8060  Yes.
                          infusion pump.
63650..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
63655..................  Implant                         J8             0039          0.8612  Yes.
                          neuroelectrodes.
63663..................  Revise spine eltrd              J8             0061          0.5642  Yes.
                          perq aray.
63664..................  Revise spine eltrd              J8             0061          0.5642  Yes.
                          plate.
63685..................  Insrt/redo spine n              J8             0318          0.8658  Yes.
                          generator.
64553..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
64555..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
64561..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
64565..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
64568..................  Inc for vagus n                 J8             0318          0.8658  Yes.
                          elect impl.
64569..................  Revise/repl vagus               J8             0061          0.5642  Yes.
                          n eltrd.
64575..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
64580..................  Implant                         J8             0039          0.8612  Yes.
                          neuroelectrodes.
64581..................  Implant                         J8             0061          0.5642  Yes.
                          neuroelectrodes.
64590..................  Insrt/redo pn/                  J8             0039          0.8612  Yes.
                          gastr stimul.
65770..................  Revise cornea with              J8             0293          0.6588  Yes.
                          implant.
69714..................  Implant temple                  J8             0425          0.5661  Yes.
                          bone w/stimul.
69715..................  Temple bne implnt               J8             0425          0.5661  Yes.
                          w/stimulat.
69718..................  Revise temple bone              J8             0425          0.5661  Yes.
                          implant.
69930..................  Implant cochlear                J8             0259          0.8316  Yes.
                          device.
0238T..................  Trluml perip athrc              J8             0319          0.5796  Yes.
                          iliac art.
0282T..................  Periph field                    J8             0061          0.5642  Yes.
                          stimul trial.
0283T..................  Periph field                    J8             0318          0.8658  Yes.
                          stimul perm.
0302T..................  Icar ischm mntrng               J8             0089          0.6940  Yes.
                          sys compl.
0303T..................  Icar ischm mntrng               J8             0090          0.6828  Yes.
                          sys eltrd.
0304T..................  Icar ischm mntrng               J8             0090          0.6828  Yes.
                          sys device.
0308T..................  Insj ocular                     J8             0351          0.9004  Yes.
                          telescope prosth.
0316T..................  Replc vagus nerve               J8             0039          0.8612  Yes.
                          pls gen.
0319T..................  Insert subq defib               J8             0108          0.8095  Yes.
                          w/eltrd.
0320T..................  Insert subq defib               J8             0090          0.6828  Yes.
                          electrode.
0321T..................  Insert subq defib               J8             0107          0.7807  Yes.
                          pls gen.
0323T..................  Rmvl & replc subq               J8             0107          0.7807  Yes.
                          pls gen.
0334T..................  Perq stablj                     J8             0425          0.5661  Yes.
                          sacroiliac joint.
----------------------------------------------------------------------------------------------------------------

    We invite public comment on these proposals.
e. ASC Treatment of Surgical Procedures Proposed for Removal From the 
OPPS Inpatient Only 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 only list for possible inclusion on the ASC list of covered 
surgical procedures. There are no procedures proposed for removal from 
the OPPS inpatient only list for CY 2015, so we are not proposing any 
procedures for possible inclusion on the ASC list of covered surgical 
procedures under this section.
2. Covered Ancillary Services
    Consistent with the established ASC payment system policy, we are 
proposing 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

[[Page 41024]]

OPPS and, therefore, also under the ASC payment system for CY 2015.
    To maintain consistency with the OPPS, we are proposing that these 
services also would be packaged under the ASC payment system for CY 
2015. Comment indicator ``CH,'' discussed in section XII.F. of this 
proposed rule, is used in Addendum BB to this proposed rule (which is 
available via the Internet on the CMS Web site) to indicate covered 
ancillary services for which we are proposing 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 this proposed rule, all ASC covered 
ancillary services and their proposed payment indicators for CY 2015 
are included in Addendum BB to this proposed rule.
    We invite public comment on this proposal.

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

1. Proposed 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 were, therefore, 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 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 (Sec.  416.171(d)).
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for 
CY 2015
    We are proposing to update ASC payment rates for CY 2015 using the 
established rate calculation methodologies under Sec.  416.171 and 
using our proposed modified definition of device-intensive procedures, 
as discussed above. Because the proposed OPPS relative payment weights 
are based on geometric mean costs for CY 2015, the ASC system will use 
geometric means to determine proposed relative payment weights under 
the ASC standard methodology. We are proposing to continue to use the 
amount calculated under the ASC standard ratesetting methodology for 
procedures assigned payment indicators ``A2'' and ``G2.''
    We are proposing 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. Thus, we are proposing 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 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. Thus, no Medicare payment would be made when a device 
removal procedures is performed in an ASC without another surgical 
procedure included on the claim so no Medicare payment would be made if 
a device was removed but not replaced. To address this concern, for the 
71 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 are proposing to continue 
this policy for the 71 device removal procedures for these same 
reasons.
    We invite public comment on these proposals.
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

[[Page 41025]]

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 are not proposing 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 proposed rule.
d. Proposed 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 (e.g., 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 refer readers to the 
CY 2012 OPPS/ASC final rule with comment period (76 FR 74427 through 
74428).
    For CY 2015, we are proposing 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 are proposing 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 are 
proposing 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 invite public comment on these proposals.
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 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). We are not 
proposing any changes to our current policy regarding ASC payment for 
LDR prostate brachytherapy services for CY 2015.
2. Proposed 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.

[[Page 41026]]

Thus, our final policy generally aligns ASC payment bundles with those 
under the OPPS (72 FR 42495). In all 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.
    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 will, therefore, 
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 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.
    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 (non-device) 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 since 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 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. Proposed Payment for Covered Ancillary Services for CY 2015
    For CY 2015, we are proposing to update the ASC payment rates and 
to make changes to ASC 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 are proposing 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 
are proposing 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 are proposing 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 this 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 are proposing 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

[[Page 41027]]

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, 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 are proposing 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 are 
proposing to continue this modification to the payment methodology in 
CY 2015 and, therefore, are proposing 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 (see 42 CFR 416.2). 
Covered ancillary services include, among 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 (see 42 CFR 416.164(b)(5)). Currently, there are 
certain non-imaging 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 non-
imaging 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 are proposing 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 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 are proposing 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.
    We are proposing 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 are proposing 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 are proposing 
changes to the definitions for payment indicators ``Z2'' and ``Z3,'' as 
detailed in section XII.F.2 of this preamble below, and are proposing 
changes to Sec. Sec.  416.164(a)(11) and (b)(5) as well as Sec.  
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 are proposing to add this code to the list of 
ASC covered ancillary services and are proposing separate ASC payment 
as a covered 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 are listed in Addendum BB to this proposed rule (which is 
available via the Internet on the CMS Web site).
    We invite public comment on these proposals.

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-Service-Payment/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 Sec.  
416.185(b), the deadline for receipt of public comments is 30 days 
following

[[Page 41028]]

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--
    [cir] Provide a list of determinations made as a result of our 
review of all new NTIOL class requests and public comments;
    [cir] 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.
    [cir] 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.
    [cir] 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 are not proposing to revise the payment adjustment amount for CY 
2015.

F. Proposed 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 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'' is also 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). 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 is used in Addenda AA and BB to this 
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 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. Proposed ASC Payment and Comment Indicators
    We are not proposing 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 above in section 
XII.D.2.b. of this proposed rule, that certain diagnostic tests qualify 
as covered ancillary services when provided integral to an ASC covered 
surgical procedure, we are proposing 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 this proposed rule (which are 
available via the Internet on the CMS Web site) for the complete list 
of ASC payment and comment indicators proposed for the CY 2015 update.

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

[[Page 41029]]

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 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 this 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 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 Sec.  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 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 raw pre-floor and pre-reclassified hospital wage indexes 
results in the most appropriate adjustment to the labor portion of ASC 
costs. In addition, use of the unadjusted hospital wage data avoids 
further reductions in certain rural statewide wage index values that 
result from reclassification. 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 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 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 pre-reclassified 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 are proposing to use the new CBSAs delineations 
issued by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index. 
Therefore, because the ASC wage indexes are the pre-floor and pre-
reclassified hospital wage indexes, the proposed CY 2015 ASC wage 
indexes reflect the new OMB delineations. As discussed in section 
XII.G.2.b. of this proposed rule, we are proposing a transition to 
these new OMB delineations 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 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. Proposed 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). Consistent with our established 
policy, we are proposing 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 are proposing 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 and CY 2015. We are

[[Page 41030]]

proposing 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 is 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. At the time of this proposed rule, we have available 98 
percent of 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. 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 this proposed rule, is posted on the CMS Web site at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. Proposed 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 are proposing 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 hospital wage indexes, the proposed 
CY 2015 ASC wage indexes reflect 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 are proposing a 
transition to the new OMB delineations similar to what has been 
proposed for the IPPS for FY 2015 (79 FR 28062) and the OPPS as 
described in section II.C of this proposed rule. Specifically for ASCs, 
we are proposing 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 are proposing 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 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.
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. Consistent with 
our final ASC payment policy, for the CY 2015 ASC payment system, we 
are proposing 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 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 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

[[Page 41031]]

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 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 
Sec. Sec.  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 with comment period (75 FR 72062 
through 72064) for illustrative examples of how the MFP adjustment is 
applied to the ASC payment system.
    For this proposed rule, 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 is 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 is 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 are proposing 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 are proposing 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 are 
proposing 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 are 
proposing to apply a -0.8 percent quality reporting/MFP-adjusted CPI-U 
update factor to the CY 2014 ASC conversion factor for ASCs not meeting 
the quality reporting requirements. We also are proposing 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 are proposing 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 are proposing 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 invite public comment on these proposals.
3. Display of Proposed CY 2015 ASC Payment Rates
    Addenda AA and BB to this proposed rule (which are available via 
the Internet on the CMS Web site) display the proposed updated ASC 
payment rates for CY 2015 for covered surgical procedures and covered 
ancillary services, respectively. 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 proposed CY 2015 payment 
rates. Specifically, in Addendum AA, a ``Y'' in the column titled 
``Proposed to be Subject to Multiple Procedure Discounting'' indicates 
that the surgical procedure would 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

[[Page 41032]]

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 ``Proposed CY 2015 
Payment Weight'' are the proposed relative payment weights for each of 
the listed services for CY 2015. The proposed 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 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 proposed CY 2015 payment rate displayed in the 
``Proposed CY 2015 Payment Rate'' column, each ASC payment weight in 
the ``Proposed CY 2015 Payment Weight'' column was multiplied by the 
proposed CY 2015 conversion factor of $43.918. 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 proposed rule).
    In Addendum BB, there are no relative payment weights displayed in 
the ``Proposed CY 2015 Payment Weight'' column for items and services 
with predetermined national payment amounts, such as separately payable 
drugs and biologicals. The ``Proposed CY 2015 Payment'' column displays 
the proposed CY 2015 national unadjusted ASC payment rates for all 
items and services. The proposed 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 April 2014.
    Addendum E provides the HCPCS codes and short descriptors for 
surgical procedures that are proposed to be excluded from payment in 
ASCs for FY 2015.

III. 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;
     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.
    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%2FQnetTier2&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

[[Page 41033]]

review every 3 years. In the measure maintenance process, the measure 
steward 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 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.
    We are not proposing any changes to our policies on the public 
display of quality measures.

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.
    We are not proposing any changes to the process for retaining 
measures previously adopted.

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 
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 Measures Application 
Partnership (MAP) when evaluating measures for removal.
2. Proposed Criteria for Removal of ``Topped-Out'' Measures
    In this proposed rule, we are proposing 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 are proposing to 
apply the following two criteria, the first of which was previously 
adopted by the Hospital VBP Program in the Hospital Inpatient VBP 
Program final rule (76 FR 26496 through 26497). The second criterion is 
a modified version of what was previously adopted by the Hospital VBP 
Program in the above mentioned final rule, with the change from the 
``less than'' operator ( 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

[[Page 41034]]

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 
whose rates are below the 5th percentile and above the 95th percentile. 
We have proposed these same criteria for when we would consider a 
measure to be ``topped-out'' for the Hospital VBP Program (79 FR 28119) 
and the Hospital IQR Program (79 FR 28219), and we are also proposing 
them for the ASCQR Program in section XIV.B.3. of this proposed rule.
    We invite public comment on this proposal.
3. Proposed Removal of Measures From the Hospital OQR Program for the 
CY 2017 Payment Determination and Subsequent Years
    We are proposing 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 meet 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 are proposing in section XIII.C.2. of this proposed rule 
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 are proposing to remove these three measures from the 
Hospital OQR Program beginning with the CY 2017 payment determination.
    We believe that removal is appropriate as there is little room for 
improvement for these measures, all of which address standard clinical 
care. In addition, by removing these measures, we would alleviate the 
maintenance costs and administrative burden to hospitals associated 
with retaining them. Should we determine that hospital adherence to 
these practices has unacceptably declined, we would repropose these 
measures in future rulemaking. In addition, we would comply with any 
requirements imposed by the Paperwork Reduction Act before 
reinstituting these measures. We have also proposed to remove three 
measures under the Hospital IQR Program that are similar to these 
measures. We note that the similar measures are called AMI-1, SCIP-Inf-
1, and SCIP-Inf-2, respectively, in the Hospital IQR Program and that 
we proposed to retain SCIP-Inf-1 and SCIP-Inf-2 as voluntarily reported 
electronic clinical quality measures (79 FR 28219 through 28220 and 79 
FR 29242).
    We invite public comment on these proposals.

   Hospital OQR Program Measures Proposed for Removal for the CY 2017
               Payment Determination and Subsequent Years
------------------------------------------------------------------------
          NQF No.                              Measure
------------------------------------------------------------------------
0286.....................  OP-4: Aspirin at Arrival.
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 No..                           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**.
0528.....................  OP-7: Prophylactic Antibiotic Selection for
                            Surgical Patients**.
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.

[[Page 41035]]

 
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&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=MungoBlobs.
** Measures we are proposing for removal beginning with the CY 2017
  payment determination in section XIII.C.3. of this proposed rule.
*** Measure we are proposing for voluntary data collection in section
  XIII.D.3.b. of this proposed rule.
**** Name has been updated to correspond with NQF-endorsed name.

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 
75100). 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 51636). In this proposed 
rule, we are making 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.
a. Clarification of Submission Deadline and Data Submitted
    We note 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 are proposing to remedy that error through this 
proposed rule. Specifically, we finalized that the first deadline for 
hospitals to submit NHSN HAI measure data would be ``May 15, 2015 with 
respect to the October 1, 2015 through March 31, 2015 encounter 
period'' (78 FR 75117). We are clarifying here that the beginning of 
the encounter period should be ``October 1, 2014'' instead of ``October 
1, 2015.'' In addition, we are clarifying here that the data to be 
submitted are more specifically referred to as ``health care personnel 
influenza vaccination summary reporting data'' instead of ``HAI measure 
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. 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 to clarify in an Operational 
Guidance document, that beginning with the 2014-2015 influenza season 
(CY 2014 reporting period and CY 2016 payment determination), 
facilities should collect and report a single vaccination count for 
each health care facility by CNN, instead of separately reporting by 
inpatient or outpatient setting. We are clarifying here that facilities 
will report data to NHSN by enrolled facility. CDC will then submit the 
data on behalf of the facilities by CNN. 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 regarding the reporting of a single count 
applicable across the inpatient and outpatient settings was also noted 
in the FY 2015 IPPS/LTCH PPS proposed rule for the Hospital IQR Program 
(79 FR 28221). We note that, in that rule, we refer to reporting 
specifically by CNN rather than by ``enrolled facility''.
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

[[Page 41036]]

during January 1, 2014-December 31, 2014 (78 FR 75114 through 75115).
    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-December 31, 2014 to April 1, 2014-December 31, 2014 (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228721506778). The data submission window for data collected from April 1, 
2014-December 31, 2014 is still July 1, 2015-November 1, 2015. The data 
submission windows and the encounter periods for subsequent years 
remains 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.
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 this proposed rule, we are: (1) Correcting our response to 
public comments, (2) noting our decision to delay data collection for 
the CY 2016 payment determination, and, (3) proposing 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 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. We note that in considering and selecting this measure, 
however, 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 final rule 
with comment period (78 FR 43643 through 43644 and 75090 through 
75091).
b. Delayed Data Collection for OP-31 and Proposed Exclusion from the CY 
2016 Payment Determination Measure Set
    Since our adoption of this measure, we have come to believe that it 
may 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 it difficult 
for hospitals to have knowledge of the visual function of the patient 
before and after surgery.
    We are also 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%2FQnetTier2&cid=1228721506778). 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%2FQnetTier2&cid=1228721506778). Therefore, we are proposing 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 will not subject hospitals to a payment 
reduction with respect to this measure for the CY 2016 payment 
determination.
    We invite comment on this proposal.
c. Proposed Voluntary Collection of Data for OP-31 for the CY 2017 
Payment Determination and Subsequent Years
    We continue to believe that this measure addresses an area of care 
that is not adequately addressed in our current measure set and that 
the measure serves to drive coordination of care (78 FR 75103). 
Further, we believe that HOPDs should be a partner in care with 
physicians and other clinicians using their facility, and this measure 
provides an opportunity to do so. Therefore, we are continuing to 
include this measure in the Hospital OQR Program measure set, but we 
are proposing 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. Further, we will not subject 
hospitals to a payment reduction with respect to this measure during 
the period of voluntary reporting. For hospitals that choose to 
voluntarily submit data, 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 (78 FR 75092).
    We invite public comment on this proposal.

E. Proposed New Quality Measure for the CY 2017 Payment Determination 
and Subsequent Years

    We are proposing 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 Risk-Standardized Hospital 
Visit Rate after Outpatient Colonoscopy. Colonoscopy is one of the most 
frequently performed procedures in the outpatient setting in

[[Page 41037]]

the United States.\1\ The most recent data available indicate that, in 
2002 alone, physicians performed an estimated 14 million colonoscopies 
in the United States.\2\ 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.3 4 5 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.6 7 8 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 will encourage providers to achieve the outcome rates 
of the best performers.
---------------------------------------------------------------------------

    \1\ 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.
    \2\ 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.
    \3\ Rathgaber SW., Wick TM. Colonoscopy completion and 
complication rates in a community gastroenterology practice. 
Gastrointest Endosc. 2006; 64:556-62.
    \4\ 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.
    \5\ 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.
    \6\ 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.
    \7\ 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.
    \8\ 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.
---------------------------------------------------------------------------

    We believe it is important to reduce adverse patient outcomes 
associated with preparation for colonoscopy, the procedure itself, and 
follow-up care. Therefore, we are proposing to include OP-32: Facility 
7-Day Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy, which is based on Medicare FFS claims, in the Hospital OQR 
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 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.\9\ 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.
---------------------------------------------------------------------------

    \9\ 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.
---------------------------------------------------------------------------

    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 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 seven 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 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-Initiatives-Patient-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_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.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

[[Page 41038]]

incidence of these events ranging from 10 to 22 per 1,000 after risk 
adjustment.'' The MAP, however, 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 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 three 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 (p. 184, MAP Report, January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.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 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. Thus, 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 by the measure being proposed 
for adoption.
    We invite public comment on the proposal to include the following 
measure in the Hospital OQR Program for the CY 2017 payment 
determination and subsequent years.

------------------------------------------------------------------------
                                Proposed measure for the CY 2017 payment
            NQF No.                determination and subsequent years
------------------------------------------------------------------------
Pending.......................  OP-32: Facility 7-Day Risk-Standardized
                                 Hospital Visit Rate after Outpatient
                                 Colonoscopy.
------------------------------------------------------------------------

    The proposed and previously finalized measures are listed below.

    Proposed Hospital OQR Program Measure Set for the CY 2017 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
            NQF No.                           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.
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.****

[[Page 41039]]

 
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&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata&blobtable=Mungo Blobs.
 ** Measure we are proposing for voluntary data collection in section
  XIII.D.3.b. of this proposed rule.
 *** New measure proposed for the CY 2017 payment determination and
  subsequent years.
 **** Name has been updated to correspond with NQF-endorsed name.

F. Possible Hospital OQR Program Measures and Topics for Future 
Consideration

    The current measure set for the Hospital OQR Program includes 
measures that assess process 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.
1. Electronic Clinical Quality Measures
    HHS believes all patients, their families, and their healthcare 
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 Strategies 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 EHR Incentive Programs requires HIE to share 
summary records for more than 10 percent of care transitions. In 
addition, to increase flexibility in the Office of the National 
Coordinator for Health Information Technology's (ONC's) health IT 
Certification Program and expand health IT certification, ONC has 
issued a proposed rule concerning a voluntary 2015 Edition of EHR 
certification criteria, which would more easily accommodate the 
certification of health IT used in health care settings where health 
care providers are not typically eligible for incentive payments under 
the EHR Incentive Programs, to facilitate greater HIE across the entire 
care continuum.
    We believe that HIE and the use of certified EHRs can effectively 
and efficiently help providers improve internal care delivery 
practices, support management of patient care across the continuum, and 
support the reporting of electronically specified clinical quality 
measures (eCQMs). More information on the Voluntary 2015 Edition EHR 
Certification Criteria proposed rule can be found at: http://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations.
    We anticipate that as electronic health records (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 this progress would 
significantly reduce the administrative burden on hospitals under the 
Hospital OQR Program to report 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.
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,

[[Page 41040]]

through future rulemaking, we intend 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 re-hospitalization. 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 re-hospitalization. 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.\10\ Therefore, as we consider implementing PHP measures 
in future years, we invite public comment regarding the utility of 
including measures for this care setting in the Hospital OQR Program.
---------------------------------------------------------------------------

    \10\ http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/Leung_PHP_PPS_2010.pdf.
---------------------------------------------------------------------------

    We specifically request 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/Setting_Priorities/Partnership/Measure_Applications_Partnership.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 request public input on other possible quality measures for 
partial hospitalization services for inclusion in the Hospital OQR 
Program in future years.
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 9 percent of those over 55 years of age.\11\ 
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.\12\ Alcohol use disorders are the most 
prevalent type of addictive disorder in individuals ages 65 and 
over.\13\ Roughly 6 percent of the elderly are considered to be heavy 
users of alcohol.\14\ 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 invite public 
comment on measures applicable to these areas that would be suitable 
for the Hospital OQR Program.
---------------------------------------------------------------------------

    \11\ 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.
    \12\ 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.
    \13\ Stephen Ross. Alcohol Use Disorders in the Elderly. 
Psychiatry Weekly (no date) Available at: http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19.
    \14\ 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.
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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: Making 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 invite public comment on these possible measures.

G. Proposed 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 
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

[[Page 41041]]

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 proposing to delete status indicator ``X''' 
as described in sections II.A.3. and X. of this proposed rule. We also 
note that we are proposing 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 section II.A.2.e. of this 
proposed rule. 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.
    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 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 
Sec.  419.41 of our regulations, prior to any adjustment for a 
hospital's failure to meet the quality reporting standards according to 
Sec.  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 proposed rule.
2. Proposed Reporting Ratio Application and Associated Adjustment 
Policy for CY 2015
    We are proposing 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 are proposing to 
continue to apply the reporting ratio to all services calculated using 
the OPPS conversion factor. For the CY 2015 OPPS, we are proposing 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 proposing to delete status indicator ``X'' as described in 
sections II.A.3. and X. of this proposed rule. We note that we are 
proposing to develop status indicator ``J1'' as part of our CY 2015 
comprehensive APC policy, discussed in section II.A.2.e. of this 
proposed rule and to apply the reporting ratio to the comprehensive 
APCs. We are proposing to continue to exclude services paid under New 
Technology APCs. We are proposing 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 are proposing to continue to apply 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. Similarly, we are proposing 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 invite public comment on these proposals.

[[Page 41042]]

H. Proposed 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).
    We are proposing 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 are proposing to correct the erroneous reference 
of ``section 1833(17)(C)'' to ``section 1833(t)(17)(C).'' We invite 
public comment on this proposal.
b. Requirements for Chart-Abstracted Measures Where Data Is Submitted 
Directly to CMS for the CY 2017 Payment Determination and Subsequent 
Years
    The following chart-abstracted measures 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-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);
     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.
    We are neither proposing new chart-abstracted measures where 
patient-level data is submitted directly to CMS nor proposing new 
requirements for data submission for chart-abstracted measures.
c. Claims-Based Measure Data Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    As discussed in section XIII.E. of the preamble of this proposed 
rule, we are proposing 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. If 
this proposal is finalized, there will be a total of eight 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);
     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). We are not proposing 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).
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.
    We are not proposing 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. 
We are not proposing any changes to this policy.
f. Proposed Review and Corrections Period for Chart-Abstracted Measures
    Under the Hospital OQR Program, hospitals submit chart-abstracted 
data to CMS on a quarterly basis. This data is 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 proposed rule. We refer 
readers to the CY 2014 OPPS/ASC

[[Page 41043]]

final rule with comment period for a discussion of our previously 
finalized policies regarding submissions deadlines for chart-abstracted 
measures (78 FR 68482). Hospitals can 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 this data until 
August 1, the first quarter submission deadline. We generally provide 
rates for the measures that have been submitted for chart-abstracted, 
patient-level data 24-48 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.
    We are proposing 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. After the 
submission deadline, however, hospitals would not be allowed to change 
these data. We believe that 4 months is sufficient time for hospitals 
to perform these activities. We invite public comment on this proposal.
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). We are proposing three changes to our 
validation procedures: (1) We are proposing 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 are proposing 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 
are proposing 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. Proposed 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.
    We are proposing 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 OPPS Clinical 
Warehouse during the data collection period for the applicable payment 
determination (76 FR 74484). We are proposing that, beginning with the 
CY 2015 encounter period for the CY 2017 payment 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%2FQnetTier2&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 be submitted by August 1, 
2014. We believe this change is necessary because it increases the 
probability that selected hospitals have current data in the Warehouse 
to be validated. Previously, hospitals that did not have data from the 
current year available could still be selected for validation. We 
invite public comment on this proposal.
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. We are not proposing 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. We are not proposing any changes to this policy.
e. Proposed 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). We are proposing two 
changes to these policies for the CY 2017 payment determination and 
subsequent years: (1) We are proposing 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 
are proposing that a 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 are proposing 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 proposed rule for the 
Hospital IQR Program (79 FR 28251), we have

[[Page 41044]]

proposed 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 Sec.  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 are proposing 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.
    For the CY 2017 payment determination and subsequent years, we are 
proposing that hospitals that chose to securely transmit electronic 
versions of medical information should either: (1) Download or copy the 
digital image 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%2FQnetBasic&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 payment determination and subsequent years, we are proposing 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 note that a typographical error exists in our 
validation language in Sec.  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 are proposing to make this change in the 
regulation text.
    We invite public comment on these proposals.

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 Sec.  419.46(f)(3) 
stating that a hospital that is dissatisfied with a decision made by 
CMS on its reconsideration request may file an appeal with the Provider 
Reimbursement Review Board.
    We are not proposing 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. We are not proposing 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 are proposing to make a conforming change from the 
phrase ``extension or waiver'' to the phrase ``extension or exemption'' 
in 42 CFR 419.46(d). Section 419.46(d) currently states,

Exception. CMS may grant an extension or waiver of one or more data 
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 
waiver as follows:
    (1) Upon request by the hospital. Specific requirements for 
submission of a request for an extension or waiver are available on 
the QualityNet Web site.
    (2) At the discretion of CMS. CMS may grant waivers or 
extensions to hospitals that have not requested them when CMS 
determines that an extraordinary circumstance has occurred.

    We are proposing to revise this language to state,

Exception. CMS may grant an extension or exception of one or more 
data 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:
    (1) Upon request by the hospital. Specific requirements for 
submission of a request for an extension or exception are available 
on the QualityNet Web site.
    (2) 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.

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 proposed rule for a 
general overview of our quality reporting programs.

[[Page 41045]]

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 
priorities we consider for ASCQR Program quality measure selection.
2. Proposed 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 this proposed rule, 
we are proposing 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 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 the 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 a 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, we 
are proposing 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 
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 ListServ and the ASCQR Program QualityNet Web site at 
http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&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 that continued use of a 
measure raises specific safety concerns, we are proposing 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 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 are proposing 
to adopt these measure removal criteria for the ASCQR Program.
    We invite public comment on these proposals.
3. Proposed Criteria for Removal of ``Topped-Out'' Measures
    We are proposing 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 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 are proposing 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

[[Page 41046]]

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 hospital scores is clustered tightly 
around the mean value, suggesting that it is not useful to draw 
distinctions among individual ASCs' measure performance. The truncated 
CV excludes observations whose rates are below the 5th percentile and 
above the 95th percentile. This was done to avoid undue effects of the 
highest and lowest outlier ASCs, which if included, would tend to 
greatly widen the dispersion of the distribution and make the measure 
appear to be more reliable or discerning. These same criteria for when 
we would consider a measure to be ``topped-out'' have been proposed for 
adoption in the Hospital VBP Program (79 FR 28119) and the Hospital IQR 
Program (79 FR 28219).
    We invite public comment on this proposal.
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 finalized our proposal to implement 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 measure for the CY 2016 payment determination and subsequent years 
(74 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 have previously adopted are listed 
below.

   ASC Program Measure Set Previously Adopted for the CY 2016 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
          ASC No.                NQF No.             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=122
                                              8772475754.
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.*
------------------------------------------------------------------------
* We are proposing voluntary data collection starting in CY 2017 for
  this previously adopted measure in section XIV.E.3.c. of this proposed
  rule.

5. Proposed New ASCQR Program Quality 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 75124) for a detailed discussion of our approach to ASCQR 
measure selection. In this proposed rule, we are proposing 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.\15\ The most recent data available indicate that, in 
2002 alone, physicians performed an estimated 14 million colonoscopies 
in the United States.\16\ 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.17 18 19 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.20 21 22 Some adverse events such as bleeding 
occur after day 7, but based on input from clinical experts, public 
comment, and

[[Page 41047]]

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.
---------------------------------------------------------------------------

    \15\ 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.
    \16\ 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.
    \17\ Rathgaber SW, Wick TM. Colonoscopy completion and 
complication rates in a community gastroenterology practice. 
Gastrointest Endosc. 2006; 64:556-62.
    \18\ 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.
    \19\ 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.
    \20\ 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.
    \21\ 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.
    \22\ 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.
---------------------------------------------------------------------------

    We believe it is important to reduce adverse patient outcomes 
associated with preparation for colonoscopy, the procedure itself, and 
follow-up care. Therefore, we are proposing to include the ASC-12: 
Facility Seven-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy measure, which is based on 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 unaware of complications 
following colonoscopy for which patients visit the hospital.\23\ 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.
---------------------------------------------------------------------------

    \23\ 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.
---------------------------------------------------------------------------

    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 seven 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 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 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 seven days following a 
colonoscopy. Additional methodology details, and information obtained 
from public comment for measure development are available at: http://www.cms.gov/Medicare/Quality-Initiatives-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 1st of 
each year a list of quality and efficiency measures that the Secretary 
is considering for the Medicare program. The measure that we are 
proposing 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_Pre-Rulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.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.
    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, MAP Report). 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 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 
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. 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. Thus, adoption of this 
measure provides an opportunity to enhance the information available to 
patients choosing among ASCs who 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.

[[Page 41048]]

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 
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_Pre-Rulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal_Programs.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 section 1833(t)(17) 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. 
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 non-
endorsed measures.
    In summary, we are proposing to adopt one new measure for the ASCQR 
Program for the CY 2017 payment determination and subsequent years.

------------------------------------------------------------------------
                                                 Proposed ASCQR measure
                                                for the CY 2017 payment
        ASC No.                NQF No.             determination and
                                                    subsequent years
------------------------------------------------------------------------
ASC-12................  Pending..............  Facility Seven-Day Risk-
                                                Standardized Hospital
                                                Visit Rate after
                                                Outpatient Colonoscopy.
------------------------------------------------------------------------

    If this proposal is finalized, the measure set for the ASCQR 
Program CY 2017 payment determination and subsequent years would be as 
listed below.

 Proposed ASC Program Measure Set for the CY 2017 Payment Determination
                          and Subsequent Years
------------------------------------------------------------------------
          ASC No.                NQF No.             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.**
------------------------------------------------------------------------
* We are proposing voluntary data collection for this previously adopted
  measure in section XIV.E.3.c. of this proposed rule.
** New measure proposed for CY 2017 payment determination and subsequent
  years.

    We invite 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.
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 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

[[Page 41049]]

purchasing programs, as appropriate. Accordingly, 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.
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 
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%2FQnetTier2&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 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.
    We are not proposing 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. These data will be displayed at the CCN level. We are not 
proposing any changes to this policy.

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 
would be reduced by 2.0 percentage points for ASCs that fail to meet 
the reporting requirements of the ASCQR Program. This reduction would 
apply 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 proposed rule.
    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 proposed rule, 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, 
brachytherapy sources that are paid based on the OPPS

[[Page 41050]]

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 proposed rule) are paid at the 
lesser of the MPFS nonfacility PE RVU-based amounts and the standard 
ASC ratesetting methodology. We finalized our proposal that the 
standard ASC ratesetting methodology for this 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, assigned to 
an office-based or radiology procedure 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. We are not 
proposing any changes to these policies.

D. Administrative Requirements

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. We are not proposing 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. We are not proposing any changes to 
these policies.

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

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 subsequent years. We are not proposing 
any changes to these policies.
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. We are not proposing any changes to these policies.
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. We are not proposing 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.
    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%2FQnetTier3&cid=1228772879036). The data

[[Page 41051]]

submission timeframe and the encounter period for subsequent years 
remain as previously finalized (78 FR 75139).
c. Delayed Data Collection and Proposed Exclusion for ASC-11 for the CY 
2016 Payment Determination and Proposed Voluntary Data Collection for 
ASC-11 for CY 2017 and Subsequent Payment Determination 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 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 
may 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%2FQnetTier3&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%2FQnetTier3&cid=1228773811586). Therefore, we are proposing 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. 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, are proposing 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 invite public comment on this proposal.
4. Claims-Based Measure Data Requirements for the Proposed New Measure 
for the CY 2017 Payment Determination and Subsequent Years
    We are proposing 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. We are 
proposing 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, for the CY 2017 payment determination for this measure, claims 
from July 1, 2014 to June 30, 2015 would be used. We note that we are 
proposing to adopt this measure under the Hospital OQR Program, as 
described in section XIII.H.2.c. of this proposed rule. 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 invite public comment on this proposal.
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 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/ambulatory-surgery/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 has been updated in this 
proposed rule.
b. Proposed Data Collection Timeframes for the CY 2017 Payment 
Determination and Subsequent Years and Proposed 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 that data collection for the CY 2016 payment 
determination would be

[[Page 41052]]

from October 1, 2014 through March 31, 2015 (the 2014-2015 influenza 
season data). We are proposing 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.
    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 CMS 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 this proposed rule, we are proposing 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 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 invite public comment on this proposal.
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 administrative contractors) or 
Web-based measures for the ASCQR Program, which is in alignment with 
our requirements for the Hospital IQR and OQR Programs. We are not 
proposing any changes to this policy.
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. We are not proposing 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. We are not proposing any changes to 
the informal reconsideration process.

XV. Proposed Changes to the Rural Provider and Hospital Ownership 
Exceptions to the Physician Self-Referral Law: Expansion Exception 
Process

A. Background

1. Statutory Basis
    Section 1877 of the Act, also known as the ``physician self-
referral law'' prohibits: (1) 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), unless an exception 
applies; and (2) the entity from submitting claims to Medicare (or to 
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 that 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 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).

[[Page 41053]]

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.
    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 qualify for an expansion 
exception as an applicable hospital. Specifically, Sec.  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 3 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 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 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 and, 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). We refer to 
the filed hospital cost report data that are required under our 
existing regulations as ``HCRIS data'' in this proposal.
    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, 
industry stakeholders informed us of what they believed to be certain 
limitations regarding the required use of HCRIS data, which we describe 
in the following two sections.
1. Medicaid Managed Care Data
    Existing Sec.  411.362(c)(2)(ii) provides that an applicable 
hospital must use filed cost report discharge data to estimate its 
annual percent of total inpatient admissions under Medicaid for the 
most recent fiscal year for which data are available. Existing Sec.  
411.362(c)(3)(ii) similarly provides that a high Medicaid facility must 
use filed cost report discharge data to estimate its annual percent of 
total inpatient admissions under Medicaid and such percent for every 
other hospital located in its county for each of the 3 most recent 
fiscal years for which data are available.
    Since the issuance and implementation of this rule, several 
industry stakeholders have informed us that a correctly completed 
hospital cost report does not include Medicaid managed care admissions 
or discharges and, therefore, Medicaid managed care admissions and 
discharges are not available in HCRIS. The industry stakeholders 
claimed that, because HCRIS data does not include Medicaid managed care 
admissions or discharges, they are unable to satisfy Sec. Sec.  
411.362(c)(2)(ii) and (c)(3)(ii) and,

[[Page 41054]]

thus, cannot qualify for an exception under the existing expansion 
exception process, despite claiming to have served a significant number 
of total Medicaid patients.
    After being notified of this issue, we confirmed that hospitals 
cannot report Medicaid managed care admissions or discharges through 
their hospital cost reports and that this information is not available 
in HCRIS. In addition, we have concluded that the information collected 
currently through HCRIS cannot be used to estimate Medicaid managed 
care admissions or discharges for purposes of estimating inpatient 
Medicaid admissions under Sec. Sec.  411.362(c)(2)(ii) and (c)(3)(ii).
    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 
based on the exclusion of Medicaid managed care data. Accordingly, as 
detailed in section XV.C. of this proposed rule, we are proposing 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 inpatient admissions under Medicaid. (We refer 
in this proposal to the non-HCRIS internal data sources and external 
data sources that we are proposing to permit for purposes of the 
expansion exception process as ``supplemental data sources.'') We 
believe that our proposal to permit the use of supplemental data 
sources is necessary to effectuate section 6001(a) of the Affordable 
Care Act for those physician-owned hospitals that are unable to satisfy 
the criteria for an expansion exception using only HCRIS data.
2. Hospitals That Lack Filed Cost Reports for the Relevant Fiscal Years
    As stated above, existing Sec.  411.362(c)(3)(ii) provides that a 
high Medicaid facility must use filed cost report discharge data to 
estimate its annual percent of total inpatient admissions under 
Medicaid and such percent for every other hospital located in its 
county for each of the 3 most recent fiscal years for which data are 
available. One industry stakeholder, seeking to avail itself of the 
whole hospital exception, stated that it would like to expand its 
facility capacity by qualifying as a high Medicaid facility. The 
stakeholder claimed that, although it treated Medicaid patients during 
the relevant 3-year period, it does not have filed cost report 
discharge data available for each of the relevant fiscal years because 
it was not a Medicare participating provider during the entire period. 
The industry stakeholder further claimed that it is unable to request 
an exception as a high Medicaid facility until it has 3 years of the 
required filed cost report data.
    The stakeholder is correct that a hospital that has not 
participated as a provider in the Medicare program for all of the 3 
most recent fiscal years for which data are available would be 
precluded from seeking a facility expansion exception. It would be 
similarly prohibitive if 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 for the 
entire period for which comparisons are required under the statute and 
our regulations. We find this to be another persuasive reason to permit 
the use of supplemental data sources and, as such, we are proposing to 
permit the use of other data sources, as further detailed in section 
XV.C. of this proposed rule, for physician-owned hospitals to estimate 
the percentages of inpatient admissions under Medicaid for Sec.  
411.362(c)(3)(ii). We believe that our proposal will enable physician-
owned hospitals to perform the comparison set forth in Sec.  
411.362(c)(3)(ii), even if the requesting hospital and/or another 
hospital located in its county lacks filed hospital cost report data 
for some or all of the relevant fiscal years. We note that the proposal 
would apply regardless of the reason that the requesting hospital and/
or another hospital in its county lacks filed hospital cost report 
data.
    The industry stakeholder that informed us of this issue would like 
to qualify as a high Medicaid facility; therefore, the stakeholder's 
comments addressed only the inpatient Medicaid admissions criterion for 
high Medicaid facilities. However, as stated above, hospitals seeking 
to qualify as an applicable hospital also use filed hospital cost 
report data for the inpatient Medicaid admissions, bed capacity, and 
bed occupancy criteria set forth in Sec.  411.362(c)(2). We recognize 
that these hospitals may also lack filed hospital cost report data or 
may be subject to comparisons against other hospitals that lack filed 
cost report data for the relevant fiscal year. Therefore, as further 
detailed in section XV.C. of this proposed rule, we are proposing to 
permit the use of supplemental data sources for the inpatient Medicaid 
admissions, bed capacity, and bed occupancy criteria for applicable 
hospitals.

C. Proposed Changes To Permit Supplemental Data Sources in the 
Expansion Exception Process

    Given the limitations regarding the required use of HCRIS data 
described in sections XV.B.1. and XV.B.2. of this proposed rule, we are 
proposing to revise our regulations at Sec. Sec.  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 
are not prescribing that hospitals use a specific individual data 
source or combination of data sources.
    We are proposing that, for purposes of the expansion exception 
process, internal data sources are sources generated, maintained, or 
under the control of the Department. The following list provides 
examples of internal data sources that we are proposing physician-owned 
hospitals may use in the expansion exception process:
     Healthcare Cost and Utilization Project (HCUP)--HCUP is a 
family of health care databases and related software tools and products 
developed through a Federal-State-industry partnership and sponsored by 
the Agency for Healthcare Research and Quality (AHRQ). HCUP databases 
bring together the data collection efforts of State data organizations, 
hospital associations, private data organizations, and the Federal 
government to create a national information resource of encounter-level 
health care data (HCUP Partners).
     Medicaid Statistical Information System (MSIS)--States 
report Medicaid data through MSIS. Through this system, States submit 
raw eligibility and claims data to CMS, which CMS uses to produce 
Medicaid program characteristics and utilization information.
     Medicaid Analytic Extract (MAX)--MAX data are person-level 
data files on Medicaid eligibility, service utilization, and payment 
information for all individuals, whether or not they used any Medicaid 
services in a given calendar year. The purpose of MAX is to produce 
data to support research and policy analysis on Medicaid populations.
    We also are seeking public comments that recommend other possible 
internal data sources.
    We are proposing that, for purposes of the expansion exception 
process,

[[Page 41055]]

external data sources are data sources generated, maintained, or under 
the control of a State Medicaid agency. We are seeking public comments 
that recommend other possible external data sources, including those of 
other State agencies or departments.
    We are proposing to define the terms ``internal data source'' and 
``external data source'' in Sec.  411.351. We recognize the need for an 
accurate and consistent expansion exception process. Accordingly, we 
are proposing 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. In 
addition, we are proposing 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. Finally, we 
are proposing in Sec.  411.351 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 note 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 believe that the supplemental data sources should--
     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 Sec. Sec.  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.
    Under the existing expansion exception process, CMS uses HCRIS data 
to provide the average percent of total inpatient Medicaid admissions 
per county, the average bed capacity per State, the national average 
bed capacity, and the average bed occupancy rate per State on the CMS 
Web site at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. If we finalize 
our proposal to permit the use of supplemental data sources, we plan to 
continue to provide HCRIS-based information and issue guidance on the 
potential use of supplemental data sources on the CMS Web site.
    We recognize that if a physician-owned hospital uses data from a 
supplemental data source, the hospitals may ultimately need to make 
estimates or determinations in addition to those referenced in our 
existing regulations. Accordingly, we are proposing to revise our 
regulations to allow for the additional estimates or determinations 
that may be necessary under our revised process. Specifically, we are 
proposing to permit a requesting hospital to use data from a 
supplemental data source to:
     Estimate its own annual percentage of inpatient Medicaid 
admissions (Sec.  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 (Sec.  411.362(c)(2)(ii)).
     Determine the average bed capacity in the State in which 
the hospital is located (Sec.  411.362(c)(2)(iv)).
     Determine the national average bed capacity (Sec.  
411.362(c)(2)(iv)).
     Determine its own average bed occupancy rate (Sec.  
411.362(c)(2)(v)).
     Determine the average bed occupancy rate for the State in 
which the hospital is located (Sec.  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 (Sec.  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 (Sec.  411.362(c)(3)(ii)).
    We note that section 1877(i)(3)(F) of the Act requires that a high 
Medicaid facility use data from 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. We are proposing 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 sufficient data to perform the 
comparisons required under Sec. Sec.  411.362(c)(2)(ii), (c)(2)(iv), 
(c)(2)(v), and (c)(3)(ii). Specifically, we are proposing 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 are proposing 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.
    Modifying our current interpretation of ``the most recent fiscal 
year for which data are available'' would allow physician-owned 
hospitals in counties or States where all data necessary to perform the 
required estimates and determinations have been filed or otherwise 
included in the permissible data source(s) to proceed with an expansion 
exception request, even if hospitals unrelated to the request have not 
filed or otherwise submitted data to the source(s) being used in the 
hospital's request. We also are proposing to require that data from the 
same fiscal year be used for the applicable hospital eligibility 
criteria at Sec. Sec.  411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), even 
if the hospital uses multiple data sources for those criteria. We 
believe that requiring the use of data from the same fiscal year will 
ensure consistency and equitability in the expansion exception process. 
We are seeking 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.
    In addition, we are proposing to require that the requesting 
hospital provide actual notification directly to hospitals whose data 
are part of the comparisons set forth under

[[Page 41056]]

Sec. Sec.  411.362(c)(2)(ii) and (c)(3)(ii) of the regulations. Under 
proposed Sec.  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. 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.
    Finally, our existing regulations at Sec.  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. We believe that permitting the use of data from 
an internal data source or an external data source would likely require 
additional time for our review of an expansion exception request, 
including any comments submitted with respect to the request. For 
example, CMS may need to obtain the data from the original source, 
confirm that the data presented in the request are an accurate 
representation of the original source data, and objectively verify the 
estimates and determinations presented in the request. Therefore, we 
are proposing to revise our regulations at Sec.  411.362(c)(5) to 
extend the date by which certain expansion exception requests will be 
deemed complete. Specifically, we are proposing to revise Sec.  
411.362(c)(5) to provide that, where the request, any written comments, 
and any rebuttal statement include only HCRIS data, an expansion 
exception request will 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 are proposing that, where the request, any written 
comments, or a rebuttal statement includes data from a supplemental 
data source, an expansion exception request will 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.
    We note that additional revisions may be necessary to conform our 
regulations at Sec.  411.362(c) if we finalize our proposal to permit 
the use of supplemental data sources.

D. Additional Considerations

    As stated above, we recognize the need for an accurate and 
consistent expansion exception process. We are aware that data sources 
have unique characteristics due to their inputs, collection methods, 
compilation, and other factors, and will take this into consideration 
if we finalize our proposal to permit the use of supplemental data 
sources. In an effort to implement an accurate and consistent expansion 
exception process, we are seeking public comments on the utility, 
appropriateness, and limitations of our proposal to permit the use of 
supplemental data sources. Specifically, we are seeking public 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.
     Describe how data from a particular data source could be 
used in the expansion exception process. We encourage 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 are requesting 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 seek public 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.

XVI. Proposed 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.''
    In commenting on our FY 2014 proposal, 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 indicate that no 
certification is 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

[[Page 41057]]

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 current regulations, we have 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 the requirement of 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 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 Sec.  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 42 CFR 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 physician 
certification may not outweigh the associated administrative 
requirements placed on hospitals. Therefore, while we continue to 
believe that the inpatient admission order is necessary for all 
inpatient admissions, we are proposing 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, 42 CFR 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 are proposing to remove paragraph (c) 
from Sec.  412.3. As we are proposing to rely on a different statutory 
authority for such regulation, 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 
existing longstanding policy is 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 existing 
regulations, and our policy goals, we are proposing 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 
current regulations at Sec.  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 are not 
proposing 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 are proposing 
to define long-stay cases as cases with stays of 20 days or longer.
    Specifically, in this proposed rule, we are proposing to revise 
paragraph (a) of Sec.  424.13 to specify that ``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) The reasons for either--
    (i) Continued hospitalization of the patient for medical 
treatment or medically required diagnostic study; or
    (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 are proposing to revise paragraph (b) of Sec.  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

[[Page 41058]]

of these cases is to help ensure that Medicare pays only for services 
of the type appropriate for Medicare coverage, we are not proposing 
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 admission to IRFs. Therefore, we also are 
not proposing any changes to the admission requirements for IRFs.
    We are inviting public comment on these proposals.

XVII. CMS-Identified Overpayments Associated With Payment Data 
Submitted by Medicare Advantage (MA) Organizations and Medicare Part D 
Sponsors (Proposed Sec. Sec.  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 Dug Event (PDE) data 
that are used by CMS to cost reconcile various Part D subsidies, as 
well as other types of data discussed below. 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 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 the CMS 
payment systems, and our approach thus far to these kinds of situations 
has been to request that MA organizations and Part D sponsors make 
these kinds of data corrections voluntarily.
    However, in instances in which the MA organization or Part D 
sponsor fails to make the requested data correction, the payment amount 
calculated for the plan 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.
    This proposed new process 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. This proposed process would not constitute a change to the 
existing Part C or Part D payment methodologies. Rather, we are merely 
proposing 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. 
The established recovery and appeals processes do not support this 
scenario. Section 1856(b) of the Act establishes authority for us to 
add standards for Part C and MA organizations. Section 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 payments to MA organizations and Part D 
sponsors are calculated 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 are proposing 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 Sec.  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 
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 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 Sec.  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 
are used in setting the risk score.
    CMS allows 13 months after the end of a data collection year for MA 
organizations to update the risk adjustment data submitted under Sec.  
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 prospective 
payments made during the payment year. The end of this 13-month period 
is called the final risk adjustment data

[[Page 41059]]

submission deadline (Sec.  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 the MA organization 
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.
    We note that after the final risk adjustment data submission 
deadline, 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 Sec.  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 Sec.  422.311, CMS conducts RADV audits of the risk 
adjustment data submitted by MA organizations pursuant to Sec.  
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 Sec.  423.329(a)); reinsurance subsidy (codified 
at Sec.  423.329(c)); low income subsidy (codified at Sec. Sec.  
423.780 and 423.782); and risk sharing (codified at Sec.  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 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 low income 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 payment determination may be reopened and revised at CMS 
discretion under Sec.  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 Sec.  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 Sec.  423.343 or a reopening described at 
Sec.  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 defined as ``erroneous payment data''). These may be 
general requests to all Part D sponsors to look for a type of payment 
issue (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 Web site 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 our Proposals

    In this proposed rule, we are proposing 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 used by CMS to recoup overpayments associated with errors 
identified by CMS in payment data submitted by MA organizations and 
Part D sponsors. We also are proposing to create a process whereby an 
MA organization or Part D sponsor can appeal the finding that payment 
data are erroneous.
    We note that our proposal is intended to establish a process to 
address 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 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 
Sec. Sec.  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).

[[Page 41060]]

1. Proposed Definitions of ``Payment Data'' and ``Applicable 
Reconciliation Date''
    We are proposing 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 Sec. Sec.  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 Sec.  422.504(l) and Sec.  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 Sec.  422.310. For Medicare Part D, data 
submitted by the Part D sponsor to CMS include enrollment data and data 
submitted under Sec.  423.329(b)(3) (risk adjustment data), Sec.  
423.336(c)(1) (cost data), Sec.  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 Sec.  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 the Social Security Administration (SSA). 
These entities are the authoritative source for data that they submit 
to CMS, and MA 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, the proposed definition of ``payment 
data'' refers only to data that the MA organization or Part D sponsor 
controls and submits to CMS for payment purposes.
    For MA organizations under Part C, we are proposing that the 
``applicable reconciliation date'' occurs on the date of the annual 
final risk adjustment data submission deadline set under Sec.  
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.
    For Part D sponsors, we are proposing 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 Sec.  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 note that the proposed definitions of ``applicable 
reconciliation date'' are nearly identical to the definitions of 
``applicable reconciliation'' at existing Sec. Sec.  422.326 and 
423.360. Similarly, the proposed definitions of ``payment data'' are 
nearly identical to the definitions of ``funds'' at existing Sec. Sec.  
422.326 and 423.360. Although proposed Sec. Sec.  422.330 and 423.352 
address overpayments to MA organizations and Part D sponsors that have 
been identified by CMS, whereas Sec. Sec.  422.326 and 423.360 address 
overpayments that are identified by the MA organization or Part D 
sponsor, 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 
current policy regarding overpayments identified by MA organizations 
and Part D sponsors and the proposed policy regarding CMS-identified 
overpayments are 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.
2. Request for Corrections of Payment Data
    We are proposing that if CMS identifies an error in payment data 
submitted by an MA organization or Part D sponsor that would result in 
an overpayment, CMS may request that the organization make corrections 
to the applicable payment data (proposed Sec. Sec.  422.330(b) and 
423.352(b)). We are proposing 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. 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.
    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 
Sec. Sec.  422.326 and 423.360, we are proposing 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 Sec.  423.343 
(that is, the determination of the final amount of direct subsidy 
described in Sec.  423.329(a)(1), final reinsurance payments described 
in Sec.  423.329(c), the final amount of the low income subsidy 
described in Sec.  423.329(d), or final risk corridor payments as 
described in Sec.  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 are proposing to use the same 
6-year look-back period as applies to plan-identified overpayments 
under existing Sec. Sec.  422.326 and 423.360 because both overpayment 
policies are

[[Page 41061]]

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.
    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 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.
3. Proposed Payment Offset
    If the MA organization or Part D sponsor submits corrected payment 
data in response to CMS's request pursuant to proposed Sec.  422.330(b) 
and Sec.  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 procedures. However, if the MA organization of Part D sponsor 
fails to correct the erroneous payment data, we are proposing that CMS 
would conduct a payment offset from plan payments (proposed Sec. Sec.  
422.330(c) and 423.352(c)).
a. Offset Amount
    Because the data would not have been corrected in the routine 
payment process, we are proposing, to be codified at Sec. Sec.  
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 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. 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 due to 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.
    We are proposing that, under the payment calculation algorithm, CMS 
would calculate the payment to the MA organization or Part D sponsor 
with and then without the corrected data as of a certain specified 
date. The difference in the two amounts would be the payment recovery 
or offset amount. The following are examples of how the offset amount 
would be calculated for Part C and Part D relative to two different 
types of payment data errors.
     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 software 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 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, low income 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

[[Page 41062]]

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 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.
b. Payment Offset Notification
    We are proposing that CMS would provide a payment offset notice to 
the MA organization or Part D sponsor (proposed Sec. Sec.  
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.
4. Proposed Appeals Process for MA Organizations and Part D Sponsors
    We are proposing an appeals process for MA organizations and Part D 
sponsors with three levels of review, including reconsideration 
(described at proposed Sec. Sec.  422.330(e)(1) and 423.352(e)(1)), an 
informal hearing (described at proposed Sec. Sec.  422.330(e)(2) and 
423.352(e)(2)), and an Administrator review (described at proposed 
Sec. Sec.  422.330(e)(3) and 423.352(e)(3)).
a. Reconsideration
    We are proposing 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 Sec. Sec.  422.330(e)(1)(i) and 423.352(e)(1)(i)). 
At proposed Sec. Sec.  422.330(e)(1)(ii) and 423.352(e)(1)(ii), we 
address the information that must be included in the MA organization's 
or Part D sponsor's request for reconsideration. The request must 
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 must be 
submitted with the request for reconsideration. Any information 
submitted after this time will be rejected as untimely. 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 that the MA organization 
or Part D sponsor timely submitted with its reconsideration request 
(Sec. Sec.  422.330(e)(1)(iii) and 423.352(e)(1)(iii)). We are 
proposing at proposed Sec. Sec.  422.330(e)(1)(iv) and 
423.352(e)(1)(iv) that CMS would inform the MA organization or Part D 
sponsor of its decision. We are proposing at Sec. Sec.  
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.
b. Informal Hearing
    Under our proposal, if the MA organization or Part D sponsor is 
dissatisfied with CMS' reconsideration decision, it would be entitled 
to request an informal hearing (proposed Sec. Sec.  422.330(e)(2) and 
423.352(e)(2)). As proposed at Sec. Sec.  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 Sec. Sec.  422.330(e)(2)(ii) and 
423.352(e)(2)(ii)).
    We set forth the proposed procedures for conducting the informal 
hearing at proposed Sec. Sec.  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 Sec.  
422.330(e)(2)(iii)(A) and Sec.  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 Sec.  
422.330(e)(2)(iii)(B) and Sec.  423.352(e)(2)(iii)(B)). Under our 
proposal, no new or additional documentation or evidence may be 
submitted at this hearing. At proposed Sec.  422.330(e)(2)(iii)(C) and 
Sec.  423.352(e)(2)(iii)(C), we are proposing 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.
    At proposed Sec. Sec.  422.330(e)(2)(iv) and 423.352(e)(2)(iv), we 
are proposing 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 Sec. Sec.  
422.330(e)(2)(v) and 423.352(e)(2)(v)).
c. Review by Administrator
    We are proposing 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 
Sec. Sec.  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 Sec. Sec.  422.330(e)(3)(ii) and 
423.352(e)(3)(ii), after receiving the request to review, the 
Administrator would have the discretion to elect to review the hearing 
determination or decline to review it. At proposed Sec. Sec.  
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 Sec. Sec.  
422.330(e)(3)(iv) and 423.352(e)(3)(iv), we are proposing 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 may determine whether to uphold, 
reverse, or modify the hearing officer's decision. The Administrator's 
determination would be final and binding (proposed Sec. Sec.  
422.330(e)(3)(v) and 423.352(e)(3)(v)).

[[Page 41063]]

5. Matters Subject To Appeal and Burden of Proof
    At proposed Sec. Sec.  422.330(f)(1) and (2) and 423.352(f)(1) and 
(2), we are proposing to limit the subject-matter 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 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 erroneous was 
incorrect 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 Sec. Sec.  422.330(g) and 423.352(g), we are proposing 
that the appeals process under paragraph (e) of these sections would 
apply only to payment offsets described at proposed Sec. Sec.  
422.330(c) and 423.352(c). It would not apply to any other CMS payment 
offset process.
6. Effective Date of Proposed Appeals Process Provisions
    We are proposing that this new procedural mechanism for a payment 
offset at proposed Sec.  422.330 and Sec.  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 Sec. Sec.  422.330(b) and 423.352(b) and the payment 
offsets under proposed Sec. Sec.  422.330(c) and 423.352(c) may apply 
to any payment year, subject to the 6-year limitation under Sec. Sec.  
422.330(b) and 423.352(b).
    We are inviting public comment on these proposals.

XVIII. Files Available to the Public via the Internet

    Addendum J to this proposed rule is a new addendum that we are 
proposing 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 proposed rule. Addendum J lists the HCPCS code pairs 
for which we are proposing complexity adjustments for CY 2015, by 
clinical family; the HCPCS codes proposed for exclusion from the 
comprehensive APC payment bundle; and the relevant cost statistics.
    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 the Addenda of this proposed rule 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-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; 
select ``1613-P'' from the list of regulations. All OPPS Addenda for 
this proposed rule are contained in the zipped folder entitled ``2015 
OPPS 1613-P Addenda'' at the bottom of the page. To view the Addenda of 
this proposed rule pertaining to the proposed 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-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; select ``1613-P'' from the list of 
regulations. All ASC Addenda for this proposed rule are contained in 
the zipped folders entitled ``Addendum AA, BB, DD1 and DD2,'' and 
``Addendum EE'' at the bottom of the page.

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.
     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 this proposed rule, we are soliciting public comments on each of 
the issues outlined above for the information collection requirements 
discussed below.

B. Requirements in Regulation Text: Proposed Changes to the Rural 
Provider and Hospital Ownership Exceptions to the Physician Self-
Referral Law: Expansion Exception Process (Sec.  411.362)

    Section XV.C. of the preamble of this proposed rule discusses our 
proposal to revise the expansion exception process for physician-owned 
hospitals under the rural provider and hospital ownership exceptions to 
the physician self-referral law. Specifically, we are proposing to 
revise 42 CFR 411.362(c) to permit physician-owned hospitals to use 
data from HCRIS, internal data sources, or external data sources to 
estimate the percentages of inpatient Medicaid admissions and to 
determine the bed capacities and the bed occupancy rates referenced in 
that section for the hospitals to demonstrate eligibility for an 
expansion exception.
    We believe the burden associated with this revision is exempt from 
the PRA under 5 CFR 1320.3(c), which defines the agency collection of 
information subject to the requirements of the PRA as information 
collection imposed on 10 or more persons within any 12-month period. We 
do not believe this information collection impacts 10 or more entities 
in a 12-month period. We have received four requests since the 
expansion exception process was implemented on February 1, 2012; only 
one of the four requests was complete and eligible to proceed in the 
process. In CYs 2012, 2013, and 2014, we received zero, two, and two 
requests, respectively.

C. Associated Information Collections Not Specified in Regulatory Text

    In this proposed rule, we make reference to proposed associated 
information collection requirements that were not discussed in the 
regulation text contained in this proposed rule. The following is a 
discussion of those requirements.
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

[[Page 41064]]

FR 75170 through 75172) for detailed discussions of the Hospital OQR 
Program information collection requirements we have previously 
finalized.
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 worth of data, 
which is submitted on an annual basis) (78 FR 75171 through 75172).
    As stated in section XIII.D.2. of this proposed rule, we delayed 
reporting for OP-29 and OP-30 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 this proposed rule, we are proposing to exclude 
this measure from the CY 2016 payment determination measure set. 
Therefore, we estimate that there 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 because of this 
proposal.
    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 and the proposed measure 
exclusion. 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 hospital) for all hospitals 
participating in the Hospital OQR Program for the CY 2016 payment 
determination based on the data collection delays for OP-29, OP-30, and 
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 delay of these 
three measures will result in a reduction of $23.8 million ($30/hour x 
792,000 hours).
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. 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 Payment Determination 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 proposed rule, we are proposing to adopt one 
additional claims-based measure for the CY 2017 payment determination 
and subsequent years: OP-32: Facility Seven-Day Risk-Standardized 
Hospital Visit Rate after Outpatient Colonoscopy. As we note in the CY 
2013 OPPS/ASC final rule with comment period (77 FR 68530), we 
calculate the 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 section XIII. of this proposed rule, we are proposing to remove 
three chart-abstracted measures from the Hospital OQR Program for the 
CY 2017 payment determination and subsequent years: 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). We previously estimated that 
each participating hospital will spend 35 minutes (or 0.583 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, OP-23) for each case (78 FR 75171). Since we are proposing to 
remove three of these measures, we believe that the time to chart-
abstract these measures will be reduced by 25 percent (3 of 12 
measures). Therefore, we estimate that hospitals will spend 
approximately 26 minutes (0.433 hours) per case to collect and submit 
these data.
    Data submitted for the CY 2014 payment determination indicate that 
a hospital will submit approximately 1,266 cases per year for these 
measures. Therefore, we estimate that the time it will take a hospital 
to abstract data for all of the chart-abstracted measures will be 549 
hours per year (1,266 cases x 0.433 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 1.8 million hours (549 hours x 3,300 hospitals) for all 
participating hospitals, for a total financial burden of approximately 
$54 million (1.8 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

[[Page 41065]]

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 estimate (although, as noted above, we 
have changed our estimate for the CY 2016 payment determination based 
on the delay of 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 proposed rule, we are proposing 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 would 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 million hours (1.8 million 
hours + 105,685 hours + 1.1 million hours) and $90 million (3 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 
estimate 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 proposed rule, we are 
proposing to require voluntary reporting for OP-31, meaning that 
failing to report this measure would not affect a hospital's CY 2017 
and subsequent years' payment determinations. 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 for 
all participating hospitals to 111 hours (660 hospitals x 0.167 hours) 
for the CY 2017 payment determination and subsequent years.
    Therefore, 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 proposed rule, we 
are proposing to correct a submission deadline for this measure. We do 
not believe there will be a change in burden due to this proposal since 
it was a typographical error and our previous estimates were based on 
the corrected submission timeframe. We also noted that hospitals may 
report this measure for both the Hospital IQR Program and the Hospital 
OQR Program by CCN. Although we believe an overall reduction in burden 
will occur from this guidance because hospitals will only be required 
to submit this information once for each program, submitting this 
information is still a requirement of the Hospital OQR Program. 
Therefore, we do not believe this guidance will result in a reduction 
in burden attributable to the Hospital OQR Program. Therefore, 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.
c. Review and Corrections Period Requirements for the CY 2017 Payment 
Determination and Subsequent Years
    In section XIII.H.2.f. of this proposed rule, we are proposing to 
formalize that the time during which hospitals submit chart-abstracted 
data is the review and corrections period for that 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 section XIII.H.3.d. of this proposed rule, we are proposing 
three changes to our validation procedures: (1) We are proposing 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 are 
proposing 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 are proposing that a hospital 
must identify the medical record staff responsible for submission of 
records under the Hospital OQR Program to the designated CMS 
contractor. We do not believe that changing the eligibility 
requirements will result in additional burden since the same number of 
hospitals will be selected for validation, as discussed below. In 
addition, we do not believe that changing to whom a hospital must 
identify the medical staff responsible for submission of records will 
result in additional burden since hospitals must already submit this 
data; that is, only the contractor to whom the data is submitted may 
change. We do believe, however, that the second

[[Page 41066]]

requirement may result in a change in burden.
    We are proposing 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. We are 
proposing that hospitals that chose to securely transmit electronic 
versions of medical information should either: (1) Download or copy the 
digital image 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. In the FY 2014 IPPS/LTCH PPS final rule, 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 (78 FR 50834 through 78 FR 50835). The Hospital IQR 
Program has proposed the second method, secure submission of digital 
images via a Secure File Transfer Portal, in the FY 2015 IPPS/LTCH 
proposed rule (79 FR 28251). For the same reasons outlined in the 
Hospital IQR Program (78 FR 50956), we are proposing a reimbursement 
rate of $3.00 per patient chart submitted electronically (using either 
of the proposed methods for electronic submission) for validation for 
the CY 2017 payment determination and 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 this data electronically may 
result in a reduction in burden; for others we believe that submitting 
paper copies will be the least burdensome option. We sample 500 
hospitals for validation, and we estimate that it will take each 
hospital 12 hours to comply with the data submission requirements. 
Therefore, 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 proposed rule, we are 
proposing to make a change from the phrase ``extension or waiver'' to 
the phrase ``extension or exemption'' throughout the regulation. We do 
not anticipate that this proposed minor change 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, 5 CFR 1320.4 of the Paperwork Reduction Act of 1995 
regulations excludes collection activities during the conduct of 
administrative actions such as redeterminations, reconsiderations, or 
appeals or all of these actions.
    We invite public comment on the burden associated with these 
information collection requirements.
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 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 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 rule, we estimated that each participating ASC would spend 35 
minutes per case to collect and submit the data for these measures, 
making a total estimated burden for ASCs with a single case per ASC of 
3,067 hours (5,260 ASCs x 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 stated in section 
XIV.E.3. of this proposed rule, we have delayed reporting for ASC-9 and 
ASC-10 by one quarter. Therefore, we estimate a 25-percent reduction in 
cases and burden for these measures for the CY 2016 payment 
determination. As stated in section XIV.E.3.c. of this proposed rule, 
we delayed reporting of ASC-11 by one year and are proposing 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 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 proposed rule, we are proposing to add 
one additional claims-based measure to the ASCQR Program. The 
additional measure, ASC-12: Facility Seven-Day Risk-Standardized 
Hospital Visit Rate after Outpatient Colonoscopy, would be computed by 
CMS based on Medicare FFS claims, and would not require ASCs to input 
QDCs. Therefore, we do not anticipate that this proposed

[[Page 41067]]

measure would add additional burden to ASCs for the CY 2017 payment 
determination and for subsequent years.
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 are proposing for 
voluntary inclusion in the ASCQR Program for CY 2017. 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) 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 proposed rule, we are proposing that 
data collection and submission be voluntary 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 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 of 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 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. We 
are not proposing 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 proposed rule, we note that we are proposing 
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 proposed minor changes will affect the burden estimates for 
this process.
f. Reconsideration and Appeals
    While there is burden associated with filing a reconsideration 
request, 5 CFR 1320.4 of the Paperwork Reduction Act of 1995 
regulations excludes collection activities during the conduct of 
administrative actions such as redeterminations, reconsiderations, or 
appeals or all of these actions.
    We invite public comment on the burden associated with these 
information collection requirements.

XX. 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 proposed 
rule, and, when we proceed with a subsequent document(s), we will 
respond to those comments in the preamble to that document.

XXI. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this proposed rule 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 
proposed rule contains the impact and other economic analyses for the 
provisions that we are proposing.
    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 proposed rule 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 proposed rule has been reviewed by 
the Office of Management and Budget. We

[[Page 41068]]

have prepared a regulatory impact analysis that, to the best of our 
ability, presents the costs and benefits of this proposed rule. We are 
soliciting public comments on the regulatory impact analysis provided.
2. Statement of Need
    This proposed rule 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 proposing to revise the APC relative payment 
weights using claims data for services furnished on and after January 
1, 2013, through and including December 31, 2013, and updated cost 
report information.
    This proposed rule 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 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 Proposed 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 proposed rule would be approximately $800 million. 
Taking into account our estimated changes in enrollment, utilization, 
and case-mix, we estimate that the proposed OPPS expenditures for CY 
2015 would be approximately $5.224 billion higher relative to 
expenditures in CY 2014. Because this proposed rule 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 52 displays the redistributional impact of the proposed 
CY 2015 changes in OPPS payment to various groups of hospitals and for 
CMHCs.
    We estimate that the proposed update to the conversion factor and 
other adjustments (not including the effects of outlier payments, the 
pass-through estimates, and the application of the proposed frontier 
State wage adjustment for CY 2015) would increase total OPPS payments 
by 2.1 percent in CY 2015. The proposed changes to the APC weights, the 
proposed changes to the wage indexes, the proposed continuation of a 
payment adjustment for rural SCHs, including EACHs, and the proposed 
payment adjustment for cancer hospitals would not increase OPPS 
payments because these proposed changes to the OPPS are budget neutral. 
However, these proposed updates would 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 
proposed payments, including proposed 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 proposed 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, would increase total 
estimated OPPS payments by 2.2 percent.
    We estimate the total increase (from proposed changes to the ASC 
provisions in this proposed rule as well as from enrollment, 
utilization, and case-mix changes) in expenditures under the ASC 
payment system for CY 2015 compared to CY 2014 to be approximately $243 
million. Because the provisions for the ASC payment system are part of 
a proposed rule that is economically significant as measured by the 
$100 million threshold, we have prepared a regulatory impact analysis 
of the proposed changes to the ASC payment system that, to the best of 
our ability, presents the costs and benefits of this portion of the 
proposed rule. Tables 53 and Table 54 of this proposed rule display the 
redistributional impact of the proposed 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 Proposed OPPS Changes in This Proposed Rule
(1) Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the proposed CY 2015 policy changes on various hospital groups. We 
post on the CMS Web site our proposed hospital-specific estimated 
payments for CY 2015 with the other supporting documentation for this 
proposed rule. To view the hospital-specific estimates, we refer 
readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the Web 
site, select ``regulations and notices'' from the left side of the page 
and then select ``CMS-1613-P'' 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 
proposed rule. We show hospital-specific data only for hospitals whose 
claims were used for modeling the impacts shown in Table 52 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 proposed 
rule for a discussion of the hospitals whose claims we do not use for 
ratesetting and impact purposes.
    We estimate the effects of the proposed 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 proposed 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 this 
proposed rule, we are soliciting 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 receive 
will be addressed in the applicable sections of the final rule with 
comment period.
(2) Estimated Effects of Proposed OPPS Changes on Hospitals
    Table 52 below shows the estimated impact of this proposed rule on 
hospitals. Historically, the first line of the impact table, which 
estimates the proposed change in 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

[[Page 41069]]

permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 52, 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 proposed rule.
    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 proposed 
IPPS market basket percentage increase for FY 2015 is 2.7 percent (79 
FR 28087). Section 1833(t)(3)(F)(i) of the Act reduces that 2.7 percent 
by the multifactor productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act, which is proposed to be 0.4 
percentage points for FY 2015 (which is also the proposed MFP 
adjustment for FY 2015 in the FY 2015 IPPS/LTCH PPS proposed rule (79 
FR 28087); 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 points, resulting in the proposed OPD fee schedule increase 
factor of 2.1 percent. We are proposing to use the proposed OPD fee 
schedule increase factor of 2.1 percent in the calculation of the CY 
2015 proposed 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 52.
    To illustrate the impact of the proposed 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 52 shows the estimated redistribution of the proposed 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 
proposed wage indexes and the provider adjustments (Column 3); the 
combined impact of all the proposed changes described in the preceding 
columns plus the proposed 2.1 percent OPD fee schedule increase factor 
update to the conversion factor (Column 4); the combined impact shown 
in Column 4 plus the proposed CY 2015 frontier State wage index 
adjustment (Column 5); and the estimated impact taking into account all 
proposed payments for CY 2015 relative to all payments for CY 2014, 
including the impact of proposed changes in estimated outlier payments 
and proposed 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 proposing 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 would 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 proposed rule would 
redistribute money during implementation also would 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 proposed rates for CY 2015 would 
increase Medicare OPPS payments by an estimated 2.2 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 2.2 percent increase 
in Medicare payments to all other hospitals. These estimated payments 
would not significantly impact other providers.
Column 1: Total Number of Hospitals
    The first line in Column 1 in Table 52 shows the total number of 
facilities (3,947), 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 
proposed rule. At this time, we are unable to calculate a 
disproportionate share (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 (3,814), 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 Proposed Changes
    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 would experience a 
decrease of -0.1 percent, with the impact ranging from an increase of 
0.1 percent to a decrease of -0.3 percent, depending on the number of 
beds. Rural hospitals would experience an increase

[[Page 41070]]

of 0.5 percent, with the impact ranging from an increase of 1.2 percent 
to a decrease of -0.6 percent, depending on the number of beds. Major 
teaching hospitals would experience an increase of 0.6 percent overall.
Column 3: New Wage Indexes and the Effect of the Provider Adjustments
    Column 3 demonstrates the combined budget neutral impact of the 
proposed APC recalibration; the proposed updates for the wage indexes 
with the proposed fiscal year (FY) 2015 IPPS post-reclassification wage 
indexes; and the proposed rural adjustment. We modeled the independent 
effect of the proposed budget neutrality adjustments and the proposed 
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 proposed 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 proposed 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 proposing to continue the rural payment adjustment of 7.1 
percent to rural SCHs for CY 2015, as described in section II.E. of 
this proposed rule.
    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 proposed 
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 proposed FY 2015 wage policy 
results in modest redistributions.
    There is no difference in impact between the CY 2014 cancer 
hospital payment adjustment and the proposed CY 2015 cancer hospital 
payment adjustment because we are proposing the same payment-to-cost 
ratio target in CY 2015 as in CY 2014.
Column 4: All Proposed Budget Neutrality Changes Combined With the 
Proposed Market Basket Update
    Column 4 demonstrates the combined impact of all the proposed 
changes previously described and the proposed update to the conversion 
factor of 2.1 percent. Overall, these changes would increase payments 
to urban hospitals by 2.1 percent and to rural hospitals by 2.4 
percent. Most classes of hospitals would receive an increase in line 
with the proposed 2.1 percent overall increase after the update is 
applied to the budget neutrality adjustments.
Column 5: All Proposed Adjustments With the Proposed Frontier State 
Wage Index Adjustment
    This column shows the impact of all proposed budget neutrality 
adjustments, application of the proposed 2.1 percent OPD fee schedule 
increase factor, and the nonbudget-neutral impact of applying the 
proposed CY 2015 frontier State wage adjustment. Rural hospitals in 
West North Central and Mountain States would experience estimated 
increases in payment of 3.8 and 4.3 percent, respectively, as a result 
of the proposed frontier State wage index adjustment, while urban 
hospitals in those States would experience estimated increases of 3.2 
and 2.5 percent, respectively.
Column 6: All Proposed Changes for CY 2015
    Column 6 depicts the full impact of the proposed CY 2015 policies 
on each hospital group by including the effect of all of the proposed 
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 proposed OPD fee schedule increase; the impact of the 
proposed frontier State wage index adjustment; the impact of estimated 
OPPS outlier payments as discussed in section II.G. of this proposed 
rule; the proposed 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 
proposed rule); 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 35 
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 
proposed changes for CY 2015 would increase payments to all providers 
by 2.2 percent for CY 2015. We modeled the independent effect of all 
proposed changes in Column 6 using the final relative payment weights 
for CY 2014 and the proposed relative payment weights for CY 2015. We 
used the final conversion factor for CY 2014 of $72.672 and the 
proposed CY 2015 conversion factor of $74.176 discussed in section 
II.B. of this proposed rule.
    Column 6 contains simulated outlier payments for each year. We used 
the 1-year proposed charge inflation factor used in the FY 2015 IPPS/
LTCH PPS proposed rule (79 FR 28321) of 5.57 percent (1.0557) to 
increase individual costs on the CY 2013 claims, and we used the most 
recent overall CCR in the April 2014 Outpatient Provider-Specific File 
(OPSF) to estimate outlier payments for CY 2014. Using the CY 2013 
claims and a 5.57 percent charge inflation factor, we currently 
estimate that outlier payments for CY 2014, using a multiple threshold 
of 1.75 and a proposed fixed-dollar threshold of $2,900 would be 
approximately 0.9 percent of total payments. The estimated current 
outlier payments of 0.9 percent are incorporated in the comparison in 
Column 6. We used the same set of claims and a proposed charge 
inflation factor of 11.46 percent (1.1146) and the CCRs in the April 
2014 OPSF, with an adjustment of 0.9813, to reflect relative changes in 
cost and charge inflation between CY 2013 and CY 2015, to model the CY 
2015 proposed outliers at 1.0 percent of estimated total payments using 
a multiple threshold of 1.75 and a proposed fixed-dollar threshold of 
$3,100. The charge inflation and CCR inflation factors are discussed in 
detail in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321).
    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 would be negligible. Overall, we estimate that facilities 
would experience an increase of 2.2 percent under this proposed rule in 
CY 2015 relative to total spending in CY 2014. This projected increase 
(shown in Column 6) of Table 52 reflects the proposed 2.1 percent OPD 
fee schedule increase factor, less 0.01 percent for the proposed change 
in the pass-through estimate between CY 2014 and CY 2015, plus 0.1 
percent for the difference in estimated outlier payments between CY 
2014 (0.9 percent) and CY 2015 (1.0 percent), less 0.1 percent due to 
the frontier adjustment in CY 2014, plus 0.1 percent due to the 
proposed frontier State wage index adjustment in CY 2015. We estimate 
that the combined effect of all proposed changes for CY 2015 would 
increase payments to urban hospitals by 2.2 percent.
    Overall, we estimate that rural hospitals would experience a 2.5 
percent increase as a result of the

[[Page 41071]]

combined effects of all proposed changes for CY 2015. We estimate that 
rural hospitals that bill less than 5,000 lines of OPPS services would 
experience a decrease of -3.1 percent and rural hospitals that bill 
11,000 or more lines of OPPS services would experience increases 
ranging from 1.5 to 3.0 percent.
    Among hospitals by teaching status, we estimate that the impacts 
resulting from the combined effects of all proposed changes would 
include an increase of 2.9 percent for major teaching hospitals and 2.1 
percent for nonteaching hospitals. Minor teaching hospitals would 
experience an estimated increase of 1.8 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
would experience an increase of 2.4 percent, proprietary hospitals 
would experience an increase of 1.7 percent, and governmental hospitals 
would experience an increase of 2.2 percent.

                    Table 52--Estimated Impact of the Proposed CY 2015 Changes for the Hospital Outpatient Prospective Payment System
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           All proposed
                                                                                                            All budget    budget neutral
                                                                                                              neutral       changes and
                                                                                APC        Proposed new       changes        proposed
                                                             Number of     Recalibration  wage index and  (combined cols  update (column   All proposed
                                                             hospitals     (all proposed     provider        2,3) with        4) with         changes
                                                                             changes)       adjustments      proposed        proposed
                                                                                                           market basket   frontier wage
                                                                                                              update          index,
                                                                                                                            adjustment
                                                                     (1)             (2)             (3)             (4)             (5)             (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL FACILITIES *........................................           3,947             0.0             0.0             2.1             2.2             2.2
ALL HOSPITALS...........................................           3,814             0.0             0.0             2.1             2.2             2.2
(excludes hospitals permanently held harmless and CMHCs)
URBAN HOSPITALS.........................................           2,953            -0.1             0.0             2.1             2.2             2.2
    LARGE URBAN (GT 1 MILL.)............................           1,616            -0.1             0.1             2.2             2.2             2.3
    OTHER URBAN (LE 1 MILL.)............................           1,337            -0.1            -0.1             1.9             2.2             2.1
RURAL HOSPITALS.........................................             861             0.5            -0.2             2.4             2.7             2.5
    SOLE COMMUNITY......................................             377             0.7            -0.1             2.6             3.0             2.7
    OTHER RURAL.........................................             484             0.3            -0.3             2.2             2.3             2.2
BEDS (URBAN):
    0-99 BEDS...........................................           1,008             0.1             0.1             2.4             2.6             2.5
    100-199 BEDS........................................             856             0.2             0.0             2.3             2.4             2.4
    200-299 BEDS........................................             462            -0.2             0.1             2.0             2.2             2.2
    300-499 BEDS........................................             412            -0.3             0.0             1.8             2.0             2.0
    500 + BEDS..........................................             215             0.1             0.0             2.1             2.1             2.3
BEDS (RURAL):
    0-49 BEDS...........................................             338             0.9             0.0             3.0             3.2             3.0
    50-100 BEDS.........................................             319             1.2            -0.2             3.0             3.3             3.1
    101-149 BEDS........................................             117             0.3            -0.1             2.3             2.6             2.4
    150-199 BEDS........................................              47             0.0            -0.5             1.6             2.3             1.7
    200 + BEDS..........................................              40            -0.6            -0.2             1.3             1.3             1.4
VOLUME (URBAN):
    LT 5,000 Lines......................................             500            -2.6            -0.2            -0.8            -0.6            -0.7
    5,000-10,999 Lines..................................             138            -2.7            -0.1            -0.7            -0.1            -0.5
    11,000-20,999 Lines.................................             120            -2.4             0.0            -0.3            -0.1            -0.1
    21,000-42,999 Lines.................................             237            -0.4             0.1             1.8             1.8             1.9
    42,999-89,999 Lines.................................             540            -0.2             0.0             1.9             1.9             2.0
    GT 89,999 Lines.....................................           1,418             0.0             0.0             2.1             2.2             2.3
VOLUME (RURAL):
    LT 5,000 Lines......................................              35            -5.1            -0.1            -3.1            -0.3            -3.1
    5,000-10,999 Lines..................................              27            -4.1             0.1            -1.9            -0.7            -1.9
    11,000-20,999 Lines.................................              50            -0.2            -0.4             1.5             1.7             1.5
    21,000-42,999 Lines.................................             162             1.0            -0.1             3.0             3.5             3.0
    GT 42,999 Lines.....................................             587             0.5            -0.2             2.4             2.6             2.5
REGION (URBAN):
    NEW ENGLAND.........................................             151             1.3            -0.1             3.3             3.3             3.4
    MIDDLE ATLANTIC.....................................             357             0.5             0.5             3.1             3.1             3.2
    SOUTH ATLANTIC......................................             468            -0.2            -0.2             1.6             1.6             1.8
    EAST NORTH CENT.....................................             465             0.1            -0.3             1.9             1.9             2.1
    EAST SOUTH CENT.....................................             175            -1.0            -0.5             0.6             0.6             0.8
    WEST NORTH CENT.....................................             192            -0.1             0.0             2.0             3.2             2.1
    WEST SOUTH CENT.....................................             509            -1.1            -0.2             0.8             0.8             1.0
    MOUNTAIN............................................             199             0.0             0.0             2.1             2.5             2.3
    PACIFIC.............................................             390            -0.1             1.0             3.1             3.1             3.2
    PUERTO RICO.........................................              47             1.0             0.5             3.6             3.6             3.6
REGION (RURAL):
    NEW ENGLAND.........................................              23             2.0            -0.1             4.0             4.0             4.1
    MIDDLE ATLANTIC.....................................              58             1.4             0.4             3.9             3.9             4.0
    SOUTH ATLANTIC......................................             130            -0.3            -0.5             1.3             1.3             1.4

[[Page 41072]]

 
    EAST NORTH CENT.....................................             120             0.7             0.0             2.8             2.8             2.9
    EAST SOUTH CENT.....................................             165            -0.2            -0.4             1.5             1.5             1.6
    WEST NORTH CENT.....................................              99             0.7            -0.2             2.6             3.8             2.6
    WEST SOUTH CENT.....................................             181             0.1            -0.6             1.6             1.6             1.7
    MOUNTAIN............................................              61             0.9            -0.5             2.6             4.3             2.8
    PACIFIC.............................................              24             1.4             0.9             4.4             4.4             4.4
TEACHING STATUS:
    NON-TEACHING........................................           2,793            -0.1             0.0             2.0             2.1             2.1
    MINOR...............................................             699            -0.3            -0.1             1.7             1.9             1.8
    MAJOR...............................................             322             0.6             0.1             2.8             2.8             2.9
DSH PATIENT PERCENT:
    0...................................................              15             0.2             0.5             2.8             3.2             2.8
    GT 0-0.10...........................................             334             0.3             0.2             2.6             2.8             2.7
    0.10-0.16...........................................             317             0.3            -0.1             2.4             2.5             2.4
    0.16-0.23...........................................             681             0.2            -0.1             2.3             2.4             2.4
    0.23-0.35...........................................           1,095             0.0             0.0             2.1             2.3             2.2
    GE 0.35.............................................             811            -0.2             0.0             1.9             1.9             2.1
    DSH NOT AVAILABLE **................................             561            -6.6             0.1            -4.4            -4.4            -4.5
URBAN TEACHING/DSH:
    TEACHING & DSH......................................             928             0.1             0.0             2.2             2.3             2.3
    NO TEACHING/DSH.....................................           1,482            -0.2             0.1             2.0             2.1             2.1
    NO TEACHING/NO DSH..................................              13             0.2             0.5             2.9             2.9             2.9
    DSH NOT AVAILABLE **................................             530            -6.1             0.2            -3.8            -3.8            -3.9
TYPE OF OWNERSHIP:
    VOLUNTARY...........................................           2,007             0.1             0.0             2.2             2.4             2.4
    PROPRIETARY.........................................           1,255            -0.5             0.0             1.6             1.7             1.7
    GOVERNMENT..........................................             552             0.0            -0.1             2.1             2.1             2.2
CMHCs...................................................              72            -4.0            -0.1            -2.0            -2.0            -1.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all proposed 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 proposed FY 2015 hospital inpatient wage index, including all
  proposed hold harmless policies and transitional wages. The proposed rural adjustment continues our current policy of 7.1 percent so the budget
  neutrality factor is 1. The budget neutrality adjustment for the proposed 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 proposed 2.1 percent OPD fee schedule update factor (2.7
  percent reduced by 0.4 percentage points 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 non-budget 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 3,947 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.

(3) Estimated Effects of Proposed OPPS Changes on CMHCs
    The last line of Table 52 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 reports for the provider-type-specific APC. For CY 
2015, we are proposing to continue the provider-type-specific APC 
structure that we adopted in CY 2011. We modeled the impact of this 
proposed APC policy assuming that CMHCs would 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 
proposed rule. 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 would experience an overall -1.6 percent decrease in payments 
from CY 2014 (shown in Column 6).

[[Page 41073]]

    Column 3 shows that the estimated impact of adopting the proposed 
FY 2015 wage index values would result in a small decrease of -0.1 
percent to CMHCs. We note that all providers paid under the OPPS, 
including CMHCs, would receive a 2.1 percent OPD fee schedule increase 
factor. Column 4 shows that combining this proposed OPD fee schedule 
increase factor, along with proposed changes in APC policy for CY 2015 
and the proposed FY 2015 wage index updates, would result in an 
estimated decrease of -2.0 percent. Column 5 shows that adding the 
proposed frontier State wage index adjustment would result in no change 
to the cumulative -2.0 percent decrease. Column 6 shows that adding the 
proposed changes in outlier and pass-though payments would result in an 
additional 0.4 percent increase in payment for CMHCs, for a total 
decrease of -1.6 percent. This reflects all proposed changes to CMHCs 
for CY 2015.
(4) Estimated Effect of Proposed 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 would 
increase for services for which the OPPS payments would rise and would 
decrease for services for which the OPPS payments would 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 proposed rule. In all cases, the statute limits 
beneficiary liability for copayment for a procedure to the hospital 
inpatient deductible for the applicable year.
    We estimate that the aggregate beneficiary coinsurance percentage 
would be 20.1 percent for all services paid under the OPPS in CY 2015. 
The estimated aggregate beneficiary coinsurance reflects general system 
adjustments, including proposed recalibration of the APC relative 
payment weights, proposed change in the portion of OPPS payments 
dedicated to pass-through payments, and the CY 2015 comprehensive APC 
policy discussed in section II.A.2.e. of this proposed rule.
(5) Estimated Effects of Proposed 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 proposed rule. No types of providers or suppliers other than 
hospitals, CMHCs and ASCs would be affected by the proposed changes in 
this proposed rule.
(6) Estimated Effects of Proposed OPPS Changes on the Medicare and 
Medicaid Programs
    The effect on the Medicare program is expected to be $800 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 
proposed rule.
(7) Alternative OPPS Policies Considered
    Alternatives to the OPPS changes we are proposing to make and the 
reasons for our selected alternatives are discussed throughout this 
proposed rule.
 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 
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 Proposed 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 proposed rule, we are proposing to set 
the CY 2015 ASC relative payment weights by scaling the proposed CY 
2015 OPPS relative payment weights by the proposed ASC scaler of 
0.9142. The estimated effects of the proposed updated relative payment 
weights on payment rates are varied and are reflected in the estimated 
payments displayed in Tables 53 and 54 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 proposed CY 2015 ASC conversion factor by 
adjusting the CY 2014 ASC conversion factor by 0.9983 to account for 
changes in the pre-floor and pre-reclassified hospital wage indexes 
between CY 2014 and CY 2015 and by applying the proposed CY 2015 MFP-
adjusted CPI-U update factor of 1.2 percent (projected CPI-U update of 
1.7 percent minus a projected productivity adjustment of 0.5 percent). 
The proposed CY 2015 ASC conversion factor is $43.918.
(1) Limitations of Our Analysis
    Presented here are the projected effects of the proposed 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 proposed CY 2015 changes would 
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 would experience changes 
in payment that differ from the aggregated estimated impacts presented 
below.
(2) Estimated Effects of ASC Payment System Proposed 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 proposed update to the CY 2015 payments would 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

[[Page 41074]]

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 proposed CY 
2015 updates to the ASC payment system on Medicare payments to ASCs, 
assuming the same mix of services as reflected in our CY 2013 claims 
data. Table 53 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 54 shows a comparison of estimated CY 2014 payments to estimated 
CY 2015 payments for procedures that we estimate would receive the most 
Medicare payment in CY 2014.
    Table 53 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 53.
     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 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 proposed updates to ASC payment rates 
for CY 2015 compared to CY 2014.
    As seen in Table 53, for the six specialty groups that account for 
the most ASC utilization and spending, we estimate that the proposed 
update to ASC rates for CY 2015 would result in a 2-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, and a 3-percent increase 
in aggregate payment amounts for genitourinary system procedures and 
integumentary system procedures.
    An estimated increase in aggregate payment for the specialty group 
does not mean that all procedures in the group would 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 
would increase by 9 percent for CY 2015.
    Also displayed in Table 53 is a separate estimate of Medicare ASC 
payments for the group of separately payable covered ancillary items 
and services. The payment 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 would not change 
for CY 2015.

  Table 53--Estimated Impact of the Proposed CY 2015 Update to the ASC
    Payment System on Aggregate CY 2015 Medicare Program Payments by
        Surgical Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
                                           Estimated CY
                                             2014 ASC      Estimated CY
        Surgical specialty group           payments (in    2015 percent
                                             millions)        change
(1)                                                  (2)             (3)
------------------------------------------------------------------------
Total...................................          $3,819               1
Eye and ocular adnexa...................           1,556              -2
Digestive system........................             780               6
Nervous system..........................             572               1
Musculoskeletal system..................             474               2
Genitourinary system....................             167               3
Integumentary system....................             137               3
Respiratory system......................              54               1
Cardiovascular system...................              35              -3
Ancillary items and services............              24               0
Auditory system.........................              14               0
Hematologic & lymphatic systems.........               6              12
------------------------------------------------------------------------

    Table 54 below shows the estimated impact of the proposed 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.
     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

[[Page 41075]]

payment for CY 2014 and the estimated payment for CY 2015 based on the 
proposed update.

  Table 54--Estimated Impact of the Proposed CY 2015 Update to the ASC Payment System on Aggregate Payments for
                                               Selected Procedures
----------------------------------------------------------------------------------------------------------------
                                                                                   Estimated CY
                                                                                     2014 ASC      Estimated CY
            CPT/HCPCS code *                         Short descriptor              payments  (in   2015 percent
                                                                                     millions)        change
(1)                                      (2)....................................             (3)             (4)
----------------------------------------------------------------------------------------------------------------
66984..................................  Cataract surg w/iol, 1 stage...........          $1,132              -2
43239..................................  Upper GI endoscopy, biopsy.............             170               9
45380..................................  Colonoscopy and biopsy.................             168               6
45385..................................  Lesion removal colonoscopy.............             107               6
66982..................................  Cataract surgery, complex..............              93              -2
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               2
64493..................................  Inj paravert f jnt l/s 1 lev...........              47               0
64635..................................  Destroy lumb/sac facet jnt.............              45              -3
G0105..................................  Colorectal scrn; hi risk ind...........              45               0
63650..................................  Implant neuroelectrodes................              41               5
G0121..................................  Colon ca scrn not hi rsk ind...........              41               0
64590..................................  Insrt/redo pn/gastr stimul.............              39              -4
15823..................................  Revision of upper eyelid...............              35               1
63685..................................  Insrt/redo spine n generator...........              35              27
29827..................................  Arthroscop rotator cuff repr...........              34               1
64721..................................  Carpal tunnel surgery..................              32              -1
29881..................................  Knee arthroscopy/surgery...............              30              -1
29824..................................  Shoulder arthroscopy/surgery...........              28               1
29880..................................  Knee arthroscopy/surgery...............              25              -1
43235..................................  Uppr gi endoscopy diagnosis............              23               9
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               6
67042..................................  Vit for macular hole...................              21              -1
26055..................................  Incise finger tendon sheath............              20              -1
----------------------------------------------------------------------------------------------------------------

(3) Estimated Effects of ASC Payment System Proposed Policies on 
Beneficiaries
    We estimate that the proposed CY 2015 update to the ASC payment 
system would 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 proposing to designate as 
office-based for CY 2015. First, other than certain preventive services 
where coinsurance and the Part B deductible is waived to comply with 
sections 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 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 proposing to designate as office-based in CY 
2015, the beneficiary coinsurance amount under the ASC payment system 
generally would 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 proposing to make to 
the ASC payment system and the reasons that we have chosen specific 
options are discussed throughout this proposed rule. There are no 
proposed 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/a-4.pdf), we have 
prepared two accounting statements to illustrate the impacts of this 
proposed rule. The first accounting statement, Table 55 (below), 
illustrates the classification of expenditures for the CY 2015 
estimated hospital OPPS incurred benefit impacts associated with the 
proposed CY 2015

[[Page 41076]]

OPD fee schedule increase, based on the 2014 Trustee's Report. The 
second accounting statement, Table 56 (below), illustrates the 
classification of expenditures associated with the 1.2 percent proposed 
CY 2015 update to the ASC payment system, based on the provisions of 
this proposed rule and the baseline spending estimates for ASCs in the 
2014 Trustee's Report. Lastly, the tables classify most estimated 
impacts as transfers.

     Table 55--Accounting Statement: CY 2015 Estimated Hospital OPPS
 Transfers From CY 2014 to CY 2015 Associated With the Proposed CY 2015
              Hospital Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $800 million.
From Whom to Whom......................  Federal Government to
                                          outpatient hospitals and other
                                          providers who receive payment
                                          under the hospital OPPS.
                                        --------------------------------
    Total..............................  $800 million.
------------------------------------------------------------------------

  Table 56--Accounting Statement: Classification of Estimated Transfers
  From CY 2014 to CY 2015 as a Result of the Proposed CY 2015 Update to
                         the ASC Payment System
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $36 million.
From Whom to Whom......................  Federal Government to Medicare
                                          Providers and Suppliers.
                                        --------------------------------
    Total..............................  $36 million.
------------------------------------------------------------------------

d. Effects of Proposed Requirements for the Hospital OQR Program
    In section XIII. of this proposed rule, we are proposing to adopt 
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 receive the full OPD 
fee schedule increase factor for the CY 2017 payment determination and 
subsequent years.
    In sections XIII.E. and XIII.C.3.of this proposed rule, for the CY 
2017 payment determination and subsequent years, we are proposing to 
add one claims-based quality measure and to remove three measures from 
the Hospital OQR Program. In sections XIII.D.3.b. and c. of this 
proposed rule we are proposing to remove one measure 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 would 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.
    Because the measure we are proposing to add for the CY 2017 payment 
determination and subsequent years 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 the Hospital OQR Program 
requirements. We anticipate a reduction in burden of approximately 
862,077 hours or $25.9 million across participating hospitals from the 
three measures we are proposing to remove and the one measure we are 
proposing to make voluntary as further detailed in sections XIII.C.3. 
and XIII.D.3.c. of this proposed rule, respectively, and the 
information collection requirements in section XIX.C.1. of this 
proposed rule.
    The validation requirements for the CY 2017 payment determination 
and subsequent years would 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 proposed rule, we are proposing 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 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 previously (76 FR 74577), we would 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 proposed 
electronic methods, we are proposing in the information collection 
requirements section of this proposed rule 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 is 
generally 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 would fail the validation 
documentation submission requirement for the CY 2017 payment 
determination. Because we would pay for the data collection effort 
though, we believe that a requirement for medical record documentation 
for up to 12 cases per quarter for up to 500 hospitals for CY 2015 
represents a minimal burden to Hospital OQR Program participating 
hospitals.
e. Effects of CY 2015 Proposed Policies for the ASCQR Program
    In section XIV. of this proposed rule, we are proposing to adopt 
policies affecting the ASCQR Program. Of 5,300 ASCs that met 
eligibility requirements, we determined that 116 ASCs did not meet the 
requirements to receive the full annual payment update for CY 2014.
    In section XIV.B.5. of this proposed rule, for the CY 2017 payment

[[Page 41077]]

determination and subsequent years, we are proposing to add one claims-
based quality measure. The measure we are proposing for CY 2017 and 
subsequent years is claims-based and would not require additional data 
reporting or other action by ASCs. Therefore, we do not anticipate that 
this measure would cause any additional ASCs to fail to meet the ASCQR 
Program requirements. We present the time and burdens associated with 
our policies and proposals in section XIX.C.2. of this proposed rule.
    In section XIV.E.3.b. of this proposed rule, we note a 3-month 
delay in data collection for two measures for the CY 2016 payment 
determination. We do not believe that this 3-month delay in data 
collection would significantly affect the number of ASCs that meet the 
ASCQR Program requirements.
    In section XIV.E.3.c. of this proposed rule, we are proposing that 
one measure which was to be first included in the CY 2016 payment 
determination, would not be included in the CY 2016 measure set and 
that the measure would be voluntary for the CY 2017 payment 
determination and subsequent years. ASCs would not be subject to a 
payment reduction for the CY 2016 payment determination, nor would ASCs 
be subject to a payment reduction for the CY 2017 payment determination 
and subsequent years for failing to report this measure. Because this 
measure was not included in the CY 2014 payment determination and has 
not yet affected any payment determination, we do not believe that 
there will be an impact on the number of ASCs that meet the ASCQR 
Program requirements from our proposals 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 
would 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).
    Further, we do not believe that any of the proposals in this 
proposed rule would 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 would 
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 would not receive the full annual payment update 
in CY 2017 due to failure to meet the ASCQR Program requirements.
f. Effects of Proposed 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).
    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 Sec.  
411.362(c)(2) for applicable hospitals and Sec.  411.362(c)(3) for high 
Medicaid facilities (76 FR 42350 through 42352). In section XV. of this 
proposed rule, we discuss our proposal to permit hospitals also to use 
internal or external data sources, as defined in the proposal, to 
demonstrate satisfaction of the eligibility criteria. Under our 
proposal, we would 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 criteria. We believe 
the impact of our proposed modification on affected hospitals would be 
minimal, given that the use of data from an internal or external source 
is voluntary.
    Our proposal would 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 Sec. Sec.  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 believe the impact of this proposed 
additional requirement on physician-owned hospitals would be minimal.
    We believe that our proposals would 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 would be affected by these proposals as a result of 
their ownership interests in hospitals.
    We believe that beneficiaries may be positively impacted by our 
proposals. 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 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 proposals are necessary to conform our regulations to the 
amendments to section 1877 of the Act.

[[Page 41078]]

    We are soliciting public comments on each of the issues outlined 
above that contain estimates of the costs and benefits of the proposed 
rule. We are specifically soliciting comments on the potential impact 
on State governments, given that we are proposing to define external 
data sources as data sources generated, maintained, or under the 
control of a State Medicaid agency.
g. Effects of Proposed 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 proposed rule, we discuss our proposals 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 data to CMS. It is difficult to predict how 
many times CMS would annually determine an overpayment due to erroneous 
data submitted to CMS by the MA organization or Part D sponsor and 
that, therefore, would be subject to the proposed offset and appeals 
regulations. However, we predict that it would be highly unlikely to 
exceed 10 cases a year and would probably be fewer. Further, electing 
to appeal a CMS overpayment determination under the proposed 
regulations is completely at the discretion of the MA organization or 
Part D sponsor. The MA 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 would be costs 
associated with preparing the appeal request.
    We are proposing three levels of appeal review (reconsideration, 
informal hearing, and Administrator review), each of which the MA 
organization or Part D sponsor would 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 would not involve oral testimony. The extent to which 
there would be costs associated with preparing the appeal request is 
subject to preference and choice. We estimate that it would 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 high-level 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 would 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 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 would 
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 $35.5 million or less in any single 
year. Most ASCs and most CMHCs are considered small businesses with 
total revenues of $14 million or less in any single year. We estimate 
that this proposed rule may have a significant impact on approximately 
2,007 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 
proposed rule may have a significant impact on approximately 709 small 
rural hospitals.
    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 proposed rule does 
not mandate any requirements for State, local, or tribal governments, 
or for the private sector.

D. Conclusion

    The changes we are proposing to make in this proposed rule would 
affect all classes of hospitals paid under the OPPS and would affect 
both CMHCs and ASCs. We estimate that most classes of hospitals paid 
under the OPPS would experience a modest increase or a minimal decrease 
in payment for services furnished under the OPPS in CY 2015. Table 52 
demonstrates the estimated distributional impact of the OPPS budget 
neutrality requirements that would result in a 2.2 percent increase in 
payments for all services paid under the OPPS in CY 2015, after 
considering all of the proposed changes to APC reconfiguration and 
recalibration, as well as the proposed OPD fee schedule increase 
factor, proposed wage index changes, including the proposed frontier 
State wage index adjustment, estimated payment for outliers, and 
proposed changes to the pass-through payment estimate. However, some 
classes of providers that are paid under the OPPS would experience more 
significant gains and others would experience modest losses in OPPS 
payments in CY 2015.
    The proposed updates to the ASC payment system for CY 2015 would 
affect each of the approximately 5,300 ASCs currently approved for 
participation in the Medicare program. The effect on an individual ASC 
would 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

[[Page 41079]]

the ASC payment system, and the extent to which the ASC provides a 
different set of procedures in the coming year. Table 53 demonstrates 
the estimated distributional impact among ASC surgical specialties of 
the MFP-adjusted CPI-U update factor of 1.2 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 proposed rule in accordance with Executive Order 13132, 
Federalism, and have determined that they would 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 52 of 
this proposed rule, we estimate that OPPS payments to governmental 
hospitals (including State and local governmental hospitals) would 
increase by 2.2 percent under this proposed rule. 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 
proposed rule, in conjunction with the remainder of this document, 
demonstrate that this proposed rule is consistent with the regulatory 
philosophy and principles identified in Executive Order 12866, the RFA, 
and section 1102(b) of the Act.
    This proposed rule would 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.

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.

    For reasons stated in the preamble of this document, the Centers 
for Medicare & Medicaid Services is proposing to amend 42 CFR Chapter 
IV as set forth below:

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATION ON MEDICARE 
PAYMENT

0
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).

0
2. Section 411.351 is amended by adding the definitions ``External data 
source'' and ``Internal data source'' in alphabetical order to read as 
follows:

Sec.  411.351  Definitions.

* * * * *
    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 
Sec.  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 
described in Sec.  411.362(c), are accurate, complete, and objectively 
verifiable.
* * * * *
    Internal data source means a data source other than the Healthcare 
Cost Report Information System that--
    (1) Is generated, maintained, or under the control of the 
Department;
    (2) Is reliable and transparent;
    (3) Maintains data that, for purposes of the process described in 
Sec.  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 
described in Sec.  411.362(c), are accurate, complete, and objectively 
verifiable.
* * * * *
0
3. Section 411.362 is amended by revising paragraphs (c)(2)(ii), 
(c)(2)(iv), (c)(2)(v), (c)(3)(ii), and (c)(5) to read as follows:

Sec.  411.362  Additional requirements concerning physician ownership 
and investment in hospitals.

* * * * *
    (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 fiscal year for which data are available as of the date that the 
hospital submits its request. A hospital must use only filed Medicare 
hospital cost report data, data from an internal data source (as 
defined at Sec.  411.351), and/or data from an external data source (as 
defined at Sec.  411.351) 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:
* * * * *
    (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 data are 
available as of the date that the hospital submits its request. A 
hospital must use only filed Medicare hospital cost report data, data 
from an internal data source (as defined at Sec.  411.351), and/or data 
from an external data source (as defined at Sec.  411.351) to determine 
the average bed capacity in the State in which the hospital is located 
and the national average bed capacity.
    (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 
data are available as of the date that the hospital submits its 
request. A hospital must use only filed Medicare hospital cost report 
data, data from an internal data source (as defined at Sec.  411.351), 
and/or data from an external data source (as defined at Sec.  411.351) 
to determine its average bed occupancy rate and the average bed

[[Page 41080]]

occupancy rate for the State in which the hospital is located.
    (3) * * *
    (ii) Medicaid inpatient admissions. With respect to each of the 3 
most recent fiscal years 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. A 
hospital must use only filed Medicare hospital cost report data, data 
from an internal data source (as defined at Sec.  411.351), and/or data 
from an external data source (as defined at Sec.  411.351) 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.
* * * * *
    (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 internal data source or 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.
    (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

0
4. 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), and sec. 124 of Public Law 106-113 (113 
Stat.1501A-332).

Sec.  412.3  [Amended]

0
5. Section 412.3 is amended by--
0
a. Removing paragraph (c).
0
b. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d), 
respectively.
0
c. In newly 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

0
6. 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).

0
7. Section 416.164 is amended by revising paragraphs (a)(11) and (b)(5) 
to read as follows:

Sec.  416.164  Scope of ASC services.

    (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.
* * * * *
0
8. Section 416.171 is amended by revising paragraphs (b)(1) and (2) to 
read as follows:

Sec.  416.171  Determination of payment rates for ASC services.

* * * * *
    (b) * * *
    (1) Covered ancillary services specified in Sec.  416.164(b), with 
the exception of radiology services and certain diagnostic tests as 
provided in Sec.  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.
* * * * *

PART 419--PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT 
DEPARTMENT SERVICES

0
9. 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).

0
10. Section 419.2 is amended by revising paragraphs (b)(7) and (16) to 
read as follows:

Sec.  419.2  Basis of payment.

* * * * *
    (b) * * *
    (7) Ancillary services;
* * * * *
    (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);
* * * * *
0
11. Section 419.22 is amended by revising paragraph (j) to read as 
follows:

Sec.  419.22  Hospital services excluded from payment under the 
hospital outpatient prospective payment system.

* * * * *
    (j) Except as provided in Sec.  419.2(b)(11), prosthetic devices 
and orthotic devices.
* * * * *
0
12. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(6) to 
read as follows:

Sec.  419.32  Calculation of prospective payment rates for hospital 
outpatient services.

* * * * *
    (b) * * *
    (1) * * *
    (iv) * * *

[[Page 41081]]

    (B) * * *
    (6) For calendar year 2015, a multifactor productivity adjustment 
(as determined by CMS) and 0.2 percentage point.
* * * * *

Sec.  419.46  [Amended]

0
13. Section 419.46 is amended by--
0
a. In paragraph (c)(1), removing the phrase ``section 1833(17)(C)'' and 
adding in its place the phrase ``section 1833(t)(17)(C)''.
0
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 apppears.
0
c. In paragraph (d)(2), removing the term ``waivers'' and adding in its 
place the term ``exceptions''.
0
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)''.
0
14. Section 419.64 is amended by revising paragraph (a)(4)(iv) to read 
as follows:

Sec.  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, unless pass-through payment for a skin 
substitute as a biological is made on or before January 1, 2015.
* * * * *
0
15. Section 419.66 is amended by revising paragraph (b)(3) and removing 
paragraph (b)(4)(iii).
    The revision reads as follows:

Sec.  419.66  Transitional pass-through payments: Medical devices.

* * * * *
    (b) * * *
    (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

0
16. 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).

0
17. Section 422.330 is added to subpart G to read as follows:

Sec.  422.330  CMS-identified overpayments associated with payment data 
submitted by MA organizations.

    (a) Definitions. For purposes of this section--
    Payment data means data controlled and submitted by an MA 
organization to CMS and used for payment purposes, including enrollment 
data and data submitted under Sec.  422.310.
    Applicable reconciliation date occurs on the date of the annual 
final deadline for risk adjustment data submission described at Sec.  
422.310(g)(2)(ii).
    (b) Request to correct payment data. If CMS identifies an error in 
payment data other than an error identified through the process 
described in Sec.  422.311, 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 requesting 
that the MA organization correct the payment data. 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. 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. CMS will calculate the 
payment offset amount using 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 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.
    (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.
    (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 (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 10 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.

[[Page 41082]]

    (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)(iii) 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 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

0
18. 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.

0
19. Section 423.352 is added to read as follows:

Sec.  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--
    (1) Prescription drug event (PDE) data for the annual Part D 
payment reconciliations referred to in Sec.  423.343(c) and (d); or
    (2) Direct and indirect remuneration data.
    Payment data means data controlled and submitted by a Part D 
sponsor to CMS and used for payment purposes, including enrollment data 
and data submitted under Sec. Sec.  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 Sec.  
423.308, including data submitted to CMS regarding direct and indirect 
remuneration.
    (b) Request to correct payment data. If CMS identifies an error in 
payment data submitted by a Part D sponsor, 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 Part D 
sponsor requesting that the Part D sponsor correct the payment data. 
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. 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. CMS will calculate the 
payment offset amount using 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 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 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 (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

[[Page 41083]]

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:
    (A) CMS provides written notice of the time and place of the 
informal hearing at least 10 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.
    (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)(iii) 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 PAYMENT

0
20. 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).

0
21. Section 424.13 is amended by--
0
a. Revising paragraph (a) introductory text.
0
b. Removing paragraph (a)(1).
0
c. Redesignating paragraphs (a)(2), (3), and (4) as paragraphs (a)(1), 
(2), and (3), respectively.
0
d. Revising newly redesignated paragraph (a)(1)(i).
0
e. Revising paragraph (b).
    The revisions read as follows:

Sec.  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) 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: June 24, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: June 27, 2014.
Sylvia M. Burwell,
Secretary.
[FR Doc. 2014-15939 Filed 7-3-14; 4:15 pm]
BILLING CODE 4120-01-P
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