Vol. 79 Monday, 

No. 134 July 14, 2014 

Part III 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

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 


sroberts on DSK5SPTVN1PROD with PROPOSALS
40916 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

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. 

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 


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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-ServicePayment/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 


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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-toCharge 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 


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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 PassThrough 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 (‘‘ThresholdPackaged 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 DeviceIntensive 

(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 


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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 ClaimsBased 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 §§ 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’’ 


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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 (§ 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 costsharing, 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 passthrough 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 tocost ratio (PCR) after the additional 

payments is equal to the weighted 

average PCR for the other OPPS 


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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 devicedependent 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 costsharing 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 


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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 costbased 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 laborrelated 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. 


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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 passthrough 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 speechlanguage 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 § 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_

AdvisoryPanelonAmbulatoryPayment

ClassificationGroups.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 


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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 subjectmatter 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-ServicePayment/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-tocharge 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 


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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 


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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/<. 

11301 ....... Shave skin lesion 0.6–1.0 cm. 

11719 ....... Trim nail(s) any number. 

11720 ....... Debride nail 1–5. 

11721 ....... Debride nail 6 or more. 

17000 ....... Destruct premalg lesion. 

17110 ....... Destruct b9 lesion 1–14. 

29240 ....... Strapping of shoulder. 

29260 ....... Strapping of elbow or wrist. 

29280 ....... Strapping of hand or finger. 

29520 ....... Strapping of hip. 

29530 ....... Strapping of knee. 

51741 ....... Electro-uroflowmetry first. 

51798 ....... Us urine capacity measure. 

53601 ....... Dilate urethra stricture. 

53661 ....... Dilation of urethra. 

54240 ....... Penis study. 

67820 ....... Revise eyelashes. 

69210 ....... Remove impacted ear wax uni. 

69220 ....... Clean out mastoid cavity. 

70030 ....... X-ray eye for foreign body. 

70100 ....... X-ray exam of jaw <4views. 

70110 ....... X-ray exam of jaw 4/> views. 

70120 ....... X-ray exam of mastoids. 

70130 ....... X-ray exam of mastoids. 

70140 ....... X-ray exam of facial bones. 

70150 ....... X-ray exam of facial bones. 


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TABLE 1—HCPCS CODES PROPOSED

TO BE REMOVED FROM THE CY 

2015 BYPASS LIST—Continued 

HCPCS 

Code HCPCS Short descriptor 

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/< vws. 

72220 ....... X-ray exam sacrum tailbone. 

73000 ....... X-ray exam of collar bone. 

73010 ....... X-ray exam of shoulder blade. 

73020 ....... X-ray exam of shoulder. 

73030 ....... X-ray exam of shoulder. 

73050 ....... X-ray exam of shoulders. 

73060 ....... X-ray exam of humerus. 

73070 ....... X-ray exam of elbow. 

73080 ....... X-ray exam of elbow. 

73090 ....... X-ray exam of forearm. 

73100 ....... X-ray exam of wrist. 

73110 ....... X-ray exam of wrist. 

73120 ....... X-ray exam of hand. 

73130 ....... X-ray exam of hand. 

73140 ....... X-ray exam of finger(s). 

73510 ....... X-ray exam of hip. 

73520 ....... X-ray exam of hips. 

73540 ....... X-ray exam of pelvis & hips. 

73550 ....... X-ray exam of thigh. 

73560 ....... X-ray exam of knee 1 or 2. 

73562 ....... X-ray exam of knee 3. 

73564 ....... X-ray exam knee 4 or more. 

73565 ....... X-ray exam of knees. 

73590 ....... X-ray exam of lower leg. 

73600 ....... X-ray exam of ankle. 

73610 ....... X-ray exam of ankle. 

73620 ....... X-ray exam of foot. 

73630 ....... X-ray exam of foot. 

73650 ....... X-ray exam of heel. 

TABLE 1—HCPCS CODES PROPOSED

TO BE REMOVED FROM THE CY 

2015 BYPASS LIST—Continued 

HCPCS 

Code HCPCS Short descriptor 

73660 ....... X-ray exam of toe(s). 

74000 ....... X-ray exam of abdomen. 

74010 ....... X-ray exam of abdomen. 

74020 ....... X-ray exam of abdomen. 

74022 ....... X-ray exam series abdomen. 

76100 ....... X-ray exam of body section. 

76510 ....... Ophth us b & quant a. 

76514 ....... Echo exam of eye thickness. 

76516 ....... Echo exam of eye. 

76519 ....... Echo exam of eye. 

76645 ....... Us exam breast(s). 

76816 ....... Ob us follow-up per fetus. 

76882 ....... Us xtr non-vasc lmtd. 

76970 ....... Ultrasound exam follow-up. 

76977 ....... Us bone density measure. 

77072 ....... X-rays for bone age. 

77073 ....... X-rays bone length studies. 

77074 ....... X-rays bone survey limited. 

77076 ....... X-rays bone survey infant. 

77077 ....... Joint survey single view. 

77078 ....... Ct bone density axial. 

77079 ....... Ct bone density peripheral. 

77080 ....... Dxa bone density axial. 

77081 ....... Dxa bone density/peripheral. 

77082 ....... Dxa bone density vert fx. 

77083 ....... Radiographic absorptiometry. 

80500 ....... Lab pathology consultation. 

80502 ....... Lab pathology consultation. 

85097 ....... Bone marrow interpretation. 

86510 ....... Histoplasmosis skin test. 

86850 ....... Rbc antibody screen. 

86870 ....... Rbc antibody identification. 

86880 ....... Coombs test direct. 

86885 ....... Coombs test indirect qual. 

86886 ....... Coombs test indirect titer. 

86900 ....... Blood typing abo. 

86901 ....... Blood typing rh (d). 

86904 ....... Blood typing patient serum. 

86905 ....... Blood typing rbc antigens. 

86906 ....... Blood typing rh phenotype. 

86930 ....... Frozen blood prep. 

86970 ....... Rbc pretx incubatj w/chemicl. 

86977 ....... Rbc serum pretx incubj/inhib. 

88104 ....... Cytopath fl nongyn smears. 

88106 ....... Cytopath fl nongyn filter. 

88107 ....... Cytopath fl nongyn sm/fltr. 

88108 ....... Cytopath concentrate tech. 

88112 ....... Cytopath cell enhance tech. 

88120 ....... Cytp urne 3–5 probes ea spec. 

88160 ....... Cytopath smear other source. 

88161 ....... Cytopath smear other source. 

88162 ....... Cytopath smear other source. 

88172 ....... Cytp dx eval fna 1st ea site. 

88173 ....... Cytopath eval fna report. 

88182 ....... Cell marker study. 

88184 ....... Flowcytometry/tc 1 marker. 

88189 ....... Flowcytometry/read 16 & >. 

88300 ....... Surgical path gross. 

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. 

TABLE 1—HCPCS CODES PROPOSED

TO BE REMOVED FROM THE CY 

2015 BYPASS LIST—Continued 

HCPCS 

Code HCPCS Short descriptor 

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. 


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TABLE 1—HCPCS CODES PROPOSED

TO BE REMOVED FROM THE CY 

2015 BYPASS LIST—Continued 

HCPCS 

Code HCPCS Short descriptor 

93786 ....... Ambulatory bp recording. 

93788 ....... Ambulatory bp analysis. 

93875 ....... Extracranial study. 

94015 ....... Patient recorded spirometry. 

94690 ....... Exhaled air analysis. 

95803 ....... Actigraphy testing. 

95869 ....... Muscle test thor paraspinal. 

95900 ....... Motor nerve conduction test. 

95921 ....... Autonomic nrv parasym inervj. 

95970 ....... Analyze neurostim no prog. 

96900 ....... Ultraviolet light therapy. 

96910 ....... Photochemotherapy with uv-b. 

96912 ....... Photochemotherapy with uv-a. 

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 Costto-Charge Ratios (CCRs) 

For CY 2015, we are proposing to 

continue to use the hospital-specific 

overall ancillary and departmental costto-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-tocost center crosswalk that contains a 

hierarchy of CCRs used to estimate costs 

from charges for each revenue code. 

That crosswalk is available for review 

and continuous comment on the CMS 

Web site at: http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/ 

index.html. 

To ensure the completeness of the 

revenue code-to-cost center crosswalk, 

we reviewed changes to the list of 

revenue codes for CY 2013 (the year of 

claims data we used to calculate the 

proposed CY 2015 OPPS payment rates) 

and found that the National Uniform 

Billing Committee (NUBC) did not add 

any new revenue codes to the NUBC 

2013 Data Specifications Manual. 

In accordance with our longstanding 

policy, we calculated CCRs for the 

standard and nonstandard cost centers 

accepted by the electronic cost report 

database. In general, 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 hospitalspecific 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 


sroberts on DSK5SPTVN1PROD with PROPOSALS
40930 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

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

Cost allocation method 

CT MRI 

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. 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 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 Contrast ....................................................................................................................... 9.3 

0284 ............ Magnetic Resonance Imaging and Magnetic Resonance Angiography with Contrast ............................................. 4.2 

0331 ............ Combined Abdomen and Pelvis CT without Contrast ............................................................................................... 12.0 

0332 ............ Computed Tomography without Contrast .................................................................................................................. 14.1 

0333 ............ Computed Tomography without Contrast followed by Contrast ................................................................................ 12.1 

0334 ............ Combined Abdomen and Pelvis CT with Contrast .................................................................................................... 10.1 

0336 ............ Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast ........................................ 7.4 

0337 ............ Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast f ...................................... 6.0 

0383 ............ Cardiac Computed Tomographic Imaging ................................................................................................................. 4.3 

0662 ............ CT Angiography ......................................................................................................................................................... 10.3 

8005 ............ CT and CTA without Contrast Composite ................................................................................................................. 12.7 

8006 ............ CT and CTA with Contrast Composite ...................................................................................................................... 9.2 

8007 ............ MRI and MRA without Contrast Composite ............................................................................................................... 6.3 

8008 ............ MRI and MRA with Contrast Composite .................................................................................................................... 6.3 

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-Feefor-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-Feefor-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 


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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 hospitalspecific overall ancillary CCR to the 

clinic revenue code. The revenue codeto-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 lineitems 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 lineitem 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. 


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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 compositespecific 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 (‘‘STVpackaged’’) 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’’ (‘‘STVpackaged’’) or status indicator ‘‘Q2’’ (‘‘Tpackaged’’) 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. NonOPPS 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 


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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’’ (‘‘Tpackaged’’) 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’’ (‘‘STVpackaged’’), 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 (‘‘Tpackaged’’) 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’’ (‘‘Tpackaged’’) 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 


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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. 


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TABLE 4—PROPOSED CY 2015 PACKAGED REVENUE CODES—Continued 

Revenue code Description 

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 postreclassification wage indices and, 

therefore, would result in the most 

accurate unadjusted geometric mean 

costs. We are proposing to use these prereclassified 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 


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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 medianbased 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 devicedependent 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 devicedependent 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-todevice edits and device-to-procedure 

edits used in ratesetting for devicedependent 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 


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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 devicedependent 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-toprocedure 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 devicedependent 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, devicedependent 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-toprocedure 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-toprocedure 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-toprocedure 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. 

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—Continued 

APC APC Title 

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 bloodspecific cost center often resulted in an 

underestimation of the true hospital 

costs for blood and blood products. 


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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 hospitalspecific 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 bloodspecific CCR methodology better 

responds to the absence of a bloodspecific 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 nonstranded 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 


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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 selfadministered 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 


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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 addon 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 addon codes currently assigned to deviceintensive 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 devicedependent 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 


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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 costsharing 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 passthrough 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. 


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TABLE 6—PROPOSED COMPREHENSIVE APC PAYMENT BUNDLING POLICY EXCLUSIONS FOR CY 2015—Continued 

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 costbased 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 


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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 devicedependent APCs) are appropriate 

candidates for comprehensive APC 

payment because the device-dependent 

APCs not included in last year’s 


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comprehensive APC payment proposal 

are similar to the original 29 devicedependent APCs that were proposed as 

comprehensive APCs in CY 2014. 

Similar to the original 29 devicedependent 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/MedicareFee-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 noncomprehensive 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 


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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 standalone 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 


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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 devicedependent 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 devicedependent 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 devicedependent 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 devicedependent 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 


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$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 


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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 passthrough 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-andGuidance/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-passthrough 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 addon 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 


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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 addon 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 allogeneicunrelated 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 


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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 procedurebased 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 devicedependent 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 devicedependent add-on codes, although we 

would evaluate their additional cost for 

purposes of applying the proposed 

complexity adjustment criteria. 

Instead of eliminating all devicedependent 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 devicedependent APCs. A particular device Ccode or codes would no longer be 

required for a particular procedure. We 


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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

Clinical family Proposed CY 

2015 C–APC APC Title 

Proposed CY 

2015 APC 

geometric 

mean cost 

AICDP ............... 0090 Level II Pacemaker and Similar Procedures ............................................................................ $6,961.45 

AICDP ............... 0089 Level III Pacemaker and Similar Procedures ........................................................................... 9,923.94 

AICDP ............... 0655 Level IV Pacemaker and Similar Procedures .......................................................................... 17,313.08 

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 Repositioning .............................................................. 1,522.15 

CATHX ............. 0652 Insertion of Intraperitoneal and Pleural Catheters ................................................................... 2,764.85 

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 Procedures ....................................................................... 5,582.10 

NSTIM .............. 0039 Level III Neurostimulator & Related Procedures ...................................................................... 17,697.46 

NSTIM .............. 0318 Level IV Neurostimulator & Related Procedures ..................................................................... 27,283.10 

ORTHO ............. 0425 Level V Musculoskeletal Procedures Except Hand and Foot .................................................. 10,846.49 

PUMPS ............. 0227 Implantation of Drug Infusion Device ....................................................................................... 16,419.95 

RADTX ............. 0067 Single Session Cranial Stereotactic Radiosurgery ................................................................... 10,227.12 

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 


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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 addon 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 CardioverterDefibrillators (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 


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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 


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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 


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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 contrast composite)* CY 2015 approximate APC 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 contrast composite) CY 2015 Approximate APC 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. 


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TABLE 8—PROPOSED OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

71270 ...................................................................................................... Ct thorax w/o & w/dye. 

71275 ...................................................................................................... Ct angiography, chest. 

72126 ...................................................................................................... Ct neck spine w/dye.

72127 ...................................................................................................... Ct neck spine w/o & w/dye. 

72129 ...................................................................................................... Ct chest spine w/dye. 

72130 ...................................................................................................... Ct chest spine w/o & w/dye. 

72132 ...................................................................................................... Ct lumbar spine w/dye. 

72133 ...................................................................................................... Ct lumbar spine w/o & w/dye. 

72191 ...................................................................................................... Ct angiograph pelv w/o & w/dye. 

72193 ...................................................................................................... Ct pelvis w/dye. 

72194 ...................................................................................................... Ct pelvis w/o & w/dye. 

73201 ...................................................................................................... Ct upper extremity w/dye. 

73202 ...................................................................................................... Ct uppr extremity w/o & w/dye. 

73206 ...................................................................................................... Ct angio upr extrm w/o & w/dye. 

73701 ...................................................................................................... Ct lower extremity w/dye. 

73702 ...................................................................................................... Ct lwr extremity w/o & w/dye. 

73706 ...................................................................................................... Ct angio lwr extr w/o & w/dye. 

74160 ...................................................................................................... Ct abdomen w/dye. 

74170 ...................................................................................................... Ct abdomen w/o & w/dye. 

74175 ...................................................................................................... Ct angio abdom w/o & w/dye. 

74262 ...................................................................................................... Ct colonography, w/dye. 

75635 ...................................................................................................... Ct angio abdominal arteries. 

74177 ...................................................................................................... Ct angio abd & pelv w/contrast. 

74178 ...................................................................................................... Ct angio abd & pelv 1 + regns. 

* If a ‘‘without contrast’’ CT or CTA procedure is performed during the same session as a ‘‘with contrast’’ CT or CTA procedure, the I/OCE would assign APC 8006 

rather than APC 8005. 

Family 3—MRI and MRA With and Without Contrast 

CY 2015 APC 8007 (MRI and MRA without contrast composite)* CY 2015 approximate APC geometric mean cost = $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 contrast composite) CY 2015 Approximate APC 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. 


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TABLE 8—PROPOSED OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

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 


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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 devicedependent 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-on ................................................................................................................................ 0655 

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-on ............................................................................................................................. 0229 

37234 ................ Revsc opn/prq tib/pero stent ................................................................................................................................ 0083 

37235 ................ Tib/per revasc stnt & ather ................................................................................................................................... 0083 

37237 ................ Open/perq place stent ea add .............................................................................................................................. 0083 

37239 ................ Open/perq place stent ea add .............................................................................................................................. 0083 

49435 ................ Insert subq exten to ip cath .................................................................................................................................. 0427 

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 addl ................................................................................................................................ 0104 

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 b ................................................................................................................................ 0656 

C9608 ............... Perc d-e cor revasc chro add ............................................................................................................................... 0656 

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 


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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 ≤ $100. 

Preventive services will continue to be 

paid separately, and includes the 

following services listed in Table 10 

below that would otherwise be 

packaged under this policy. 

TABLE 10—PREVENTIVE SERVICES EXEMPTED FROM THE ANCILLARY SERVICE PACKAGING POLICY

HCPCS Code Short descriptor APC 

76977 ................ Us bone density measure .................................................................................................................................... 0340 

77078 ................ Ct bone density axial ............................................................................................................................................ 0260 

77080 ................ Dxa bone density axial ......................................................................................................................................... 0261 

77081 ................ Dxa bone density/peripheral ................................................................................................................................. 0260 

G0117 ............... Glaucoma scrn hgh risk direc .............................................................................................................................. 0260 

G0118 ............... Glaucoma scrn hgh risk direc .............................................................................................................................. 0230 

G0130 ............... Single energy x-ray study ..................................................................................................................................... 0230 

G0389 ............... Ultrasound exam aaa screen ............................................................................................................................... 0265 

G0404 ............... Ekg tracing for initial prev ..................................................................................................................................... 0450 

Q0091 ............... Obtaining screen pap smear ................................................................................................................................ 0450 

In addition, we 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 

APC 

Proposed CY 

2015 OPPS 

geometric 

mean cost 

Proposed CY 

2015 OPPS SI Group title 

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. 


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TABLE 11—APCS FOR PROPOSED CONDITIONALLY PACKAGED ANCILLARY SERVICES FOR CY 2015—Continued 

APC 

Proposed CY 

2015 OPPS 

geometric 

mean cost 

Proposed CY 

2015 OPPS SI Group title 

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 § 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 

§ 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 § 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 

§ 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-ServicePayment/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 


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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 


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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 passthrough 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 § 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 laborrelated costs across geographic regions 

in a budget neutral manner’’ (codified at 

42 CFR 419.43(a)). This portion of the 


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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 § 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 multicampus 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 


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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 nonIPPS hospitals paid under the OPPS to 

qualify for the out-migration adjustment 

if they are located in a section 505 outmigration 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 outmigration wage adjustment if they are 

located in a section 505 out-migration 

county. This is the same proposed outmigration 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-ServicePayment/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 outmigration 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 nonIPPS 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. 


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D. Proposed Statewide Average Default 

CCRs 

In addition to using CCRs to estimate 

costs from charges on claims for 

ratesetting, CMS uses overall hospitalspecific 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 lineitems 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 

State Urban/rural 

Proposed CY 

2015 default 

CCR 

Previous default CCR 

(CY 2014 

OPPS 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 


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TABLE 12—PROPOSED CY 2015 STATEWIDE AVERAGE CCRs—Continued 

State Urban/rural 

Proposed CY 

2015 default 

CCR 

Previous default CCR 

(CY 2014 

OPPS final 

rule) 

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 


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40968 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

TABLE 12—PROPOSED CY 2015 STATEWIDE AVERAGE CCRs—Continued 

State Urban/rural 

Proposed CY 

2015 default 

CCR 

Previous default CCR 

(CY 2014 

OPPS final 

rule) 

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 § 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 § 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 ‘‘preBBA 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 


sroberts on DSK5SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 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

Provider No. Hospital name 

Estimated 

percentage 

increase in 

OPPS 

payments 

for CY 2015 

050146 .............. City of Hope Comprehensive Cancer Center ....................................................................................................... 15.5 

050660 .............. USC Norris Cancer Hospital ................................................................................................................................. 22.0 

100079 .............. Sylvester Comprehensive Cancer Center ............................................................................................................ 15.8 

100271 .............. H. Lee Moffitt Cancer Center & Research Institute ............................................................................................. 19.9 

220162 .............. Dana-Farber Cancer Institute ............................................................................................................................... 47.6 

330154 .............. Memorial Sloan-Kettering Cancer Center ............................................................................................................ 45.7 

330354 .............. Roswell Park Cancer Institute .............................................................................................................................. 16.6 

360242 .............. James Cancer Hospital & Solove Research Institute .......................................................................................... 35.1 

390196 .............. Fox Chase Cancer Center ................................................................................................................................... 18.5 

450076 .............. M.D. Anderson Cancer Center ............................................................................................................................. 60.1 

500138 .............. Seattle Cancer Care Alliance ............................................................................................................................... 53.3 


sroberts on DSK5SPTVN1PROD with PROPOSALS
40970 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

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-byservice 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 fixeddollar 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 fixeddollar 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 ProviderSpecific 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 


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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 laborrelated 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 


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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 

§ 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-ServicePayment/AcuteInpatientPPS/ 

index.html. This step is to be followed 

only if the hospital is not reclassified or 

redesignated under section 1886(d)(8) or 

section 1886(d)(10) of the Act. 

Step 4. Multiply the applicable wage 

index determined under Steps 2 and 3 

by the amount determined under Step 1 

that represents the labor-related portion 

of the national unadjusted payment rate. 

The formula below is a mathematical 

representation of Step 4 and adjusts the 

labor-related portion of the national 

unadjusted payment rate for the specific 

service by the wage index. 

Xa is the labor-related portion of the 

national unadjusted payment rate 

(wage adjusted). 

Xa = .60 * (national unadjusted payment 

rate) * applicable wage index. 

Step 5. Calculate 40 percent (the 

nonlabor-related portion) of the national 

unadjusted payment rate and add that 

amount to the resulting product of Step 

4. The result is the wage index adjusted 

payment rate for the relevant wage 

index area. 

The formula below is a mathematical 

representation of Step 5 and calculates 

the remaining portion of the national 

payment rate, the amount not 

attributable to labor, and the adjusted 

payment for the specific service. 

Y is the nonlabor-related portion of the 

national unadjusted payment rate. 

Y = .40 * (national unadjusted payment 

rate). 

Adjusted Medicare Payment = Y + Xa

Step 6. If a provider is an SCH, set 

forth in the regulations at § 412.92, or an 

EACH, which is considered to be an 

SCH under section 1886(d)(5)(D)(iii)(III) 

of the Act, and located in a rural area, 

as defined in § 412.64(b), or is treated as 

being located in a rural area under 

§ 412.103, multiply the wage index 

adjusted payment rate by 1.071 to 

calculate the total payment. 

The formula below is a mathematical 

representation of Step 6 and applies the 

rural adjustment for rural SCHs. 

Adjusted Medicare Payment (SCH or 

EACH) = Adjusted Medicare 

Payment * 1.071. 

We 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). 


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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 


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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 Codes ..... April 1, 2014 ...................... CY 2015 OPPS/ASC proposed rule.CY 2015 OPPS/ASC final 

rule with comment period. 

July 1, 2014 ....................... Level II HCPCS Codes ..... July 1, 2014 ...................... CY 2015 OPPS/ASC proposed rule.CY 2015 OPPS/ASC final 

rule with comment period. 

Category I (certain vaccine 

codes) and III CPT 

codes.

July 1, 2014 ...................... CY 2015 OPPS/ASC proposed rule.CY 2015 OPPS/ASC final 

rule with comment period. 

October 1, 2014 ................ Level II HCPCS Codes ..... October 1, 2014 ................ CY 2015 OPPS/ASC final 

rule with comment period.

CY 2016 OPPS/ASC final 

rule with comment period. 

January 1, 2015 ................ Level II HCPCS Codes ..... January 1, 2015 ................ CY 2015 OPPS/ASC final 

rule with comment period.

CY 2016 OPPS/ASC final 

rule with comment period. 

Category I and III CPT 

Codes.

January 1, 2015 ................ CY 2015 OPPS/ASC final 

rule with comment period.

CY 2016 OPPS/ASC final 

rule with comment period. 

This process is discussed in detail 

below. We have separated our 

discussion into two sections based on 

whether we 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 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 status 

indicator 

Proposed CY 

2015 APC 

C9021* .............. Injection, obinutuzumab, 10 mg ............................................................................................... G 1476 

C9739 ............... Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants ........................... T 0162 

C9740 ............... Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants .................... T 1564 


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TABLE 15—NEW LEVEL II HCPCS CODES IMPLEMENTED IN APRIL 2014—Continued 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 status 

indicator 

Proposed CY 

2015 APC 

Q2052 ............... Services, supplies and accessories used in the home under the Medicare intravenous immune globulin (ivig) demonstration.N N/A 

* 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 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 status 

indicator 

Proposed 

CY 2015 APC 

Proposed CY 

2015 payment 

rate 

C2644 ............... Brachytherapy source, cesium-131 chloride solution, per millicurie ............ U 2644 $18.97 

C9022 * ............. Injection, elosulfase alfa, 1 mg .................................................................... G 1480 226.42 

C9134 * ............. Factor XIII (antihemophilic factor, recombinant), Tretten, per 10 i.u ........... G 1481 14.10 

Q9970 ** ............ Injection, ferric carboxymaltose, 1 mg ......................................................... G 9441 1.06 

Q9974 *** .......... Injection, morphine sulfate, preservative-free for epidural or intrathecal 

use, 10 mg.

N N/A N/A 

* 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, 


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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 

CY 2014 

CPT Code CY 2014 Long descriptor 

Proposed CY 

2015 status 

indicator 

Proposed CY 

2015 APC 

Proposed CY 

2015 payment 

rate 

0347T ................ Placement of interstitial device(s) in bone for radiostereometric analysis 

(RSA).

Q2 0420 $125.05 

0348T ................ Radiologic examination, radiostereometric analysis (RSA); spine, (includes, cervical, thoracic and lumbosacral, when performed).S 0261 95.36 

0349T ................ Radiologic examination, radiostereometric analysis (RSA); upper extremity(ies), (includes shoulder, elbow and wrist, when performed).S 0261 95.36 

0350T ................ Radiologic examination, radiostereometric analysis (RSA); lower extremity(ies), (includes hip, proximal femur, knee and ankle, when performed).S 0261 95.36 

0351T ................ Optical coherence tomography of breast or axillary lymph node, excised 

tissue, each specimen; real time intraoperative.

N N/A N/A 

0352T ................ Optical coherence tomography of breast or axillary lymph node, excised 

tissue, each specimen; interpretation and report, real time or referred.

B N/A N/A 

0353T ................ Optical coherence tomography of breast, surgical cavity; real time 

intraoperative.

N N/A N/A 

0354T ................ Optical coherence tomography of breast, surgical cavity; interpretation 

and report, real time or referred.

B N/A N/A 

0355T ................ Gastrointestinal tract imaging, intraluminal (eg, capsule endoscopy), 

colon, with interpretation and report.

T 0142 857.73 

0356T ................ Insertion of drug-eluting implant (including punctal dilation and implant removal when performed) into lacrimal canaliculus, each.Q1 0698 101.41 

0358T ................ Bioelectrical impedance analysis whole body composition assessment, 

supine position, with interpretation and report.

Q1 0340 61.88 

0359T ................ Behavior identification assessment, by the physician or other qualified 

health care professional, face-to-face with patient and caregiver(s), includes administration of standardized and non-standardized tests, detailed behavioral history, patient observation and caregiver interview, interpretation of test results, discussion of findings and recommendations 

with the primary guardian(s)/caregiver(s), and preparation of report.

V 0632 107.98 

0360T ................ Observational behavioral follow-up assessment, includes physician or 

other qualified health care professional direction with interpretation and 

report, administered by one technician; first 30 minutes of technician 

time, face-to-face with the patient.

V 0632 107.98 

0361T ................ Observational behavioral follow-up assessment, includes physician or 

other qualified health care professional direction with interpretation and 

report, administered by one technician; each additional 30 minutes of 

technician time, face-to-face with the patient (List separately in addition 

to code for primary service).

N N/A N/A 

0362T ................ Exposure behavioral follow-up assessment, includes physician or other 

qualified health care professional direction with interpretation and report, administered by physician or other qualified health care professional with the assistance of one or more technicians; first 30 minutes 

of technician(s) time, face-to-face with the patient.

V 0632 107.98 

0363T ................ Exposure behavioral follow-up assessment, includes physician or other 

qualified health care professional direction with interpretation and report, administered by physician or other qualified health care professional with the assistance of one or more technicians; each additional 

30 minutes of technician(s) time, face-to-face with the patient (List separately in addition to code for primary procedure).

N N/A N/A 

0364T ................ Adaptive behavior treatment by protocol, administered by technician, 

face-to-face with one patient; first 30 minutes of technician time.

S 0322 92.61 

0365T ................ Adaptive behavior treatment by protocol, administered by technician, 

face-to-face with one patient; each additional 30 minutes of technician 

time (List separately in addition to code for primary procedure).

N N/A N/A 

0366T ................ Group adaptive behavior treatment by protocol, administered by technician, face-to-face with two or more patients; first 30 minutes of technician time.S 0325 65.91 

0367T ................ Group adaptive behavior 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).

N N/A N/A 

0368T ................ Adaptive behavior treatment with protocol modification administered by 

physician or other qualified health care professional with one patient; 

first 30 minutes of patient face-to-face time.

S 0322 92.61 


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TABLE 17—NEW CATEGORY III CPT CODES IMPLEMENTED IN JULY 2014—Continued 

CY 2014 

CPT Code CY 2014 Long descriptor 

Proposed CY 

2015 status 

indicator 

Proposed CY 

2015 APC 

Proposed CY 

2015 payment 

rate 

0369T ................ Adaptive behavior treatment with protocol modification administered by 

physician or other qualified health care professional with one patient; 

each additional 30 minutes of patient face-to-face time (List separately 

in addition to code for primary procedure).

N N/A N/A 

0370T ................ Family adaptive behavior treatment guidance, administered by physician 

or other qualified health care professional (without the patient present).

S 0324 130.28 

0371T ................ Multiple-family group adaptive behavior treatment guidance, administered 

by physician or other qualified health care professional (without the patient present).

S 0324 130.28 

0372T ................ Adaptive behavior treatment social skills group, administered by physician 

or other qualified health care professional face-to-face with multiple patients.

S 0325 65.91 

0373T ................ Exposure adaptive behavior treatment with protocol modification requiring 

two or more technicians for severe maladaptive behavior(s); first 60 

minutes of technicians’ time, face-to-face with patient.

S 0323 117.36 

0374T ................ Exposure adaptive behavior treatment with protocol modification requiring 

two or more technicians for severe maladaptive behavior(s); each additional 30 minutes of technicians’ time face-to-face with patient (List separately in addition to code for primary procedure).

N N/A N/A 

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 


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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®) coding system 

maintained by the AMA for billing. 

CPT® is the standard code set adopted 

under the Health Insurance Portability 

and Accountability Act of 1996 (HIPAA) 

for outpatient services. The AMA CPT 

Editorial Panel’s coding cycle occurs 

concurrently with our calendar year 

rulemaking cycle for the OPPS and the 

ASC payment system. 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 


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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 Gcodes. 

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 

§ 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 rateper-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 


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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 § 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-Feefor-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 lowvolume 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, 


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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 newlyconfigured 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 APC APC Title description 

CY 2014 

status 

indicator 

0035 .................. Vascular Puncture and Minor Diagnostic Procedures ......................................................................................... X 

0230 .................. Level I Eye Tests & Treatments ........................................................................................................................... S 

0231 .................. Level III Eye Tests & Treatments ......................................................................................................................... S 

0232 .................. Level I Anterior Segment Eye Procedures ........................................................................................................... T 

0233 .................. Level III Anterior Segment Eye Procedures ......................................................................................................... T 

0234 .................. Level IV Anterior Segment Eye Procedures ........................................................................................................ T 

0235 .................. Level I Posterior Segment Eye Procedures ......................................................................................................... T 

0237 .................. Level II Posterior Segment Eye Procedures ........................................................................................................ T 

0238 .................. Level I Repair and Plastic Eye Procedures ......................................................................................................... T 

0239 .................. Level II Repair and Plastic Eye Procedures ........................................................................................................ T 

0240 .................. Level III Repair and Plastic Eye Procedures ....................................................................................................... T 

0241 .................. Level IV Repair and Plastic Eye Procedures ....................................................................................................... T 

0242 .................. Level V Repair and Plastic Eye Procedures ........................................................................................................ T 

0243 .................. Strabismus/Muscle Procedures ............................................................................................................................ T 

0244 .................. Corneal and Amniotic Membrane Transplant ....................................................................................................... T 

0246 .................. Cataract Procedures with IOL Insert .................................................................................................................... T 


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TABLE 19—CY 2014 OPHTHALMOLOGY-RELATED APCS—Continued 

CY 2014 APC APC Title description 

CY 2014 

status 

indicator 

0247 .................. Laser Eye Procedures .......................................................................................................................................... T 

0249 .................. Cataract Procedures without IOL Insert ............................................................................................................... T 

0255 .................. Level II Anterior Segment Eye Procedures .......................................................................................................... T 

0293 .................. Level VI Anterior Segment Eye Procedures ........................................................................................................ T 

0672 .................. Level III Posterior Segment Eye Procedures ....................................................................................................... T 

0673 .................. Level V Anterior Segment Eye Procedures ......................................................................................................... T 

0698 .................. Level II Eye Tests & Treatments .......................................................................................................................... S 

0699 .................. Level IV Eye Tests & Treatments ........................................................................................................................ T 

TABLE 20—PROPOSED CY 2015 OPHTHALMOLOGY-RELATED APCS

Proposed CY 

2015 APC APC Title description 

Proposed 

CY 2015 

status 

indicator 

0230 .................. Level I Eye Tests & Treatments ........................................................................................................................... S 

0231 .................. Level III Eye Tests & Treatments ......................................................................................................................... S 

0233 .................. Level II Intraocular Procedures ............................................................................................................................ T 

0238 .................. Level I Extraocular, Repair, and Plastic Eye Procedures .................................................................................... T 

0239 .................. Level II Extraocular, Repair, and Plastic Eye Procedures ................................................................................... T 

0240 .................. Level III Extraocular, Repair, and Plastic Eye Procedures .................................................................................. T 

0242 .................. Level IV Extraocular, Repair, and Plastic Eye Procedures .................................................................................. T 

0247 .................. Laser Eye Procedures .......................................................................................................................................... T 

0255 .................. Level I Intraocular Procedures ............................................................................................................................. T 

0293 .................. Level IV Intraocular Procedures ........................................................................................................................... J1 

0351 .................. Level V Intraocular Procedures ............................................................................................................................ J1 

0673 .................. Level III Intraocular Procedures ........................................................................................................................... T 

0698 .................. Level II Eye Tests & Treatments .......................................................................................................................... S 

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 


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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 APC APC Title description 

CY 2014 

Status 

indicator 

0188 .................. Level II Female Reproductive Proc ...................................................................................................................... T 

0189 .................. Level III Female Reproductive Proc ..................................................................................................................... T 

0191 .................. Level I Female Reproductive Proc ....................................................................................................................... T 

0192 .................. Level IV Female Reproductive Proc ..................................................................................................................... T 

0193 .................. Level V Female Reproductive Proc ...................................................................................................................... T 

0195 .................. Level VI Female Reproductive Procedures .......................................................................................................... T 

0202 .................. Level VII Female Reproductive Procedures ......................................................................................................... T 

TABLE 22—PROPOSED CY 2015 FEMALE REPRODUCTIVE APCS

Proposed CY 

2015 APC APC Title description 

Proposed 

CY 2015 

status 

indicator 

0188 .................. Level I Female Reproductive Procedures ............................................................................................................ T 

0189 .................. Level II Female Reproductive Procedures ........................................................................................................... T 

0192 .................. Level III Female Reproductive Procedures .......................................................................................................... T 

0193 .................. Level IV Female Reproductive Procedures .......................................................................................................... T 

0202 .................. Level V Female Reproductive Procedures ........................................................................................................... J1 

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 devicerelated 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 imageguidance procedure codes describing 

the imaging service. 

TABLE 23—HOW IMAGE-GUIDED BREAST BIOPSY PROCEDURES WERE REPORTED IN CY 2013 

CY 2013 

CPT code Long descriptor CY 2013 SI CY 2013 APC CY 2013 Payment 

Device-Related Breast Biopsy CPT Codes 

19102 ................ Biopsy of breast; percutaneous, needle core, using imaging guidance ..... T 0005 $625.24 

19103 ................ Biopsy of breast; percutaneous, automated vacuum assisted or rotating 

biopsy device, using imaging guidance.

T 0037 1,118.54 

Localization Device CPT Codes Reported with CPT Codes 19102 and 19103 

19290 ................ Preoperative placement of needle localization wire, breast ........................ Q1 0340 49.64 

19291 ................ Preoperative placement of needle localization wire, breast; each additional lesion (List separately in addition to code for primary procedure).N N/A N/A 

19295 ................ Image guided placement, metallic localization clip, percutaneous, during 

breast biopsy/aspiration (List separately in addition to code for primary 

procedure).

Q1 0340 49.64 

Image Guidance CPT Codes Reported with CPT Codes 19102 and 19103 

76942 ................ Ultrasonic guidance for needle placement (eg, biopsy, aspiration, injection, localization device), imaging supervision and interpretation.N N/A N/A 


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TABLE 23—HOW IMAGE-GUIDED BREAST BIOPSY PROCEDURES WERE REPORTED IN CY 2013—Continued 

CY 2013 

CPT code Long descriptor CY 2013 SI CY 2013 APC CY 2013 Payment 

77021 ................ Magnetic resonance guidance for needle placement (eg, for biopsy, needle aspiration, injection, or placement of localization device) radiological supervision and interpretation.N N/A N/A 

77031 ................ Stereotactic localization guidance for breast biopsy or needle placement 

(eg, for wire localization or for injection), each lesion, radiological supervision and interpretation.

N N/A N/A 

77032 ................ Mammographic guidance for needle placement, breast (eg, for wire localization or for injection), each lesion, radiological supervision and interpretation.N N/A N/A 

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. 


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TABLE 24—PROPOSED APCS TO WHICH IMAGE-GUIDED BREAST BIOPSY PROCEDURE CODES WOULD BE ASSIGNED FOR

CY 2015 

CY 2014 

CPT code Long descriptor CY 2014 SI CY 2014 APC 

CY 2014 

payment 

rate 

Proposed 

CY 2015 SI 

Proposed 

CY 2015 

APC 

Proposed 

CY 2015 

payment 

rate 

19081 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; first 

lesion, including stereotactic guidance.

T 0005 $702.08 T 0005 $1,062.28 

19082 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; each 

additional lesion, including 

stereotactic guidance (List separately 

in addition to code for primary procedure).

N N/A N/A N N/A N/A 

19083 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; first 

lesion, including ultrasound guidance.

T 0005 702.08 T 0005 1,062.28 

19084 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; each 

additional lesion, including ultrasound 

guidance (List separately in addition 

to code for primary procedure).

N N/A N/A N N/A N/A 

19085 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; first 

lesion, including magnetic resonance 

guidance.

T 0005 702.08 T 0005 1,062.28 

19086 ........... Biopsy, breast, with placement of 

breast localization device(s) (eg, clip, 

metallic pellet), when performed, and 

imaging of the biopsy specimen, 

when performed, percutaneous; each 

additional lesion, including magnetic 

resonance guidance (List separately 

in addition to code for primary procedure).

N N/A N/A N N/A N/A 

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 imageguided 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 


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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 

CPT Code Long descriptor 

CY 2014 

OPPS 

SI 

CY 2014 

OPPS 

APC 

Proposed 

CY 2015 

OPPS 

SI 

Proposed 

CY 2015 

OPPS 

APC 

10030 ................ Image-guided fluid collection drainage by catheter (eg, 

abscess, hematoma, seroma, lymphocele, cyst), soft 

tissue (eg, extremity, abdominal wall, neck), 

percutaneous.

T 0006 T 0007 

49407 ................ Image-guided fluid collection drainage by catheter (eg, 

abscess, hematoma, seroma, lymphocele, cyst); peritoneal or retroperitoneal, transvaginal or transrectal.

T 0685 T 0005 

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 APC APC Title description 

CY 2014 

Status 

indicator 

0160 .................. Level I Cystourethroscopy and other Genitourinary Procedures ......................................................................... T 

0161 .................. Level II Cystourethroscopy and other Genitourinary Procedures ........................................................................ T 

0162 .................. Level III Cystourethroscopy and other Genitourinary Procedures ....................................................................... T 

0163 .................. Level IV Cystourethroscopy and other Genitourinary Procedures ....................................................................... T 

0429 .................. Level V Cystourethroscopy and other Genitourinary Procedures ........................................................................ T 

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 


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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 2015 

APC 

APC Title description 

Proposed 

CY 2015 

Status 

indicator 

0160 .................. Level I Cystourethroscopy and other Genitourinary Procedures ......................................................................... T 

0161 .................. Level II Cystourethroscopy and other Genitourinary Procedures ........................................................................ T 

0162 .................. Level III Cystourethroscopy and other Genitourinary Procedures ....................................................................... T 

0163 .................. Level IV Cystourethroscopy and other Genitourinary Procedures ....................................................................... T 

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 

Procedure code Long descriptor CY 2014 SI CY 

2014 APC 

Proposed 

CY 2015 

SI 

Proposed 

CY 2015 

APC 

15110 ................ Epidermal autograft, trunk, arms, legs; first 100 sq cm 

or less, or 1% of body area of infants and children.

T 0329 T 0327 

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 


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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 

HCPCS Code Long descriptor CY 2014 SI CY 2014 APC Proposed CY 

2015 SI 

Proposed CY 

2015 APC 

G0456 ................ Negative pressure wound therapy, (eg, vacuum assisted drainage collection) using a mechanically-powered device, not durable medical equipment, including provision of cartridge and dressing(s), topical application(s), wound assessment, and instructions for 

ongoing care, per session; total wounds(s) surface 

area less than or equal to 50 square centimeters.

T 0016 T 0015 

G0457 ................ Negative pressure wound therapy, (eg, vacuum assisted drainage collection) using a mechanically-powered device, not durable medical equipment, including provision of cartridge and dressing(s), topical application(s), wound assessment, and instructions for 

ongoing care, per session; total wounds(s) surface 

area greater than 50 square centimeters.

T 0016 T 0015 

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 

CPT code Long descriptor CY 2014 

OPPS SI 

CY 2014 

OPPS APC 

Proposed 

CY 2015 

OPPS 

SI 

Proposed 

CY 2015 

OPPS 

APC 

43274 ................. Endoscopic retrograde cholangiopancreatography 

(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.

T 0151 J1 0384 


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TABLE 30—PROPOSED CY 2015 APC AND STATUS INDICATOR ASSIGNMENTS FOR CPT CODES 43274 AND 43276— 

Continued 

CPT code Long descriptor CY 2014 

OPPS SI 

CY 2014 

OPPS APC 

Proposed 

CY 2015 

OPPS 

SI 

Proposed 

CY 2015 

OPPS 

APC 

43276 ................. Endoscopic retrograde cholangiopancreatography 

(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.

T 0151 J1 0384 

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 PassThrough 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 passthrough 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 passthrough 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 passthrough 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 


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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 passthrough 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 passthrough 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 § 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 passthrough 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 passthrough 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 passthrough evaluation process and passthrough 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 passthrough 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 (§ 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 passthrough 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 


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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. 


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TABLE 32—PROPOSED DEVICES TO

WHICH THE PROPOSED NO COST/

FULL CREDIT AND PARTIAL CREDIT

DEVICE PAYMENT ADJUSTMENT POLICY WOULD APPLY IN CY 2015— 

Continued 

Proposed 

CY 2015 

device 

HCPCS 

code 

Proposed CY 2015 short 

descriptor 

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 PassThrough 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 passthrough 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-PartB-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 passthrough 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 passthrough 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 


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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 

2015 HCPCS 

Code 

Proposed CY 2015 long descriptor Proposed CY 

2015 SI 

Proposed CY 

2015 APC 

C9290 ............... Injection, bupivicaine liposome, 1 mg ...................................................................................... N N/A 

C9293 ............... Injection, glucarpidase, 10 units ............................................................................................... K 9293 

J0178 ................ Injection, aflibercept, 1 mg vial ................................................................................................. K 1420 

J0716 ................ Injection, centruroides (scorpion) immune f(ab)2, up to 120 milligrams .................................. K 1431 

J9019 ................ Injection, asparaginase (erwinaze), 1,000 iu ............................................................................ K 9289 

J9306 ................ Injection, pertuzumab, 1 mg ..................................................................................................... K 1471 

Q4131 ............... EpiFix, per square centimeter .................................................................................................. N N/A 

Q4132 ............... Grafix core, per square centimeter ........................................................................................... N N/A 

Q4133 ............... Grafix prime, per square centimeter ......................................................................................... N N/A 

3. Proposed Drugs, Biologicals, and 

Radiopharmaceuticals With New or 

Continuing Pass-Through Status in CY 

2015 

We are proposing to continue passthrough 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 passthrough 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 passthrough status during CY 2015, we are 

proposing to follow the standard ASP 

methodology to determine the passthrough 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 passthrough 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, passthrough 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 


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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 passthrough 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 

2015 HCPCS 

code 

CY 2015 Long descriptor Proposed CY 

2015 SI 

Proposed CY 

2015 APC 

A9520 ............... Technetium Tc 99m tilmanocept, diagnostic, up to 0.5 millicuries .......................................... G 1463 

C9021 ............... Injection, obinutuzumab, 10 mg ............................................................................................... G 1476 

C9022 ............... Injection, elosulfase alfa, 1mg .................................................................................................. G 1480 

C9132 ............... Prothrombin complex concentrate (human), Kcentra, per i.u. of Factor IX activity ................. G 9132 

C9133 ............... Factor ix (antihemophilic factor, recombinant), Rixubus, per i.u. ............................................. G 1467 

C9134 ............... Injection, Factor XIII A-subunit, (recombinant), per 10 i.u. ...................................................... G 1481 

C9441 ............... Injection, ferric carboxymaltose, 1 mg ...................................................................................... G 9441 

C9497 ............... Loxapine, inhalation powder, 10 mg ........................................................................................ G 9497 

J1446 ................ Injection, tbo-filgrastim, 5 micrograms ...................................................................................... G 1447 

J1556 ................ Injection, immune globulin (Bivigam), 500 mg ......................................................................... G 9130 

J3060 ................ Injection, taliglucerase alfa, 10 units ........................................................................................ G 9294 

J7315 ................ Mitomycin, ophthalmic, 0.2 mg ................................................................................................. G 1448 

J7316 ................ Injection, Ocriplasmin, 0.125mg ............................................................................................... G 9298 

J7508 ................ Tacrolimus, Extended Release, Oral, 0.1 mg .......................................................................... G 1465 

J9047 ................ Injection, carfilzomib, 1 mg ....................................................................................................... G 9295 

J9262 ................ Injection, omacetaxine mepesuccinate, 0.01 mg ..................................................................... G 9297 

J9354 ................ Injection, ado-trastuzumab emtansine, 1 mg ........................................................................... G 9131 

J9371 ................ Injection, Vincristine Sulfate Liposome, 1 mg .......................................................................... G 1466 

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 nonpassthrough 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 passthrough payment amount for passthrough 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 passthrough 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 


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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. 

TABLE 35—PROPOSED APCS TO

WHICH A DIAGNOSTIC RADIOPHARMACEUTICAL OFFSET MAY BE

APPLICABLE IN CY 2015—Continued 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC title 

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 passthrough payment amount for passthrough 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 passthrough 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 passthrough 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. 


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TABLE 36—PROPOSED APCS TO

WHICH A CONTRAST AGENT OFFSET

MAY BE APPLICABLE FOR CY 

2015—Continued 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC title 

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 passthrough payment amount for passthrough 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 policypackaged 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 policypackaged 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 passthrough skin substitute or pass-through 

stress agent is used and, accordingly, 

reduce the separate OPPS payment for 

the pass-through skin substitute or passthrough 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 passthrough 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 passthrough 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 


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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 (‘‘ThresholdPackaged 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 


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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 cm2. Skin substitutes that had 

a July 2013 ASP + 6 percent amount 

above $32 per cm2 were classified in the 

high cost group and those with a July 

2013 ASP + 6 percent amount at or 

below $32 per cm2 were classified in the 

low cost group. Any new skin 

substitutes without pricing information 

are assigned to the low cost category 

until pricing information is available to 

compare to the $32 per cm2 threshold 

for CY 2014. Skin substitutes with passthrough 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 cm2). 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 cm2 prices for 

large sizes. Therefore, the use of ASP 

data to categorize products into high 

and low cost categories can result in 

placement of products that have 

significant inpatient use of the large, 

lower-priced (per cm2) sizes into the 

low cost category, even though these 

large size products are not often used in 

the hospital outpatient department. 

• Using a weighted average ASP to 

establish the high/low cost categories, 

combined with the drug pass-through 

policy, will lead to unstable high/low 

cost skin substitute categories in the 

future. According to one manufacturer, 

under our 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 


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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 

cm2). Skin substitutes with a MUC 

above $27 per cm2 using CY 2013 

claims are proposed to be classified in 

the high cost group and those with a 

MUC at or below $27 per cm2 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 cm2

threshold for CY 2015. 

TABLE 39—PROPOSED SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS

CY 2014 

HCPCS Code CY 2014 Short descriptor 

Proposed 

CY 2015 

SI 

CY 2014 

High/low 

status based 

on weighted 

ASP 

Proposed CY 

2015 High/

low status 

based on 

weighted 

MUC 

C9358 ............... SurgiMend, fetal ................................................................................................ N Low ............. Low 

C9360 ............... SurgiMend, neonatal ......................................................................................... N Low .............. Low 

C9363 ............... Integra Meshed Bil Wound Mat ........................................................................ N Low ............. High 

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 matrix ............................................................................. N Low .............. Low 

Q4125 ............... Arthroflex ........................................................................................................... N High ............. High 

Q4126 ............... Memoderm/derma/tranz/integup ....................................................................... N High ............. High 

Q4127 ............... Talymed ............................................................................................................. G High ............. High 

Q4128 ............... Flexhd/Allopatchhd/matrixhd ............................................................................. N Low .............. High 

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, 1cm .......................................................................... N Low ............. Low 

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 1cm ............................................................................ N Low ............. Low 

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 


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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

CY 2014 

HCPCS CY 2014 Short descriptor 

Passthrough 

expiration 

date 

C9358 ............... SurgiMend, fetal ................................................................................................................................................... 12/31/2010 

C9360 ............... SurgiMend, neonatal ............................................................................................................................................ 12/31/2011 

C9363 ............... Integra Meshed Bil Wound Mat ............................................................................................................................ 12/31/2011 

Q4101 ............... Apligraf .................................................................................................................................................................. 12/31/2002 

Q4104 ............... Integra BMWD ...................................................................................................................................................... 12/31/2006 

Q4105 ............... Integra DRT .......................................................................................................................................................... 12/31/2006 

Q4106 ............... Dermagraft ............................................................................................................................................................ 03/31/2005 

Q4107 ............... Graftjacket ............................................................................................................................................................ 12/31/2006 

Q4108 ............... Integra matrix ........................................................................................................................................................ 12/31/2010 

Q4110 ............... Primatrix ................................................................................................................................................................ 12/31/2008 

Q4121 ............... Theraskin .............................................................................................................................................................. 12/31/2016 

Q4122 ............... Dermacell .............................................................................................................................................................. 12/31/2015 

Q4124 ............... Oasis tri-layer wound matrix ................................................................................................................................. 12/31/2013 

Q4127 ............... Talymed ................................................................................................................................................................ 12/31/2015 

Q4131 ............... Epifix ..................................................................................................................................................................... 12/31/2014 

Q4132 ............... Grafix core ............................................................................................................................................................ 12/31/2014 

Q4133 ............... Grafix prime .......................................................................................................................................................... 12/31/2014 

As discussed 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 passthrough 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 passthrough process, which has been the 

evaluation methodology for implantable 

biologicals since 2010. 

In view of these considerations, we 

are proposing that applications for passthrough 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-Feefor-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 passthrough 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 §§ 419.64 and 419.66 to 

reflect this proposed new policy. 

Specifically, we are proposing to revise 

§ 419.64 by deleting the existing 

paragraph (a)(4)(iv) text because it is 

currently outdated and adding new text 

at paragraph (a)(4)(iv) to exclude skin 

substitutes from consideration for drug 

and biological pass-through payment 

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 § 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 


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‘‘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 § 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 passthrough 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 codespecific 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 HCPCS 

code 

Proposed CY 2015 long descriptor Proposed CY 

2015 SI 

C9257 ............... Injection, bevacizumab, 0.25 mg .......................................................................................................................... K 

J9035 ................ Injection, bevacizumab, 10 mg ............................................................................................................................. K 

J1020 ................ Injection, methylprednisolone acetate, 20 mg ...................................................................................................... N 

J1030 ................ Injection, methylprednisolone acetate, 40 mg ...................................................................................................... N 

J1040 ................ Injection, methylprednisolone acetate, 80 mg ...................................................................................................... N 

J1070 ................ Injection, testosterone cypionate, up to 100 mg .................................................................................................. N 

J1080 ................ Injection, testosterone cypionate, 1 cc, 200 mg ................................................................................................... N 

J1460 ................ Injection, gamma globulin, intramuscular, 1 cc .................................................................................................... N 

J1560 ................ Injection, gamma globulin, intramuscular over 10 cc ........................................................................................... N 

J1642 ................ Injection, heparin sodium, (heparin lock flush), per 10 units ............................................................................... N 

J1644 ................ Injection, heparin sodium, per 1000 units ............................................................................................................ N 

J1850 ................ Injection, kanamycin sulfate, up to 75 mg ............................................................................................................ N 

J1840 ................ Injection, kanamycin sulfate, up to 500 mg .......................................................................................................... N 

J2270 ................ Injection, morphine sulfate, up to 10 mg .............................................................................................................. N 

J2271 ................ Injection, morphine sulfate, 100 mg ..................................................................................................................... N 

J2788 ................ Injection, rho d immune globulin, human, minidose, 50 micrograms (250 i.u.) ................................................... N 

J2790 ................ Injection, rho d immune globulin, human, full dose, 300 micrograms (1500 i.u.) ................................................ N 

J2920 ................ Injection, methylprednisolone sodium succinate, up to 40 mg ............................................................................ N 

J2930 ................ Injection, methylprednisolone sodium succinate, up to 125 mg .......................................................................... N 

J3120 ................ Injection, testosterone enanthate, up to 100 mg ................................................................................................. N 

J3130 ................ Injection, testosterone enanthate, up to 200 mg ................................................................................................. N 

J3471 ................ Injection, hyaluronidase, ovine, preservative free, per 1 usp unit (up to 999 usp units) ..................................... N 

J3472 ................ Injection, hyaluronidase, ovine, preservative free, per 1000 usp units ................................................................ N 

J7050 ................ Infusion, normal saline solution, 250 cc ............................................................................................................... N 

J7040 ................ Infusion, normal saline solution, sterile (500 ml = 1 unit) .................................................................................... N 

J7030 ................ Infusion, normal saline solution, 1000 cc ............................................................................................................. N 


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TABLE 41—PROPOSED HCPCS CODES TO WHICH THE CY 2015 DRUG-SPECIFIC PACKAGING DETERMINATION

METHODOLOGY WOULD APPLY—Continued 

Proposed CY 

2015 HCPCS 

code 

Proposed CY 2015 long descriptor Proposed CY 

2015 SI 

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 


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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 nonpassthrough 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 


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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-Feefor-Service-Part-B-Drugs/

McrPartBDrugAvgSalesPrice/

index.html. 

6. Proposed Payment for NonpassThrough 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 nonpassthrough 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 passthrough 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 


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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 nonpassthrough 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 nonpassthrough 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

CY 2015 

HCPCS Code CY 2015 Long descriptor 

Estimated 

average 

number 

of units 

per day 

Proposed 

CY 2015 SI 

Proposed 

CY 2015 

APC 

90581 ................ Anthrax vaccine, for subcutaneous or intramuscular use ............................ 1 K 1422 

J0215 ................ Injection, alefacept, 0.5 mg .......................................................................... 29 K 1633 

J0364 ................ Injection, apomorphine hydrochloride, 1 mg ................................................ 1 N N/A 

J0630 ................ Injection, calcitonin salmon, up to 400 units ................................................ 2 K 1433 

J0638 ................ Injection, canakinumab, 1 mg ...................................................................... 180 K 1311 

J3355 ................ Injection, urofollitropin, 75 iu ........................................................................ 2 K 1741 

J7196 ................ Injection, antithrombin recombinant, 50 i. U. ............................................... 268 K 1332 

J8650 ................ Nabilone, oral, 1 mg ..................................................................................... 4 K 1424 

J9151 ................ Injection, daunorubicin citrate, liposomal formulation, 10 mg ...................... 10 K 0821 

J9215 ................ Injection, interferon, alfa-n3, (human leukocyte derived), 250,000 iu .......... 1 N N/A 

J9300 ................ Injection, gemtuzumab ozogamicin, 5 mg ................................................... 1 K 9004 

TABLE 43—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA AND WITHOUT PRICING INFORMATION FOR THE

ASP METHODOLOGY

CY 2015 

HCPCS Code CY 2015 Long descriptor 

Proposed 

CY 2015 

SI 

90296 ................ Diphtheria antitoxin, equine, any route ................................................................................................................. E 

90393 ................ Vaccina immune globulin, human, for intramuscular use .................................................................................... E 

90477 ................ Adenovirus vaccine, type 7, live, for oral use ...................................................................................................... E 

90644 ................ Meningococcal conjugate vaccine, serogroups c & y and hemophilus influenza b vaccine (hib-mency), 4 

dose schedule, when administered to children 2–15 months of age, for intramuscular use.

E 

90681 ................ Rotavirus vaccine, human, attenuated, 2 dose schedule, live, for oral use ........................................................ E 

90727 ................ Plague vaccine, for intramuscular use ................................................................................................................. E 

J0190 ................ Injection, biperiden lactate, per 5 mg ................................................................................................................... E 

J0205 ................ Injection, alglucerase, per 10 units ...................................................................................................................... E 

J0350 ................ Injection, anistreplase, per 30 units ..................................................................................................................... E 

J0365 ................ Injection, aprotonin, 10,000 kiu ............................................................................................................................ E 

J0395 ................ Injection, arbutamine hcl, 1 mg ............................................................................................................................ E 


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TABLE 43—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA AND WITHOUT PRICING INFORMATION FOR THE

ASP METHODOLOGY—Continued 

CY 2015 

HCPCS Code CY 2015 Long descriptor 

Proposed 

CY 2015 

SI 

J0710 ................ Injection, cephapirin sodium, up to 1 gm ............................................................................................................. E 

J1180 ................ Injection, dyphylline, up to 500 mg ...................................................................................................................... E 

J1435 ................ Injection estrone per 1 MG ................................................................................................................................... E 

J1562 ................ Injection, immune globulin (vivaglobin), 100 mg .................................................................................................. E 

J1620 ................ Injection, gonadorelin hydrochloride, per 100 mcg .............................................................................................. E 

J1655 ................ Injection, tinzaparin sodium, 1000 iu .................................................................................................................... E 

J1730 ................ Injection, diazoxide, up to 300 mg ....................................................................................................................... E 

J1835 ................ Injection, itraconazole, 50 mg .............................................................................................................................. E 

J2460 ................ Injection, oxytetracycline hcl, up to 50 mg ........................................................................................................... E 

J2513 ................ Injection, pentastarch, 10% solution, 100 ml ....................................................................................................... E 

J2670 ................ Injection, tolazoline hcl, up to 25 mg .................................................................................................................... E 

J2725 ................ Injection, protirelin, per 250 mcg .......................................................................................................................... E 

J2940 ................ Injection, somatrem, 1 mg .................................................................................................................................... E 

J3305 ................ Injection, trimetrexate glucuronate, per 25 mg ..................................................................................................... E 

J3365 ................ Injection, iv, urokinase, 250,000 i.u. vial .............................................................................................................. E 

J3400 ................ Injection, triflupromazine hcl, up to 20 mg ........................................................................................................... E 

J7505 ................ Muromonab-cd3, parenteral, 5 mg ....................................................................................................................... E 

J7513 ................ Daclizumab, parenteral, 25 mg ............................................................................................................................ E 

J8562 ................ Fludarabine phosphate, oral, 10 mg .................................................................................................................... E 

J9165 ................ Injection, diethylstilbestrol diphosphate, 250 mg .................................................................................................. E 

J9212 ................ Injection, interferon alfacon-1, recombinant, 1 microgram ................................................................................... E 

J9219 ................ Leuprolide acetate implant, 65 mg ....................................................................................................................... E 

Q0174 ............... Thiethylperazine maleate, 10 mg, oral, fda approved prescription anti-emetic, for use as a complete therapeutic substitute for an iv anti-emetic at the time of chemotherapy treatment, not to exceed a 48 hour dosage regimen.E 

Q0515 ............... Injection, sermorelin acetate, 1 microgram .......................................................................................................... E 

VI. 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 passthrough 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 passthrough payment in the remaining 

quarters of CY 2014 or beginning in CY 

2015. The sum of the CY 2015 passthrough 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 passthrough 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 


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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 passthrough 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 passthrough 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 policypackaged 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 policypackaged 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 policypackaged 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 passthrough 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 passthrough 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 passthrough 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 


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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 passthrough 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 passthrough 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 passthrough 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 passthrough 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 passthrough 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. 


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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 Xrays, 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 


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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 twotiered 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 hospitalbased 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 


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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 hospitalbased PHP services based exclusively on 

hospital data. The statute is reasonably 

interpreted to allow the relative 

payment weights for the OPPS payment 

rates for PHP services provided by 

CMHCs to be based solely on CMHC 

data and relative payment weights for 

hospital-based PHP services to be based 

exclusively on hospital data. Section 

1833(t)(2)(C) of the Act requires the 

Secretary to ‘‘establish relative payment 

weights for covered OPD services (and 

any groups of such services described in 

subparagraph (B)) based on . . . 

hospital costs.’’ In pertinent part, 

subparagraph (B) provides that ‘‘the 

Secretary may establish groups of 

covered OPD services . . . so that 

services classified within each group are 

comparable clinically and with respect 

to the use of resources.’’ In accordance 

with subparagraph (B), we developed 

the PHP APCs, as set forth in § 419.31 

of the regulations (65 FR 18446 and 

18447; 63 FR 47559 through 47562 and 

47567 through 47569). As discussed 

above, PHP services are grouped into 

APCs. 

Based on section 1833(t)(2)(C) of the 

Act, we believe that the word 

‘‘establish’’ can be interpreted as 

applying to APCs at the inception of the 

OPPS in 2000 or whenever a new APC 

is added to the OPPS. In creating the 

original APC for PHP services (APC 

0033), we did ‘‘establish’’ the initial 

relative payment weight for PHP 

services, provided in both hospitalbased 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

APC Group title 

Proposed geometric mean 

per diem costs 

0172 .................. Level I Partial Hospitalization (3 services) for CMHCs ........................................................................................ $97.43 

0173 .................. Level II Partial Hospitalization (4 or more services) for CMHCs ......................................................................... 114.93 

0175 .................. Level I Partial Hospitalization (3 services) for hospital-based PHPs ................................................................... 177.32 

0176 .................. Level II Partial Hospitalization (4 or more services) for hospital-based PHPs .................................................... 190.21 


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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 providerdriven 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. 


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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 ProviderBased 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 providerbased 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 providerbased 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 providerbased 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 


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use of a modifier code is the best 

mechanism for collecting this servicelevel 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-Feefor-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-Feefor-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 STVpackaged, 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 


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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 § 416.2 and § 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 passthrough status under the OPPS; (3) 

certain items and services that we 

designate as contractor-priced, 

including, but not limited to, 

procurement of corneal tissue; (4) 

certain drugs and biologicals for which 

separate payment is allowed under the 

OPPS; and (5) certain radiology services 

for which separate payment is allowed 

under the OPPS. These covered 

ancillary services are specified in 

§ 416.164(b) and, as stated previously, 

are eligible for separate ASC payment 

(72 FR 42495). Payment for ancillary 

items and services that are not paid 

separately under the ASC payment 

system is packaged into the ASC 

payment for the covered surgical 

procedure. 

We update the lists of, and payment 

rates for, covered surgical procedures 

and covered ancillary services in ASCs 

in conjunction with the annual 

proposed and final rulemaking process 

to update the OPPS and the ASC 

payment system (§ 416.173; 72 FR 

42535). In addition, as discussed in 

detail in section XII.B. of this 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. 


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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 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 payment 

indicator 

C9739 ............... Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implants ....................................................... G2 

C9740 ............... Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants ................................................ G2 

C9021 ............... Injection, obinutuzumab, 10 mg ........................................................................................................................... K2 

G2 = Non office-based surgical procedure added in CY 2008 or later; payment based on OPPS relative payment weight. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; payment based on OPPS rate. 

TABLE 46—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES IMPLEMENTED IN JULY 2014 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 payment 

indicator 

Proposed CY 

2015 payment 

rate 

C2644 ............... Brachytherapy source, cesium-131 chloride solution, per millicurie ........................................ H2 $18.97 

C9022 ............... Injection, elosulfase alfa, 1mg .................................................................................................. K2 226.42 

C9134 ............... Factor XIII (antihemophilic factor, recombinant), Tretten, per 10 i.u. ...................................... K2 14.10 


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TABLE 46—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY SERVICES IMPLEMENTED IN JULY 2014—Continued 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 payment 

indicator 

Proposed CY 

2015 payment 

rate 

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 

CY 2014 CPT 

Code CY 2014 Long descriptor 

Proposed CY 

2015 payment 

indicator 

Proposed CY 

2015 payment 

rate 

0348T ............... Radiologic examination, radiostereometric analysis (RSA); spine, (includes, cervical, thoracic and lumbosacral, when performed).Z2 $50.21 

0349T ............... Radiologic examination, radiostereometric analysis (RSA); upper extremity(ies), (includes 

shoulder, elbow and wrist, when performed).

Z2 $50.21 

0350T ............... Radiologic examination, radiostereometric analysis (RSA); lower extremity(ies), (includes 

hip, proximal femur, knee and ankle, when performed).

Z2 50.21 

0356T ............... Insertion of drug-eluting implant (including punctal dilation and implant removal when performed) into lacrimal canaliculus, each.R2 42.81 

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. 


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TABLE 48—PROPOSED ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2015 

CY 2014 

HCPCS Code CY 2014 Long descriptor 

Proposed CY 

2015 ASC 

payment 

indicator 

22551 ................ Arthrodesis, anterior interbody, including disc space preparation, discectomy, osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below c2.G2 

22554 ................ Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for 

decompression); cervical below c2.

G2 

22612 ................ Arthrodesis, posterior or posterolateral technique, single level; lumbar (with lateral transverse technique, 

when performed).

G2 

22614 ................ Arthrodesis, posterior or posterolateral technique, single level; each additional vertebral segment (list separately in addition to code for primary procedure).N1 

63020 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc; 1 interspace, cervical.

G2 

63030 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc; 1 interspace, lumbar.

G2 

63042 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial facetectomy, 

foraminotomy and/or excision of herniated intervertebral disc, reexploration, single interspace; lumbar.

G2 

63045 ................ Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, 

cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; cervical.

G2 

63047 ................ Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, 

cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; lumbar.

G2 

63056 ................ Transpedicular approach with decompression of spinal cord, equina and/or nerve root(s) (eg, herniated 

intervertebral disc), single segment; lumbar (including transfacet, or lateral extraforaminal approach) (eg, 

far lateral herniated intervertebral disc).

G2 

b. 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’’ (Officebased 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 officebased (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-officebased, 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 officebased. 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. 


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TABLE 49—ASC COVERED SURGICAL PROCEDURES NEWLY PROPOSED FOR PERMANENT OFFICE-BASED DESIGNATION

FOR CY 2015 

CY 2014 CPT 

Code CY 2014 Long descriptor 

CY 2014 ASC 

payment 

indicator 

Proposed CY 

2015 ASC 

payment 

indicator * 

10022 ................ Fine needle aspiration; with imaging guidance ........................................................................ G2 P3 

19296 ................ Placement of radiotherapy afterloading expandable catheter (single or multichannel) into 

the breast for interstitial radioelement application following partial mastectomy, includes 

imaging guidance; on date separate from partial mastectomy.

G2 P2 

* 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 (Imageguided 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

CY 2014 CPT 

Code CY 2014 Long descriptor 

CY 2014 ASC 

Payment 

indicator 

Proposed CY 

2015 ASC 

payment 

indicator ** 

0099T ............... Implantation of intrastromal corneal ring segments ................................................................. R2* R2* 

0226T ............... Anoscopy, high resolution (HRA) (with magnification and chemical agent enhancement); diagnostic, including collection of specimen(s) by brushing or washing when performed.R2* N1 

0299T ............... Extracorporeal shock wave for integumentary wound healing, high energy, including topical 

application and dressing care; initial wound.

R2* R2* 

C9800 ............... Dermal injection procedure(s) for facial lipodystrophy syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, including all items and supplies.

R2* R2* 

10030 ................ Image-guided fluid collection drainage by catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, extremity, abdominal wall, neck), percutaneous.

P2* P2* 

64617 ................ Chemodenervation of muscle(s); larynx, unilateral, percutaneous (eg, for spasmodic 

dysphonia), includes guidance by needle electromyography, when performed.

P3* P3* 

67229 ................ Treatment of extensive or progressive retinopathy, one or more sessions; preterm infant 

(less than 37 weeks gestation at birth), performed from birth up to 1 year of age (eg, retinopathy of prematurity), photocoagulation or cryotherapy.

R2* R2* 

* If designation is temporary. 

** 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. 


sroberts on DSK5SPTVN1PROD with PROPOSALS
41020 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

We invite public comment on these 

proposals. 

c. Proposed ASC Covered Surgical 

Procedures To Be Designated as DeviceIntensive 

(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 encounterbased 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 deviceintensive 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 deviceintensive 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 § 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 § 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 


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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 deviceintensive 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 deviceintensive 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 deviceintensive 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

HCPCS Code Short descriptor Proposed CY 

2015 ASC PI 

Proposed CY 

2015 OPPS 

APC 

Proposed CY 

2015 device 

offset percent 

Proposed 

FB/FC policy 

would apply 

19298 ................ Place breast rad tube/caths ................................................ J8 0648 0.4415 Yes. 

19325 ................ Enlarge breast with implant ................................................. J8 0648 0.4415 Yes. 

19342 ................ Delayed breast prosthesis ................................................... J8 0648 0.4415 Yes. 

19357 ................ Breast reconstruction .......................................................... J8 0648 0.4415 Yes. 

23515 ................ Treat clavicle fracture .......................................................... J8 0064 0.4308 Yes. 

23585 ................ Treat scapula fracture ......................................................... J8 0064 0.4308 Yes. 

23615 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

23616 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

23630 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

23670 ................ Treat dislocation/fracture ..................................................... J8 0064 0.4308 Yes. 

24361 ................ Reconstruct elbow joint ....................................................... J8 0425 0.5661 Yes. 

24363 ................ Replace elbow joint ............................................................. J8 0425 0.5661 Yes. 

24365 ................ Reconstruct head of radius ................................................. J8 0425 0.5661 Yes. 

24366 ................ Reconstruct head of radius ................................................. J8 0425 0.5661 Yes. 

24370 ................ Revise reconst elbow joint .................................................. J8 0425 0.5661 Yes. 

24371 ................ Revise reconst elbow joint .................................................. J8 0425 0.5661 Yes. 

24435 ................ Repair humerus with graft ................................................... J8 0425 0.5661 Yes. 

24498 ................ Reinforce humerus .............................................................. J8 0425 0.5661 Yes. 


sroberts on DSK5SPTVN1PROD with PROPOSALS
41022 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

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—Continued 

HCPCS Code Short descriptor Proposed CY 

2015 ASC PI 

Proposed CY 

2015 OPPS 

APC 

Proposed CY 

2015 device 

offset percent 

Proposed 

FB/FC policy 

would apply 

24515 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

24516 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

24545 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

24546 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

24575 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

24579 ................ Treat humerus fracture ........................................................ J8 0064 0.4308 Yes. 

24586 ................ Treat elbow fracture ............................................................ J8 0064 0.4308 Yes. 

24587 ................ Treat elbow fracture ............................................................ J8 0064 0.4308 Yes. 

24615 ................ Treat elbow dislocation ....................................................... J8 0064 0.4308 Yes. 

24635 ................ Treat elbow fracture ............................................................ J8 0064 0.4308 Yes. 

24666 ................ Treat radius fracture ............................................................ J8 0064 0.4308 Yes. 

25441 ................ Reconstruct wrist joint ......................................................... J8 0425 0.5661 Yes. 

25442 ................ Reconstruct wrist joint ......................................................... J8 0425 0.5661 Yes. 

25444 ................ Reconstruct wrist joint ......................................................... J8 0425 0.5661 Yes. 

25446 ................ Wrist replacement ............................................................... J8 0425 0.5661 Yes. 

25574 ................ Treat fracture radius & ulna ................................................ J8 0064 0.4308 Yes. 

25575 ................ Treat fracture radius/ulna .................................................... J8 0064 0.4308 Yes. 

25607 ................ Treat fx rad extra-articul ...................................................... J8 0064 0.4308 Yes. 

25608 ................ Treat fx rad intra-articul ....................................................... J8 0064 0.4308 Yes. 

25609 ................ Treat fx radial 3+ frag ......................................................... J8 0064 0.4308 Yes. 

26686 ................ Treat hand dislocation ......................................................... J8 0064 0.4308 Yes. 

27415 ................ Osteochondral knee allograft .............................................. J8 0425 0.5661 Yes. 

27428 ................ Reconstruction knee ............................................................ J8 0425 0.5661 Yes. 

27438 ................ Revise kneecap with implant .............................................. J8 0425 0.5661 Yes. 

27440 ................ Revision of knee joint .......................................................... J8 0425 0.5661 Yes. 

27442 ................ Revision of knee joint .......................................................... J8 0425 0.5661 Yes. 

27443 ................ Revision of knee joint .......................................................... J8 0425 0.5661 Yes. 

27446 ................ Revision of knee joint .......................................................... J8 0425 0.5661 Yes. 

27745 ................ Reinforce tibia ..................................................................... J8 0425 0.5661 Yes. 

27759 ................ Treatment of tibia fracture ................................................... J8 0064 0.4308 Yes. 

27823 ................ Treatment of ankle fracture ................................................. J8 0064 0.4308 Yes. 

27827 ................ Treat lower leg fracture ....................................................... J8 0064 0.4308 Yes. 

27828 ................ Treat lower leg fracture ....................................................... J8 0064 0.4308 Yes. 

28415 ................ Treat heel fracture ............................................................... J8 0064 0.4308 Yes. 

28715 ................ Fusion of foot bones ........................................................... J8 0425 0.5661 Yes. 

33206 ................ Insert heart pm atrial ........................................................... J8 0089 0.6940 Yes. 

33207 ................ Insert heart pm ventricular .................................................. J8 0089 0.6940 Yes. 

33208 ................ Insrt heart pm atrial & vent ................................................. J8 0089 0.6940 Yes. 

33210 ................ Insert electrd/pm cath sngl .................................................. J8 0090 0.6828 Yes. 

33211 ................ Insert card electrodes dual .................................................. J8 0090 0.6828 Yes. 

33212 ................ Insert pulse gen sngl lead ................................................... J8 0090 0.6828 Yes. 

33213 ................ Insert pulse gen dual leads ................................................. J8 0089 0.6940 Yes. 

33214 ................ Upgrade of pacemaker system ........................................... J8 0089 0.6940 Yes. 

33216 ................ Insert 1 electrode pm-defib ................................................. J8 0090 0.6828 Yes. 

33217 ................ Insert 2 electrode pm-defib ................................................. J8 0090 0.6828 Yes. 

33221 ................ Insert pulse gen mult leads ................................................. J8 0655 0.7504 Yes. 

33224 ................ Insert pacing lead & connect .............................................. J8 0089 0.6940 Yes. 

33227 ................ Remove&replace pm gen singl ........................................... J8 0090 0.6828 Yes. 

33228 ................ Remv&replc pm gen dual lead ............................................ J8 0089 0.6940 Yes. 

33229 ................ Remv&replc pm gen mult leads .......................................... J8 0655 0.7504 Yes. 

33230 ................ Insrt pulse gen w/dual leads ............................................... J8 0107 0.7807 Yes. 

33231 ................ Insrt pulse gen w/mult leads ............................................... J8 0108 0.8095 Yes. 

33233 ................ Removal of pm generator ................................................... J8 0090 0.6828 Yes. 

33240 ................ Insrt pulse gen w/singl lead ................................................ J8 0107 0.7807 Yes. 

33249 ................ Nsert pace-defib w/lead ...................................................... J8 0108 0.8095 Yes. 

33262 ................ Remv&replc cvd gen sing lead ........................................... J8 0107 0.7807 Yes. 

33263 ................ Remv&replc cvd gen dual lead ........................................... J8 0107 0.7807 Yes. 

33264 ................ Remv&replc cvd gen mult lead ........................................... J8 0108 0.8095 Yes. 

33282 ................ Implant pat-active ht record ................................................ J8 0090 0.6828 Yes. 

37221 ................ Iliac revasc w/stent .............................................................. J8 0229 0.4981 Yes. 

37225 ................ Fem/popl revas w/ather ...................................................... J8 0229 0.4981 Yes. 

37226 ................ Fem/popl revasc w/stent ..................................................... J8 0229 0.4981 Yes. 

37227 ................ Fem/popl revasc stnt & ather .............................................. J8 0319 0.5796 Yes. 

37228 ................ Tib/per revasc w/tla ............................................................. J8 0229 0.4981 Yes. 

37229 ................ Tib/per revasc w/ather ........................................................ J8 0319 0.5796 Yes. 

37230 ................ Tib/per revasc w/stent ......................................................... J8 0319 0.5796 Yes. 

37231 ................ Tib/per revasc stent & ather ................................................ J8 0319 0.5796 Yes. 

37236 ................ Open/perq place stent 1st ................................................... J8 0229 0.4981 Yes. 


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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—Continued 

HCPCS Code Short descriptor Proposed CY 

2015 ASC PI 

Proposed CY 

2015 OPPS 

APC 

Proposed CY 

2015 device 

offset percent 

Proposed 

FB/FC policy 

would apply 

37238 ................ Open/perq place stent same ............................................... J8 0229 0.4981 Yes. 

53440 ................ Male sling procedure ........................................................... J8 0385 0.5944 Yes. 

53444 ................ Insert tandem cuff ............................................................... J8 0385 0.5944 Yes. 

53445 ................ Insert uro/ves nck sphincter ................................................ J8 0386 0.6919 Yes. 

53447 ................ Remove/replace ur sphincter .............................................. J8 0386 0.6919 Yes. 

54400 ................ Insert semi-rigid prosthesis ................................................. J8 0385 0.5944 Yes. 

54401 ................ Insert self-contd prosthesis ................................................. J8 0386 0.6919 Yes. 

54405 ................ Insert multi-comp penis pros ............................................... J8 0386 0.6919 Yes. 

54410 ................ Remove/replace penis prosth ............................................. J8 0386 0.6919 Yes. 

54416 ................ Remv/repl penis contain pros ............................................. J8 0386 0.6919 Yes. 

55873 ................ Cryoablate prostate ............................................................. J8 0385 0.5944 Yes. 

61885 ................ Insrt/redo neurostim 1 array ................................................ J8 0039 0.8612 Yes. 

61886 ................ Implant neurostim arrays ..................................................... J8 0318 0.8658 Yes. 

61888 ................ Revise/remove neuroreceiver ............................................. J8 0061 0.5642 Yes. 

62361 ................ Implant spine infusion pump ............................................... J8 0227 0.8060 Yes. 

62362 ................ Implant spine infusion pump ............................................... J8 0227 0.8060 Yes. 

63650 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

63655 ................ Implant neuroelectrodes ...................................................... J8 0039 0.8612 Yes. 

63663 ................ Revise spine eltrd perq aray ............................................... J8 0061 0.5642 Yes. 

63664 ................ Revise spine eltrd plate ....................................................... J8 0061 0.5642 Yes. 

63685 ................ Insrt/redo spine n generator ................................................ J8 0318 0.8658 Yes. 

64553 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

64555 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

64561 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

64565 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

64568 ................ Inc for vagus n elect impl .................................................... J8 0318 0.8658 Yes. 

64569 ................ Revise/repl vagus n eltrd .................................................... J8 0061 0.5642 Yes. 

64575 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

64580 ................ Implant neuroelectrodes ...................................................... J8 0039 0.8612 Yes. 

64581 ................ Implant neuroelectrodes ...................................................... J8 0061 0.5642 Yes. 

64590 ................ Insrt/redo pn/gastr stimul .................................................... J8 0039 0.8612 Yes. 

65770 ................ Revise cornea with implant ................................................. J8 0293 0.6588 Yes. 

69714 ................ Implant temple bone w/stimul ............................................. J8 0425 0.5661 Yes. 

69715 ................ Temple bne implnt w/stimulat ............................................. J8 0425 0.5661 Yes. 

69718 ................ Revise temple bone implant ................................................ J8 0425 0.5661 Yes. 

69930 ................ Implant cochlear device ...................................................... J8 0259 0.8316 Yes. 

0238T ............... Trluml perip athrc iliac art ................................................... J8 0319 0.5796 Yes. 

0282T ............... Periph field stimul trial ......................................................... J8 0061 0.5642 Yes. 

0283T ............... Periph field stimul perm ...................................................... J8 0318 0.8658 Yes. 

0302T ............... Icar ischm mntrng sys compl .............................................. J8 0089 0.6940 Yes. 

0303T ............... Icar ischm mntrng sys eltrd ................................................. J8 0090 0.6828 Yes. 

0304T ............... Icar ischm mntrng sys device ............................................. J8 0090 0.6828 Yes. 

0308T ............... Insj ocular telescope prosth ................................................ J8 0351 0.9004 Yes. 

0316T ............... Replc vagus nerve pls gen ................................................. J8 0039 0.8612 Yes. 

0319T ............... Insert subq defib w/eltrd ...................................................... J8 0108 0.8095 Yes. 

0320T ............... Insert subq defib electrode .................................................. J8 0090 0.6828 Yes. 

0321T ............... Insert subq defib pls gen ..................................................... J8 0107 0.7807 Yes. 

0323T ............... Rmvl & replc subq pls gen .................................................. J8 0107 0.7807 Yes. 

0334T ............... Perq stablj sacroiliac joint ................................................... J8 0425 0.5661 Yes. 

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 


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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 officebased 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 deviceintensive procedures to incorporate the 

CY 2014 OPPS device offset 

percentages. 

Payment rates for office-based 

procedures (payment indicators ‘‘P2,’’ 

‘‘P3,’’ and ‘‘R2’’) are the lower of the 

MPFS nonfacility PE RVU-based 

amount (we refer readers to the CY 2015 

MPFS proposed rule) or the amount 

calculated using the ASC standard 

ratesetting methodology for the 

procedure. In the CY 2014 OPPS/ASC 

final rule with comment period, we 

updated the payment amounts for 

office-based procedures (payment 

indicators ‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) using 

the most recent available MPFS and 

OPPS data. We compared the estimated 

CY 2014 rate for each of the office-based 

procedures, calculated according to the 

ASC standard ratesetting methodology, 

to the MPFS nonfacility PE RVU-based 

amount to determine which was lower 

and, therefore, would be the CY 2014 

payment rate for the procedure 

according to the final policy of the 

revised ASC payment system 

(§ 416.171(d)). 

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 § 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 deviceintensive 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 


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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 cardioverterdefibrillator 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 cardioverterdefibrillator 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 deviceintensive 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. 


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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 MPFSbased 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 contractorpriced 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 passthrough 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 contractorpriced. 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 passthrough 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 


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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 §§ 416.164(a)(11) and (b)(5) 

as well as § 416.171(b)(1) to reflect these 

proposals. 

We have identified one diagnostic test 

that is within the medicine range of CPT 

codes and for which separate payment 

is allowed under the OPPS: CPT code 

91035 (Esophagus, gastroesophageal 

reflux test; with mucosal attached 

telemetry pH electrode placement, 

recording, analysis and interpretation). 

We 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 

§ 416.185(b), the deadline for receipt of 

public comments is 30 days following 


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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— 

Æ Provide a list of determinations 

made as a result of our review of all new 

NTIOL class requests and public 

comments; 

Æ 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. 

Æ 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. 

Æ 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 deviceintensive or office-based, and the 

corresponding ASC payment 

methodology; and their classification as 

separately payable ancillary services 

including radiology services, 

brachytherapy sources, OPPS passthrough 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 


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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-bystep 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, deviceintensive procedures). 

As discussed in the August 2, 2007 

final rule (72 FR 42517 through 42518) 

and as codified at § 416.172(c) of the 

regulations, the revised ASC payment 

system accounts for geographic wage 

variation when calculating individual 

ASC payments by applying the pre-floor 

and pre-reclassified 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 prefloor 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 


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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-Dataand-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 prereclassified 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 laborrelated 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 


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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 §§ 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 MFPadjusted 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 MFPadjusted 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/MFPadjusted 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 


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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 EndStage 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 NQFendorsed, 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 


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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 (<) to the ‘‘less than or 

equal to’’ operator (≤). Specifically, we 

are proposing that a measure under the 

Hospital OQR Program is ‘‘topped-out’’ 

when it meets both of the following 

criteria: 

• Statistically indistinguishable 

performance at the 75th and 90th 

percentiles; and 

• A truncated coefficient of variation 

less than or equal to 0.10. 

To identify if a measure has 

statistically indistinguishable 

performance at the 75th and 90th 

percentiles, we would determine 

whether the difference between the 75th 

and 90th percentiles for a measure is 

within two times the standard error of 

the full dataset. The coefficient of 

variation (CV) is a descriptive statistic 

that expresses the standard deviation as 

a percentage of the sample mean; this 

provides a statistic that is independent 

of the units of observation. Applied to 

this analysis, a large CV would indicate 

a broad distribution of individual 

hospital scores, with large and 


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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 chartabstracted 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 SCIPInf-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. 


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HOSPITAL OQR PROGRAM MEASURE SET PREVIOUSLY ADOPTED FOR THE CY 2016 PAYMENT DETERMINATION AND

SUBSEQUENT YEARS—Continued 

NQF No. Measure name 

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-HCPFlu.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-carehospital/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 chartabstracted 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 


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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 Webbased 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 RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy. Colonoscopy 

is one of the most frequently performed 

procedures in the outpatient setting in 


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1Russo 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. 

2Seeff 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. 

3Rathgaber SW., Wick TM. Colonoscopy 

completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 

2006; 64:556–62. 

4Rabeneck 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. 

7Leffler 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. 

8Chukmaitov 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. 

9Leffler 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 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.345

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.678 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. 

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 RiskStandardized 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 riskstandardized quality measure will 

address this information gap and 

promote quality improvement by 

providing feedback to facilities and 

physicians, as well as transparency for 

patients on the rates and variation 

across facilities in unplanned hospital 

visits after colonoscopy. 

The outcome measured in the OP–32 

measure is all-cause, unplanned 

hospital visits (admissions, observation 

stays, and emergency department visits) 

within 7 days of an outpatient 

colonoscopy procedure. The measure 

score, also referred to as the facilitylevel risk-standardized hospital visit 

rate, is derived from the calculation of 

the ratio of the numerator to the 

denominator multiplied by the crude 

rate. The numerator is the number of 

predicted (meaning adjusted actual) 

hospital visits, which is the number of 

unplanned hospital visits within 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 highrisk 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/QualityInitiatives-Patient-AssessmentInstruments/HospitalQualityInits/

Measure-Methodology.html under 

‘‘Hospital Outpatient Colonoscopy.’’ 

Section 1890A(a)(2) of the Act 

outlines the pre-rulemaking process 

established under section 1890A of the 

Act, which requires the Secretary to 

make available to the public by 

December 1 of each year a list of quality 

and efficiency measures that the 

Secretary is considering. This measure 

was included on a publicly available 

document titled ‘‘MAP Pre-Rulemaking 

Report: 2014 Recommendations on 

Measures for More than 20 Federal 

Programs’’ on the NQF Web site at: 

http://www.qualityforum.org/

Publications/2014/01/MAP_PreRulemaking_Report__2014_

Recommendations_on_Measures_for_

More_than_20_Federal_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 PreRulemaking 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 


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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. 

NQF No. Proposed measure for the CY 2017 payment 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.**** 


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PROPOSED HOSPITAL OQR PROGRAM MEASURE SET FOR THE CY 2017 PAYMENT DETERMINATION AND SUBSEQUENT

YEARS—Continued 

NQF No. Measure name 

0661 ................... OP–23: ED—Head CT or MRI Scan Results for Acute Ischemic Stroke or Hemorrhagic Stroke who Received Head CT or 

MRI Scan Interpretation Within 45 minutes of Arrival. 

N/A ..................... OP–25: Safe Surgery Checklist Use. 

N/A ..................... OP–26: Hospital Outpatient Volume on Selected Outpatient Surgical Procedures.* 

0431 ................... OP–27: Influenza Vaccination Coverage among Healthcare Personnel. 

0658 ................... OP–29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk Patients. 

0659 ................... OP–30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance 

of Inappropriate Use. 

1536 ................... OP–31: Cataracts—Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery.** 

N/A ..................... OP–32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy.*** 

* OP–26: Procedure categories and corresponding HCPCS codes are located at: http://qualitynet.org/dcs/BlobServer?blobkey=

id&blobnocache=true&blobwhere=1228889963089&blobheader=multipart%2Foctet-stream&blobheadername1=Content-Disposition&blobheader

value1=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/accelerating

hieprinciples_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/ONC10yearInteroperability

ConceptPaper.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/policyresearchers-implementers/standardsand-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 especifications 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, 


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41040 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

10http://www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/

Reports/downloads/Leung_PHP_PPS_2010.pdf. 

11O’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. 

12Stephen 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. 

13Stephen Ross. Alcohol Use Disorders in the 

Elderly. Psychiatry Weekly (no date) Available at: 

http://www.psychweekly.com/aspx/article/

ArticleDetail.aspx?articleid=19. 

14AL 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. 

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, recoverybased 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. 

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 claimsbased measures that provide indicators 

of quality of care can be found at 

http://www.pepperresources.org/

LinkClick.aspx?fileticket=stK9uUm

QWlM%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. 

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 


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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 

§ 419.41 of our regulations, prior to any 

adjustment for a hospital’s failure to 

meet the quality reporting standards 

according to § 419.43(h). Beneficiaries 

and secondary payers thereby share in 

the reduction of payments to these 

hospitals. 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68772), we 

established the policy that all other 

applicable adjustments to the OPPS 

national unadjusted payment rates 

apply when the OPD fee schedule 

increase factor is reduced for hospitals 

that fail to meet the requirements of the 

Hospital OQR Program. For example, 

the following standard adjustments 

apply to the reduced national 

unadjusted payment rates: the wage 

index adjustment; the multiple 

procedure adjustment; the interrupted 

procedure adjustment; the rural sole 

community hospital adjustment; and the 

adjustment for devices furnished with 

full or partial credit or without cost. 

Similarly, OPPS outlier payments made 

for high cost and complex procedures 

will continue to be made when outlier 

criteria are met. For hospitals that fail to 

meet the quality data reporting 

requirements, the hospitals’ costs are 

compared to the reduced payments for 

purposes of outlier eligibility and 

payment calculation. We established 

this policy in the OPPS beginning in the 

CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60642). For a 

complete discussion of the OPPS outlier 

calculation and eligibility criteria, we 

refer readers to section II.G. of this 

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. 


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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 chartabstracted 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 RiskStandardized 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 NonCardiac 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 RiskStandardized 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 Webbased 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 


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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 chartabstracted, 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/Content

Server?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 


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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 § 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/Content

Server?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 

§ 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 

§ 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. 


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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 betablockers 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 ‘‘toppedout’’ 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 


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15Russo 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. 

16Seeff 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. 

17Rathgaber SW, Wick TM. Colonoscopy 

completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 

2006; 64:556–62. 

18Rabeneck 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. 

21Leffler 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. 

22Chukmaitov 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. 

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=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 PolypsAvoidance 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 RiskStandardized 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 


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23Leffler 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. 

empirical analyses, we concluded that 

unplanned hospital visits within 7 days 

is the optimal outcome to ensure 

capture of procedure-related adverse 

events and to minimize capture of 

hospital visits unrelated to the 

procedure. This measure provides the 

opportunity for ASCs to improve quality 

of care and to lower the rates of adverse 

events leading to hospital visits after 

outpatient colonoscopy; this would 

encourage ASCs to achieve the outcome 

rates of the best performers. 

We believe it is important to reduce 

adverse patient outcomes associated 

with preparation for colonoscopy, the 

procedure itself, and follow-up care. 

Therefore, we are proposing to include 

the ASC–12: Facility Seven-Day RiskStandardized 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. 

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 facilitylevel risk-standardized hospital visit 

rate, is derived from the calculation of 

the ratio of the numerator to the 

denominator multiplied by the crude 

rate. The numerator is the number of 

predicted (meaning adjusted actual) 

hospital visits, which is the number of 

unplanned hospital visits within 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 highrisk 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/QualityInitiatives-Patient-AssessmentInstruments/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 PreRulemaking 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.quality

forum.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 welldefined 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. 


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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 NQFendorsed; 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. 

ASC No. NQF No. Proposed ASCQR measure for the CY 2017 payment determination and subsequent years 

ASC–12 ....... Pending ....... Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 

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/Content 

Server?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 PolypsAvoidance 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 


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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/Content

Server?c=Page&pagename=Qnet

Public%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 NQFendorsed, 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 


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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/Content

Server?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier3

&cid=1228772879036). The data 


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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%2FQnet

Tier3&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%2

FQnetTier3&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 RiskStandardized 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/ambulatorysurgery/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 


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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 Webbased 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 SelfReferral 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). 


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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 physicianowned hospital to qualify for an 

expansion exception as an applicable 

hospital. Specifically, § 411.362(c)(2) 

states that: (1) The hospital’s annual 

percent of total inpatient admissions 

under Medicaid must be equal to or 

greater than the average percent with 

respect to such admissions for all 

hospitals located in the county in which 

the hospital is located during the most 

recent fiscal year for which data are 

available as of the date that the hospital 

submits its exception request; (2) the 

hospital must be located in a State in 

which the average bed capacity in the 

State is less than the national average 

bed capacity during the most recent 

fiscal year for which data are available 

as of the date that the hospital submits 

its request; and (3) the hospital must 

have an average bed occupancy rate that 

is greater than the average bed 

occupancy rate in the State in which the 

hospital is located during the most 

recent fiscal year for which data are 

available as of the date that the hospital 

submits its request. 

Section 411.362(c)(3) specifies the 

criteria for a physician-owned hospital 

seeking an exception under the 

expansion exception process on the 

basis that it is a high Medicaid facility, 

including the requirement that, with 

respect to each of the 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 § 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 

§ 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 

§§ 411.362(c)(2)(ii) and (c)(3)(ii) and, 


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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 

§§ 411.362(c)(2)(ii) and (c)(3)(ii). 

We believe that some physicianowned 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 physicianowned 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 

§ 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 § 411.362(c)(3)(ii). We believe that 

our proposal will enable physicianowned hospitals to perform the 

comparison set forth in 

§ 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 § 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 

§§ 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, 


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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 § 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 § 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 

§§ 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-andAbuse/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 physicianowned 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 

(§ 411.362(c)(2)(ii)). 

• Estimate the average percentage 

with respect to such admissions for all 

hospitals located in the county in which 

the hospital is located 

(§ 411.362(c)(2)(ii)). 

• Determine the average bed capacity 

in the State in which the hospital is 

located (§ 411.362(c)(2)(iv)). 

• Determine the national average bed 

capacity (§ 411.362(c)(2)(iv)). 

• Determine its own average bed 

occupancy rate (§ 411.362(c)(2)(v)). 

• Determine the average bed 

occupancy rate for the State in which 

the hospital is located 

(§ 411.362(c)(2)(v)). 

• Estimate its annual percentage of 

total inpatient admissions under 

Medicaid for each of the 3 most recent 

fiscal years for which data are available 

(§ 411.362(c)(3)(ii)). 

• Estimate the annual percentages of 

total inpatient admissions under 

Medicaid for every other hospital 

located in the county in which the 

hospital is located for each of the 3 most 

recent fiscal years for which data are 

available (§ 411.362(c)(3)(ii)). 

We 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 

§§ 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 

§§ 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 


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§§ 411.362(c)(2)(ii) and (c)(3)(ii) of the 

regulations. Under proposed 

§ 411.362(c)(5), the notification must be 

in writing, in either electronic or hard 

copy form, and must be provided at the 

same time that the hospital discloses on 

any public Web site for the hospital that 

it is requesting an exception. 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 

§ 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 

§ 411.362(c)(5) to extend the date by 

which certain expansion exception 

requests will be deemed complete. 

Specifically, we are proposing to revise 

§ 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 § 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 


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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 § 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 

§ 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 

§ 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 

§ 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 § 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 


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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 §§ 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 planspecific county payment rate multiplied 

by the enrollee risk score), plus the plan 

rebate amount (if any). The plan-specific 

county rates and the plan rebate amount 

are based on the bid approved by CMS 

and are set in advance for a payment 

year. In addition, payment rates may be 

adjusted for enrollees with end-stage 

renal disease, enrollees in Medical 

Savings Account MA plans, and 

enrollees in religious fraternal benefit 

society MA plans under § 422.304. 

Prospective payments are made during 

the year, subject to a reconciliation after 

the end of the year. 

CMS adjusts the plan-specific county 

payment rate for each enrollee based on 

an enrollee risk score. Enrollee risk 

scores are determined using the CMSHierarchical 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 

§ 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 

§ 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 


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submission deadline 

(§ 422.310(g)(2)(ii)). 

For each payment year, we apply 

three sets of risk scores to adjust 

payments: Initial and midyear risk 

scores during the payment year (both 

sets are based on incomplete diagnosis 

data from the data collection year), and 

final risk scores after the payment year 

using data MA organizations submitted 

as of the final deadline for risk 

adjustment data (which reflect complete 

data for the data collection year). During 

the year, CMS makes monthly 

prospective payments to 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 § 422.310(g)(2)(ii); this 

provision was recently adopted in the 

final rule entitled ‘‘Medicare Program; 

Contract Year 2015 Policy and 

Technical Changes to the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs’’ (79 

FR 29843). When such corrections are 

submitted, CMS conducts another 

reconciliation to correct the payments 

made to the MA organization using the 

established payment adjustment 

process. In addition, under § 422.311, 

CMS conducts RADV audits of the risk 

adjustment data submitted by MA 

organizations pursuant to § 422.310. 

Such RADV audits are conducted at the 

MA organization contract level and are 

designed to calculate a contract–level 

error rate and payment adjustment 

amount for a specific payment year 

under audit. 

2. Medicare Part D Payment Background 

For Medicare Part D, the Medicare 

Prescription Drug Benefit, Improvement, 

and Modernization Act (MMA), which 

amended the Act by adding Part D 

under Title 18, provides four payment 

mechanisms: Direct subsidy (codified at 

§ 423.329(a)); reinsurance subsidy 

(codified at § 423.329(c)); low income 

subsidy (codified at §§ 423.780 and 

423.782); and risk sharing (codified at 

§ 423.336(b)). As a condition of 

payment, section 1860D–15(d)(2)(A) of 

the Act requires that Part D sponsors 

submit data and information necessary 

for CMS to carry out those payment 

provisions. Part D 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 costsharing 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 costsharing 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 § 423.346. In our final 

rule, ‘‘Medicare Program; Medicare 

Prescription Drug Benefit’’ published in 

the Federal Register on January 28, 

2005 (70 FR 4194), we stated that 

including the Medicare Part D 

reopening provision at § 423.346 would 

‘‘ensure that the discovery of any 

overpayment or underpayments could 

be rectified’’ (70 FR 4316). However, 

this is only possible to the extent that 

the data submitted by Part D sponsors 

are accurate. Accordingly, prior to 

making a payment determination for a 

coverage year, either through a 

reconciliation described at § 423.343 or 

a reopening described at § 423.346, CMS 

periodically makes requests that Part D 

sponsors correct payment data that do 

not comply with program requirements 

(that is, what we have 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 §§ 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). 


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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 

§§ 422.330(a) and 423.352(a)). The MA 

organization or Part D sponsor is 

responsible for the accuracy of such 

data. MA organizations and Part D 

sponsors are currently required to attest 

to the accuracy, completeness, and 

truthfulness of such data under 

§ 422.504(l) and § 423.505(k), 

respectively. For Medicare Part C, the 

data submitted by the MA organization 

to CMS include, for example, 

enrollment data and risk adjustment 

data specified at § 422.310. For 

Medicare Part D, data submitted by the 

Part D sponsor to CMS include 

enrollment data and data submitted 

under § 423.329(b)(3) (risk adjustment 

data), § 423.336(c)(1) (cost data), 

§ 423.343 (data for retroactive 

adjustments and reconciliations), and 

data provided for purposes of 

supporting allowable reinsurance costs 

and allowable risk corridor costs as 

defined in § 423.308, which include 

data submitted to CMS regarding direct 

or indirect remuneration (DIR). 

There are additional payment-related 

data that CMS uses to calculate Part C 

and Part D payments that are submitted 

directly to CMS by other entities, such 

as 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 

§ 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 § 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 

§§ 422.326 and 423.360. Similarly, the 

proposed definitions of ‘‘payment data’’ 

are nearly identical to the definitions of 

‘‘funds’’ at existing §§ 422.326 and 

423.360. Although proposed §§ 422.330 

and 423.352 address overpayments to 

MA organizations and Part D sponsors 

that have been identified by CMS, 

whereas §§ 422.326 and 423.360 address 

overpayments that are identified by the 

MA organization or Part D sponsor, we 

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 

§§ 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 

§§ 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 § 423.343 (that is, the 

determination of the final amount of 

direct subsidy described in 

§ 423.329(a)(1), final reinsurance 

payments described in § 423.329(c), the 

final amount of the low income subsidy 

described in § 423.329(d), or final risk 

corridor payments as described in 

§ 423.336) for contract year 2015 (which 

would take place in 2016), CMS may 

request corrections to erroneous 

payment data for contract years 2010 

through 2015. We are proposing to use 

the same 6-year look-back period as 

applies to plan-identified overpayments 

under existing §§ 422.326 and 423.360 

because both overpayment policies are 


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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 § 422.330(b) and 

§ 423.352(b), CMS will perform a 

reconciliation in the payment system 

using the established payment 

adjustment process. CMS’ systems will 

conduct a payment reconciliation and 

determine the associated payment 

adjustment based on the corrected data 

using established payment 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 

§§ 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 §§ 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 outof-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 costsharing 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 


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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 §§ 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 §§ 422.330(e)(1) and 

423.352(e)(1)), an informal hearing 

(described at proposed §§ 422.330(e)(2) 

and 423.352(e)(2)), and an 

Administrator review (described at 

proposed §§ 422.330(e)(3) and 

423.352(e)(3)). 

a. Reconsideration 

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 §§ 422.330(e)(1)(i) and 

423.352(e)(1)(i)). At proposed 

§§ 422.330(e)(1)(ii) and 423.352(e)(1)(ii), 

we address the information that must be 

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 

(§§ 422.330(e)(1)(iii) and 

423.352(e)(1)(iii)). We are proposing at 

proposed §§ 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 §§ 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 

§§ 422.330(e)(2) and 423.352(e)(2)). As 

proposed at §§ 422.330(e)(2)(i) and 

423.352(e)(2)(i), a request for an 

informal hearing must be made in 

writing and filed within 30 days of the 

date of CMS’ reconsideration decision. 

The request must include a copy of 

CMS’ reconsideration decision and must 

specify the findings or issues in the 

decision with which the MA 

organization or Part D sponsor disagrees 

and the reasons for its disagreement 

(proposed §§ 422.330(e)(2)(ii) and 

423.352(e)(2)(ii)). 

We set forth the proposed procedures 

for conducting the informal hearing at 

proposed §§ 422.330(e)(2)(iii) and 

423.352(e)(2)(iii). Under these 

procedures, CMS would provide written 

notice of the time and place of the 

informal hearing at least 10 days before 

the scheduled date of the hearing 

(proposed § 422.330(e)(2)(iii)(A) and 

§ 423.352(e)(2)(iii)(A)); the informal 

hearing would be conducted by a CMS 

hearing officer. The hearing officer 

would be limited to reviewing the 

record that was before CMS when CMS 

made its reconsideration determination 

(proposed § 422.330(e)(2)(iii)(B) and 

§ 423.352(e)(2)(iii)(B)). Under our 

proposal, no new or additional 

documentation or evidence may be 

submitted at this hearing. At proposed 

§ 422.330(e)(2)(iii)(C) and 

§ 423.352(e)(2)(iii)(C), we 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 §§ 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 §§ 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 §§ 422.330(e)(3)(i) 

and 423.352(e)(3)(i)). The MA 

organization or Part D sponsor may 

provide written arguments to the 

Administrator for review. Under 

proposed §§ 422.330(e)(3)(ii) and 

423.352(e)(3)(ii), after receiving the 

request to review, the Administrator 

would have the discretion to elect to 

review the hearing determination or 

decline to review it. At proposed 

§§ 422.330(e)(3)(iii) and 

423.352(e)(3)(iii), if the Administrator 

declines to review the hearing officer’s 

decision, the hearing officer’s decision 

would be final and binding. At 

proposed §§ 422.330(e)(3)(iv) and 

423.352(e)(3)(iv), we 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 

§§ 422.330(e)(3)(v) and 423.352(e)(3)(v)). 


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5. Matters Subject To Appeal and 

Burden of Proof 

At proposed §§ 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 §§ 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 

§§ 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 § 422.330 and 

§ 423.352 would apply after the effective 

date of any final rule implementing the 

new payment offset and appeals 

process, but that requests to correct 

payment data under proposed 

§§ 422.330(b) and 423.352(b) and the 

payment offsets under proposed 

§§ 422.330(c) and 423.352(c) may apply 

to any payment year, subject to the 6- 

year limitation under §§ 422.330(b) and 

423.352(b). 

We 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/HospitalOutpatient-Regulations-andNotices.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-Feefor-Service-Payment/ASCPayment/ASCRegulations-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 

(§ 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 


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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 × 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 × 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 × 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 × 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 × 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 RiskStandardized 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 chartabstracted 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 × 

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 × 3,300 hospitals) for 

all participating hospitals, for a total 

financial burden of approximately $54 

million (1.8 million hours × $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 


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hours) per case per measure to chartabstract. 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 × 0.417 hours/case × 384 case/ 

measure × 2 measures) for all 

participating hospitals for OP–29 and 

OP–30 for a total financial burden of 

approximately $33 million ($30/hour × 

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 chartabstract. 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 × 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 

× 0.417 hours/case × 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 × 

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 × $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 Webbased tool. Therefore, the estimated 

annual estimate burden associated with 

these measures for all participating 

hospitals is 3,307 hours (3,300 hospitals 

× 0.167 hours/measure × 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 × 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 × 0.167 hours) 

for the CY 2017 payment determination 

and subsequent years. 

Therefore, we estimate that the 

financial burden incurred for the Webbased submission of these measures for 

all participating hospitals will be 

$119,070 ($30/hour × (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 


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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 × 12 hours/

hospital) and a total financial impact of 

$180,000 ($30/hour × 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 × 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 claimsbased 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 


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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 × 2 measures 

× 0.167 hours per ASC) and $52,680 

(1,756 hours × $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 × $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 × $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 × 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 × 0.583 hours per 

case per ASC) and $18,390 (613 hours 

× $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 


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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 hospitalspecific 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 hospitalspecific 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 


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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 hospitalbased 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 passthrough 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 passthrough 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 


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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 postreclassification 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 fixeddollar 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 


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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

Number of 

hospitals 

APC 

Recalibration 

(all proposed 

changes) 

Proposed new 

wage index 

and provider 

adjustments 

All budget 

neutral 

changes 

(combined 

cols 2,3) with 

proposed 

market basket 

update 

All proposed 

budget neutral 

changes and 

proposed 

update (column 4) with 

proposed 

frontier wage 

index, 

adjustment 

All proposed 

changes 

(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 


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TABLE 52—ESTIMATED IMPACT OF THE PROPOSED CY 2015 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE

PAYMENT SYSTEM—Continued 

Number of 

hospitals 

APC 

Recalibration 

(all proposed 

changes) 

Proposed new 

wage index 

and provider 

adjustments 

All budget 

neutral 

changes 

(combined 

cols 2,3) with 

proposed market basket update 

All proposed 

budget neutral 

changes and 

proposed 

update (column 4) with 

proposed frontier wage 

index adjustment 

All proposed 

changes 

(1) (2) (3) (4) (5) (6) 

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-tocost 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 providertype-specific APC. For CY 2015, we are 

proposing to continue the providertype-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). 


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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 passthough 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 


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41074 Federal Register / Vol. 79, No. 134 / Monday, July 14, 2014 / Proposed Rules 

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

Surgical specialty group 

Estimated CY 

2014 ASC 

payments 

(in millions) 

Estimated CY 

2015 percent 

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 


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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

CPT/HCPCS 

code * Short descriptor 

Estimated CY 

2014 ASC 

payments 

(in millions) 

Estimated CY 

2015 percent 

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 officebased 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/a4.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 


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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 


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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 SelfReferral 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 

§ 411.362(c)(2) for applicable hospitals 

and § 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 

§§ 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 physicianowned 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. 


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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 highlevel officials of the plan or lawyers. 

According to the most recent wage data 

provided by the Bureau of Labor 

Statistics (BLS) for May 2012, the mean 

hourly wage for the category of 

‘‘Lawyers’’—which we believe, 

considering the variety of officials who 

have submitted appeals, is the most 

appropriate category—is $62.93. 

Multiplying this figure by 50 hours (10 

submissions × 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 × 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-sizestandards. 

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 


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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 

■ 1. The authority citation for part 411 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, 1871, and 1877 of the Social 

Security Act (42 U.S.C. 1302, 1395w–101 

through 1395w–152, 1395hh, and 1395nn). 

■ 2. Section 411.351 is amended by 

adding the definitions ‘‘External data 

source’’ and ‘‘Internal data source’’ in 

alphabetical order to read as follows: 

§ 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 § 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 

§ 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 § 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 

§ 411.362(c), are accurate, complete, and 

objectively verifiable. 

* * * * * 

■ 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: 

§ 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 § 411.351), and/or data 

from an external data source (as defined 

at § 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 § 411.351), 

and/or data from an external data source 

(as defined at § 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 § 411.351), and/or data from an 

external data source (as defined at 

§ 411.351) to determine its average bed 

occupancy rate and the average bed 


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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 § 411.351), and/or 

data from an external data source (as 

defined at § 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 

■ 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). 

§ 412.3 [Amended] 

■ 5. Section 412.3 is amended by— 

■ a. Removing paragraph (c). 

■ b. Redesignating paragraphs (d) and 

(e) as paragraphs (c) and (d), 

respectively. 

■ 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 

■ 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). 

■ 7. Section 416.164 is amended by 

revising paragraphs (a)(11) and (b)(5) to 

read as follows: 

§ 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. 

* * * * * 

■ 8. Section 416.171 is amended by 

revising paragraphs (b)(1) and (2) to read 

as follows: 

§ 416.171 Determination of payment rates 

for ASC services. 

* * * * * 

(b) * * * 

(1) Covered ancillary services 

specified in § 416.164(b), with the 

exception of radiology services and 

certain diagnostic tests as provided in 

§ 416.164(b)(5); 

(2) The device portion of deviceintensive 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 

■ 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). 

■ 10. Section 419.2 is amended by 

revising paragraphs (b)(7) and (16) to 

read as follows: 

§ 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); 

* * * * * 

■ 11. Section 419.22 is amended by 

revising paragraph (j) to read as follows: 

§ 419.22 Hospital services excluded from 

payment under the hospital outpatient 

prospective payment system. 

* * * * * 

(j) Except as provided in 

§ 419.2(b)(11), prosthetic devices and 

orthotic devices. 

* * * * * 

■ 12. Section 419.32 is amended by 

adding paragraph (b)(1)(iv)(B)(6) to read 

as follows: 

§ 419.32 Calculation of prospective 

payment rates for hospital outpatient 

services. 

* * * * * 

(b) * * * 

(1) * * * 

(iv) * * * 


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(B) * * * 

(6) For calendar year 2015, a 

multifactor productivity adjustment (as 

determined by CMS) and 0.2 percentage 

point. 

* * * * * 

§ 419.46 [Amended] 

■ 13. Section 419.46 is amended by— 

■ a. In paragraph (c)(1), removing the 

phrase ‘‘section 1833(17)(C)’’ and 

adding in its place the phrase ‘‘section 

1833(t)(17)(C)’’. 

■ b. In paragraph (d) introductory text 

and paragraph (d)(1), removing the term 

‘‘waiver’’ and adding in its place the 

term ‘‘exception’’ each time it apppears. 

■ c. In paragraph (d)(2), removing the 

term ‘‘waivers’’ and adding in its place 

the term ‘‘exceptions’’. 

■ d. In paragraph (e) introductory text, 

removing the phrase ‘‘section 

1833(17)(C)’’ and adding in its place the 

phrase ‘‘section 1833(t)(17)(C)’’. 

■ 14. Section 419.64 is amended by 

revising paragraph (a)(4)(iv) to read as 

follows: 

§ 419.64 Transitional pass-through 

payments: Drugs and biologicals. 

* * * * * 

(a) * * * 

(4) * * * 

(iv) A biological that is not a skin 

substitute or similar product that aids 

wound healing, unless pass-through 

payment for a skin substitute as a 

biological is made on or before January 

1, 2015. 

* * * * * 

■ 15. Section 419.66 is amended by 

revising paragraph (b)(3) and removing 

paragraph (b)(4)(iii). 

The revision reads as follows: 

§ 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 

■ 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). 

■ 17. Section 422.330 is added to 

subpart G to read as follows: 

§ 422.330 CMS-identified overpayments 

associated with payment data submitted by 

MA organizations. 

(a) Definitions. For purposes of this 

section— 

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 § 422.310. 

Applicable reconciliation date occurs 

on the date of the annual final deadline 

for risk adjustment data submission 

described at § 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 

§ 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. 


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(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 

■ 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. 

■ 19. Section 423.352 is added to read 

as follows: 

§ 423.352 CMS-identified overpayments 

associated with payment data submitted by 

Part D sponsors. 

(a) Definitions. For purposes of this 

section— 

Applicable reconciliation date occurs 

on the later of either the annual 

deadline for submitting— 

(1) Prescription drug event (PDE) data 

for the annual Part D payment 

reconciliations referred to in 

§ 423.343(c) and (d); or 

(2) Direct and indirect remuneration 

data. 

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 §§ 423.329(b)(3), 

423.336(c)(1), and 423.343, and data 

provided for purposes of supporting 

allowable reinsurance costs and 

allowable risk corridor costs as defined 

in § 423.308, including data submitted 

to CMS regarding direct and indirect 

remuneration. 

(b) Request to correct payment data. 

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 


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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 

■ 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). 

■ 21. Section 424.13 is amended by— 

■ a. Revising paragraph (a) introductory 

text. 

■ b. Removing paragraph (a)(1). 

■ c. Redesignating paragraphs (a)(2), (3), 

and (4) as paragraphs (a)(1), (2), and (3), 

respectively. 

■ d. Revising newly redesignated 

paragraph (a)(1)(i). 

■ e. Revising paragraph (b). 

The revisions read as follows: 

§ 424.13 Requirements for inpatient 

services of hospitals other than inpatient 

psychiatric facilities. 

(a) Content of certification and 

recertification. Medicare Part A pays for 

inpatient hospital services (other than 

inpatient psychiatric facility services) 

for cases that are 20 inpatient days or 

more, or are outlier cases under subpart 

F of part 412 of this chapter, only if a 

physician certifies or recertifies the 

following: 

* * * * * 

(1) * * * 

(i) 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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