[Federal Register Volume 83, Number 147 (Tuesday, July 31, 2018)]
[Proposed Rules]
[Pages 37046-37240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15958]



[[Page 37045]]

Vol. 83

Tuesday,

No. 147

July 31, 2018

Part II

Book 2 of 2 Books

Pages 37045-37420





 Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 416 and 419



 Medicare Program: Proposed Changes to Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems and Quality 
Reporting Programs; Requests for Information on Promoting 
Interoperability and Electronic Health Care Information, Price 
Transparency, and Leveraging Authority for the Competitive Acquisition 
Program for Part B Drugs and Biologicals for a Potential CMS Innovation 
Center Model; Proposed Rule

Federal Register / Vol. 83 , No. 147 / Tuesday, July 31, 2018 / 
Proposed Rules

[[Page 37046]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 416 and 419

[CMS-1695-P]
RIN 0938-AT30


Medicare Program: Proposed Changes to Hospital Outpatient 
Prospective Payment and Ambulatory Surgical Center Payment Systems and 
Quality Reporting Programs; Requests for Information on Promoting 
Interoperability and Electronic Health Care Information, Price 
Transparency, and Leveraging Authority for the Competitive Acquisition 
Program for Part B Drugs and Biologicals for a Potential CMS Innovation 
Center Model

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare hospital 
outpatient prospective payment system (OPPS) and the Medicare 
ambulatory surgical center (ASC) payment system for CY 2019 to 
implement 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. The proposed 
rule also includes requests for information on promoting 
interoperability and electronic health care information exchange, 
improving beneficiary access to provider and supplier charge 
information, and leveraging the authority for the Competitive 
Acquisition Program (CAP) for Part B drugs and biologicals for a 
potential CMS Innnovation Center model. In addition, we are proposing 
to modify the Hospital Consumer Assessment of Healthcare Providers and 
Systems (HCAHPS) Survey measure under the Hospital Inpatient Quality 
Reporting (IQR) Program by removing the Communication about Pain 
questions.

DATES: To be assured consideration, comments on 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 24, 2018.

ADDRESSES: In commenting, please refer to file code CMS-1695-P when 
commenting on the issues in this proposed rule. Because of staff and 
resource limitations, we cannot accept comments by facsimile (FAX) 
transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    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-1695-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-1695-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    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: (We note that public comments must be 
submitted through one of the four channels outlined in the ADDRESSES 
section above. Comments may not be submitted via email.)
    340B Drug Payment Policy to Nonexcepted Off-Campus Departments of a 
Hospital, contact Juan Cortes via email <a href="/cdn-cgi/l/email-protection#531926323d7d103c2127362013303e207d3b3b207d343c25"><span class="__cf_email__" data-cfemail="511b24303f7f123e2325342211323c227f3939227f363e27">[email protected]</span></a> or at 
410-786-4325.
    Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact 
the HOP Panel mailbox at <a href="/cdn-cgi/l/email-protection#6829382b3809060d04280b051b4600001b460f071e"><span class="__cf_email__" data-cfemail="7b3a2b382b1a151e173b18160855131308551c140d">[email protected]</span></a>.
    Ambulatory Surgical Center (ASC) Payment System, contact Scott 
Talaga via email <a href="/cdn-cgi/l/email-protection#bfecdcd0cbcb91ebded3ded8deffdcd2cc91d7d7cc91d8d0c9"><span class="__cf_email__" data-cfemail="0457676b70702a506568656365446769772a6c6c772a636b72">[email protected]</span></a> or at 410-786-4142.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Administration, Validation, and Reconsideration Issues, contact Anita 
Bhatia via email <a href="/cdn-cgi/l/email-protection#04456a6d70652a466c65706d65446769772a6c6c772a636b72"><span class="__cf_email__" data-cfemail="b0f1ded9c4d19ef2d8d1c4d9d1f0d3ddc39ed8d8c39ed7dfc6">[email protected]</span></a> or at 410-786-7236.
    Ambulatory Surgical Center Quality Reporting (ASCQR) Program 
Measures, contact Vinitha Meyyur via email <a href="/cdn-cgi/l/email-protection#83d5eaedeaf7ebe2adcee6fafaf6f1c3e0eef0adebebf0ade4ecf5"><span class="__cf_email__" data-cfemail="02546b6c6b766a632c4f677b7b777042616f712c6a6a712c656d74">[email protected]</span></a> 
or at 410-786-8819.
    Blood and Blood Products, contact Joshua McFeeters via email 
<a href="/cdn-cgi/l/email-protection#652f0a160d10044b280623000011001716250608164b0d0d164b020a13"><span class="__cf_email__" data-cfemail="eaa08599829f8bc4a789ac8f8f9e8f9899aa898799c4828299c48d859c">[email protected]</span></a> or at 410-786-9732.
    Cancer Hospital Payments, contact Scott Talaga via email 
<a href="/cdn-cgi/l/email-protection#d083b3bfa4a4fe84b1bcb1b7b190b3bda3feb8b8a3feb7bfa6"><span class="__cf_email__" data-cfemail="96c5f5f9e2e2b8c2f7faf7f1f7d6f5fbe5b8fefee5b8f1f9e0">[email protected]</span></a> or at 410-786-4142.
    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck 
Braver via email <a href="/cdn-cgi/l/email-protection#e8ab809d8b83c6aa9a899e8d9aa88b859bc680809bc68f879e"><span class="__cf_email__" data-cfemail="55163d20363e7b172734233027153638267b3d3d267b323a23">[email protected]</span></a> or at 410-786-6719.
    CPT Codes, contact Marjorie Baldo via email 
<a href="/cdn-cgi/l/email-protection#95d8f4e7fffae7fcf0bbd7f4f9f1fad5f6f8e6bbfdfde6bbf2fae3"><span class="__cf_email__" data-cfemail="ffb29e8d95908d969ad1bd9e939b90bf9c928cd197978cd1989089">[email protected]</span></a> or at 410-786-4617.
    Collecting Data on Services Furnished in Off-Campus Provider-Based 
Emergency Departments, contact Twi Jackson via email 
<a href="/cdn-cgi/l/email-protection#82d6f5ebacc8e3e1e9f1edecc2e1eff1aceaeaf1ace5edf4"><span class="__cf_email__" data-cfemail="6430130d4a2e05070f170b0a240709174a0c0c174a030b12">[email protected]</span></a> or at 410-786-1159.
    Comment Solicitation to Control for Unnecessary Increases in Volume 
of Outpatient Services, contact Elise Barringer via email 
<a href="/cdn-cgi/l/email-protection#5b1e3732283e75193a292932353c3e291b38362875333328753c342d"><span class="__cf_email__" data-cfemail="0441686d77612a466576766d6a636176446769772a6c6c772a636b72">[email protected]</span></a> or at 410-786-9222.
    Composite APCs (Low Dose Brachytherapy and Multiple Imaging), 
contact Elise Barringer via email <a href="/cdn-cgi/l/email-protection#3c7950554f59127e5d4e4e55525b594e7c5f514f1254544f125b534a"><span class="__cf_email__" data-cfemail="2d6841445e48036f4c5f5f44434a485f6d4e405e0345455e034a425b">[email protected]</span></a> or at 
410-786-9222.
    Comprehensive APCs (C-APCs), contact Lela Strong-Holloway via email 
<a href="/cdn-cgi/l/email-protection#0a466f666b24597e7865646d4a69677924626279246d657c"><span class="__cf_email__" data-cfemail="c68aa3aaa7e895b2b4a9a8a186a5abb5e8aeaeb5e8a1a9b0">[email protected]</span></a> or at 410-786-3213.
    Expansion of Clinical Families of Services at Excepted Off-Campus 
Departments of a Provider, contact Juan Cortes via email 
<a href="/cdn-cgi/l/email-protection#c68cb3a7a8e885a9b4b2a3b586a5abb5e8aeaeb5e8a1a9b0"><span class="__cf_email__" data-cfemail="9ed4ebfff0b0ddf1eceafbeddefdf3edb0f6f6edb0f9f1e8">[email protected]</span></a> or at 410-786-4325.
    Hospital Outpatient Quality Reporting (OQR) Program Administration, 
Validation, and Reconsideration Issues, contact Anita Bhatia via email 
<a href="/cdn-cgi/l/email-protection#11507f7865703f53797065787051727c623f7979623f767e67"><span class="__cf_email__" data-cfemail="2b6a45425f4a0569434a5f424a6b48465805434358054c445d">[email protected]</span></a> or at 410-786-7236.
    Hospital Outpatient Quality Reporting (OQR) Program Measures, 
contact Vinitha Meyyur via email <a href="/cdn-cgi/l/email-protection#b2e4dbdcdbc6dad39cffd7cbcbc7c0f2d1dfc19cdadac19cd5ddc4"><span class="__cf_email__" data-cfemail="2177484f485549400f6c445858545361424c520f4949520f464e57">[email protected]</span></a> or at 410-
786-8819.
    Hospital Outpatient Visits (Emergency Department Visits and 
Critical Care Visits), contact Twi Jackson via email

[[Page 37047]]

<a href="/cdn-cgi/l/email-protection#a8fcdfc186e2c9cbc3dbc7c6e8cbc5db86c0c0db86cfc7de"><span class="__cf_email__" data-cfemail="792d0e105733181a120a1617391a140a5711110a571e160f">[email protected]</span></a> or at 410-786-1159.
    Inpatient Only (IPO) Procedures List, contact Lela Strong-Holloway 
via email <a href="/cdn-cgi/l/email-protection#c28ea7aea3ec91b6b0adaca582a1afb1ecaaaab1eca5adb4"><span class="__cf_email__" data-cfemail="5e123b323f700d2a2c3130391e3d332d7036362d70393128">[email protected]</span></a> or at 410-786-3213.
    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga 
via email <a href="/cdn-cgi/l/email-protection#8fdcece0fbfba1dbeee3eee8eecfece2fca1e7e7fca1e8e0f9"><span class="__cf_email__" data-cfemail="0556666a71712b516469646264456668762b6d6d762b626a73">[email protected]</span></a> or at 410-786-4142.
    No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson 
via email <a href="/cdn-cgi/l/email-protection#1246657b3c58737179617d7c52717f613c7a7a613c757d64"><span class="__cf_email__" data-cfemail="db8facb2f591bab8b0a8b4b59bb8b6a8f5b3b3a8f5bcb4ad">[email protected]</span></a> or at 410-786-1159.
    OPPS Brachytherapy, contact Scott Talaga via email 
<a href="/cdn-cgi/l/email-protection#8ad9e9e5fefea4deebe6ebedebcae9e7f9a4e2e2f9a4ede5fc"><span class="__cf_email__" data-cfemail="adfecec2d9d983f9ccc1cccaccedcec0de83c5c5de83cac2db">[email protected]</span></a> or at 410-786-4142.
    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-
Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier 
Payments, and Wage Index), contact Erick Chuang via email 
<a href="/cdn-cgi/l/email-protection#2c695e454f47026f44594d424b6c4f415f0244445f024b435a"><span class="__cf_email__" data-cfemail="6623140f050d48250e1307080126050b15480e0e1548010910">[email protected]</span></a> or at 410-786-1816 or Scott Talaga via email 
<a href="/cdn-cgi/l/email-protection#4b1828243f3f651f2a272a2c2a0b28263865232338652c243d"><span class="__cf_email__" data-cfemail="81d2e2eef5f5afd5e0ede0e6e0c1e2ecf2afe9e9f2afe6eef7">[email protected]</span></a> or at 410-786-4142.
    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar 
Products, contact Josh McFeeters via email <a href="/cdn-cgi/l/email-protection#e9a3869a81c7a48aaf8c8c9d8c9b9aa98a849ac781819ac78e869f"><span class="__cf_email__" data-cfemail="9fd5f0ecf7b1d2fcd9fafaebfaedecdffcf2ecb1f7f7ecb1f8f0e9">[email protected]</span></a> 
or at 410-786-9732.
    OPPS New Technology Procedures/Services, contact the New Technology 
APC email at <a href="/cdn-cgi/l/email-protection#3d73584a69585e557c6d7e5c4d4d51545e5c495452534e7d5e504e1355554e135a524b"><span class="__cf_email__" data-cfemail="eba58e9cbf8e8883aabba88a9b9b8782888a9f82848598ab888698c5838398c58c849d">[email protected]</span></a>.
    OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo via 
email <a href="/cdn-cgi/l/email-protection#420f2330282d302b276c00232e262d02212f316c2a2a316c252d34"><span class="__cf_email__" data-cfemail="fdb09c8f97928f9498d3bf9c919992bd9e908ed395958ed39a928b">[email protected]</span></a> or at 410-786-4617.
    OPPS Packaged Items/Services, contact Lela Strong-Holloway via 
email <a href="/cdn-cgi/l/email-protection#ce82aba2afe09dbabca1a0a98eada3bde0a6a6bde0a9a1b8"><span class="__cf_email__" data-cfemail="410d242d206f1235332e2f2601222c326f2929326f262e37">[email protected]</span></a> or at 410-786-3213.
    OPPS Pass-Through Devices, contact the Device Pass-Through email at 
<a href="/cdn-cgi/l/email-protection#246041524d47417470455454484d4745504d4b4a57644749570a4c4c570a434b52"><span class="__cf_email__" data-cfemail="1f5b7a69767c7a4f4b7e6f6f73767c7e6b7670716c5f7c726c3177776c31787069">[email protected]</span></a>.
    OPPS Status Indicators (SI) and Comment Indicators (CI), contact 
Marina Kushnirova via email <a href="/cdn-cgi/l/email-protection#3875594a51565916734d4b5056514a574e59785b554b1650504b165f574e"><span class="__cf_email__" data-cfemail="6c210d1e05020d4227191f0402051e031a0d2c0f011f4204041f420b031a">[email protected]</span></a> or at 410-
786-2682.
    Partial Hospitalization Program (PHP) and Community Mental Health 
Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at 
<a href="/cdn-cgi/l/email-protection#306078606051495d555e44605f5c59534970535d431e5858431e575f46"><span class="__cf_email__" data-cfemail="c5958d9595a4bca8a0abb195aaa9aca6bc85a6a8b6ebadadb6eba2aab3">[email protected]</span></a>.
    Request for Information on Leveraging the Authority for the 
Competitive Acquisition Program (CAP) for Part B Drugs and Biologicals 
for a Potential CMS Innovation Center Model, contact the CMS Innovation 
Center Team Mailbox via email at <a href="/cdn-cgi/l/email-protection#b6f5fbfbffe6d7c4c2f4f2c4c3d1f5f7e6e9e4f0fff6d5dbc598dedec598d1d9c0"><span class="__cf_email__" data-cfemail="1a595757534a7b686e585e686f7d595b4a45485c535a79776934727269347d756c">[email protected]</span></a>.
    Request for Information on Promoting Interoperability and 
Electronic Healthcare Information Exchange, contact Scott Cooper via 
email at <a href="/cdn-cgi/l/email-protection#dc8fbfb3a8a8f29fb3b3acb9ae9cbfb1aff2b4b4aff2bbb3aa"><span class="__cf_email__" data-cfemail="beedddd1caca90fdd1d1cedbccfeddd3cd90d6d6cd90d9d1c8">[email protected]</span></a> or at 410-786-9465.
    Request for Information on Requirements for Hospitals To Make 
Public a List of Their Standard Charges via the internet, contact Elise 
Barringer via email <a href="/cdn-cgi/l/email-protection#7e3b12170d1b503c1f0c0c1710191b0c3e1d130d5016160d50191108"><span class="__cf_email__" data-cfemail="0d4861647e68234f6c7f7f64636a687f4d6e607e2365657e236a627b">[email protected]</span></a> or at 410-786-9222.
    Rural Hospital Payments, contact Joshua McFeeters via email 
<a href="/cdn-cgi/l/email-protection#efa5809c879a8ec1a28ca98a8a9b8a9d9caf8c829cc187879cc1888099"><span class="__cf_email__" data-cfemail="cb81a4b8a3beaae586a88daeaebfaeb9b88ba8a6b8e5a3a3b8e5aca4bd">[email protected]</span></a> or at 410-786-9732.
    Skin Substitutes, contact Josh McFeeters via email 
<a href="/cdn-cgi/l/email-protection#074d68746f7266294a644162627362757447646a74296f6f7429606871"><span class="__cf_email__" data-cfemail="12587d617a67733c5f715477776677606152717f613c7a7a613c757d64">[email protected]</span></a> or at 410-786-9732.
    All Other Issues Related to Hospital Outpatient and Ambulatory 
Surgical Center Payments Not Previously Identified, contact Marjorie 
Baldo via email <a href="/cdn-cgi/l/email-protection#bef3dfccd4d1ccd7db90fcdfd2dad1feddd3cd90d6d6cd90d9d1c8"><span class="__cf_email__" data-cfemail="460b27342c29342f236804272a222906252b35682e2e3568212930">[email protected]</span></a> or at 410-786-4617.

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 
website as soon as possible after they have been received: http://www.regulations.gov/. Follow the search instructions on that website 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 Publishing Office. This database can be 
accessed via the internet at https://www.gpo.gov/fdsys/.

Addenda Available Only Through the Internet on the CMS Website

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

Table of Contents

I. Summary and Background
    A. Executive Summary of This Document
    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)
    F. Public Comments Received in Response to CY 2018 OPPS/ASC 
Final Rule With Comment Period
II. Proposed Updates Affecting OPPS Payments
    A. Recalibration of APC Relative Payment Weights
    B. Proposed Conversion Factor Update
    C. Proposed Wage Index Changes
    D. Proposed Statewide Average Default Cost-to-Charge Ratios 
(CCRs)
    E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) 
and Essential Access Community Hospitals (EACHs) under Section 
1833(t)(13)(B) of the Act
    F. Proposed Payment Adjustment for Certain Cancer Hospitals for 
CY 2019
    G. Proposed Hospital Outpatient Outlier Payments
    H. Proposed Calculation of an Adjusted Medicare Payment From the 
National Unadjusted Medicare Payment
    I. Proposed Beneficiary Copayments
III. Proposed OPPS Ambulatory Payment Classification (APC) Group 
Policies
    A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes
    B. Proposed OPPS Changes--Variations within APCs
    C. Proposed New Technology APCs
    D. Proposed OPPS APC-Specific Policies
IV. Proposed OPPS Payment for Devices
    A. Pass-Through Payments for Devices
    B. Proposed Device-Intensive Procedures
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and 
Radiopharmaceuticals
    A. Proposed OPPS Transitional Pass-Through Payment for 
Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
    B. Proposed OPPS Payment for Drugs, Biologicals, and 
Radiopharmaceuticals Without Pass-Through Payment Status
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for 
Drugs, Biologicals, Radiopharmaceuticals, and Devices
    A. Background

[[Page 37048]]

    B. Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Hospital Outpatient Visits and 
Critical Care Services
VIII. Proposed Payment for Partial Hospitalization Services
    A. Background
    B. Proposed PHP APC Update for CY 2019
    C. Proposed Outlier Policy for CMHCs
IX. Proposed Procedures That Would Be Paid Only as Inpatient 
Procedures
    A. Background
    B. Proposed Changes to the Inpatient Only (IPO) List
X. Proposed Nonrecurring Policy Changes
    A. Collecting Data on Services Furnished in Off-Campus Provider-
Based Emergency Departments
    B. Proposal and Comment Solicitation on Method to Control 
Unnecessary Increases in the Volume of Outpatient Services
    C. Proposal to Apply the 340B Drug Payment Policy to Nonexcepted 
Off-Campus Departments of a Hospital
    D. Expansion of Clinical Families of Services at Excepted Off-
Campus Departments of a Provider
XI. Proposed CY 2019 OPPS Payment Status and Comment Indicators
    A. Proposed CY 2019 OPPS Payment Status Indicator Definitions
    B. Proposed CY 2019 Comment Indicator Definitions
XII. Proposed Updates to the Ambulatory Surgical Center (ASC) 
Payment System
    A. Background
    B. Proposed Treatment of New and Revised Codes
    C. Proposed Update to the List of ASC Covered Surgical 
Procedures and Covered Ancillary Services
    D. Proposed ASC Payment for Covered Surgical Procedures and 
Covered Ancillary Services
    E. New Technology Intraocular Lenses (NTIOLs)
    F. Proposed ASC Payment and Comment Indicators
    G. Proposed Calculation of the Proposed ASC Payment Rates and 
the Proposed ASC Conversion Factor
XIII. Requirements for the Hospital Outpatient Quality Reporting 
(OQR) Program
    A. Background
    B. Hospital OQR Program Quality Measures
    C. Administrative Requirements
    D. Form, Manner, and Timing of Data Submitted for the Hospital 
OQR Program
    E. Proposed Payment Reduction for Hospitals That Fail to Meet 
the Hospital OQR Program Requirements for the CY 2019 Payment 
Determination
XIV. Requirements for the Ambulatory Surgical Center Quality 
Reporting (ASCQR) Program
    A. Background
    B. ASCQR Program Quality Measures
    C. Administrative Requirements
    D. Form, Manner, and Timing of Data Submitted for the ASCQR 
Program
    E. Payment Reduction for ASCs That Fail to Meet the ASCQR 
Program Requirements
XV. Requests for Information (RFIs)
    A. Request for Information on Promoting Interoperability and 
Electronic Health Care Information Exchange Through Possible 
Revisions to the CMS Patient Health and Safety Requirements for 
Hospitals and Other Medicare-Participating and Medicaid-
Participating Providers and Suppliers
    B. Request for Information on Price Transparency: Improving 
Beneficiary Access to Provider and Supplier Charge Information
    C. Request for Information on Leveraging the Authority for the 
Competitive Acquisition Program (CAP) for Part B Drugs and 
Biologicals for a Potential CMS Innovation Center Model
XVI. Proposed Additional Hospital Inpatient Quality Reporting (IQR) 
Program Policies
XVII. Files Available to the Public Via the Internet
XVIII. Collection of Information Requirements
    A. Statutory Requirement for Solicitation of Comments
    B. ICRs for the Hospital OQR Program
    C. ICRs for the ASCQR Program
    D. ICRs for the Proposed Update to the HCAHPS Survey Measure in 
the Hospital IQR Program
    E. Total Reduction in Burden Hours and in Costs
XIX. Response to Comments
XX. Economic Analyses
    A. Statement of Need
    B. Overall Impact for the Provisions of This Proposed Rule
    C. Detailed Economic Analyses
    D. Effects of the Proposed Update to the HCAHPS Survey Measure 
in the Hospital IQR Program
    E. Regulatory Review Costs
    F. Regulatory Flexibility Act (RFA) Analysis
    G. Unfunded Mandates Reform Act Analysis
    H. Reducing Regulation and Controlling Regulatory Costs
    I. Conclusion
XXI. 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 (HOPDs) and ambulatory 
surgical centers (ASCs) beginning January 1, 2019. Section 1833(t) of 
the Social Security Act (the Act) requires us to annually review and 
update the payment rates for services payable under the Hospital 
Outpatient Prospective Payment System (OPPS). Specifically, section 
1833(t)(9)(A) 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. In addition, 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 proposed rule, we also are including three Requests for 
Information (RFIs) on: (1) Promoting interoperability and electronic 
health care information exchange through possible revisions to the CMS 
patient health and safety requirements for hospitals and other 
Medicare-participating and Medicaid-participating providers and 
suppliers; (2) improving beneficiary access to provider and supplier 
charge information; and (3) leveraging the authority for the 
Competitive Acqisition Program (CAP) for Part B drugs and biologicals 
for a potential CMS Innovation Center model. In addition, we are 
proposing to modify the HCAHPS Survey measure by removing the 
Communication about Pain questions from the HCAHPS Survey for the 
Hospital IQR Program, which are used to assess patients' experiences of 
care, effective with January 2022 discharges for the FY 2024 payment 
determination.
2. Improving Patient Outcomes and Reducing Burden Through Meaningful 
Measures
    Regulatory reform and reducing regulatory burden are high 
priorities for CMS. To reduce the regulatory burden on the healthcare 
industry, lower health care costs, and enhance patient care, in October 
2017, we launched the Meaningful Measures Initiative.\1\ This 
initiative is one component of our agency-wide Patients Over Paperwork 
Initiative,\2\ which is aimed at evaluating and streamlining 
regulations with a goal to reduce unnecessary cost and burden, increase 
efficiencies, and improve

[[Page 37049]]

beneficiary experience. The Meaningful Measures Initiative is aimed at 
identifying the highest priority areas for quality measurement and 
quality improvement in order to assess the core quality of care issues 
that are most vital to advancing our work to improve patient outcomes. 
The Meaningful Measures Initiative represents a new approach to quality 
measures that fosters operational efficiencies, and will reduce costs 
including, collection and reporting burden while producing quality 
measurement that is more focused on meaningful outcomes.
---------------------------------------------------------------------------

    \1\ Meaningful Measures web page: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.
    \2\ Remarks by Administrator Seema Verma at the Health Care 
Payment Learning and Action Network (LAN) Fall Summit, as prepared 
for delivery on October 30, 2017. Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.
---------------------------------------------------------------------------

    The Meaningful Measures framework has the following objectives:
    <bullet> Address high-impact measure areas that safeguard public 
health;
    <bullet> Patient-centered and meaningful to patients;
    <bullet> Outcome-based where possible;
    <bullet> Fulfill each program's statutory requirements;
    <bullet> Minimize the level of burden for health care providers;
    <bullet> Significant opportunity for improvement;
    <bullet> Address measure needs for population based payment through 
alternative payment models; and
    <bullet> Align across programs and/or with other payers.
    In order to achieve these objectives, we have identified 19 
Meaningful Measures areas and mapped them to six overarching quality 
priorities as shown in the table below.

------------------------------------------------------------------------
            Quality priority                 Meaningful measure area
------------------------------------------------------------------------
Making Care Safer by Reducing Harm       Healthcare-Associated
 Caused in the Delivery of Care.          Infections
                                         Preventable Healthcare Harm
Strengthen Person and Family Engagement  Care is Personalized and
 as Partners in Their Care.               Aligned with Patient's Goals
                                         End of Life Care According to
                                          Preferences
                                         Patient's Experience of Care
                                         Patient Reported Functional
                                          Outcomes
Promote Effective Communication and      Medication Management
 Coordination of Care.                   Admissions and Readmissions to
                                          Hospitals
                                         Transfer of Health Information
                                          and Interoperability
Promote Effective Prevention and         Preventive Care
 Treatment of Chronic Disease.           Management of Chronic
                                          Conditions
                                         Prevention, Treatment, and
                                          Management of Mental Health
                                         Prevention and Treatment of
                                          Opioid and Substance Use
                                          Disorders
                                         Risk Adjusted Mortality
Work with Communities to Promote Best    Equity of Care
 Practices of Healthy Living.            Community Engagement
Make Care Affordable...................  Appropriate Use of Healthcare
                                         Patient-focused Episode of Care
                                         Risk Adjusted Total Cost of
                                          Care
------------------------------------------------------------------------

    By including Meaningful Measures in our programs, we believe that 
we can also address the following cross-cutting measure criteria:
    <bullet> Eliminating disparities;
    <bullet> Tracking measurable outcomes and impact;
    <bullet> Safeguarding public health;
    <bullet> Achieving cost savings;
    <bullet> Improving access for rural communities; and
    <bullet> Reducing burden.
    We believe that the Meaningful Measures Initiative will improve 
outcomes for patients, their families, and health care providers while 
reducing burden and costs for clinicians and providers as well as 
promoting operational efficiencies.
3. Summary of the Major Provisions
    <bullet> OPPS Update: For CY 2019, we are proposing to increase the 
payment rates under the OPPS by an outpatient department (OPD) fee 
schedule increase factor of 1.25 percent. This increase factor is based 
on the proposed hospital inpatient market basket percentage increase of 
2.8 percent for inpatient services paid under the hospital inpatient 
prospective payment system (IPPS), minus the proposed multifactor 
productivity (MFP) adjustment of 0.8 percentage point, and minus a 0.75 
percentage point adjustment required by the Affordable Care Act. Based 
on this proposed update, we estimate that total payments to OPPS 
providers (including beneficiary cost-sharing and estimated changes in 
enrollment, utilization, and case-mix) for CY 2019 would be 
approximately $74.6 billion, an increase of approximately $4.9 billion 
compared to estimated CY 2018 OPPS payments.
    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.
    <bullet> Comprehensive APCs: For CY 2019, we are proposing to 
create three new comprehensive APCs (C-APCs). These proposed new C-APCs 
include ears, nose, and throat (ENT) and vascular procedures. This 
proposal would increase the total number of C-APCs to 65.
    <bullet> Proposed Changes to the Inpatient Only List: For CY 2019, 
we are proposing to remove two procedures from the inpatient only list 
and add one procedure to the list.
    <bullet> Proposal and Comment Solicitation on Method to Control 
Unnecessary Increases in Volume of Outpatient Services: To the extent 
that similar services can be safely provided in more than one setting, 
it is not prudent for the Medicare program to pay more for these 
services in one setting than another. We believe that capping the OPPS 
payment at the Physician Fee Schedule (PFS)-equivalent rate would be an 
effective method to control the volume of these unnecessary services 
because the payment differential that is driving the site-of-service 
decision will be removed. In particular, we believe this method of 
capping payment will control unnecessary volume increases as manifested 
both in terms of numbers of covered outpatient department services 
furnished and costs of those services. Therefore, we are proposing to 
use our authority under section 1833(t)(2)(F) of the Act to apply an 
amount equal to the site-specific PFS payment rate for nonexcepted 
items and services furnished by a nonexcepted off-campus PBD (the PFS 
payment rate) for the clinic visit service, as described by HCPCS code 
G0463, when provided at an off-campus PBD excepted from section 
1833(t)(21) of the Act. In addition, we are soliciting public

[[Page 37050]]

comments on how to expand the Secretary's statutory authority under 
section 1833(t)(2)(F) of the Act to additional items and services paid 
under the OPPS that may represent unnecessary increases in hospital 
outpatient department utilization.
    <bullet<ls-thn-eq> Expansion of Services at Off-Campus Provider-
Based Departments (PBDs) Paid under the OPPS (Section 603): For CY 
2019, we are proposing that if an excepted off-campus PBD furnishes a 
service from a clinical family of services for which it did not 
previously furnish a service (and subsequently bill for that service) 
during a baseline period, services from this new clinical family of 
services would not be covered OPD services. Instead, services in the 
new clinical family of services would be paid under the PFS.
    <bullet<ls-thn-eq> Proposal to Apply 340B Drug Payment Policy to 
Off-Campus Departments of a Hospital Paid under the Medicare Physician 
Fee Schedule: For CY 2019, we are proposing to pay average sales price 
(ASP) minus 22.5 percent for 340B-acquired drugs furnished by 
nonexcepted, off-campus provider-based departments (PBDs). This is 
consistent with the payment methodology adopted in CY 2018 for 340B-
acquired drugs furnished in hospital departments paid under the OPPS.
    <bullet<ls-thn-eq> Payment Policy for Biosimilar Biological 
Products without Pass-Through Status That Are Acquired under the 340B 
Program: For CY 2019, we are proposing to pay nonpass-through 
biosimilars acquired under the 340B program at ASP minus 22.5 percent 
of the biosimilar's own ASP rather than ASP minus 22.5 percent of the 
reference product's ASP.
    <bullet<ls-thn-eq> Payment of Drugs, Biologicals, and 
Radiopharmaceuticals If Average Sales Price (ASP) Data Are Not 
Available: For CY 2019, we are proposing to pay separately payable 
drugs and biological products that do not have pass-through payment 
status and are not acquired under the 340B Program at wholesale 
acquisition cost (WAC)+3 percent instead of WAC+6 percent. If WAC data 
are not available for a drug or biological product, we are proposing to 
continue our policy to pay separately payable drugs and biological 
products at 95 percent of the average wholesale price (AWP). Drugs and 
biologicals that are acquired under the 340B Program would continue to 
be paid at ASP minus 22.5 percent, WAC minus 22.5 percent, or 69.46 
percent of AWP, as applicable.
    <bullet> Device-Intensive Procedure Criteria: For CY 2019, we are 
proposing to modify the device-intensive criteria to allow procedures 
that involve single-use devices, regardless of whether or not they 
remain in the body after the conclusion of the procedure, to qualify as 
device-intensive procedures. We also are proposing to allow procedures 
with a device offset percentage of greater than 30 percent to qualify 
as device-intensive procedures. In addition, we are soliciting comments 
on whether any high-cost devices (other than capital equipment) should 
be left out of the definition of single-use devices or, alternatively, 
whether our proposed definition excludes devices that commenters 
believe should be subject to our device-intensive policy.
    <bullet> Device Pass-Through Payment Applications: For CY 2019, we 
are evaluating seven applications for device pass-through payments and 
are seeking public comments in this CY 2019 proposed rule on whether 
these applications meet the criteria for device pass-through payment 
status.
    <bullet> New Technology APC Payment for Extremely Low-Volume 
Procedures: For CY 2019, we are proposing to apply a ``smoothing 
methodology'' based on multiple years of claims data to establish a 
more stable rate for services assigned to New Technology APCs with 
fewer than 100 claims per year under the OPPS. Under the smoothing 
methodology, we would calculate the geometric mean costs, the median 
costs, and the arithmetic mean costs for these procedures to promote 
payment stability. This methodology allows the option to use of one of 
these methodologies to assign the most representative payment for the 
service. In addition, we are proposing to exclude low-volume services 
from bundling into C-APC procedures.
    <bullet> Cancer Hospital Payment Adjustment: For CY 2019, we are 
proposing to continue to provide additional payments to cancer 
hospitals so that the cancer hospital's payment-to-cost ratio (PCR) 
after the additional payments is equal to the weighted average PCR for 
the other OPPS hospitals using the most recently submitted or settled 
cost report data. However, section 16002(b) of the 21st Century Cures 
Act requires that this weighted average PCR be reduced by 1.0 
percentage point. Based on the data and the required 1.0 percentage 
point reduction, we are proposing that a target PCR of 0.88 would be 
used to determine the CY 2019 cancer hospital payment adjustment to be 
paid at cost report settlement. That is, the payment adjustments would 
be the additional payments needed to result in a PCR equal to 0.88 for 
each cancer hospital.
    <bullet> Rural Adjustment: For 2019 and subsequent years, we are 
proposing to continue the 7.1 percent adjustment to OPPS payments for 
certain rural SCHs, including essential access community hospitals 
(EACHs). We intend to continue the 7.1 percent adjustment for future 
years in the absence of data to suggest a different percentage 
adjustment should apply.
    <bullet> Ambulatory Surgical Center (ASC) Payment Update: For CYs 
2019 through 2023, we are proposing to update the ASC payment system 
using the hospital market basket update instead of the CPI-U. However, 
we are requesting public comments on ASCs' cost structure to assess 
whether the hospital market basket is an appropriate proxy for ASC 
costs. During this 5-year period, we intend to examine whether such 
adjustment leads to a migration of services from other settings to the 
ASC setting. Using the hospital market basket methodology, for CY 2019, 
we are proposing to increase payment rates under the ASC payment system 
by 2.0 percent for ASCs that meet the quality reporting requirements 
under the ASCQR Program. This proposed increase is based on a proposed 
hospital market basket percentage increase of 2.8 percent minus a 
proposed MFP adjustment required by the Affordable Care Act of 0.8 
percentage point.
    Based on this proposed update, we estimate that total payments to 
ASCs (including beneficiary cost-sharing and estimated changes in 
enrollment, utilization, and case-mix) for CY 2019 would be 
approximately $4.89 billion, an increase of approximately $300 million 
compared to estimated CY 2018 Medicare payments to ASCs. We note that 
the CY 2019 ASC payment update, under our prior policy, would have been 
1.3 percent, based on a projected CPI-U update of 2.1 percent minus a 
MFP adjustment required by the Affordable Care Act of 0.8 percentage 
point. In addition, we will assess the feasibility of collaborating 
with stakeholders to collect ASC cost data in a minimally burdensome 
manner and could propose a plan to collect such information.
    <bullet> Proposed Changes to the List of ASC Covered Surgical 
Procedures: For CY 2019, we are proposing to revise our definition of 
``surgery'' in the ASC payment system to account for certain ``surgery-
like'' procedures that are assigned codes outside the Current 
Procedural Terminology (CPT) surgical range. In addition, we are 
proposing to add 12 cardiac catheterization procedures to the ASC 
covered procedures list. We also are soliciting public comments on our 
proposal to reassess, and soliciting further public comments on, 
procedures recently

[[Page 37051]]

added to the ASC covered procedures list.
    <bullet> Payment for Non-Opioid Pain Management Therapy: For CY 
2019, in response to the recommendation from the President's Commission 
on Combating Drug Addiction and the Opioid Crisis, we are proposing to 
change the packaging policy for certain drugs when administered in the 
ASC setting and provide separate payment for non-opioid pain management 
drugs that function as a supply when used in a surgical procedure when 
the procedure is performed in an ASC. In addition, we are soliciting 
public comments and peer-reviewed evidence to help determine whether we 
should pay separately for other non-opioid treatments for pain under 
the OPPS and the ASC payment system.
    <bullet> Hospital Outpatient Quality Reporting (OQR) Program: For 
the Hospital OQR Program, we are proposing changes for the CY 2019, CY 
2020, and CY 2021 payment determinations and subsequent years. 
Effective upon the final rule, we are proposing to: (1) Update measure 
removal Factor 7; (2) add a new removal Factor 8; and (3) codify our 
measure removal policies and factors. We also are providing 
clarification of our ``topped-out'' criteria. These proposals would 
align the Hospital OQR Program measure removal factors with those used 
in the ASCQR Program. In addition, beginning with CY 2019, we are 
proposing to update the frequency with which we would release a 
Hospital OQR Program Specifications Manual such that it would occur 
every 6 to 12 months. We also are proposing for the CY 2020 payment 
determination and subsequent years: (1) To update the participation 
status requirements by removing the Notice of Participation (NOP) form; 
and (2) to extend the reporting period for the OP-32: Facility Seven-
Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy 
measure to 3 years.
    Beginning with the CY 2020 payment determination and subsequent 
years, we also are proposing to remove the OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel measure.
    Beginning with the CY 2021 payment determination and subsequent 
years, we are proposing to remove the following nine measures: (1) OP-
5: Median Time to ECG; (2) OP-9: Mammography Follow-up Rates; (3) OP-
11: Thorax CT Use of Contrast Material; (4) OP-12: The Ability for 
Providers with HIT to Receive Laboratory Data Electronically Directly 
into Their Qualified/Certified EHR System as Discrete Searchable Data; 
(5) OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 
CT; (6) OP-17: Tracking Clinical Results between Visits; (7) OP-29: 
Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 
Colonoscopy in Average Risk Patients; (8) OP-30: Endoscopy/Polyp 
Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use; and (9) OP-31: 
Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery.
    <bullet> Ambulatory Surgical Center Quality Reporting (ASCQR) 
Program: For the ASCQR Program, we are proposing changes in policies 
for the CY 2020 payment determination and CY 2021 payment determination 
and subsequent years. Effective upon the final rule, we are proposing 
to: (1) Remove one factor; (2) add two new measure removal factors; and 
(3) update the regulations to better reflect our measure removal 
policies. We also are making one clarification to measure removal 
Factor 1. These proposals would align the ASCQR Program measure removal 
factors with those used in the Hospital OQR Program.
    Beginning with the CY 2020 payment determination and subsequent 
years, we are proposing to extend the reporting period for the ASC-12: 
Facility Seven-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy measure to 3 years. For the CY 2020 payment 
determination and subsequent years, we also are proposing to remove one 
measure from the ASCQR Program measure set, ASC-8: Influenza 
Vaccination Coverage Among Healthcare Personnel.
    Beginning with the CY 2021 payment determination and subsequent 
years, we are proposing to remove seven measures: (1) ASC-1: Patient 
Burn; (2) ASC-2: Patient Fall; (3) ASC-3: Wrong Site, Wrong Side, Wrong 
Patient, Wrong Procedure, Wrong Implant; (4) ASC-4: All-Cause Hospital 
Transfer/Admission; (5) ASC-9: Endoscopy/Polyp Surveillance Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients; (6) ASC-10: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use; and (7) 
ASC-11: Cataracts--Improvement in Patient's Visual Function within 90 
Days Following Cataract Surgery.
    <bullet> Hospital Inpatient Quality Reporting (IQR) Program Update: 
In this proposed rule, we are proposing to modify the HCAHPS Survey 
measure by removing the Communication about Pain questions from the 
HCAHPS Survey for the Hospital IQR Program, effective with January 2022 
discharges for the FY 2024 payment determination and subsequent years.
4. Summary of Costs and Benefits
    In sections XX. and XXI. 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 Proposed OPPS Update
(1) Impacts of All Proposed OPPS Changes
    Table 42 in section XX. of this proposed rule displays the 
distributional impact of all the proposed OPPS changes on various 
groups of hospitals and CMHCs for CY 2019 compared to all estimated 
OPPS payments in CY 2018. We estimate that policies in this proposed 
rule would result in a 0.1 percent overall decrease in OPPS payments to 
providers. We estimate that total OPPS payments for CY 2019, including 
beneficiary cost-sharing, to the approximate 3,800 facilities paid 
under the OPPS (including general acute care hospitals, children's 
hospitals, cancer hospitals, and CMHCs) would decrease by approximately 
$80 million compared to CY 2018 payments, excluding 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 we adopted 
beginning in CY 2011 and basing payment fully on the type of provider 
furnishing the service, we estimate a 17.9 percent decrease in CY 2019 
payments to CMHCs relative to their CY 2018 payments.
(2) Impacts of the Proposed Updated Wage Indexes
    We estimate that our proposed update of the wage indexes based on 
the FY 2019 IPPS proposed rule wage indexes would result in no 
estimated payment change for urban and rural hospitals under the OPPS. 
These proposed wage indexes include the continued implementation of the 
OMB labor market area delineations based on 2010 Decennial Census data, 
with updates as discussed in section II.C. of this proposed rule.

[[Page 37052]]

(3) Impacts of the Proposed Rural Adjustment and the Cancer Hospital 
Payment Adjustment
    There are no significant impacts of our proposed CY 2019 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 hospital payment 
adjustments. While we are implementing the required reduction to the 
cancer hospital payment adjustment in section 16002 of the 21st Century 
Cures Act for CY 2019, the proposed target payment-to-cost ratio (PCR) 
for CY 2019 remains the same as in CY 2018 and therefore does not 
impact the budget neutrality adjustments.
(4) Impacts of the Proposed OPD Fee Schedule Increase Factor
    For the CY 2019 OPPS, we are proposing an OPD fee schedule increase 
factor of 1.25 percent to the conversion factor for CY 2019. As a 
result of the proposed OPD fee schedule increase factor and other 
budget neutrality adjustments, we estimate that rural and urban 
hospitals would experience increases of approximately 1.3 percent for 
urban hospitals and 1.5 percent for rural hospitals. Classifying 
hospitals by teaching status, we estimate nonteaching hospitals would 
experience increases of 1.4 percent, minor teaching hospitals would 
experience increases of 1.3 percent, and major teaching hospitals would 
experience a decrease of 1.1 percent. We also classified hospitals by 
type of ownership. We estimate that hospitals with voluntary ownership 
would experience increases of 1.3 percent, hospitals with proprietary 
ownership would experience increases of 1.4 percent, and hospitals with 
government ownership would experience decrease of 1.3 percent in 
payments.
(5) Impacts of the Proposal to Control for Unnecessary Increases in the 
Volume of Outpatient Services
    In section X.B. of this proposed rule, we discuss our CY 2019 
proposal to control for unnecessary increases in the volume of 
outpatient service by paying for clinic visits furnished at an off-
campus provider-based department at a PFS-equivalent rate under the 
OPPS rather than at the standard OPPS rate. As a result of this 
proposal, we estimated decreases of 1.2 percent to urban hospitals, and 
estimated decreases of 1.3 percent to rural hospitals, with the 
estimated effect for individual groups of hospitals depending on the 
volume of clinic visits provided at off-campus provider-based 
departments.
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 percentage change in 
estimated total payments by specialty groups under the proposed CY 2019 
payment rates, compared to estimated CY 2018 payment rates, generally 
ranges between an increase of 1 to 4 percent, depending on the service, 
with some exceptions. We estimate the impact of applying the hospital 
market basket update to proposed ASC payment rates would increase 
payments by $32 million under the ASC payment system in CY 2019 
compared to if we applied an update based on CPI-U.
c. Impact of the Proposed Changes to the Hospital OQR Program
    Across 3,300 hospitals participating in the Hospital OQR Program, 
we estimate that our proposed requirements would result in the 
following changes to costs and burdens related to information 
collection for the Hospital OQR Program compared to previously adopted 
requirements: (1) No change in the total collection of information 
burden or costs for the CY 2020 payment determination; (2) a total 
collection of information burden reduction of 1,468,614 hours and a 
total collection of information cost reduction of approximately $57.3 
million for the CY 2021 payment determination due to the proposed 
removal of six specific measures: OP-5, OP-12, OP-17, OP-29, OP-30, and 
OP-31.
    Further, we anticipate that the proposed removal of a total of 10 
measures would result in a reduction in costs unrelated to information 
collection. For example, it may be costly for health care providers to 
track the confidential feedback, preview reports, and publicly reported 
information on a measure where we use the measure in more than one 
program. Also, when measures are in multiple programs, maintaining the 
specifications for those measures, as well as the tools we need to 
collect, validate, analyze, and publicly report the measure data may 
result in costs to CMS. In addition, beneficiaries may find it 
confusing to see public reporting on the same measure in different 
programs.
d. Impact of the Proposed Changes to the ASCQR Program
    Across 3,937 ASCs participating in the ASCQR Program, we estimate 
that our proposed requirements would result in the following changes to 
costs and burdens related to information collection for the ASCQR 
Program compared to previously adopted requirements: (1) No change in 
the total collection of information burden or costs for the CY 2020 
payment determination; (2) a total collection of information burden 
reduction of 140,585 hours and a total collection of information cost 
reduction of approximately $5.1 million for the CY 2021 payment 
determination due to the proposed removal of three specific measures: 
ASC-9, ASC-10, and ASC-11.
    Further, we anticipate that the proposed removal of a total of 
eight measures would result in a reduction in costs unrelated to 
information collection. For example, it may be costly for health care 
providers to track the confidential feedback, preview reports, and 
publicly reported information on a measure where we use the measure in 
more than one program. Also, when measures are in multiple programs, 
maintaining the specifications for those measures as well as the tools 
we need to collect, analyze, and publicly report the measure data may 
result in costs to CMS. In addition, beneficiaries may find it 
confusing to see public reporting on the same measure in different 
programs.

B. Legislative and Regulatory Authority for the Hospital OPPS

    When Title XVIII of the Social Security Act was enacted, Medicare 
payment for hospital outpatient services was based on hospital-specific 
costs. In an effort to ensure that Medicare and its beneficiaries pay 
appropriately for services and to encourage more efficient delivery of 
care, the Congress mandated replacement of the reasonable cost-based 
payment methodology with a prospective payment system (PPS). The 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 
1833(t) to the Act, authorizing implementation of a PPS for hospital 
outpatient services. The OPPS was first implemented for services 
furnished on or after August 1, 2000. Implementing regulations for the 
OPPS are located at 42 CFR parts 410 and 419.
    The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. 
The following Acts made additional changes to the OPPS: the Medicare,

[[Page 37053]]

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; the American Taxpayer Relief Act 
of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR 
Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the 
Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), 
enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization 
Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the 
Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 
2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), 
enacted on December 18, 2015, and the 21st Century Cures Act (Pub. L. 
114-255), enacted on December 13, 2016.
    Under the OPPS, we generally 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 Medicare 
Part B.
    The OPPS rate is an unadjusted national payment amount that 
includes the Medicare payment and the beneficiary copayment. This rate 
is divided into a labor-related amount and a nonlabor-related amount. 
The labor-related amount is adjusted for area wage differences using 
the hospital inpatient wage index value for the locality in which the 
hospital or CMHC is located.
    All services and items within an APC group are comparable 
clinically and with respect to resource use (section 1833(t)(2)(B) of 
the Act). In accordance with section 1833(t)(2) of the Act, subject to 
certain exceptions, items and services within an APC group cannot be 
considered comparable with respect to the use of resources if the 
highest median cost (or mean cost, if elected by the Secretary) for an 
item or service in the APC group is more than 2 times greater than the 
lowest median cost (or mean cost, if elected by the Secretary) for an 
item or service within the same APC group (referred to as the ``2 times 
rule''). In implementing this provision, we generally use the cost of 
the item or service assigned to an APC group.
    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 
generally provides for temporary additional payments, which we refer to 
as ``transitional pass-through payments,'' for at least 2 but not more 
than 3 years for certain drugs, biological agents, brachytherapy 
devices used for the treatment of cancer, and categories of other 
medical devices and in some cases, provides for a longer period under 
which transitional pass-through payments are made. For new technology 
services that are not eligible for transitional pass-through payments, 
and for which we lack sufficient clinical information and cost data to 
appropriately assign them to a clinical APC group, we have established 
special APC groups based on costs, which we refer to as New Technology 
APCs. These New Technology APCs are designated by cost bands which 
allow us to provide appropriate and consistent payment for designated 
new procedures that are not yet reflected in our claims data. Similar 
to pass-through payments, an assignment to a New Technology APC is 
temporary; that is, we retain a service within a New Technology APC 
until we acquire sufficient data to assign it to a clinically 
appropriate APC group.

C. Excluded OPPS Services and Hospitals

    Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to 
designate the hospital outpatient services that are paid under the 
OPPS. While most hospital outpatient services are payable under the 
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for 
ambulance, physical and occupational therapy, and speech-language 
pathology services, for which payment is made under a fee schedule. It 
also excludes screening mammography, diagnostic mammography, and 
effective January 1, 2011, an annual wellness visit providing 
personalized prevention plan services. The Secretary exercises the 
authority granted under the statute to also exclude from the OPPS 
certain services that are paid under fee schedules or other payment 
systems. Such excluded services include, for example, the professional 
services of physicians and nonphysician practitioners paid under the 
Physician Fee Schedule (PFS); 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. In addition, 
section 1833(t)(1)(B)(v) of the Act does not include applicable items 
and services (as defined in subparagraph (A) of paragraph (21)) that 
are furnished on or after January 1, 2017 by an off-campus outpatient 
department of a provider (as defined in subparagraph (B) of paragraph 
(21). We set forth the services that are excluded from payment under 
the OPPS in regulations at 42 CFR 419.22.
    Under Sec.  419.20(b) of the regulations, we specify the types of 
hospitals that are excluded from payment under the OPPS. These excluded 
hospitals include:
    <bullet> Critical access hospitals (CAHs);
    <bullet> Hospitals located in Maryland and paid under the Maryland 
All-Payer Model;
    <bullet> Hospitals located outside of the 50 States, the District 
of Columbia, and Puerto Rico; and
    <bullet> 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

[[Page 37054]]

implemented for services furnished on or after August 1, 2000. Section 
1833(t)(9)(A) 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 website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

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

1. Authority of the Panel
    Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of 
Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 
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, 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 Public Health 
Service 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 HOP 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 Panel, and at that time named the APC Panel. This 
expert panel is composed of appropriate representatives of providers 
(currently employed full-time, not as consultants, in their respective 
areas of expertise) who review clinical data, and advise 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--
    <bullet> May advise on the clinical integrity of Ambulatory Payment 
Classification (APC) groups and their associated weights;
    <bullet> May advise on the appropriate supervision level for 
hospital outpatient services;
    <bullet> Continues to be technical in nature;
    <bullet> Is governed by the provisions of the FACA;
    <bullet> Has a Designated Federal Official (DFO); and
    <bullet> Is chaired by a Federal Official designated by the 
Secretary.
    The Panel's charter was amended on November 15, 2011, renaming the 
Panel and expanding the Panel's authority to include supervision of 
hospital outpatient therapeutic services and to add critical access 
hospital (CAH) representation to its membership. The Panel's charter 
was also amended on November 6, 2014 (80 FR 23009), and the number of 
members was revised from up to 19 to up to 15 members. The Panel's 
current charter was approved on November 21, 2016, for a 2-year period 
(81 FR 94378).
    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 website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.
3. Panel Meetings and Organizational Structure
    The Panel has held many meetings, with the last meeting taking 
place on August 21, 2017. Prior to each meeting, we publish a notice in 
the Federal Register to announce the meeting and, when necessary, to 
solicit nominations for Panel membership, to announce new members and 
to announce any other changes of which the public should be aware. 
Beginning in CY 2017, we have transitioned to one meeting per year (81 
FR 31941). Further information on the 2018 summer meeting can be found 
in the meeting notice titled ``Medicare Program: Announcement of the 
Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on 
August 20-21, 2018'' (83 FR 19785).
    In addition, 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 
include the following:
    <bullet> APC Groups and Status Indicator Assignments Subcommittee, 
which advises the Panel on the appropriate status indicators 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, as 
well as the appropriate APC assignment of HCPCS codes regarding 
services for which separate payment is made;
    <bullet> Data Subcommittee, which is responsible for studying the 
data issues confronting the Panel and for recommending options for 
resolving them; and
    <bullet> Visits and Observation Subcommittee, which reviews and 
makes recommendations to the Panel on all technical issues pertaining 
to observation services and hospital outpatient visits paid under the 
OPPS.
    Each of these subcommittees was established by a majority vote from 
the full Panel during a scheduled Panel meeting, and the Panel 
recommended at the August 21, 2017 meeting that the subcommittees 
continue. We accepted this recommendation.
    Discussions of the other recommendations made by the Panel at the 
August 21, 2017 Panel meeting, namely endovascular procedure APCs, 
blood derived hematopoietic stem cell transplantation, OPPS payment for 
drugs acquired under the 340B program, and packaging of drug 
administration services, were discussed in the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 59216) and the CY 2018 OPPS/ASC 
correction notice (82 FR 61184), or 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 website mentioned earlier in this section, and the FACA database at 
http://facadatabase.gov.

F. Public Comments Received on the CY 2018 OPPS/ASC Final Rule With 
Comment Period

    We received approximately 127 timely pieces of correspondence on 
the

[[Page 37055]]

CY 2018 OPPS/ASC final rule with comment period that appeared in the 
Federal Register on December 14, 2017 (82 FR 59216), some of which 
contained comments on the interim APC assignments and/or status 
indicators of new or replacement Level II HCPCS codes (identified with 
comment indicator ``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC 
Addendum BB to that final rule). Summaries of the public comments on 
new or replacement Level II HCPCS codes will be set forth in the CY 
2019 final rule with comment period under the appropriate subject 
matter headings.

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.
    In this CY 2019 OPPS/ASC proposed rule, for CY 2019, we are 
proposing to recalibrate the APC relative payment weights for services 
furnished on or after January 1, 2019, and before January 1, 2020 (CY 
2019), using the same basic methodology that we described in the CY 
2018 OPPS/ASC final rule with comment period (82 FR 52367 through 
52370), using updated CY 2017 claims data. 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.
    For the purpose of recalibrating the APC proposed relative payment 
weights for CY 2019, we began with approximately 163 million final 
action claims (claims for which all disputes and adjustments have been 
resolved and payment has been made) for HOPD services furnished on or 
after January 1, 2017, and before January 1, 2018, before applying our 
exclusionary criteria and other methodological adjustments. After the 
application of those data processing changes, we used approximately 86 
million final action claims to develop the proposed CY 2019 OPPS 
payment weights. For exact numbers of claims used and additional 
details on the claims accounting process, we refer readers to the 
claims accounting narrative under supporting documentation for this CY 
2019 OPPS/ASC proposed rule on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    Addendum N to this proposed rule (which is available via the 
internet on the CMS website) includes the proposed list of bypass codes 
for CY 2019. The proposed list of bypass codes contains codes that were 
reported on claims for services in CY 2017 and, therefore, includes 
codes that were in effect in CY 2017 and used for billing, but were 
deleted for CY 2018. We retained these deleted bypass codes on the 
proposed CY 2019 bypass list because these codes existed in CY 2017 and 
were covered OPD services in that period, and CY 2017 claims data are 
used to calculate CY 2019 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 are 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 2019 are identified by asterisks (*) in the fourth column of 
Addendum N.
    We are not proposing to remove any codes from the CY 2019 bypass 
list.
b. Proposed Calculation and Use of Cost-to-Charge Ratios (CCRs)
    For CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are 
proposing to continue to use the hospital-specific overall ancillary 
and departmental cost-to-charge ratios (CCRs) to convert charges to 
estimated costs through application of a revenue code-to-cost center 
crosswalk. To calculate the APC costs on which the proposed CY 2019 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 2017 claims data by comparing these claims 
data to the most recently available hospital cost reports, which, in 
most cases, are from CY 2016. For the proposed CY 2019 OPPS payment 
rates, we used the set of claims processed during CY 2017. We applied 
the hospital-specific CCR to the hospital's charges at the most 
detailed level possible, based on a revenue code-to-cost center 
crosswalk that contains a hierarchy of CCRs used to estimate costs from 
charges for each revenue code. That crosswalk is available for review 
and continuous comment on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    To ensure the completeness of the revenue code-to-cost center 
crosswalk, we reviewed changes to the list of revenue codes for CY 2017 
(the year of claims data we used to calculate the proposed CY 2019 OPPS 
payment rates) and found that the National Uniform Billing Committee 
(NUBC) did not add any new revenue codes to the NUBC 2017 Data 
Specifications Manual.
    In accordance with our longstanding policy, we calculate CCRs for 
the standard and nonstandard cost centers accepted by the electronic 
cost report database. In general, the most detailed level at which we 
calculate CCRs is 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.a.(1) of this proposed rule.
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840 
through 74847), we finalized our policy of creating new cost centers 
and distinct CCRs for implantable devices, magnetic resonance imagings 
(MRIs), computed tomography (CT) scans, and cardiac catheterization. 
However, in response to the CY 2014 OPPS/ASC proposed rule, commenters 
reported that some hospitals currently use an imprecise ``square feet'' 
allocation methodology for the costs of large moveable equipment like 
CT scan and MRI machines. They indicated that while CMS recommended 
using two alternative allocation methods, ``direct assignment'' or 
``dollar value,'' as a more accurate methodology for directly assigning 
equipment costs, industry analysis suggested that approximately only 
half of the reported cost centers for CT scans and MRIs rely on these 
preferred methodologies. In response to concerns from commenters, we 
finalized a policy for the CY 2014 OPPS to remove claims from providers 
that use a cost allocation method of ``square feet'' to calculate CCRs 
used to estimate costs associated with the APCs for CT and MRI (78 FR 
74847). Further, we finalized a transitional policy to estimate the 
imaging APC relative

[[Page 37056]]

payment weights using only CT and MRI cost data from providers that do 
not use ``square feet'' as the cost allocation statistic. We provided 
that this finalized policy would sunset in 4 years to provide a 
sufficient time for hospitals to transition to a more accurate cost 
allocation method and for the related data to be available for 
ratesetting purposes (78 FR 74847). Therefore, beginning CY 2018, with 
the sunset of the transition policy, we would estimate the imaging APC 
relative payment weights using cost data from all providers, regardless 
of the cost allocation statistic employed. However, in the CY 2018 
OPPS/ASC final rule with comment period (82 FR 59228 and 59229), we 
finalized a policy to extend the transition policy for 1 additional 
year and continued to remove claims from providers that use a cost 
allocation method of ``square feet'' to calculate CT and MRI CCRs for 
the CY 2018 OPPS.
    As we discussed in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59228), some stakeholders have raised concerns regarding 
using claims from all providers to calculate CT and MRI CCRs, 
regardless of the cost allocations statistic employed (78 FR 74840 
through 74847). Stakeholders noted that providers continue to use the 
``square feet'' cost allocation method and that including claims from 
such providers would cause significant reductions in the imaging APC 
payment rates.
    Table 1 below demonstrates the relative effect on imaging APC 
payments after removing cost data for providers that report CT and MRI 
standard cost centers using ``square feet'' as the cost allocation 
method by extracting HCRIS data on Worksheet B-1. Table 2 below 
provides statistical values based on the CT and MRI standard cost 
center CCRs using the different cost allocation methods.

    Table 1--Percentage Change in Estimate Cost for CT and MRI APCs When Excluding Claims From Provider Using
                                  ``Square Feet'' as the Cost Allocation Method
----------------------------------------------------------------------------------------------------------------
                                                                                                    Percentage
                     APC                                        APC descriptor                        change
----------------------------------------------------------------------------------------------------------------
5521........................................  Level 1 Imaging without Contrast..................            -3.6
5522........................................  Level 2 Imaging without Contrast..................             5.5
5523........................................  Level 3 Imaging without Contrast..................             4.3
5524........................................  Level 4 Imaging without Contrast..................             4.7
5571........................................  Level 1 Imaging with Contrast.....................             7.7
5572........................................  Level 2 Imaging with Contrast.....................             8.4
5573........................................  Level 3 Imaging with Contrast.....................             2.8
8005........................................  CT and CTA without Contrast Composite.............            13.9
8006........................................  CT and CTA with Contrast Composite................            11.4
8007........................................  MRI and MRA without Contrast Composite............             6.6
8008........................................  MRI and MRA with Contrast Composite...............             7.4
----------------------------------------------------------------------------------------------------------------


                Table 2--CCR Statistical Values Based on use of Different Cost Allocation Methods
----------------------------------------------------------------------------------------------------------------
                                                                CT                              MRI
             Cost allocation method              ---------------------------------------------------------------
                                                    Median CCR       Mean CCR       Median CCR       Mean CCR
----------------------------------------------------------------------------------------------------------------
All Providers...................................          0.0377          0.0527          0.0780          0.1046
Square Feet Only................................          0.0309          0.0475          0.0701          0.0954
Direct Assign...................................          0.0553          0.0645          0.1058          0.1227
Dollar Value....................................          0.0446          0.0592          0.0866          0.1166
Direct Assign and Dollar Value..................          0.0447          0.0592          0.0867          0.1163
----------------------------------------------------------------------------------------------------------------

    Our analysis shows that since the CY 2014 OPPS in which we 
established the transition policy, the number of valid MRI CCRs has 
increased by 17.4 percent to 2,174 providers and the number of valid CT 
CCRs has increased by 14.8 percent to 2,244 providers. However, as 
shown in Table 1 above, nearly all imaging APCs would see an increase 
in payment rates for CY 2019 if claims from providers that report using 
the ``square feet'' cost allocation method were removed. This can be 
attributed to the generally lower CCR values from providers that use a 
cost allocation method of ``square feet'' as shown in Table 2 above.
    In response to provider concerns and to provide added flexibility 
for hospitals to improve their cost allocation methods, for the CY 2019 
OPPS, we are proposing to extend our transition policy and remove 
claims from providers that use a cost allocation method of ``square 
feet'' to calculate CCRs used to estimate costs with the APCs for CT 
and MRI identified in Table 2 above. This proposed extension would mean 
that CMS would now be providing 6 years for providers to transition 
from a ``square feet'' cost allocation method to another cost 
allocation method. We do not believe another extension in CY 2020 will 
be warranted and expect to determine the imaging APC relative payment 
weights for CY 2020 using cost data from all providers, regardless of 
the cost allocation method employed.

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 2019. The Hospital 
OPPS page on the CMS website on which this proposed rule is posted 
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used 
in the development of the proposed payment rates. That accounting 
provides additional detail regarding the number of claims derived at 
each stage of the process. In addition, below in this section we 
discuss the file of claims that comprises the data set that is 
available upon payment of an administrative fee

[[Page 37057]]

under a CMS data use agreement. The CMS website, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about obtaining the ``OPPS Limited 
Data Set,'' which now includes the additional variables previously 
available only in the OPPS Identifiable Data Set, including ICD-10-CM 
diagnosis codes and revenue code payment amounts. This file is derived 
from the CY 2017 claims that were used to calculate the proposed 
payment rates for the CY 2019 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 2019, in this CY 2019 OPPS/ASC proposed 
rule, we are proposing to continue to use geometric mean costs to 
calculate the proposed relative weights on which the CY 2019 OPPS 
payment rates are based.
    We used the methodology described in sections II.A.2.a. through 
II.A.2.c. of this proposed rule to calculate the costs we used to 
establish the proposed relative payment weights used in calculating the 
proposed OPPS payment rates for CY 2019 shown in Addenda A and B to 
this proposed rule (which are available via the internet on the CMS 
website). 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.
    We note that this will be the first year in which claims data 
containing lines with the modifier ``PN'' will be available, which 
indicate nonexcepted items and services furnished and billed by off-
campus provider-based departments (PBDs) of hospitals. Because 
nonexcepted services are not paid under the OPPS, we are proposing to 
remove those claim lines reported with modifier ``PN'' from the claims 
data used in ratesetting for the CY 2019 OPPS and subsequent years.
    For details of the claims process used in this proposed rule, we 
refer readers to the claims accounting narrative under supporting 
documentation for this CY 2019 OPPS/ASC proposed rule on the CMS 
website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
a. Proposed Calculation of Single Procedure APC Criteria-Based Costs
(1) Blood and Blood Products
(a) Methodology
    Since the implementation of the OPPS in August 2000, we have made 
separate payments for blood and blood products through APCs rather than 
packaging payment for them into payments for the procedures with which 
they are administered. Hospital payments for the costs of blood and 
blood products, as well as for the costs of collecting, processing, and 
storing blood and blood products, are made through the OPPS payments 
for specific blood product APCs.
    In this CY 2019 OPPS/ASC proposed rule, we are proposing to 
continue to establish payment rates for blood and blood products using 
our blood-specific CCR methodology, which utilizes actual or simulated 
CCRs from the most recently available hospital cost reports to convert 
hospital charges for blood and blood products to costs. This 
methodology has been our standard ratesetting methodology for blood and 
blood products since CY 2005. It was developed in response to data 
analysis indicating that there was a significant difference in CCRs for 
those hospitals with and without blood-specific cost centers, and past 
public comments indicating that the former OPPS policy of defaulting to 
the overall hospital CCR for hospitals not reporting a blood-specific 
cost center often resulted in an underestimation of the true hospital 
costs for blood and blood products. 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 also are 
proposing to 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 2019 
payment rates for blood and blood products are based using the actual 
blood-specific CCR for hospitals that reported costs and charges for a 
blood cost center and a hospital-specific, simulated blood-specific CCR 
for hospitals that did not report costs and charges for a blood cost 
center.
    We continue to believe that the hospital-specific, simulated blood-
specific, CCR methodology better responds to the absence of a blood-
specific CCR for a hospital than alternative methodologies, such as 
defaulting to the overall hospital CCR or applying an average blood-
specific CCR across hospitals. Because this methodology takes into 
account the unique charging and cost accounting structure of each 
hospital, we believe that it yields more accurate estimated costs for 
these products. We continue to believe that this methodology in CY 2019 
would 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.b. of the CY 2018 
OPPS/ASC final rule with comment period (82 FR 59234 through 59239), 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. Under this policy, we 
include the costs of blood and blood products when calculating the 
overall costs of these C-APCs. In this CY 2019 OPPS/ASC proposed rule, 
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 C-APCs. Because the costs of blood and blood products would be 
reflected in the overall costs of the C-APCs (and, as a result, in the 
proposed payment rates of the C-APCs), we are proposing to not make 
separate payments for blood and blood products when they appear on the 
same claims as services assigned to the C-APCs (we refer readers to the 
CY 2015 OPPS/ASC final rule with comment period (79 FR 66796)).
    We also refer readers to Addendum B to this proposed rule (which is 
available via the internet on the CMS website) for the proposed CY 2019 
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

[[Page 37058]]

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).
(b) Pathogen-Reduced Platelets Payment Rate
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322 
through 70323), we reiterated that we calculate 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. Because HCPCS code P9072 (Platelets, pheresis, 
pathogen reduced or rapid bacterial tested, each unit), the predecessor 
code to HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each 
unit), was new for CY 2016, there were no claims data available on the 
charges and costs for this blood product upon which to apply our blood-
specific CCR methodology. Therefore, we established an interim payment 
rate for HCPCS code P9072 based on a crosswalk to existing blood 
product HCPCS code P9037 (Platelets, pheresis, leukocytes reduced, 
irradiated, each unit), which we believed provided the best proxy for 
the costs of the new blood product. In addition, we stated that once we 
had claims data for HCPCS code P9072, we would calculate its payment 
rate using the claims data that should be available for the code 
beginning in CY 2018, which is our practice for other blood product 
HCPCS codes for which claims data have been available for 2 years.
    We stated in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59232) that, although our standard practice for new codes 
involves using claims data to set payment rates once claims data become 
available, we were concerned that there may have been confusion among 
the provider community about the services that HCPCS code P9072 
described. That is, as early as 2016, there were discussions about 
changing the descriptor for HCPCS code P9072 to include the phrase ``or 
rapid bacterial tested'', which is a less costly technology than 
pathogen reduction. In addition, effective January 2017, the code 
descriptor for HCPCS code P9072 was changed to describe rapid bacterial 
testing of platelets and, effective July 1, 2017, the descriptor for 
the temporary successor code for HCPCS code P9072 (HCPCS code Q9988) 
was changed again back to the original descriptor for HCPCS code P9072 
that was in place for 2016.
    Based on the ongoing discussions involving changes to the original 
HCPCS code P9072 established in CY 2016, we believed that claims from 
CY 2016 for pathogen reduced platelets may have potentially reflected 
certain claims for rapid bacterial testing of platelets. Therefore, we 
decided to continue to crosswalk the payment amount for services 
described by HCPCS code P9073 to the payment amount for services 
described by HCPCS P9037 for CY 2018 (82 FR 59232), as had been done 
previously, to determine the payment rate for services described by 
HCPCS code P9072. In this proposed rule, for CY 2019, we have reviewed 
the CY 2017 claims data for the two predecessor codes to HCPCS code 
P9073 (HCPCS codes P9072 and Q9988), along with the claims data for the 
CY 2017 temporary code for pathogen test for platelets (HCPCS code 
Q9987), which describes rapid bacterial testing of platelets.
    We found that there were over 2,200 claims billed with either HCPCS 
code P9072 or Q9988. Accordingly, we believe that there are a 
sufficient number of claims to use to calculate a payment rate for 
HCPCS code P9073 for CY 2019. We also performed checks to estimate the 
share of claims that may have been billed for rapid bacterial testing 
of platelets as compared to the share of claims that may have been 
billed for pathogen-reduced, pheresis platelets (based on when HCPCS 
code P9072 was an active procedure code from January 1, 2017 to June 
30, 2017). First, we found that the geometric mean cost for pathogen-
reduced, pheresis platelets, as reported by HCPCS code Q9988 when 
billed separately for rapid bacterial testing of platelets, was 
$453.87, and that over 1,200 claims were billed for services described 
by HCPCS code Q9988. Next, we found that the geometric mean cost for 
rapid bacterial testing of platelets, as reported by HCPCS code Q9987 
on claims, was $33.44, and there were only 59 claims reported for 
services described by HCPCS code Q9987, of which 3 were separately 
paid.
    These findings imply that almost all of the claims billed for 
services reported with HCPCS code P9072 were for pathogen-reduced, 
pheresis platelets. In addition, the geometric mean cost for services 
described by HCPCS code P9072, which may contain rapid bacterial 
testing of platelets claims, was $468.11, which is lower than the 
geometric mean cost for services described by HCPCS code Q9988 of 
$453.87, which would not have contained claims for rapid bacterial 
testing of platelets. Because the geometric mean for services described 
by HCPCS code Q9987 is only $33.44, it would be expected that if a 
significant share of claims billed for services described by HCPCS code 
P9072 were for the rapid bacterial testing of platelets, the geometric 
mean cost for services described by HCPCS code P9072 would be lower 
than the geometric mean cost for services described by HCPCS code 
Q9988. Instead, we found that the geometric mean cost for services 
described by HCPCS code Q9988 is higher than the geometric mean cost 
for services described by HCPCS code P9072.
    Based on our analysis of claims data, we believe there are 
sufficient claims available to establish a payment rate for pathogen-
reduced pheresis platelets without using a crosswalk. Therefore, we are 
proposing to calculate the payment rate for services described by HCPCS 
code P9073 in CY 2019 and in subsequent years using claims payment 
history, which is the standard methodology used by the OPPS for HCPCS 
and CPT codes with at least 2 years of claims history. We refer readers 
to Addendum B of this proposed rule for the proposed payment rate for 
services described by HCPCS code P9073 reportable under the OPPS. 
Addendum B is available via the internet on the CMS website.
(2) 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 
methodology uses costs based on claims data to set the relative payment 
weights for hospital outpatient services. This payment methodology 
results in more consistent, predictable, and equitable payment amounts 
per source across hospitals by averaging the extremely high and low 
values, in contrast to payment based on hospitals' charges adjusted to 
costs. We believe that the OPPS methodology, as opposed to payment 
based on hospitals' charges

[[Page 37059]]

adjusted to cost, also would provide hospitals with incentives for 
efficiency in the provision of brachytherapy services to Medicare 
beneficiaries. Moreover, this approach is consistent with our payment 
methodology for the vast majority of items and services paid under the 
OPPS. We refer readers to the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70323 through 70325) for further discussion of the 
history of OPPS payment for brachytherapy sources.
    In this CY 2019 OPPS/ASC proposed rule, for CY 2019, we are 
proposing to use the costs derived from CY 2017 claims data to set the 
proposed CY 2019 payment rates for brachytherapy sources because CY 
2017 is the same year of data we are proposing to use to set the 
proposed payment rates for most other items and services that would be 
paid under the CY 2019 OPPS. We are proposing to base the payment rates 
for brachytherapy sources on the geometric mean unit costs for each 
source, consistent with the methodology that we are proposing 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 nonstranded not 
otherwise specified (NOS) codes, HCPCS codes C2698 (Brachytherapy 
source, stranded, not otherwise specified, per source) and C2699 
(Brachytherapy source, non-stranded, not otherwise specified, per 
source), 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). Specifically, this 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. The proposed CY 2019 payment rates 
for brachytherapy sources are included in Addendum B to this proposed 
rule (which is available via the internet on the CMS website) and are 
identified with status indicator ``U''. For CY 2019, we are proposing 
to continue to assign status indicator ``U'' (Brachytherapy Sources, 
Paid under OPPS; separate APC payment) to HCPCS code C2645 
(Brachytherapy planar source, palladium-103, per square millimeter) and 
to use external data (invoice prices) and other relevant information to 
establish the proposed APC payment rate for HCPCS code C2645. 
Specifically, we are proposing to set the payment rate at $4.69 per 
mm\2\, the same rate that was in effect for CYs 2017 and 2018.
    We note that, for CY 2019, we are proposing to assign status 
indicator ``E2'' (Items and Services for Which Pricing Information and 
Claims Data Are Not Available) to HCPCS code C2644 (Brachytherapy 
cesium-131 chloride) because this code was not reported on CY 2017 
claims. Therefore, we are unable to calculate a proposed payment rate 
based on the general OPPS ratesetting methodology described earlier. 
Although HCPCS code C2644 became effective July 1, 2014, there are no 
CY 2017 claims reporting this code. Therefore, we are proposing to 
assign new proposed status indicator ``E2'' to HCPCS code C2644 in the 
CY 2019 OPPS.
    We continue to invite hospitals and other parties to submit 
recommendations to us for new codes to describe new brachytherapy 
sources. Such recommendations should be directed to the Division of 
Outpatient Care, Mail Stop C4-01-26, 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.
b. Proposed Comprehensive APCs (C-APCs) for CY 2019
(1) Background
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 
through 74910), we finalized a comprehensive payment policy that 
packages payment for adjunctive and secondary items, services, and 
procedures into the most costly primary procedure under the OPPS at the 
claim level. The policy was finalized in CY 2014, but the effective 
date was delayed until January 1, 2015, to allow additional time for 
further analysis, opportunity for public comment, and systems 
preparation. The comprehensive APC (C-APC) policy was implemented 
effective January 1, 2015, with modifications and clarifications in 
response to public comments received regarding specific provisions of 
the C-APC policy (79 FR 66798 through 66810).
    A C-APC is defined 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 C-APCs as a category 
broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 
(79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70332), we finalized 10 additional C-APCs to be 
paid under the existing C-APC payment policy and added one additional 
level to both the Orthopedic Surgery and Vascular Procedures clinical 
families, which increased the total number of C-APCs to 37 for CY 2016. 
In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584 
through 79585), we finalized another 25 C-APCs for a total of 62 C-
APCs. In the CY 2018 OPPS/ASC final rule, we did not change the total 
number of C-APCs from 62.
    Under this policy, we designate a service described by a HCPCS code 
assigned to a C-APC as the primary service when the service is 
identified by OPPS status indicator ``J1''. When such a primary service 
is reported on a hospital outpatient claim, taking into consideration 
the few exceptions that are discussed below, we make payment for all 
other items and services reported on the hospital outpatient claim as 
being integral, ancillary, supportive, dependent, and adjunctive to the 
primary service (hereinafter collectively referred to as ``adjunctive 
services'') and representing components of a complete comprehensive 
service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services 
are packaged into the payments for the primary services. This results 
in a single prospective payment for each of the primary, comprehensive 
services based on the costs of all reported services at the claim 
level.
    Services excluded from the C-APC policy under the OPPS include 
services that are not covered OPD services, services that cannot by 
statute be paid for under the OPPS, and services that are required by 
statute to be separately paid. This includes certain mammography and 
ambulance services that are not covered OPD services in accordance with 
section 1833(t)(1)(B)(iv) of the Act;

[[Page 37060]]

brachytherapy seeds, which also are required by statute to receive 
separate payment under section 1833(t)(2)(H) of the Act; pass-through 
payment drugs and devices, which also require separate payment under 
section 1833(t)(6) of the Act; self-administered drugs (SADs) that are 
not otherwise packaged as supplies because they are not covered under 
Medicare Part B under section 1861(s)(2)(B) of the Act; and certain 
preventive services (78 FR 74865 and 79 FR 66800 through 66801). A list 
of services excluded from the C-APC policy is included in Addendum J to 
this proposed rule (which is available via the internet on the CMS 
website).
    The C-APC policy payment methodology set forth in the CY 2014 OPPS/
ASC final rule with comment period for the C-APCs and modified and 
implemented beginning in CY 2015 is summarized as follows (78 FR 74887 
and 79 FR 66800):
    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule 
with comment period, we define the C-APC payment policy as including 
all covered OPD services on a hospital outpatient claim reporting a 
primary service that is assigned to status indicator ``J1'', excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS. Services and procedures described by HCPCS 
codes assigned to status indicator ``J1'' are assigned to C-APCs based 
on our usual APC assignment methodology by evaluating the geometric 
mean costs of the primary service claims to establish resource 
similarity and the clinical characteristics of each procedure to 
establish clinical similarity within each APC.
    In the CY 2016 OPPS/ASC final rule with comment period, we expanded 
the C-APC payment methodology to qualifying extended assessment and 
management encounters through the ``Comprehensive Observation 
Services'' C-APC (C-APC 8011). Services within this APC are assigned 
status indicator ``J2''. Specifically, we make a payment through C-APC 
8011 for a claim that:
    <bullet> Does not contain a procedure described by a HCPCS code to 
which we have assigned status indicator ``T'' that is reported with a 
date of service on the same day or 1 day earlier than the date of 
service associated with services described by HCPCS code G0378;
    <bullet> Contains 8 or more units of services described by HCPCS 
code G0378 (Observation services, per hour);
    <bullet> Contains services provided on the same date of service or 
1 day before the date of service for HCPCS code G0378 that are 
described by one of the following codes: HCPCS code G0379 (Direct 
referral of patient for hospital observation care) on the same date of 
service as HCPCS code G0378; CPT code 99281 (Emergency department visit 
for the evaluation and management of a patient (Level 1)); CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient (Level 2)); CPT code 99283 (Emergency department visit for 
the evaluation and management of a patient (Level 3)); 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 G0380 
(Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B 
emergency department visit (Level 2)); HCPCS code G0382 (Type B 
emergency department visit (Level 3)); HCPCS code G0383 (Type B 
emergency department visit (Level 4)); HCPCS code G0384 (Type B 
emergency department visit (Level 5)); 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); and
    <bullet> Does not contain services described by a HCPCS code to 
which we have assigned status indicator ``J1''.
    The assignment of status indicator ``J2'' to a specific combination 
of services performed in combination with each other allows for all 
other OPPS payable services and items reported on the claim (excluding 
services that are not covered OPD services or that cannot by statute be 
paid for under the OPPS) to be deemed adjunctive services representing 
components of a comprehensive service and resulting in a single 
prospective payment for the comprehensive service based on the costs of 
all reported services on the claim (80 FR 70333 through 70336).
    Services included under the C-APC payment packaging policy, that 
is, services that are typically adjunctive to the primary service and 
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; 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 represent services that are provided 
during the complete comprehensive service (78 FR 74865 and 79 FR 
66800).
    In addition, payment for hospital outpatient department services 
that are similar to therapy services and delivered either by therapists 
or nontherapists is included as part of the payment for the packaged 
complete comprehensive service. These services that are provided during 
the perioperative period are adjunctive services and are deemed not to 
be therapy services as described in section 1834(k) of the Act, 
regardless of whether the services are delivered by therapists or other 
nontherapist health care workers. We have previously noted that therapy 
services are those provided by therapists under a plan of care in 
accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the 
Act and are paid for under section 1834(k) of the Act, subject to 
annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). 
However, certain other services similar to therapy services are 
considered and paid for as hospital outpatient department services. 
Payment for these nontherapy outpatient department services that are 
reported with therapy codes and provided with a comprehensive service 
is included in the payment for the packaged complete comprehensive 
service. We note that these services, even though they are reported 
with therapy codes, are hospital outpatient department services and not 
therapy services. Therefore, the requirement for functional reporting 
under the regulations at 42 CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) 
does not apply. We refer readers to the July 2016 OPPS Change Request 
9658 (Transmittal 3523) for further instructions on reporting these 
services in the context of a C-APC service.
    Items included in the packaged 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 SADs, unless they function as packaged 
supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We 
refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit 
Policy Manual for a description of our policy on SADs treated as 
hospital outpatient supplies, including lists of SADs that function as 
supplies and those that do not function as supplies.
    We define each hospital outpatient claim reporting a single unit of 
a single primary service assigned to status indicator ``J1'' as a 
single ``J1'' unit procedure claim (78 FR 74871 and 79

[[Page 37061]]

FR 66801). Line item charges for services included on the C-APC claim 
are converted to line item costs, which are then summed to develop the 
estimated APC costs. These claims are then assigned one unit of the 
service with status indicator ``J1'' and later used to develop the 
geometric mean costs for the C-APC relative payment weights. (We note 
that we use the term ``comprehensive'' to describe the geometric mean 
cost of a claim reporting ``J1'' service(s) or the geometric mean cost 
of a C-APC, inclusive of all of the items and services included in the 
C-APC service payment bundle.) Charges for services that would 
otherwise be separately payable are added to the charges for the 
primary service. This process differs from our traditional cost 
accounting methodology only in that all such services on the claim are 
packaged (except certain services as described above). We apply our 
standard data trims, which exclude 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 C-APCs. We establish a 
ranking of each primary service (single unit only) to be assigned to 
status indicator ``J1'' according to its comprehensive geometric mean 
costs. For the minority of claims reporting more than one primary 
service assigned to status indicator ``J1'' or units thereof, we 
identify one ``J1'' service as the primary service for the claim based 
on our cost-based ranking of primary services. We then assign these 
multiple ``J1'' procedure claims to the C-APC to which the service 
designated as the primary service is assigned. If the reported ``J1'' 
services on a claim map to different C-APCs, we designate the ``J1'' 
service assigned to the C-APC with the highest comprehensive geometric 
mean cost as the primary service for that claim. If the reported 
multiple ``J1'' services on a claim map to the same C-APC, we designate 
the most costly service (at the HCPCS code level) as the primary 
service for that claim. This process results in initial assignments of 
claims for the primary services assigned to status indicator ``J1'' to 
the most appropriate C-APCs based on both single and multiple procedure 
claims reporting these services and clinical and resource homogeneity.
    Complexity Adjustments. We use complexity adjustments to provide 
increased payment for certain comprehensive services. We apply a 
complexity adjustment by promoting qualifying paired ``J1'' service 
code combinations or paired code combinations of ``J1'' services and 
certain add-on codes (as described further below) from the originating 
C-APC (the C-APC to which the designated primary service is first 
assigned) to the next higher paying C-APC in the same clinical family 
of C-APCs. We apply this type of complexity adjustment when the paired 
code combination represents a complex, costly form or version of the 
primary service according to the following criteria:
    <bullet> Frequency of 25 or more claims reporting the code 
combination (frequency threshold); and
    <bullet> Violation of the 2 times rule in the originating C-APC 
(cost threshold).
    These criteria identify paired code combinations that occur 
commonly and exhibit materially greater resource requirements than the 
primary service. The CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79582) included a revision to the complexity adjustment 
eligibility criteria. Specifically, we finalized a policy to 
discontinue the requirement that a code combination (that qualifies for 
a complexity adjustment by satisfying the frequency and cost criteria 
thresholds described above) also not create a 2 times rule violation in 
the higher level or receiving APC.
    After designating a single primary service for a claim, we 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 there are paired code combinations that 
meet the complexity adjustment criteria. For a new HCPCS code, we 
determine initial C-APC assignment and qualification for a complexity 
adjustment using the best available information, crosswalking the new 
HCPCS code to a predecessor code(s) when appropriate.
    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 promote the claim including the complex 
version of the primary service as described by the code combination to 
the next higher cost C-APC within the clinical family, unless the 
primary service is already assigned to the highest cost APC within the 
C-APC clinical family or assigned to the only C-APC in a clinical 
family. We do not create new APCs with a comprehensive geometric mean 
cost that is higher than the highest geometric mean cost (or only) C-
APC in a clinical family just to accommodate potential complexity 
adjustments. Therefore, the highest payment for any claim including a 
code combination for services assigned to a C-APC would be the highest 
paying C-APC in the clinical family (79 FR 66802).
    We package payment for all add-on codes into the payment for the C-
APC. However, certain primary service add-on combinations may qualify 
for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70331), all add-on codes that can be 
appropriately reported in combination with a base code that describes a 
primary ``J1'' service are evaluated for a complexity adjustment.
    To determine which combinations of primary service codes reported 
in conjunction with an add-on code may qualify for a complexity 
adjustment for CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are 
proposing to apply the frequency and cost criteria thresholds discussed 
above, testing claims reporting one unit of a single primary service 
assigned to status indicator ``J1'' and any number of units of a single 
add-on code for the primary ``J1'' service. If the frequency and cost 
criteria thresholds for a complexity adjustment are met and 
reassignment to the next higher cost APC in the clinical family is 
appropriate (based on meeting the criteria outlined above), we make a 
complexity adjustment for the code combination; that is, we reassign 
the primary service code reported in conjunction with the add-on code 
to the next higher cost C-APC within the same clinical family of C-
APCs. As previously stated, we package payment for add-on codes into 
the C-APC payment rate. If any add-on code reported in conjunction with 
the ``J1'' primary service code does not qualify for a complexity 
adjustment, payment for the add-on service continues to be packaged 
into the payment for the primary service and is not reassigned to the 
next higher cost C-APC. We list the complexity adjustments proposed for 
``J1'' and add-on code combinations for CY 2019, 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 website).
    Addendum J to this proposed rule includes the cost statistics for 
each code combination that would qualify for a complexity adjustment 
(including primary code and add-on code

[[Page 37062]]

combinations). Addendum J to this proposed rule also contains summary 
cost statistics for each of the paired code combinations that describe 
a complex code combination that would qualify for a complexity 
adjustment and are proposed to be reassigned to the next higher cost C-
APC within the clinical family. The combined statistics for all 
proposed reassigned complex code combinations are represented by an 
alphanumeric code with the first 4 digits of the designated primary 
service followed by a letter. For example, the proposed geometric mean 
cost listed in Addendum J for the code combination described by 
complexity adjustment assignment 3320R, which is assigned to C-APC 5224 
(Level 4 Pacemaker and Similar Procedures), includes all paired code 
combinations that are proposed to be reassigned to C-APC 5224 when CPT 
code 33208 is the primary code. Providing the information contained in 
Addendum J to this proposed rule allows stakeholders the opportunity to 
better assess the impact associated with the proposed reassignment of 
claims with each of the paired code combinations eligible for a 
complexity adjustment.
(2) Proposed Additional C-APCs for CY 2019
    For CY 2019 and subsequent years, in this CY 2019 OPPS/ASC proposed 
rule, we are proposing to continue to apply the C-APC payment policy 
methodology made effective in CY 2015 and updated with the 
implementation of status indicator ``J2'' in CY 2016. We refer readers 
to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583) 
for a discussion of the C-APC payment policy methodology and revisions. 
Each year, in accordance with section 1833(t)(9)(A) of the Act, we 
review and revise the services within each APC group and the APC 
assignments under the OPPS. As a result of our annual review of the 
services and the APC assignments under the OPPS, we are proposing to 
add three C-APCs under the existing C-APC payment policy beginning in 
CY 2019: proposed C-APC 5163 (Level 3 ENT Procedures); proposed C-APC 
5183 (Level 3 Vascular Procedures); and proposed C-APC 5184 (Level 4 
Vascular Procedures). These APCs were selected to be included in this 
proposal because, similar to other C-APCs, these APCs include primary, 
comprehensive services, such as major surgical procedures, that are 
typically reported with other ancillary and adjunctive services. Also, 
similar to other APCs that have been converted to C-APCs, there are 
higher APC levels within the clinical family or related clinical family 
of these APCs that have previously been assigned to a C-APC. Table 3 of 
this proposed rule lists the proposed C-APCs for CY 2019. All C-APCs 
are displayed in Addendum J to this proposed rule (which is available 
via the internet on the CMS website). Addendum J to this proposed rule 
also contains all of the data related to the C-APC payment policy 
methodology, including the list of proposed complexity adjustments and 
other information.

                                        Table 3--Proposed CY 2019 C-APCs
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed new
             C-APC                   CY 2019 APC group title             Clinical family            C[dash]APC
----------------------------------------------------------------------------------------------------------------
5072...........................  Level 2 Excision/Biopsy/         EBIDX                          ...............
                                  Incision and Drainage.
5073...........................  Level 3 Excision/Biopsy/         EBIDX                          ...............
                                  Incision and Drainage.
5091...........................  Level 1 Breast/Lymphatic         BREAS                          ...............
                                  Surgery and Related Procedures.
5092...........................  Level 2 Breast/Lymphatic         BREAS                          ...............
                                  Surgery and Related Procedures.
5093...........................  Level 3 Breast/Lymphatic         BREAS                          ...............
                                  Surgery & Related Procedures.
5094...........................  Level 4 Breast/Lymphatic         BREAS                          ...............
                                  Surgery & Related Procedures.
5112...........................  Level 2 Musculoskeletal          ORTHO                          ...............
                                  Procedures.
5113...........................  Level 3 Musculoskeletal          ORTHO                          ...............
                                  Procedures.
5114...........................  Level 4 Musculoskeletal          ORTHO                          ...............
                                  Procedures.
5115...........................  Level 5 Musculoskeletal          ORTHO                          ...............
                                  Procedures.
5116...........................  Level 6 Musculoskeletal          ORTHO                          ...............
                                  Procedures.
5153...........................  Level 3 Airway Endoscopy.......  AENDO                          ...............
5154...........................  Level 4 Airway Endoscopy.......  AENDO                          ...............
5155...........................  Level 5 Airway Endoscopy.......  AENDO                          ...............
5163...........................  Level 3 ENT Procedures.........  ENTXX                                       *
5164...........................  Level 4 ENT Procedures.........  ENTXX                          ...............
5165...........................  Level 5 ENT Procedures.........  ENTXX                          ...............
5166...........................  Cochlear Implant Procedure.....  COCHL                          ...............
5183...........................  Level 3 Vascular Procedures....  VASCX                                       *
5184...........................  Level 4 Vascular Procedures....  VASCX                                       *
5191...........................  Level 1 Endovascular Procedures  EVASC                          ...............
5192...........................  Level 2 Endovascular Procedures  EVASC                          ...............
5193...........................  Level 3 Endovascular Procedures  EVASC                          ...............
5194...........................  Level 4 Endovascular Procedures  EVASC                          ...............
5200...........................  Implantation Wireless PA         WPMXX                          ...............
                                  Pressure Monitor.
5211...........................  Level 1 Electrophysiologic       EPHYS                          ...............
                                  Procedures.
5212...........................  Level 2 Electrophysiologic       EPHYS                          ...............
                                  Procedures.
5213...........................  Level 3 Electrophysiologic       EPHYS                          ...............
                                  Procedures.
5222...........................  Level 2 Pacemaker and Similar    AICDP                          ...............
                                  Procedures.
5223...........................  Level 3 Pacemaker and Similar    AICDP                          ...............
                                  Procedures.
5224...........................  Level 4 Pacemaker and Similar    AICDP                          ...............
                                  Procedures.
5231...........................  Level 1 ICD and Similar          AICDP                          ...............
                                  Procedures.
5232...........................  Level 2 ICD and Similar          AICDP                          ...............
                                  Procedures.
5244...........................  Level 4 Blood Product Exchange   SCTXX                          ...............
                                  and Related Services.
5302...........................  Level 2 Upper GI Procedures....  GIXXX                          ...............
5303...........................  Level 3 Upper GI Procedures....  GIXXX                          ...............
5313...........................  Level 3 Lower GI Procedures....  GIXXX                          ...............
5331...........................  Complex GI Procedures..........  GIXXX                          ...............
5341...........................  Abdominal/Peritoneal/Biliary     GIXXX                          ...............
                                  and Related Procedures.
5361...........................  Level 1 Laparoscopy & Related    LAPXX                          ...............
                                  Services.

[[Page 37063]]

 
5362...........................  Level 2 Laparoscopy & Related    LAPXX                          ...............
                                  Services.
5373...........................  Level 3 Urology & Related        UROXX                          ...............
                                  Services.
5374...........................  Level 4 Urology & Related        UROXX                          ...............
                                  Services.
5375...........................  Level 5 Urology & Related        UROXX                          ...............
                                  Services.
5376...........................  Level 6 Urology & Related        UROXX                          ...............
                                  Services.
5377...........................  Level 7 Urology & Related        UROXX                          ...............
                                  Services.
5414...........................  Level 4 Gynecologic Procedures.  GYNXX                          ...............
5415...........................  Level 5 Gynecologic Procedures.  GYNXX                          ...............
5416...........................  Level 6 Gynecologic Procedures.  GYNXX                          ...............
5431...........................  Level 1 Nerve Procedures.......  NERVE                          ...............
5432...........................  Level 2 Nerve Procedures.......  NERVE                          ...............
5462...........................  Level 2 Neurostimulator &        NSTIM                          ...............
                                  Related Procedures.
5463...........................  Level 3 Neurostimulator &        NSTIM                          ...............
                                  Related Procedures.
5464...........................  Level 4 Neurostimulator &        NSTIM                          ...............
                                  Related Procedures.
5471...........................  Implantation of Drug Infusion    PUMPS                          ...............
                                  Device.
5491...........................  Level 1 Intraocular Procedures.  INEYE                          ...............
5492...........................  Level 2 Intraocular Procedures.  INEYE                          ...............
5493...........................  Level 3 Intraocular Procedures.  INEYE                          ...............
5494...........................  Level 4 Intraocular Procedures.  INEYE                          ...............
5495...........................  Level 5 Intraocular Procedures.  INEYE                          ...............
5503...........................  Level 3 Extraocular, Repair,     EXEYE                          ...............
                                  and Plastic Eye Procedures.
5504...........................  Level 4 Extraocular, Repair,     EXEYE                          ...............
                                  and Plastic Eye Procedures.
5627...........................  Level 7 Radiation Therapy......  RADTX                          ...............
5881...........................  Ancillary Outpatient Services    N/A                            ...............
                                  When Patient Dies.
8011...........................  Comprehensive Observation        N/A                            ...............
                                  Services.
----------------------------------------------------------------------------------------------------------------
C-APC Clinical Family Descriptor Key: AENDO = Airway Endoscopy; AICDP = Automatic Implantable Cardiac
  Defibrillators, Pacemakers, and Related Devices.; BREAS = Breast Surgery; COCHL = Cochlear Implant; EBIDX =
  Excision/Biopsy/Incision and Drainage; ENTXX = ENT Procedures; EPHYS = Cardiac Electrophysiology; EVASC =
  Endovascular Procedures; EXEYE = Extraocular Ophthalmic Surgery; GIXXX = Gastrointestinal Procedures; GYNXX =
  Gynecologic Procedures; INEYE = Intraocular Surgery; LAPXX = Laparoscopic Procedures; NERVE = Nerve
  Procedures; NSTIM = Neurostimulators; ORTHO = Orthopedic Surgery; PUMPS = Implantable Drug Delivery Systems;
  RADTX = Radiation Oncology; SCTXX = Stem Cell Transplant; UROXX = Urologic Procedures; VASCX = Vascular
  Procedures; WPMXX = Wireless PA Pressure Monitor.

(3) Exclusion of Procedures Assigned to New Technology APCs From the 
Comprehensive APC (C-APC) Policy
    Services that are assigned to New Technology APCs are typically new 
procedures that do not have sufficient claims history to establish an 
accurate payment for the procedures. Beginning in CY 2002, we retain 
services within New Technology APC groups until we gather sufficient 
claims data to enable us to assign the service to an appropriate 
clinical APC. This policy allows us to move a service from a New 
Technology APC in less than 2 years if sufficient data are available. 
It also allows us to retain a service in a New Technology APC for more 
than 2 years if sufficient data upon which to base a decision for 
reassignment have not been collected (82 FR 59277).
    The C-APC payment policy packages payment for adjunctive and 
secondary items, services, and procedures into the most costly primary 
procedure under the OPPS at the claim level. When a procedure assigned 
to a New Technology APC is included on the claim with a primary 
procedure, identified by OPPS status indicator ``J1'', payment for the 
new technology service is typically packaged into the payment for the 
primary procedure. Because the new technology service is not separately 
paid in this scenario, the overall number of single claims available to 
determine an appropriate clinical APC for the new service is reduced. 
This is contrary to the objective of the New Technology APC payment 
policy, which is to gather sufficient claims data to enable us to 
assign the service to an appropriate clinical APC.
    For example, for CY 2017, there were seven claims generated for 
HCPCS code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intraocular retinal 
electrode array, with vitrectomy), which involves the use of the 
Argus[supreg] II Retinal Prosthesis System. However, several of these 
claims were not available for ratesetting because HCPCS code 0100T was 
reported with a ``J1'' procedure and, therefore, payment was packaged 
into the associated C-APC payment. If these services had been 
separately paid under the OPPS, there would be at least two additional 
single claims available for ratesetting. As mentioned previously, the 
purpose of the new technology APC policy is to ensure that there are 
sufficient claims data for new services, which is particularly 
important for services with a low volume such as procedures described 
by HCPCS code 0100T. Another concern is the costs reported for the 
claims when payment is not packaged for a new technology procedure may 
not be representative of all of the services included on a claim that 
is generated, which may also affect our ability to assign the new 
service to the most appropriate clinical APC.
    To address this issue and help ensure that there is sufficient 
claims data for services assigned to New Technology APCs, we are 
proposing to exclude payment for any procedure that is assigned to a 
New Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) 
from being packaged when included on a claim with a ``J1'' service 
assigned to a C-APC. This issue is also addressed in section III.C.3.b. 
of this proposed rule.
c. Proposed 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

[[Page 37064]]

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 mental 
health services and multiple imaging services. (We note that, in the CY 
2018 OPPS/ASC final rule with comment period, we finalized a policy to 
delete the composite APC 8001 (LDR Prostate Brachytherapy Composite) 
for CY 2018 and subsequent years.) We refer readers to the CY 2008 
OPPS/ASC final rule with comment period (72 FR 66611 through 66614 and 
66650 through 66652) for a full discussion of the development of the 
composite APC methodology, and the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74163) and the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59241 through 59242 and 59246 through 52950) for 
more recent background.
    In this CY 2019 OPPS/ASC proposed rule, for CY 2019 and subsequent 
years, we are proposing to continue our composite APC payment policies 
for mental health services and multiple imaging services, as discussed 
below. In addition, as discussed in section II.A.2.b.(3) and II.A.2.c. 
of the CY 2018 OPPS/ASC proposed rule and final rule with comment 
period (82 FR 33577 through 33578 and 59241 through 59242 and 59246, 
respectively), we are proposing to continue to assign CPT code 55875 
(Transperineal placement of needs or catheters into prostate for 
interstitial radioelement application, with or without cystoscopy) to 
status indicator ``J1'' and to continue to assign the services 
described by CPT code 55875 to C-APC 5375 (Level 5 Urology and Related 
Services) for CY 2019.
(1) Mental Health Services Composite APC
    In this CY 2019 OPPS/ASC proposed rule, 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.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588 
through 79589), we finalized a policy to combine the existing Level 1 
and Level 2 hospital-based PHP APCs into a single hospital-based PHP 
APC, and thereby discontinue APCs 5861 (Level 1 Partial Hospitalization 
(3 services) for Hospital-Based PHPs) and 5862 (Level 2 Partial 
Hospitalization (4 or more services) for Hospital-Based PHPs) and 
replace them with APC 5863 (Partial Hospitalization (3 or more services 
per day)).
    In the CY 2018 OPPS/ASC proposed rule and final rule with comment 
period (82 FR 33580 through 33581 and 59246 through 59247, 
respectively), we proposed and finalized the policy for CY 2018 and 
subsequent years that, when the aggregate payment for specified mental 
health services provided by one hospital to a single beneficiary on a 
single 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 will be paid through composite APC 
8010 (Mental Health Services Composite). In addition, we set the 
payment rate for composite APC 8010 for CY 2018 at the same payment 
rate that will be paid for APC 5863, which is the maximum partial 
hospitalization per diem payment rate for a hospital, and finalized a 
policy that the hospital will continue to be paid the payment rate for 
composite APC 8010. Under this policy, the I/OCE will 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 5863 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.
    For CY 2019, we are proposing that when the aggregate payment for 
specified mental health services provided by one hospital to a single 
beneficiary on a single 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 
paid through composite APC 8010 for CY 2019. In addition, we are 
proposing to set the proposed payment rate for composite APC 8010 at 
the same payment rate that we are proposing for APC 5863, which is the 
maximum partial hospitalization per diem payment rate for a hospital, 
and that the hospital continue to be paid the proposed payment rate for 
composite APC 8010.
    (2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, 
and 8008)
    Effective January 1, 2009, we provide a single payment each time a 
hospital submits a claim for 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 under 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:
    <bullet> APC 8004 (Ultrasound Composite);
    <bullet> APC 8005 (CT and CTA without Contrast Composite);
    <bullet> APC 8006 (CT and CTA with Contrast Composite);

[[Page 37065]]

    <bullet> APC 8007 (MRI and MRA without Contrast Composite); and
    <bullet> APC 8008 (MRI and MRA with Contrast Composite).
    We define the single imaging session for the ``with contrast'' 
composite APCs as having at least one or more imaging procedures from 
the same family performed with contrast on the same date of service. 
For example, if the hospital performs an MRI without contrast during 
the same session as at least one other MRI with contrast, the hospital 
will receive payment based on the payment rate for APC 8008, the ``with 
contrast'' composite APC.
    We make a single payment for those imaging procedures that qualify 
for payment based on the composite APC payment rate, which includes any 
packaged services furnished on the same date of service. The standard 
(noncomposite) APC assignments continue to apply for single imaging 
procedures and multiple imaging procedures performed across families. 
For a full discussion of the development of the multiple imaging 
composite APC methodology, we refer readers to the CY 2009 OPPS/ASC 
final rule with comment period (73 FR 68559 through 68569).
    In this CY 2019 OPPS/ASC proposed rule, we are proposing, for CY 
2019 and subsequent years, 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 would reflect and promote the 
efficiencies hospitals can achieve when performing multiple imaging 
procedures during a single session.
    The proposed CY 2019 payment rates for the five multiple imaging 
composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) are based on 
proposed geometric mean costs calculated from a partial year of CY 2017 
claims available for this CY 2019 OPPS/ASC proposed rule that qualified 
for composite payment under the current policy (that is, those claims 
reporting 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 have used to calculate the geometric 
mean costs for these composite APCs since CY 2014, 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, in accordance with 
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 CY 2019 OPPS/ASC proposed rule (which is available 
via the internet on the CMS website) and are discussed in more detail 
in section II.A.1.b. of this CY 2019 OPPS/ASC proposed rule.
    For this CY 2019 OPPS/ASC proposed rule, we were able to identify 
approximately 638,902 ``single session'' claims out of an estimated 1.7 
million potential claims for payment through composite APCs from our 
ratesetting claims data, which represents approximately37 percent of 
all eligible claims, to calculate the proposed CY 2019 geometric mean 
costs for the multiple imaging composite APCs. Table 4 of this CY 2019 
OPPS/ASC proposed rule lists the proposed HCPCS codes that would be 
subject to the multiple imaging composite APC policy and their 
respective families and approximate composite APC proposed geometric 
mean costs for CY 2019.

 Table 4--Proposed OPPS Imaging Families and Multiple Imaging Procedure
                             Composite APCs
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 Proposed CY 2019 APC 8004 (ultrasound     Proposed CY 2019 approximate
               composite)                 APC geometric mean cost = $300
------------------------------------------------------------------------
                          Family 1--Ultrasound
------------------------------------------------------------------------
76700..................................  Us exam, abdom, complete.
76705..................................  Echo exam of abdomen.
76770..................................  Us exam abdo back wall, comp.
76776..................................  Us exam k transpl w/Doppler.
76831..................................  Echo exam, uterus.
76856..................................  Us exam, pelvic, complete.
76857..................................  Us exam, pelvic, limited.
------------------------------------------------------------------------
 Proposed CY 2019 APC 8005 (CT and CTA     Proposed CY 2019 approximate
     without contrast composite) *        APC geometric mean cost = $275
------------------------------------------------------------------------
             Family 2--CT and CTA with and without Contrast
------------------------------------------------------------------------
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.
------------------------------------------------------------------------
 Proposed CY 2019 APC 8006 (CT and CTA     Proposed CY 2019 approximate
        with contrast composite)          APC geometric mean cost = $501
------------------------------------------------------------------------
70487..................................  Ct maxillofacial w/dye.
70460..................................  Ct head/brain w/dye.

[[Page 37066]]

 
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.
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
  assigns the procedure to APC 8006 rather than APC 8005.


------------------------------------------------------------------------
 
------------------------------------------------------------------------
 Proposed CY 2019 APC 8007 (MRI and MRA    Proposed CY 2019 approximate
     without contrast composite) *        APC geometric mean cost = $556
------------------------------------------------------------------------
             Family 3--MRI and MRA with and without Contrast
------------------------------------------------------------------------
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.
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.
------------------------------------------------------------------------
 Proposed CY 2019 APC 8008 (MRI and MRA    Proposed CY 2019 approximate
        with contrast composite)          APC geometric mean cost = $871
------------------------------------------------------------------------
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.

[[Page 37067]]

 
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.
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
  assigns the procedure to 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 a bundle of specific services for a particular 
patient. The OPPS packages payments 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 costly 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 occurs if separate payment is provided 
for the item.
    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 payments 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. 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), the CY 2014 OPPS/ASC 
final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70343), the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79592), and the

[[Page 37068]]

CY 2018 OPPS/ASC final rule with comment period (82 FR 59250). 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). 
Our overarching goal is to make payments for all services 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 under the OPPS to 
determine which OPPS services can be packaged to further achieve the 
objective of advancing the OPPS toward a more prospective payment 
system.
    For CY 2019, we 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 that they support. Specifically, we examined the HCPCS 
code definitions (including CPT code descriptors) and outpatient 
hospital billing patterns 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 this CY 2019 OPPS/ASC proposed rule, for CY 
2019, we are proposing to conditionally package the costs of selected 
newly identified ancillary services into payment with a primary service 
where we believe that the packaged item or service is integral, 
ancillary, supportive, dependent, or adjunctive to the provision of 
care that was reported by the primary service HCPCS code. Below we 
discuss proposed changes to packaging policies beginning in CY 2019.
b. Proposed CY 2019 Packaging Policy for Non-Opioid Pain Management 
Treatments
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the 
framework of existing packaging categories, such as drugs that function 
as supplies in a surgical procedure or diagnostic test or procedure, we 
requested stakeholder feedback on common clinical scenarios involving 
currently packaged items and services described by HCPCS codes that 
stakeholders believe should not be packaged under the OPPS. We also 
expressed interest in stakeholder feedback on common clinical scenarios 
involving separately payable HCPCS codes for which payment would be 
most appropriately packaged under the OPPS. Commenters expressed a 
variety of views on packaging under the OPPS. In the CY 2018 OPPS/ASC 
final rule with comment period, we summarized the comments received in 
response to our request (82 FR 59255). The comments ranged from 
requests to unpackage most items and services that are either 
conditionally or unconditionally packaged under the OPPS, including 
drugs and devices, to specific requests for separate payment for a 
specific drug or device. We stated in the CY 2018 OPPS/ASC final rule 
with comment period that CMS would continue to explore and evaluate 
packaging policies under the OPPS and consider these policies in future 
rulemaking.
    In addition to stakeholder feedback regarding OPPS packaging 
policies, the President's Commission on Combating Drug Addiction and 
the Opioid Crisis (the Commission) recently recommended that CMS 
examine payment policies for certain drugs that function as a supply, 
specifically non-opioid pain management treatments. The Commission was 
established in 2017 to study ways to combat and treat drug abuse, 
addiction, and the opioid crisis. The Commission's report \3\ included 
a recommendation for CMS to ``. . . review and modify ratesetting 
policies that discourage the use of non-opioid treatments for pain, 
such as certain bundled payments that make alternative treatment 
options cost prohibitive for hospitals and doctors, particularly those 
options for treating immediate postsurgical pain. . . . '' \4\ With 
respect to the packaging policy, the Commission's report states that 
``. . . the current CMS payment policy for `supplies' related to 
surgical procedures creates unintended incentives to prescribe opioid 
medications to patients for postsurgical pain instead of administering 
non-opioid pain medications. Under current policies, CMS provides one 
all-inclusive bundled payment to hospitals for all `surgical supplies,' 
which includes hospital-administered drug products intended to manage 
patients' postsurgical pain. This policy results in the hospitals 
receiving the same fixed fee from Medicare whether the surgeon 
administers a non-opioid medication or not.'' \5\ HHS also presented an 
Opioid Strategy in April 2017 \6\ that aims in part to support cutting-
edge research and advance the practice of pain management. On October 
26, 2017, the opioid crisis was declared a national public health 
emergency under Federal law \7\ and this determination was renewed on 
April 20, 2018.\8\
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    \3\ President's Commission on Combating Drug Addiction and the 
Opioid Crisis, Report (2017). Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-1-2017.pdf.
    \4\ Ibid, at page 57, Recommendation 19.
    \5\ Ibid.
    \6\ Available at: https://www.hhs.gov/about/leadership/secretary/speeches/2017-speeches/secretary-price-announces-hhs-strategy-for-fighting-opioid-crisis/index.html.
    \7\ Available at: https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
    \8\ Available at: https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx.
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    In response to stakeholder comments on the CY 2018 OPPS/ASC 
proposed rule and in light of the recommendations regarding payment 
policies for certain drugs, we recently evaluated the impact of our 
packaging policy for drugs that function as a supply when used in a 
surgical procedure on the utilization of these drugs in both the 
hospital outpatient department and the ASC setting. Currently, as noted 
above, drugs that function as a supply are packaged under the OPPS and 
the ASC payment system, regardless of the costs of the drugs. The costs 
associated with packaged drugs that function as a supply are included 
in the ratesetting methodology for the surgical procedures with which 
they are billed and the payment rate for the associated procedure 
reflects the costs of the packaged drugs and other packaged items and 
services to the extent they are billed with the procedure. In our 
evaluation, we used currently available data to analyze the utilization 
patterns associated with specific drugs that function as a supply over 
a 5-year time period (CYs 2013 through 2017) to determine whether this 
packaging policy has reduced the use of these drugs. If the packaging 
policy discouraged the use of drugs that function as a supply or 
impeded access to these products, we would expect to see a significant 
decline in utilization of these drugs over time, although we note that 
a decline in utilization could also reflect other factors, such as the 
availability of alternative products. We did not observe significant 
declines in the total number of units used in the hospital outpatient 
department for a majority of the drugs included in our analysis.
    In fact, under the OPPS, we observed the opposite effect for 
several drugs that function as a supply, including Exparel

[[Page 37069]]

(HCPCS code C9290). Exparel is a liposome injection of bupivacaine, an 
amide local anesthetic, indicated for single-dose infiltration into the 
surgical site to produce postsurgical analgesia. In 2011, Exparel was 
approved by the FDA for administration into the postsurgical site to 
provide postsurgical analgesia.\9\ Exparel had pass-through payment 
status from CYs 2012 through 2014 and was separately paid under both 
the OPPS and the ASC payment system during this 3-year period. 
Beginning in CY 2015, Exparel was packaged as a surgical supply under 
both the OPPS and the ASC payment system. Exparel is currently the only 
non-opioid pain management drug that is packaged as a drug that 
functions as a supply when used in a surgical procedure under the OPPS 
and the ASC payment system.
---------------------------------------------------------------------------

    \9\ Available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2011/022496s000lbl.pdf.
---------------------------------------------------------------------------

    From CYs 2013 through 2017, there was an overall increase in the 
OPPS Medicare utilization of Exparel of approximately 229 percent (from 
2.3 million units to 7.7 million units) during this 5-year time period. 
The total number of claims reporting Exparel increased by 222 percent 
(from 10,609 claims to 34,183 claims) over this time period. This 
increase in utilization continued, even after the 3-year drug pass-
through payment period ended for this product in 2014, with 18 percent 
overall growth in the total number of units used from CYs 2015 through 
2017 (from 6.5 million units to 7.7 million units). The number of 
claims reporting Exparel increased by 21 percent during this time 
period (from 28,166 claims to 34,183 claims).
    Thus, we have not found evidence to support the notion that the 
OPPS packaging policy has had an unintended consequence of discouraging 
the use of non-opioid treatment for postsurgical pain management in the 
hospital outpatient department. Therefore, based on this data analysis, 
we do not believe that changes are necessary under the OPPS for the 
packaged drug policy for drugs that function as a surgical supply when 
used in a surgical procedure in this setting at this time.
    In terms of Exparel in particular, we have received several 
requests to pay separately for the drug rather than packaging payment 
for it as a surgical supply. In the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66874 and 66875), in response to comments from 
stakeholders requesting separate payment for Exparel, we stated that we 
considered Exparel to be a drug that functions as a surgical supply 
because it is indicated for the alleviation of postoperative pain. We 
also stated that we consider all items related to the surgical outcome 
and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy. In the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59345), we reiterated our position with regard to payment 
for Exparel, stating that we believed that payment for this drug is 
appropriately packaged with the primary surgical procedure. In 
addition, we have reviewed recently available literature with respect 
to Exparel, including a briefing document \10\ submitted for the FDA 
Advisory Committee Meeting held February 14-15, 2018, by the 
manufacturer of Exparel that notes that ``. . . Bupivacaine, the active 
pharmaceutical ingredient in Exparel, is a local anesthetic that has 
been used for infiltration/field block and peripheral nerve block for 
decades'' and that ``since its approval, Exparel has been used 
extensively, with an estimated 3.5 million patient exposures in the 
U.S.'' \11\ On April 6, 2018, the FDA approved Exparel's new indication 
for use as an interscalene brachial plexus nerve block to produce 
postsurgical regional analgesia.\12\ Based on our review of currently 
available OPPS Medicare claims data and public information from the 
manufacturer of the drug, we do not believe that the OPPS packaging 
policy has discouraged the use of Exparel for either of the drug's 
indications. Accordingly, we continue to believe it is appropriate to 
package payment for Exparel as we do with other postsurgical pain 
management drugs when it is furnished in a hospital outpatient 
department. However, we are seeking public comments on whether separate 
payment would nonetheless further incentivize appropriate use of 
Exparel in the hospital outpatient setting and peer-reviewed evidence 
that such increased utilization would lead to a decrease in opioid use 
and addiction among Medicare beneficiaries.
---------------------------------------------------------------------------

    \10\ Food and Drug Administration, Meeting of the Anesthetic and 
Analgesic Drug Products Advisory Committee Briefing Document (2018). 
Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/AnestheticAndAnalgesicDrugProductsAdvisoryCommittee/UCM596314.pdf.
    \11\ Ibid, page 9.
    \12\ Available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2018/022496s009lbledt.pdf.
---------------------------------------------------------------------------

    Although we found increases in utilization for Exparel when it is 
paid under the OPPS, we did notice different effects on Exparel 
utilization when examining the effects of our packaging policy under 
the ASC payment system. In particular, during the same 5-year period of 
CYs 2013 through 2017, the total number of units of Exparel used in the 
ASC setting decreased by 25 percent (from 98,160 total units to 73,595 
total units) and the total number of claims reporting Exparel decreased 
by 16 percent (from 527 claims to 441 claims). In the ASC setting, 
after the pass-through payment period ended for Exparel at the end of 
CY 2014, the total number of units of Exparel used decreased by 70 
percent (from 244,757 units to 73,595 units) between CYs 2015 and 2017. 
The total number of claims reporting Exparel also decreased during this 
time period by 62 percent (from 1,190 claims to 441 claims). However, 
there was an increase of 238 percent (from 98,160 total units to 
331,348 total units) in the total number of units of Exparel used in 
the ASC setting during the time period of CYs 2013 and 2014 when the 
drug received pass-through payments, indicating that the payment rate 
of ASP +6 percent for Exparel may have an impact on its usage in the 
ASC setting. The total number of claims reporting Exparel also 
increased during this time period from 527 total claims to 1,540 total 
claims, an increase of 192 percent.
    While several variables may contribute to this difference between 
utilization and claims reporting in the hospital outpatient department 
and the ASC setting, one potential explanation is that, in comparison 
to hospital outpatient departments, ASCs tend to provide specialized 
care and a more limited range of services. Also, ASCs are paid, in 
aggregate, approximately 55 percent of the OPPS rate. Therefore, 
fluctuations in payment rates for specific services may impact these 
providers more acutely than hospital outpatient departments, and 
therefore, ASCs may be less likely to choose to furnish non-opioid 
postsurgical pain management treatments, which are typically more 
expensive than opioids, as a result. Another possible contributing 
factor is that ASCs do not typically report packaged items and services 
and, accordingly, our analysis may be undercounting the number of 
Exparel units utilized in the ASC setting.
    In light of the results of our evaluation of packaging policies 
under the OPPS and the ASC payment system, which showed decreased 
utilization for certain drugs that function as a supply in the ASC 
setting in comparison to the hospital outpatient department setting, as 
well as the Commission's recommendation to examine payment

[[Page 37070]]

policies for non-opioid pain management drugs that function as a 
supply, we believe a change in how we pay for non-opioid pain 
management drugs that function as surgical supplies may be warranted. 
In particular, we believe it may be appropriate to pay separately for 
evidence-based non-opioid pain management drugs that function as a 
supply in a surgical procedure in the ASC setting to address the 
decreased utilization of these drugs and to encourage use of these 
types of drugs rather than prescription opioids. Therefore, we are 
proposing in section XII.D.3. of this proposed rule to unpackage and 
pay separately for the cost of non-opioid pain management drugs that 
function as surgical supplies when they are furnished in the ASC 
setting for CY 2019.
    We have stated previously (82 FR 59250) that our packaging policies 
are designed to support our strategic goal of using larger payment 
bundles in the OPPS to maximize hospitals' incentives to provide care 
in the most efficient manner. The packaging policies established under 
the OPPS also typically apply when services are provided in the ASC 
setting, and the policies have the same strategic goals in both 
settings. While this proposal is a departure from our current ASC 
packaging policy for drugs (specifically, non-opioid pain management 
drugs) that function as a supply when used in a surgical procedure, we 
believe that this proposed change will incentivize the use of non-
opioid pain management drugs and is responsive to the Commission's 
recommendation to examine payment policies for non-opioid pain 
management drugs that function as a supply, with the overall goal of 
combating the current opioid addiction crisis. As previously noted, the 
proposal for payment of non-opioid pain management drugs in the ASC 
setting is presented in further detail in section XII.D.3. of this 
proposed rule. However, we also are interested in peer-reviewed 
evidence that demonstrates that non-opioid alternatives, such as 
Exparel, in the outpatient setting actually do lead to a decrease in 
prescription opioid use and addiction and are seeking public comments 
containing evidence that demonstrate whether and how such non-opioid 
alternatives affect prescription opioid use during or after an 
outpatient visit or procedure.
    In addition, as noted in section XII.D.3. of this proposed rule, we 
are seeking comment on whether the proposed policy would decrease the 
dose, duration, and/or number of opioid prescriptions beneficiaries 
receive during and following an outpatient visit or procedure 
(especially for beneficiaries at high-risk for opioid addiction) as 
well as whether there are other non-opioid pain management alternatives 
that would have similar effects and may warrant separate payment. For 
example, we are interested in identifying whether single post-surgical 
analgesic injections, such as Exparel, or other non-opioid drugs or 
devices that are used during an outpatient visit or procedure are 
associated with decreased opioid prescriptions and reduced cases of 
associated opioid addiction following such an outpatient visit or 
procedure. We also are requesting comments that provide evidence (such 
as published peer-reviewed literature) we could use to determine 
whether these products help to deter or avoid prescription opioid use 
and addiction as well as evidence that the current packaged payment for 
such non-opioid alternatives presents a barrier to access to care and 
therefore warrants separate payment under either or both the OPPS and 
the ASC payment system. The reduction or avoidance of prescription 
opioids would be the criteria we would seek to determine whether 
separate payment is warranted for CY 2019. Should evidence change over 
time, we would consider whether a reexamination of any policy adopted 
in the final rule would be necessary.
    In addition, we are inviting the public to submit ideas on 
regulatory, subregulatory, policy, practice, and procedural changes to 
help prevent opioid use disorders and improve access to treatment under 
the Medicare program. We are interested in identifying barriers that 
may inhibit access to non-opioid alternatives for pain treatment and 
management or access to opioid use disorder treatment, including those 
barriers related to payment methodologies or coverage. In addition, 
consistent with our ``Patients Over Paperwork'' Initiative, we are 
interested in suggestions to improve existing requirements in order to 
more effectively address the opioid epidemic.
    As noted above, we are interested in comments regarding other non-
opioid treatments besides Exparel that might be affected by OPPS and 
ASC packaging policies, including alternative, non-opioid pain 
treatments, such as devices or therapy services that are not currently 
separable payable. We are specifically interested in comments regarding 
whether CMS should consider separate payment for such items and 
services for which payment is currently packaged under the OPPS and the 
ASC payment system that are effective non-opioid alternatives as well 
as evidence that demonstrates such items and services lead to a 
decrease in prescription opioid use during or after an outpatient visit 
or procedure in order to determine whether separate payment may be 
warranted. We intend to examine the evidence submitted to determine 
whether to adopt a final policy that incentivizes use of non-opioid 
alternative items and services that have evidence to demonstrate an 
associated decrease in prescription opioid use and addiction following 
an outpatient visit or procedure. Some examples of evidence that may be 
relevant could include an indication on the product's FDA label or 
studies published in peer-reviewed literature that such product aids in 
the management of acute or chronic pain and is an evidence-based non-
opioid alternative for acute and/or chronic pain management. We would 
also be interested in evidence relating to products that have shown 
clinical improvement over other alternatives, such as a device that has 
been shown to provide a substantial clinical benefit over the standard 
of care for pain management. This could include, for example, spinal 
cord stimulators used to treat chronic pain such as the devices 
described by HCPCS codes C1822 (Generator, neurostimulator 
(implantable), high frequency, with rechargeable battery and charging 
system), C1820 (Generator, neurostimulator (implantable), with 
rechargeable battery and charging system), and C1767 (Generator, 
neurostimulator (implantable), nonrechargeable) which are primarily 
assigned to APCs 5463 and 5464 (Levels 3 and 4 Neurostimulator and 
Related Procedures) with proposed CY 2019 payment rates of $18,718 and 
$27,662, respectively, that have received pass-through payment status 
as well as other similar devices.
    Currently, all devices are packaged under the OPPS and the ASC 
payment system unless they have pass-through payment status. However, 
in light of the Commission's recommendation to review and modify 
ratesetting policies that discourage the use of non-opioid treatments 
for pain, we are interested in comments from stakeholders regarding 
whether, similar to the goals of the proposed payment policy for non-
opioid pain management drugs that function as a supply when used in a 
surgical procedure, a policy of providing separate payment (rather than 
packaged payment) for these products, indefinitely or for a specified 
period of time, would also incentivize the use of alternative non-
opioid pain

[[Page 37071]]

management treatments and improve access to care for non-opioid 
alternatives, particularly for innovative and low-volume items and 
services.
    We also are interested in comments regarding whether we should 
provide separate payment for non-opioid pain management treatments or 
products using a mechanism such as an equitable payment adjustment 
under our authority at section 1833(t)(2)(E) of the Act, which states 
that the Secretary shall establish, in a budget neutral manner, other 
adjustments as determined to be necessary to ensure equitable payments. 
For example, we are considering whether an equitable payment adjustment 
in the form of an add-on payment for APCs that use a non-opioid pain 
management drug, device, or service would be appropriate. To the extent 
that commenters provide evidence to support this approach, we would 
consider adopting a final policy, which could include regulatory 
changes that would allow for an exception to the packaging of certain 
nonpass-through devices that represent non-opioid alternatives for 
acute or chronic pain that have evidence to demonstrate that their use 
leads to a decrease in opioid prescriptions or addictions, in the final 
rule for CY 2019 to effectuate such change.
    Alternatively, we are interested in comments on whether a 
reorganization of the APC structure for procedures involving these 
products or establishing more granular APC groupings for specific 
procedure and device combinations to ensure that the payment rate for 
such services is aligned with the resources associated with procedures 
involving specific devices would better achieve our goal of 
incentivizing increased use of non-opioid alternatives, with the aim of 
reducing opioid use and subsequent addiction. For example, we would 
consider finalizing a policy to establish new APCs for procedures 
involving non-opioid pain management packaged items or services if such 
APCs would better recognize the resources involved in furnishing such 
items and services and decrease or eliminate the need for prescription 
opioids. In addition, given the general desire to encourage provider 
efficiency through creating larger bundles of care and packaging items 
and services that are integral, ancillary, supportive, dependent, or 
adjunctive to a primary service, we also are seeking comment on how 
such alternative payment structures would continue to balance the goals 
of incentivizing provider efficiencies with encouraging the use of non-
opioid alternatives to pain management. Furthermore, because patients 
may receive opioid prescriptions following receipt of a non-opioid drug 
or implantation of a device, we are interested in identifying any cost 
implications for the patient and the Medicare program caused by this 
potential change in policy. The implications of incentivizing non-
opioid pain management drugs available for postsurgical acute pain 
relief during or after an outpatient visit or procedure are also of 
interest, including for non-opioid drugs. The goal is to encourage 
appropriate use of such non-opioid alternatives. We note that this 
comment solicitation is also discussed in section XII.D.3. of this 
proposed rule.
4. Proposed Calculation of OPPS Scaled Payment Weights
    We established a policy in the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68283) of using geometric mean-based APC costs to 
calculate relative payment weights under the OPPS. In the CY 2018 OPPS/
ASC final rule with comment period (82 FR 59255 through 59256), we 
applied this policy and calculated the relative payment weights for 
each APC for CY 2018 that were shown in Addenda A and B to that final 
rule with comment period (which were made available via the internet on 
the CMS website) using the APC costs discussed in sections II.A.1. and 
II.A.2. of that final rule with comment period. For CY 2019, as we did 
for CY 2018, we are proposing to continue to apply the policy 
established in CY 2013 and calculate relative payment weights for each 
APC for CY 2019 using geometric mean-based APC costs.
    For CY 2012 and CY 2013, outpatient clinic visits were assigned to 
one of five levels of clinic visit APCs, with APC 0606 representing a 
mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75036 through 75043), we finalized a policy that created 
alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for 
assessment and management of a patient), representing any and all 
clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 
(Hospital Clinic Visits). 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.
    For CY 2016, we deleted APC 0634 and reassigned the outpatient 
clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and 
Related Services) (80 FR 70372). For CY 2019, as we did for CY 2018, we 
are proposing to continue to standardize all of the relative payment 
weights to APC 5012. We believe that standardizing relative payment 
weights to the geometric mean of the APC to which HCPCS code G0463 is 
assigned maintains consistency in calculating unscaled weights that 
represent the cost of some of the most frequently provided OPPS 
services. For CY 2019, as we did for CY 2018, we are proposing to 
assign APC 5012 a relative payment weight of 1.00 and to divide the 
geometric mean cost of each APC by the geometric mean cost for APC 5012 
to derive the unscaled relative payment weight for each APC. The choice 
of the APC on which to standardize the relative payment weights does 
not affect payments made under the OPPS because we scale the weights 
for budget neutrality.
    We note that, in section X.B. of this proposed rule, we discuss our 
CY 2019 proposal to control for unnecessary increases in the volume of 
outpatient service by paying for clinic visits furnished at an off-
campus provider-based department at a PFS-equivalent rate under the 
OPPS rather than at the standard OPPS rate. While the volume associated 
with these visits is included in the impact model, and thus used in 
calculating the weight scalar, the proposal has only a negligible 
effect on the scalar. Specifically, under the proposed policy, there 
would be no change to the relativity of the OPPS payment weights 
because the adjustment is made at the payment level rather than in the 
cost modeling. Further, under our proposal, the savings that would 
result from the change in payments for these clinic visits would not be 
budget neutral. Therefore, the impact of the proposed policy would 
generally not be reflected in the budget neutrality adjustments, 
whether the adjustment is to the OPPS relative weights or to the OPPS 
conversion factor.
    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 2019 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

[[Page 37072]]

the estimated aggregate weight using the CY 2018 scaled relative 
payment weights to the estimated aggregate weight using the proposed CY 
2019 unscaled relative payment weights.
    For CY 2018, we multiplied the CY 2018 scaled APC relative payment 
weight applicable to a service paid under the OPPS by the volume of 
that service from CY 2017 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 2019, we 
are proposing to apply the same process using the estimated CY 2019 
unscaled relative payment weights rather than scaled relative payment 
weights. We are proposing to calculate the weight scalar by dividing 
the CY 2018 estimated aggregate weight by the unscaled CY 2019 
estimated aggregate weight.
    For a detailed discussion of the weight scalar calculation, we 
refer readers to the OPPS claims accounting document available on the 
CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2019 OPPS 
proposed rule link and open the claims accounting document link at the 
bottom of the page.
    We are proposing to compare the estimated unscaled relative payment 
weights in CY 2019 to the estimated total relative payment weights in 
CY 2018 using CY 2017 claims data, holding all other components of the 
payment system constant to isolate changes in total weight. Based on 
this comparison, we are proposing to adjust the calculated CY 2019 
unscaled relative payment weights for purposes of budget neutrality. We 
are proposing to adjust the estimated CY 2019 unscaled relative payment 
weights by multiplying them by a proposed weight scalar of 1.4553 to 
ensure that the proposed CY 2019 relative payment weights are scaled to 
be budget neutral. The proposed CY 2019 relative payment weights listed 
in Addenda A and B to this proposed rule (which are available via the 
internet on the CMS website) were scaled and incorporated the 
recalibration adjustments discussed in sections II.A.1. and II.A.2. of 
this proposed rule.
    Section 1833(t)(14) of the Act provides the payment rates for 
certain SCODs. Section 1833(t)(14)(H) of the Act provides 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.2. of this proposed rule) 
is included in the budget neutrality calculations for the CY 2019 OPPS.

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 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20381), consistent with current law, based on IHS 
Global, Inc.'s fourth quarter 2017 forecast of the FY 2019 market 
basket increase, the proposed FY 2019 IPPS market basket update is 2.8 
percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) 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 
2019.
    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, and then revised this methodology as 
discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In 
this proposed rule, the proposed MFP adjustment for FY 2019 is 0.8 
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 updated data, if appropriate, to 
determine the CY 2019 market basket update and the MFP adjustment, 
which are components in calculating the OPD fee schedule increase 
factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, 
in the CY 2019 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 2019, 
section 1833(t)(3)(G)(v) of the Act provides a 0.75 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)(v) of the Act, we are proposing to 
apply a 0.75 percentage point reduction to the OPD fee schedule 
increase factor for CY 2019.
    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 
1.25 percent for the CY 2019 OPPS (which is 2.8 percent, the proposed 
estimate of the hospital inpatient market basket percentage increase, 
less the proposed 0.8 percentage point MFP adjustment, and less the 
0.75 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 CY 2019 OPPS/ASC proposed rule, we are proposing to amend 
42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (10) to reflect 
the requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 
2019, we reduce the OPD fee schedule increase factor by the MFP 
adjustment as determined by CMS, and

[[Page 37073]]

to reflect the requirement in section 1833(t)(3)(G)(v) 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 0.75 percentage point 
for CY 2019.
    To set the OPPS conversion factor for this CY 2019 OPPS/ASC 
proposed rule, we are proposing to increase the CY 2018 conversion 
factor of $78.636 by 1.25 percent. In accordance with section 
1833(t)(9)(B) of the Act, we are proposing further to adjust the 
conversion factor for CY 2019 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 1.0004 for wage index changes by comparing proposed total estimated 
payments from our simulation model using the proposed FY 2019 IPPS wage 
indexes to those payments using the FY 2018 IPPS wage indexes, as 
adopted on a calendar year basis for the OPPS.
    For this CY 2019 OPPS/ASC proposed rule, 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 would be 1.0000.
    For this CY 2019 OPPS/ASC proposed rule, 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 2019 budget neutrality adjustment factor 
for the cancer hospital payment adjustment by comparing estimated 
proposed total CY 2019 payments under section 1833(t) of the Act, 
including the proposed CY 2019 cancer hospital payment adjustment, to 
estimated CY 2019 total payments using the CY 2018 final cancer 
hospital payment adjustment as required under section 1833(t)(18)(B) of 
the Act. The CY 2019 proposed estimated payments applying the proposed 
CY 2019 cancer hospital payment adjustment are the same as estimated 
payments applying the CY 2018 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. In accordance with section 16002(b) of the 21st 
Century Cures Act, we are applying a budget neutrality factor 
calculated as if the proposed cancer hospital adjustment target 
payment-to-cost ratio was 0.89, not the 0.88 target payment-to-cost 
ratio we are proposing to apply as stated in section II.F. of this 
proposed rule.
    For this CY 2019 OPPS/ASC proposed rule, we estimate that proposed 
pass-through spending for drugs, biologicals, and devices for CY 2019 
would equal approximately $126.7 million, which represents 0.17 percent 
of total projected CY 2019 OPPS spending. Therefore, the proposed 
conversion factor would be adjusted by the difference between the 0.04 
percent estimate of pass-through spending for CY 2018 and the 0.17 
percent estimate of proposed pass-through spending for CY 2019, 
resulting in a proposed decrease for CY 2019 of 0.13 percent. Proposed 
estimated payments for outliers would remain at 1.0 percent of total 
OPPS payments for CY 2019. We estimate for this proposed rule that 
outlier payments would be 1.02 percent of total OPPS payments in CY 
2018; the 1.00 percent for proposed outlier payments in CY 2019 would 
constitute a 0.02 percent increase in payment in CY 2019 relative to CY 
2018.
    For this CY 2019 OPPS/ASC proposed rule, we also are proposing that 
hospitals that fail to meet the reporting requirements of the Hospital 
OQR Program would continue to be subject to a further reduction of 2.0 
percentage points to the OPD fee schedule increase factor. For 
hospitals that fail to meet the requirements of the Hospital OQR 
Program, we are proposing to make all other adjustments discussed 
above, but use a reduced OPD fee schedule update factor of -0.75 
percent (that is, the proposed OPD fee schedule increase factor of 1.25 
percent further reduced by 2.0 percentage points). This would result in 
a proposed reduced conversion factor for CY 2019 of $77.955 for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -1.591 in the conversion factor relative to hospitals 
that met the requirements).
    In summary, for CY 2019, we are proposing to amend Sec.  
419.32(b)(1)(iv)(B) by adding a new paragraph (10) to reflect the 
reductions to the OPD fee schedule increase factor that are required 
for CY 2019 to satisfy the statutory requirements of sections 
1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We are proposing to use a 
reduced conversion factor of $77.955 in the calculation of payments for 
hospitals that fail to meet the Hospital OQR Program requirements (a 
difference of -1.591 in the conversion factor relative to hospitals 
that met the requirements).
    For CY 2019, we are proposing to use a conversion factor of $79.546 
in the calculation of the national unadjusted payment rates for those 
items and services for which payment rates are calculated using 
geometric mean costs; that is, the proposed OPD fee schedule increase 
factor of 1.25 percent for CY 2019, the required proposed wage index 
budget neutrality adjustment of approximately1.0004, the proposed 
cancer hospital payment adjustment of 1.0000, and the proposed 
adjustment of 0.02 percentage point of projected OPPS spending for the 
difference in the pass-through spending and outlier payments that 
result in a proposed conversion factor for CY 2019 of $79.546.

C. Proposed Wage Index Changes

    Section 1833(t)(2)(D) of the Act requires the Secretary to 
determine a wage adjustment factor to adjust the portion of payment and 
coinsurance attributable to labor-related costs for relative 
differences in labor and labor-related costs across geographic regions 
in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion 
of the 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). We are proposing to continue this policy 
for the CY 2019 OPPS. We refer readers to section II.H. of this 
proposed rule for a description and an example of how the wage index 
for a particular hospital is used to determine payment for the 
hospital.
    As discussed in the claims accounting narrative included with the 
supporting documentation for this proposed rule (which is available via 
the internet on the CMS website), for estimating APC costs, we 
standardize 60 percent of estimated claims costs for geographic area 
wage variation using the same proposed FY 2019 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 OPPS 
April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), 
the OPPS adopted the final fiscal year IPPS post-

[[Page 37074]]

reclassified wage index as the calendar year wage index for adjusting 
the OPPS standard payment amounts for labor market differences. 
Therefore, the wage index that applies to a particular acute care, 
short-stay hospital under the IPPS also applies to that hospital under 
the OPPS. As initially explained in the September 8, 1998 OPPS proposed 
rule (63 FR 47576), we believe that using the IPPS wage index as the 
source of an adjustment factor for the OPPS is reasonable and logical, 
given the inseparable, subordinate status of the HOPD within the 
hospital overall. In 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). 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 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 at Sec.  419.43(c)(2) and (c)(3) of our regulations. For 
the CY 2019 OPPS, we are proposing to implement this provision in the 
same manner as we have since CY 2011. Under this policy, the frontier 
State hospitals would receive a wage index of 1.00 if the otherwise 
applicable wage index (including reclassification, the rural floor, and 
rural floor budget neutrality) is less than 1.00 (as discussed below, 
we are proposing not to extend the imputed floor under the OPPS for CY 
2019 and subsequent years, consistent with our proposal in the FY 2019 
IPPS/LTCH PPS proposed rule (83 FR 20362 and 20363) not to extend the 
imputed floor under the IPPS for FY 2019 and subsequent fiscal years). 
Because the HOPD receives a wage index based on the geographic location 
of the specific inpatient hospital with which it is associated, the 
frontier State wage index adjustment applicable for the inpatient 
hospital also would apply for any associated HOPD. We refer readers to 
the FY 2011 through FY 2018 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; for FY 2014, 78 FR 50590 through 50591; for 
FY 2015, 79 FR 49971; for FY 2016, 80 FR 49498; for FY 2017, 81 FR 
56922; and for FY 2018, 82 FR 38142.
    In addition to the changes required by the Affordable Care Act, we 
note that the proposed FY 2019 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 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 2019 IPPS/LTCH PPS proposed rule (83 FR 20353 
through 20377) for a detailed discussion of all proposed changes to the 
FY 2019 IPPS wage indexes. We note that, in the FY 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20362 through 20363), we proposed not to apply the 
imputed floor to the IPPS wage index computations for FY 2019 and 
subsequent fiscal years. Consistent with this, we are proposing not to 
extend the imputed floor policy under the OPPS beyond December 31, 2018 
(the date the imputed floor policy is set to expire under the OPPS). We 
refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 
through 38142) for a detailed discussion of the application of the 
imputed floor under the IPPS for FY 2018.
    As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 
through 49963) and in each subsequent IPPS/LTCH PPS final rule, 
including the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 
38130), the Office of Management and Budget (OMB) issued revisions to 
the labor market area delineations on February 28, 2013 (based on 2010 
Decennial Census data), that included a number of significant changes 
such as new Core Based Statistical Areas (CBSAs), urban counties that 
became rural, rural counties that became urban, and existing CBSAs that 
were split apart (OMB Bulletin 13-01). This bulletin can be found at: 
https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 
through 49985), for purposes of the IPPS, we adopted the use of the OMB 
statistical area delineations contained in OMB Bulletin No. 13-01, 
effective October 1, 2014. For purposes of the OPPS, in the CY 2015 
OPPS/ASC final rule with comment period (79 FR 66826 through 66828), we 
adopted the use of the OMB statistical area delineations contained in 
OMB Bulletin No. 13-01, effective January 1, 2015, beginning with the 
CY 2015 OPPS wage indexes. In the FY 2017 IPPS/LTCH PPS final rule (81 
FR 56913), we adopted revisions to statistical areas contained in OMB 
Bulletin No. 15-01, issued on July 15, 2015, which provided updates to 
and superseded OMB Bulletin No. 13-01 that was issued on February 28, 
2013. For purposes of the OPPS, in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79598), we adopted the revisions to the OMB 
statistical area delineations contained in OMB Bulletin No. 15-01, 
effective January 1, 2017, beginning with the CY 2017 OPPS wage 
indexes. We believe that it is important for the OPPS to use the latest 
labor market area delineations available as soon as is reasonably 
possible in order to maintain a more accurate and up-to-date payment 
system that reflects the reality of population shifts and labor market 
conditions.
    On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which 
provided updates to and superseded OMB Bulletin No. 15-01 that was 
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 
provide detailed information on the update to the statistical areas 
since July 15, 2015, and are based on the application of the 2010 
Standards for Delineating Metropolitan and Micropolitan Statistical 
Areas to Census Bureau population estimates for July 1, 2014 and July 
1, 2015. In OMB Bulletin No. 17-01, OMB announced that one Micropolitan 
Statistical Area now qualifies as a Metropolitan Statistical Area. The 
new urban CBSA is as follows:
    <bullet> Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of 
the principal city of Twin Falls, Idaho in Jerome County, Idaho and 
Twin Falls County, Idaho.
    The OMB Bulletin No. 17-01 is available on the OMB website at 
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20354), we noted that we did not have sufficient time to include this 
change in the computation of the proposed FY 2019 IPPS wage index, 
ratesetting, and Tables 2 and 3 associated with the FY 2019 IPPS/LTCH 
PPS proposed rule. We stated that this new CBSA may affect the IPPS 
budget neutrality factors and wage indexes, depending on whether the 
area is eligible for the rural floor and the impact of the overall 
payments of the hospital located in this new CBSA. As we did in the FY 
2019 IPPS/LTCH

[[Page 37075]]

PPS proposed rule (83 FR 20354), we are providing below an estimate of 
this new area's wage index based on the average hourly wages for new 
CBSA 46300 and the national average hourly wages from the wage data for 
the proposed FY 2019 IPPS wage index (described in section III.B. of 
the preamble of the FY 2019 IPPS/LTCH PPS proposed rule). Currently, 
provider 130002 is the only hospital located in Twin Falls County, 
Idaho, and there are no hospitals located in Jerome County, Idaho. 
Thus, the proposed wage index for CBSA 46300 is calculated using the 
average hourly wage data for one provider (provider 130002).
    Below we provide the proposed FY 2019 IPPS unadjusted and 
occupational mix adjusted national average hourly wages and the 
estimated CBSA average hourly wages. Taking the estimated average 
hourly wage of new CBSA 46300 and dividing by the proposed national 
average hourly wage results in the estimated wage indexes shown in the 
table below.

------------------------------------------------------------------------
                                                            Estimated
                                           Estimated       occupational
                                        unadjusted wage    mix adjusted
                                         index for new    wage index for
                                           CBSA 46300     new CBSA 46300
------------------------------------------------------------------------
Proposed National Average Hourly Wage.     42.990625267     42.948428861
Estimated CBSA Average Hourly Wage....     35.833564813     38.127590025
Estimated Wage Index..................           0.8335           0.8878
------------------------------------------------------------------------

    As we stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20354), for the proposed FY 2019 IPPS wage indexes, we would use the 
OMB delineations that were adopted beginning with FY 2015 to calculate 
the area wage indexes, with updates as reflected in OMB Bulletin Nos. 
13-01, 15-01, and 17-01. We also stated that we would incorporate the 
revision from OMB Bulletin No. 17-01 in the final FY 2019 IPPS wage 
index, ratesetting, and tables. Similarly, for the proposed CY 2019 
OPPS wage indexes, we are proposing to use the OMB delineations that 
were adopted beginning with CY 2015 to calculate the area wage indexes, 
with updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01. 
We would incorporate the revision from OMB Bulletin No. 17-01 in the 
final CY 2019 OPPS wage index, ratesetting, and tables.
    CBSAs are made up of one or more constituent counties. Each CBSA 
and constituent county has its own unique identifying codes. The FY 
2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different 
lists of codes to identify counties: Social Security Administration 
(SSA) codes and Federal Information Processing Standard (FIPS) codes. 
Historically, CMS listed and used SSA and FIPS county codes to identify 
and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS 
wage indexes. However, the SSA county codes are no longer being 
maintained and updated, although the FIPS codes continue to be 
maintained by the U.S. Census Bureau. The Census Bureau's most current 
statistical area information is derived from ongoing census data 
received since 2010; the most recent data are from 2015. In the FY 2018 
IPPS/LTCH PPS final rule (82 FR 38130), for purposes of crosswalking 
counties to CBSAs for the IPPS wage index, we finalized our proposal to 
discontinue the use of the SSA county codes and begin using only the 
FIPS county codes. Similarly, for the purposes of crosswalking counties 
to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC final rule 
with comment period (82 FR 59260), we finalized our proposal to 
discontinue the use of SSA county codes and begin using only the FIPS 
county codes for the purposes of crosswalking counties to CBSAs for the 
OPPS wage index.
    The Census Bureau maintains a complete list of changes to counties 
or county equivalent entities on the website at: https://www.census.gov/geo/reference/county-changes.html. In our transition to 
using only FIPS codes for counties for the IPPS wage index, in the FY 
2018 IPPS/LTCH PPS final rule (82 FR 38130), we updated the FIPS codes 
used for crosswalking counties to CBSAs for the IPPS wage index 
effective October 1, 2017, to incorporate changes to the counties or 
county equivalent entities included in the Census Bureau's most recent 
list. We included these updates to calculate the area IPPS wage indexes 
in a manner that is generally consistent with the CBSA-based 
methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 
IPPS/LTCH PPS final rule. In the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59261), we finalized our proposal to implement 
these FIPS code updates for the OPPS wage index effective January 1, 
2018, beginning with the CY 2018 OPPS wage indexes.
    For this CY 2019 OPPS/ASC proposed rule, we are proposing to use 
the FY 2019 hospital IPPS post-reclassified wage index for urban and 
rural areas as the wage index for the OPPS to determine the wage 
adjustments for both the OPPS payment rate and the copayment 
standardized amount for CY 2019. Therefore, any adjustments for the FY 
2019 IPPS post-reclassified wage index would be reflected in the final 
CY 2019 OPPS wage index. (We refer readers to the FY 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20353 through 20377) and the proposed FY 2019 
hospital wage index files posted on the CMS website.) As explained 
above, 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.
    Hospitals that are paid under the OPPS, but not under the IPPS, do 
not have an assigned hospital wage index under the IPPS. Therefore, for 
non-IPPS hospitals paid under the OPPS, it is our longstanding policy 
to 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 continue this 
policy for CY 2019. The following is a brief summary of the major 
proposed FY 2019 IPPS wage index policies and adjustments that we are 
proposing to apply to these hospitals under the OPPS for CY 2019. We 
are inviting public comments on these proposals. We refer readers to 
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20353 through 20377) for 
a detailed discussion of the proposed changes to the FY 2019 IPPS wage 
indexes.
    It has been our longstanding policy to allow non-IPPS hospitals 
paid under the OPPS to qualify for the out-migration adjustment if they 
are located in a section 505 out-migration county (section 505 of the 
Medicare Prescription Drug, Improvement, and

[[Page 37076]]

Modernization Act of 2003 (MMA)). Applying this adjustment is 
consistent with our policy of adopting IPPS wage index policies for 
hospitals paid under the OPPS. We note that, because non-IPPS hospitals 
cannot reclassify, they are eligible for the out-migration wage 
adjustment if they are located in a section 505 out-migration county. 
This is the same out-migration adjustment policy that applies if the 
hospital were paid under the IPPS. For CY 2019, we are proposing to 
continue our policy of allowing non-IPPS hospitals paid under the OPPS 
to qualify for the out-migration adjustment if they are located in a 
section 505 out-migration county (section 505 of the MMA).
    As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we 
adopted the 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 were located in urban 
CBSAs in FY 2014 but were designated as rural under these revised OMB 
labor market area delineations, we generally assigned them the urban 
wage index value of the CBSA in which they were physically located for 
FY 2014 for a period of 3 fiscal years (79 FR 49957 through 49960). To 
be consistent, we applied the same policy to hospitals paid under the 
OPPS but not under the IPPS so that such hospitals maintained the wage 
index of the CBSA in which they were physically located for FY 2014 for 
3 calendar years (until December 31, 2017). Because this 3-year 
transition ended at the end of CY 2017, it was not applied beginning in 
CY 2018.
    In addition, under the IPPS, the imputed floor policy is set to 
expire effective October 1, 2018. In the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20362 through 20363), we proposed not to extend the imputed 
floor policy under the IPPS for FY 2019 and subsequent fiscal years. 
For purposes of the CY 2019 OPPS, the imputed floor policy is set to 
expire effective December 31, 2018. Consistent with the FY 2019 IPPS/
LTCH PPS proposed rule, as discussed earlier, we are proposing not to 
extend the imputed floor policy under the OPPS beyond December 31, 
2018.
    For CMHCs, for CY 2019, 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, for CMHCs previously located in urban CBSAs that were 
designated as rural under the revised OMB labor market area 
delineations in OMB Bulletin No. 13-01, we finalized a policy to 
maintain the urban wage index value of the CBSA in which they were 
physically located for CY 2014 for 3 calendar years (until December 31, 
2017). Because this 3-year transition ended at the end of CY 2017, it 
was not applied beginning in CY 2018. The wage index that would apply 
to CMHCs for CY 2019 would include the rural floor adjustment, but 
would not include the imputed floor adjustment because, as discussed 
above, we are proposing to not extend the imputed floor policy beyond 
December 31, 2018. Also, the wage index that would apply to CMHCs would 
not include the out-migration adjustment because that adjustment only 
applies to hospitals.
    Table 2 associated with the FY 2019 IPPS/LTCH PPS proposed rule 
(available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) 
identifies counties eligible for the out-migration adjustment and IPPS 
hospitals that would receive the adjustment for FY 2019. We are 
including the out-migration adjustment information from Table 2 
associated with the FY 2019 IPPS/LTCH PPS proposed rule as Addendum L 
to this proposed rule with the addition of non-IPPS hospitals that 
would receive the section 505 out-migration adjustment under the CY 
2019 OPPS. Addendum L is available via the internet on the CMS website. 
We refer readers to the CMS website 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 2019 IPPS wage index tables and Addendum L.

D. Proposed Statewide Average Default Cost-to-Charge Ratios (CCRs)

    In addition to using CCRs to estimate costs from charges on claims 
for ratesetting, CMS uses overall hospital-specific CCRs calculated 
from the hospital's most recent cost report to determine outlier 
payments, payments for pass-through devices, and monthly interim 
transitional corridor payments under the OPPS during the PPS year. MACs 
cannot calculate a CCR for some hospitals because there is no cost 
report available. For these hospitals, CMS uses the statewide average 
default CCRs to determine the payments mentioned earlier 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, hospitals that have not 
accepted assignment of an existing hospital's provider agreement, and 
hospitals that 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. L. 100-04), Chapter 4, Section 
10.11).
    In this CY 2019 OPPS/ASC proposed rule, we are proposing to update 
the default ratios for CY 2019 using the most recent cost report data. 
We discussed 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 detail on our process for calculating 
the statewide average CCRs, we refer readers to the CY 2019 OPPS 
proposed rule Claims Accounting Narrative that is posted on the CMS 
website. Table 5 below lists the proposed statewide average default 
CCRs for OPPS services furnished on or after January 1, 2019, based on 
proposed rule data.

                                Table 5--Proposed CY 2019 Statewide Average CCRs
----------------------------------------------------------------------------------------------------------------
                                                                                                     Previous
                                                                                    Proposed CY     default CCR
                     State                                 Urban/Rural             2019 default    (CY 2018 OPPS
                                                                                        CCR         Final Rule)
----------------------------------------------------------------------------------------------------------------
ALASKA........................................  RURAL...........................           0.655           0.659

[[Page 37077]]

 
ALASKA........................................  URBAN...........................           0.224           0.218
ALABAMA.......................................  RURAL...........................           0.190           0.190
ALABAMA.......................................  URBAN...........................           0.154           0.155
ARKANSAS......................................  RURAL...........................           0.193           0.186
ARKANSAS......................................  URBAN...........................           0.195           0.200
ARIZONA.......................................  RURAL...........................           0.241           0.232
ARIZONA.......................................  URBAN...........................           0.157           0.160
CALIFORNIA....................................  RURAL...........................           0.181           0.181
CALIFORNIA....................................  URBAN...........................           0.188           0.193
COLORADO......................................  RURAL...........................           0.337           0.346
COLORADO......................................  URBAN...........................           0.201           0.204
CONNECTICUT...................................  RURAL...........................           0.322           0.324
CONNECTICUT...................................  URBAN...........................           0.251           0.249
DISTRICT OF COLUMBIA..........................  URBAN...........................           0.273           0.279
DELAWARE......................................  URBAN...........................           0.268           0.295
FLORIDA.......................................  RURAL...........................           0.171           0.158
FLORIDA.......................................  URBAN...........................           0.136           0.138
GEORGIA.......................................  RURAL...........................           0.223           0.222
GEORGIA.......................................  URBAN...........................           0.199           0.198
HAWAII........................................  RURAL...........................           0.355           0.332
HAWAII........................................  URBAN...........................           0.321           0.322
IOWA..........................................  RURAL...........................           0.288           0.296
IOWA..........................................  URBAN...........................           0.242           0.254
IDAHO.........................................  RURAL...........................           0.339           0.339
IDAHO.........................................  URBAN...........................           0.376           0.369
ILLINOIS......................................  RURAL...........................           0.209           0.214
ILLINOIS......................................  URBAN...........................           0.205           0.208
INDIANA.......................................  RURAL...........................           0.256           0.299
INDIANA.......................................  URBAN...........................           0.213           0.213
KANSAS........................................  RURAL...........................           0.266           0.264
KANSAS........................................  URBAN...........................           0.195           0.199
KENTUCKY......................................  RURAL...........................           0.179           0.184
KENTUCKY......................................  URBAN...........................           0.190           0.187
LOUISIANA.....................................  RURAL...........................           0.211           0.212
LOUISIANA.....................................  URBAN...........................           0.193           0.195
MASSACHUSETTS.................................  RURAL...........................           0.314           0.322
MASSACHUSETTS.................................  URBAN...........................           0.343           0.348
MAINE.........................................  RURAL...........................           0.423           0.419
MAINE.........................................  URBAN...........................           0.419           0.422
MARYLAND......................................  RURAL...........................           0.256           0.258
MARYLAND......................................  URBAN...........................           0.226           0.227
MICHIGAN......................................  RURAL...........................           0.296           0.302
MICHIGAN......................................  URBAN...........................           0.314           0.318
MINNESOTA.....................................  RURAL...........................           0.376           0.379
MINNESOTA.....................................  URBAN...........................           0.309           0.302
MISSOURI......................................  RURAL...........................           0.216           0.220
MISSOURI......................................  URBAN...........................           0.247           0.240
MISSISSIPPI...................................  RURAL...........................           0.219           0.213
MISSISSIPPI...................................  URBAN...........................           0.157           0.160
MONTANA.......................................  RURAL...........................           0.478           0.486
MONTANA.......................................  URBAN...........................           0.339           0.350
NORTH CAROLINA................................  RURAL...........................           0.204           0.206
NORTH CAROLINA................................  URBAN...........................           0.217           0.212
NORTH DAKOTA..................................  RURAL...........................           0.325           0.366
NORTH DAKOTA..................................  URBAN...........................           0.375           0.369
NEBRASKA......................................  RURAL...........................           0.304           0.313
NEBRASKA......................................  URBAN...........................           0.227           0.233
NEW HAMPSHIRE.................................  RURAL...........................           0.304           0.307
NEW HAMPSHIRE.................................  URBAN...........................           0.247           0.255
NEW JERSEY....................................  URBAN...........................           0.198           0.200
NEW MEXICO....................................  RURAL...........................           0.231           0.224
NEW MEXICO....................................  URBAN...........................           0.280           0.284
NEVADA........................................  RURAL...........................           0.163           0.175
NEVADA........................................  URBAN...........................           0.121           0.114
NEW YORK......................................  RURAL...........................           0.297           0.299
NEW YORK......................................  URBAN...........................           0.310           0.303
OHIO..........................................  RURAL...........................           0.277           0.280
OHIO..........................................  URBAN...........................           0.204           0.203

[[Page 37078]]

 
OKLAHOMA......................................  RURAL...........................           0.215           0.215
OKLAHOMA......................................  URBAN...........................           0.166           0.169
OREGON........................................  RURAL...........................           0.277           0.290
OREGON........................................  URBAN...........................           0.327           0.336
PENNSYLVANIA..................................  RURAL...........................           0.264           0.267
PENNSYLVANIA..................................  URBAN...........................           0.177           0.173
PUERTO RICO...................................  URBAN...........................           0.547           0.577
RHODE ISLAND..................................  URBAN...........................           0.276           0.276
SOUTH CAROLINA................................  RURAL...........................           0.166           0.170
SOUTH CAROLINA................................  URBAN...........................           0.187           0.191
SOUTH DAKOTA..................................  RURAL...........................           0.338           0.391
SOUTH DAKOTA..................................  URBAN...........................           0.240           0.242
TENNESSEE.....................................  RURAL...........................           0.173           0.173
TENNESSEE.....................................  URBAN...........................           0.166           0.174
TEXAS.........................................  RURAL...........................           0.218           0.205
TEXAS.........................................  URBAN...........................           0.169           0.168
UTAH..........................................  RURAL...........................           0.288           0.391
UTAH..........................................  URBAN...........................           0.304           0.304
VIRGINIA......................................  RURAL...........................           0.177           0.177
VIRGINIA......................................  URBAN...........................           0.215           0.215
VERMONT.......................................  RURAL...........................           0.392           0.393
VERMONT.......................................  URBAN...........................           0.383           0.378
WASHINGTON....................................  RURAL...........................           0.260           0.256
WASHINGTON....................................  URBAN...........................           0.325           0.323
WISCONSIN.....................................  RURAL...........................           0.342           0.348
WISCONSIN.....................................  URBAN...........................           0.304           0.308
WEST VIRGINIA.................................  RURAL...........................           0.261           0.253
WEST VIRGINIA.................................  URBAN...........................           0.299           0.297
WYOMING.......................................  RURAL...........................           0.397           0.407
WYOMING.......................................  URBAN...........................           0.343           0.327
----------------------------------------------------------------------------------------------------------------

E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) and 
Essential Access Community Hospitals (EACHs) Under Section 
1833(t)(13)(B) of the Act for CY 2019

    In the CY 2006 OPPS final rule with comment period (70 FR 68556), 
we finalized a payment increase for rural sole community hospitals 
(SCHs) of 7.1 percent for all services and procedures paid under the 
OPPS, excluding drugs, biologicals, brachytherapy sources, and devices 
paid under the pass-through payment policy in accordance with section 
1833(t)(13)(B) of the Act, as added by section 411 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 
(Pub. L. 108-173). Section 1833(t)(13) of the Act provided the 
Secretary the authority to make an adjustment to OPPS payments for 
rural hospitals, effective January 1, 2006, if justified by a study of 
the difference in costs by APC between hospitals in rural areas and 
hospitals in urban areas. Our analysis showed a difference in costs for 
rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment 
adjustment for rural SCHs of 7.1 percent for all services and 
procedures paid under the OPPS, excluding separately payable drugs and 
biologicals, brachytherapy sources, and devices paid under the pass-
through payment policy, in accordance with section 1833(t)(13)(B) of 
the Act.
    In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 
and 68227), for purposes of receiving this rural adjustment, we revised 
Sec.  419.43(g) of the regulations to clarify that essential access 
community hospitals (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 2018. Further, in the CY 
2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated 
the regulations at Sec.  419.43(g)(4) to specify, in general terms, 
that items paid at charges adjusted to costs by application of a 
hospital-specific CCR are excluded from the 7.1 percent payment 
adjustment.
    For the CY 2019 OPPS, we are proposing to continue the current 
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. In addition, we are proposing 
to maintain this 7.1 percent payment adjustment for the years after CY 
2019 until we identify data in the future that would support a change 
to this payment adjustment.

[[Page 37079]]

F. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2019

1. Background
    Since the inception of the OPPS, which was authorized by the 
Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid 
the 11 hospitals that meet the criteria for cancer hospitals identified 
in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered 
outpatient hospital services. These cancer hospitals are exempted from 
payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced 
Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established 
section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit 
Decline in Payment,'' to determine OPPS payments to cancer and 
children's hospitals based on their pre-BBA payment amount (often 
referred to as ``held harmless'').
    As required under section 1833(t)(7)(D)(ii) of the Act, a cancer 
hospital receives the full amount of the difference between payments 
for covered outpatient services under the OPPS and a ``pre-BBA 
amount.'' That is, cancer hospitals are permanently held 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 in amount under the OPPS than the 
payment amount they would have received before implementation of the 
OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA 
amount'' is the product of the hospital's reasonable costs for covered 
outpatient services occurring in the current year and the base payment-
to-cost ratio (PCR) for the hospital defined in section 
1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and 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 or 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 hospitals and other hospitals. 
Section 1833(t)(18)(B) of the Act provides that, if the Secretary 
determines that cancer hospitals' costs are higher than those of other 
hospitals, the Secretary shall provide an appropriate adjustment under 
section 1833(t)(2)(E) of the Act to reflect these higher costs. In 
2011, after conducting the study required by section 1833(t)(18)(A) of 
the Act, we determined that outpatient costs incurred by the 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 recently 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. 
For CY 2015, the target PCR was 0.90. For CY 2016, the target PCR was 
0.92, as discussed in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70362 through 70363). For CY 2017, the target PCR was 
0.91, as discussed in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79603 through 79604). For CY 2018, the target PCR was 
0.88, as discussed in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59265 through 59266).
2. Proposed Policy for CY 2019
    Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) 
amended section 1833(t)(18) of the Act by adding subparagraph (C), 
which requires that in applying 42 CFR 419.43(i), that is, the payment 
adjustment for certain cancer hospitals, for services furnished on or 
after January 1, 2018, the target PCR adjustment be reduced by 1.0 
percentage point less than what would otherwise apply. Section 16002(b) 
also provides that, in addition to the percentage reduction, the 
Secretary may consider making an additional percentage point reduction 
to the target PCR that takes into account payment rates for applicable 
items and services described under section 1833(t)(21)(C) of the Act 
for hospitals that are not cancer hospitals described under section 
1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality 
adjustment under section 1833(t) of the Act, the Secretary shall not 
take into account the reduced expenditures that result from application 
of section 1833(t)(18)(C) of the Act. For CY 2019, we are proposing to 
provide additional payments to the 11 specified 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, reduced by 1.0 
percentage point to comply with section 16002(b) of the 21st Century 
Cures Act. We are not proposing an additional reduction beyond the 1.0 
percentage point reduction required by section 16002(b) for CY 2019. To 
calculate the proposed CY 2019 target PCR, we use 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 2019 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 2017 claims 
data that we used to model the impact of the proposed CY 2019 APC 
relative payment weights (3,676 hospitals) because it is appropriate to 
use the same set of hospitals that we are using to calibrate the 
modeled CY 2019 OPPS. The cost report data for the hospitals in this 
dataset were from cost report

[[Page 37080]]

periods with fiscal year ends ranging from 2014 to 2017.
    We then removed the cost report data of the 43 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 18 
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 3,615 hospitals with 
cost report data.
    Using this smaller dataset of cost report data, we estimated that, 
on average, the OPPS payments to other hospitals furnishing services 
under the OPPS were approximately 89 percent of reasonable cost 
(weighted average PCR of 0.89). Therefore, after applying the 1.0 
percentage point reduction as required by section 16002(b) of the 21st 
Century Cures Act, 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 0.88 for each cancer hospital.
    Table 6 below indicates the proposed estimated percentage increase 
in OPPS payments to each cancer hospital for CY 2019 due to the 
proposed cancer hospital payment adjustment policy. The actual amount 
of the CY 2019 cancer hospital payment adjustment for each cancer 
hospital will be determined at cost report settlement and will depend 
on each hospital's CY 2019 payments and costs. We note that the 
requirements contained in 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 6--Proposed Estimated CY 2019 Hospital-Specific Payment Adjustment
      for Cancer Hospitals to be Provided at Cost Report Settlement
------------------------------------------------------------------------
                                                             Estimated
                                                            percentage
                                                            increase in
        Provider No.                Hospital name          OPPS payments
                                                            for CY 2019
                                                          due to payment
                                                            adjustment
------------------------------------------------------------------------
050146.....................  City of Hope Comprehensive             37.1
                              Cancer Center.
050660.....................  USC Norris Cancer Hospital.            13.4
100079.....................  Sylvester Comprehensive                21.0
                              Cancer Center.
100271.....................  H. Lee Moffitt Cancer                  22.3
                              Center & Research
                              Institute.
220162.....................  Dana-Farber Cancer                     43.7
                              Institute.
330154.....................  Memorial Sloan-Kettering               46.9
                              Cancer Center.
330354.....................  Roswell Park Cancer                    16.2
                              Institute.
360242.....................  James Cancer Hospital &                22.6
                              Solove Research Institute.
390196.....................  Fox Chase Cancer Center....             8.4
450076.....................  M.D. Anderson Cancer Center            53.6
500138.....................  Seattle Cancer Care                    54.3
                              Alliance.
------------------------------------------------------------------------

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 2015 OPPS/ASC final rule with 
comment period (79 FR 66832 through 66834), we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS for the prospective year. 
Outlier payments are provided on a service-by-service basis when the 
cost of a service exceeds the APC payment amount multiplier threshold 
(the APC payment amount multiplied by a certain amount) as well as the 
APC payment amount plus a fixed-dollar amount threshold (the APC 
payment plus a certain amount of dollars). In CY 2018, 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 $4,150 (the fixed-dollar 
amount threshold) (82 FR 59267 through 59268). If the cost of a service 
exceeds both the multiplier threshold and the fixed-dollar threshold, 
the outlier payment is calculated as 50 percent of the amount by which 
the cost of furnishing the service exceeds 1.75 times the APC payment 
amount. Beginning with CY 2009 payments, outlier payments are subject 
to a reconciliation process similar to the IPPS outlier reconciliation 
process for cost reports, as discussed in the CY 2009 OPPS/ASC final 
rule with comment period (73 FR 68594 through 68599).
    It has been our policy to report the actual amount of outlier 
payments as a percent of total spending in the claims being used to 
model the OPPS. Our estimate of total outlier payments as a percent of 
total CY 2017 OPPS payments, using CY 2017 claims available for this 
proposed rule, is approximately 1.0 percent of the total aggregated 
OPPS payments. Therefore, for CY 2017, we estimate that we paid the 
outlier target of 1.0 percent of total aggregated OPPS payments.
    For this proposed rule, using CY 2017 claims data and CY 2018 
payment rates, we estimate that the aggregate outlier payments for CY 
2018 would be approximately 1.02 percent of the total CY 2018 OPPS 
payments. We are providing estimated CY 2019 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 website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

[[Page 37081]]

2. Proposed Outlier Calculation for CY 2019
    For CY 2019, 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 less than 0.01 percent of outlier payments 
(or 0.0001 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.C. of this proposed rule, we are proposing to continue our 
longstanding policy that if a CMHC's cost for partial hospitalization 
services, paid under APC 5853 (Partial Hospitalization for CMHCs), 
exceeds 3.40 times the payment rate for proposed APC 5853, the outlier 
payment would be calculated as 50 percent of the amount by which the 
cost exceeds 3.40 times the proposed APC 5853 payment rate. For further 
discussion of CMHC outlier payments, we refer readers to section 
VIII.C. of this proposed rule.
    To ensure that the estimated CY 2019 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 $4,600.
    We calculated this proposed fixed-dollar threshold of $4,600 using 
the standard methodology most recently used for CY 2018 (82 FR 59267 
through 59268). For purposes of estimating outlier payments for this 
proposed rule, we used the hospital-specific overall ancillary CCRs 
available in the April 2018 update to the Outpatient Provider-Specific 
File (OPSF). The OPSF contains provider-specific data, such as the most 
current CCRs, which are maintained by the MACs and used by the OPPS 
Pricer to pay claims. The claims that we use to model each OPPS update 
lag by 2 years.
    In order to estimate the CY 2019 hospital outlier payments for this 
proposed rule, we inflated the charges on the CY 2017 claims using the 
same inflation factor of 1.085868 that we used to estimate the IPPS 
fixed-dollar outlier threshold for the FY 2019 IPPS/LTCH PPS proposed 
rule (83 FR 20581). We used an inflation factor of 1.04205 to estimate 
CY 2018 charges from the CY 2017 charges reported on CY 2017 claims. 
The methodology for determining this charge inflation factor is 
discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 20581). 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 proposed to apply for the FY 2019 
IPPS outlier calculation to the CCRs used to simulate the proposed CY 
2019 OPPS outlier payments to determine the fixed-dollar threshold. 
Specifically, for CY 2019, we are proposing to apply an adjustment 
factor of 0.987842 to the CCRs that were in the April 2018 OPSF to 
trend them forward from CY 2018 to CY 2019. The methodology for 
calculating this proposed adjustment is discussed in the FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20582).
    To model hospital outlier payments for the proposed rule, we 
applied the overall CCRs from the April 2018 OPSF after adjustment 
(using the proposed CCR inflation adjustment factor of 0.987842 to 
approximate CY 2019 CCRs) to charges on CY 2017 claims that were 
adjusted (using the proposed charge inflation factor of 1.085868 to 
approximate CY 2019 charges). We simulated aggregated CY 2019 hospital 
outlier payments using these costs for several different fixed-dollar 
thresholds, holding the 1.75 multiplier threshold constant and assuming 
that outlier payments would continue to be made at 50 percent of the 
amount by which the cost of furnishing the service would exceed 1.75 
times the APC payment amount, until the total outlier payments equaled 
1.0 percent of aggregated estimated total CY 2019 OPPS payments. We 
estimated that a proposed fixed-dollar threshold of $4,600, combined 
with the proposed multiplier 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 APC 5853, exceeds 3.40 
times the payment rate for APC 5853, the outlier payment would be 
calculated as 50 percent of the amount by which the cost exceeds 3.40 
times the APC 5853 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 
section 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 referred 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 2019 OPPS/ASC proposed 
rule, the proposed 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 proposed 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 website) 
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 website) was calculated by multiplying the 
proposed CY 2019 scaled weight for the APC by the proposed CY 2019 
conversion factor.

[[Page 37082]]

    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 below the steps on how to determine the APC payments 
that would 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'', ``J2'', 
``P'', ``Q1'', ``Q2'', ``Q3'', ``Q4'', ``R'', ``S'', ``T'', ``U'', or 
``V'' (as defined in Addendum D1 to this proposed rule, which is 
available via the internet on the CMS website), 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.
    Individual providers interested in calculating the payment amount 
that they would receive for a specific service from the proposed 
national unadjusted payment rates presented in Addenda A and B to this 
proposed rule (which are available via the internet on the CMS website) 
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 proposed reduced national unadjusted payment rate is 
calculated by multiplying the reporting ratio of 0.980 times the 
``full'' national unadjusted payment rate. The proposed 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 2019 OPPS fee schedule increase factor.
    Step 1. Calculate 60 percent (the labor-related portion) of the 
national unadjusted payment rate. Since the initial implementation of 
the OPPS, we have used 60 percent to represent our estimate of that 
portion of costs attributable, on average, to labor. We refer readers 
to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 
through 18497) for a detailed discussion of how we derived this 
percentage. During our regression analysis for the payment adjustment 
for rural hospitals in the CY 2006 OPPS final rule with comment period 
(70 FR 68553), we confirmed that this labor-related share for hospital 
outpatient services is appropriate.
    The formula below is a mathematical representation of Step 1 and 
identifies the labor-related portion of a specific payment rate for a 
specific service.

X is the labor-related portion of the national unadjusted payment rate.
X = .60 * (national unadjusted payment rate).

    Step 2. Determine the wage index area in which the hospital is 
located and identify the wage index level that applies to the specific 
hospital. We note that, under the proposed CY 2019 OPPS policy for 
continuing to use the OMB labor market area delineations based on the 
2010 Decennial Census data for the wage indexes used under the IPPS, a 
hold harmless policy for the wage index may apply, as discussed in 
section II.C. of this proposed rule. The proposed 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 
2019 under the IPPS, reclassifications through the Metropolitan 
Geographic Classification Review Board (MGCRB), section 1886(d)(8)(B) 
``Lugar'' hospitals, reclassifications under section 1886(d)(8)(E) of 
the Act, as defined in Sec.  412.103 of the regulations, and hospitals 
designated as urban under section 601(g) of Public Law 98-21. For 
further discussion of the proposed changes to the FY 2019 IPPS wage 
indexes, as applied to the CY 2019 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 website) contains the qualifying counties and the 
associated wage index increase developed for the proposed FY 2019 IPPS, 
which are listed in Table 2 in the FY 2019 IPPS/LTCH PPS proposed rule 
available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. 
(Click on the link on the left side of the screen titled ``FY 2019 IPPS 
Proposed Rule Home Page'' and select ``FY 2019 Proposed Rule Tables.'') 
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.

[[Page 37083]]

Y = .40 * (national unadjusted payment rate).
Adjusted Medicare Payment = Y + Xa.

    Step 6. If a provider is an SCH, as set forth in the regulations at 
Sec.  412.92, or an EACH, which is considered to be an SCH under 
section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural 
area, as defined in Sec.  412.64(b), or is treated as being located in 
a rural area under Sec.  412.103, multiply the wage index adjusted 
payment rate by 1.071 to calculate the total payment.
    The formula below is a mathematical representation of Step 6 and 
applies the rural adjustment for rural SCHs.

Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment * 
1.071.

    We are providing 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 5071 
(Level 1 Excision/Biopsy/Incision and Drainage). The proposed CY 2019 
full national unadjusted payment rate for APC 5071 is approximately 
$581.99. The proposed reduced national unadjusted payment rate for APC 
5071 for a hospital that fails to meet the Hospital OQR Program 
requirements is approximately $570.35. This proposed reduced rate is 
calculated by multiplying the proposed reporting ratio of 0.980 by the 
proposed full unadjusted payment rate for APC 5071.
    The proposed FY 2019 wage index for a provider located in CBSA 
35614 in New York is 1.2850. The labor-related portion of the proposed 
full national unadjusted payment is approximately $448.71 (.60 * 
$581.99 * 1.2850). The labor-related portion of the proposed reduced 
national unadjusted payment is approximately $439.74 (.60 * 570.35* 
1.2850). The nonlabor-related portion of the proposed full national 
unadjusted payment is approximately $232.80 (.40 * $581.99). The 
nonlabor-related portion of the proposed reduced national unadjusted 
payment is approximately $228.14 (.40 * $570.35). The sum of the labor-
related and nonlabor-related portions of the proposed full national 
adjusted payment is approximately $681.51 ($448.71 + $232.80). The sum 
of the portions of the proposed reduced national adjusted payment is 
approximately $667.88 ($439.74 + $228.14).

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 (including items such as drugs 
and biologicals) performed in a year to the amount of the inpatient 
hospital deductible for that year.
    Section 4104 of the Affordable Care Act eliminated the Medicare 
Part B coinsurance for preventive services furnished on and after 
January 1, 2011, that meet certain requirements, including flexible 
sigmoidoscopies and screening colonoscopies, and waived the Part B 
deductible for screening colonoscopies that become diagnostic during 
the procedure. Our discussion of the changes made by the Affordable 
Care Act with regard to copayments for preventive services furnished on 
and after January 1, 2011, may be found in section XII.B. of the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72013).
2. Proposed OPPS Copayment Policy
    For CY 2019, 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, 2019 are included in Addenda A 
and B to this proposed rule (which are available via the internet on 
the CMS website).
    As discussed in section XIII.E. of this proposed rule, for CY 2019, 
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 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).
    In the CY 2004 OPPS final rule with comment period (68 FR 63459), 
we adopted a new methodology to calculate unadjusted copayment amounts 
in situations including reorganizing APCs, and we finalized the 
following rules to determine copayment amounts in CY 2004 and 
subsequent years.
    <bullet> When an APC group consists solely of HCPCS codes that were 
not paid under the OPPS the prior year because they were packaged or 
excluded or are new codes, the unadjusted copayment amount would be 20 
percent of the APC payment rate.
    <bullet> If a new APC that did not exist during the prior year is 
created and consists of HCPCS codes previously assigned to other APCs, 
the copayment amount is calculated as the product of the APC payment 
rate and the lowest coinsurance percentage of the codes comprising the 
new APC.
    <bullet> If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
equal to or greater than

[[Page 37084]]

the prior year's rate, the copayment amount remains constant (unless 
the resulting coinsurance percentage is less than 20 percent).
    <bullet> If no codes are added to or removed from an APC and, after 
recalibration of its relative payment weight, the new payment rate is 
less than the prior year's rate, the copayment amount is calculated as 
the product of the new payment rate and the prior year's coinsurance 
percentage.
    <bullet> If HCPCS codes are added to or deleted from an APC and, 
after recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in a decrease in the coinsurance 
percentage for the reconfigured APC, the copayment amount would not 
change (unless retaining the copayment amount would result in a 
coinsurance rate less than 20 percent).
    <bullet> If HCPCS codes are added to an APC and, after 
recalibrating its relative payment weight, holding its unadjusted 
copayment amount constant results in an increase in the coinsurance 
percentage for the reconfigured APC, the copayment amount would be 
calculated as the product of the payment rate of the reconfigured APC 
and the lowest coinsurance percentage of the codes being added to the 
reconfigured APC.
    We noted in the CY 2004 OPPS final rule with comment period that we 
would seek to lower the copayment percentage for a service in an APC 
from the prior year if the copayment percentage was greater than 20 
percent. We noted that this principle was consistent with section 
1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the 
national unadjusted coinsurance rate so that beneficiary liability will 
eventually equal 20 percent of the OPPS payment rate for all OPPS 
services to which a copayment applies, and with section 1833(t)(3)(B) 
of the Act, which achieves a 20-percent copayment percentage when fully 
phased in and gives the Secretary the authority to set rules for 
determining copayment amounts for new services. We further noted that 
the use of this methodology would, in general, reduce the beneficiary 
coinsurance rate and copayment amount for APCs for which the payment 
rate changes as the result of the reconfiguration of APCs and/or 
recalibration of relative payment weights (68 FR 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 5071, $116.40 is approximately 20 percent of the 
proposed full national unadjusted payment rate of $581.99. 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 
website), 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 
reporting ratio of 0.980.
    The proposed unadjusted copayments for services payable under the 
OPPS that would be effective January 1, 2019, are shown in Addenda A 
and B to this proposed rule (which are available via the internet on 
the CMS website). 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 CY 2019 OPD fee schedule increase factor 
discussed in section II.B. of this proposed rule.
    In addition, as noted earlier, 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. Proposed 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:
    <bullet> Category I CPT codes, which describe surgical procedures 
and medical services;
    <bullet> Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
    <bullet> 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 indicators (SIs) and APCs. 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

[[Page 37085]]

payment rate for an item, procedure, or service. Those items, 
procedures, or services not paid separately under the hospital OPPS are 
assigned to appropriate status indicators. Certain payment status 
indicators provide separate payment, while other payment status 
indicators do not. Section XI. of this proposed rule discusses the 
various status indicators used under the OPPS.
    In Table 7 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.

                            Table 7--Comment Timeframe for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
 OPPS Quarterly update CR     Type of code           Effective date         Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2018............  Level II HCPCS      April 1, 2018............  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            Codes.                                         proposed rule.      final rule with
                                                                                               comment period.
July 1, 2018.............  Level II HCPCS      July 1, 2018.............  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            Codes.                                         proposed rule.      final rule with
                                                                                               comment period.
                           Category I          July 1, 2018.............  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            (certain vaccine                               proposed rule.      final rule with
                            codes) CPT Codes,                                                  comment period.
                            Category III CPT
                            codes.
October 1, 2018..........  Level II HCPCS      October 1, 2018..........  CY 2019 OPPS/ASC    CY 2020 OPPS/ASC
                            Codes.                                         final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2019..........  Category I and III  January 1, 2019..........  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            CPT Codes.                                     proposed rule.      final rule with
                                                                                               comment period.
                           Level II HCPCS      January 1, 2019..........  CY 2019 OPPS/ASC    CY 2020 OPPS/ASC
                            Codes.                                         final rule with     final rule with
                                                                           comment period.     comment period.
----------------------------------------------------------------------------------------------------------------

1. Proposed Treatment of New HCPCS Codes That Were Effective April 1, 
2018 for Which we Are Soliciting Public Comments in This CY 2019 OPPS/
ASC Proposed Rule
    Through the April 2018 OPPS quarterly update CR (Transmittal 4005, 
Change Request 10515, dated March 20, 2018), we made effective nine new 
Level II HCPCS codes for separate payment under the OPPS. In this CY 
2019 OPPS/ASC proposed rule, we are soliciting public comments on the 
proposed APC and status indicator assignments for these Level II HCPCS 
codes, which are listed in Table 8 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 website).

                            Table 8--New Level II HCPCS Codes Effective April 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
       CY 2018 HCPCS code              CY 2018 Long descriptor           Proposed CY 2019 SI         2019 APC
----------------------------------------------------------------------------------------------------------------
C9462...........................  Injection, delafloxacin, 1 mg...  G                                       9462
C9463...........................  Injection, aprepitant, 1 mg.....  G                                       9463
C9464...........................  Injection, rolapitant, 0.5 mg...  G                                       9464
C9465...........................  Hyaluronan or derivative,         G                                       9465
                                   Durolane, for intra-articular
                                   injection, per dose.
C9466...........................  Injection, benralizumab, 1 mg...  G                                       9466
C9467...........................  Injection, rituximab and          G                                       9467
                                   hyaluronidase, 10 mg.
C9468...........................  Injection, factor ix              G                                       9468
                                   (antihemophilic factor,
                                   recombinant), glycopegylated,
                                   Rebinyn, 1 i.u..
C9469 *.........................  Injection, triamcinolone          G                                       9469
                                   acetonide, preservative-free,
                                   extended-release, microsphere
                                   formulation, 1 mg.
C9749...........................  Repair of nasal vestibular        J1                                      5164
                                   lateral wall stenosis with
                                   implant(s).
----------------------------------------------------------------------------------------------------------------
* HCPCS code C9469 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere
  formulation, 1 mg), which was effective April 1, 2018, was deleted June 30, 2018 and replaced with HCPCS code
  Q9993 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg)
  effective July 1, 2018.

    In addition, there were several new laboratory CPT Multianalyte 
Assays with Algorithmic Analyses (MAAA) codes (M codes) and Proprietary 
Laboratory Analyses (PLA) codes (U codes) that were effective April 1, 
2018, but were too late to include in the April 2018 OPPS Update. 
Because these codes were released on the American Medical Association's 
(AMA) CPT website in February 2018, they were too late for us to 
include in the April 2018 OPPS Update CR and in the April 2018 
Integrated Outpatient Code Editor (IOCE), and, consequently, were 
included in the July 2018 OPPS Update with an effective date of April 
1, 2018. These CPT codes are listed below in Table 9. In this CY 2019 
OPPS/ASC proposed rule, we are soliciting public comments on the 
proposed APC and status indicator assignments for these CPT codes, 
which are listed in Table 9 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 
website).

[[Page 37086]]



          Table 9--New CPT MAAA and Proprietary Laboratory Analyses (PLA) Codes Effective April 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
        CY 2018 HCPCS code              CY 2018 Long descriptor           Proposed CY 2019 SI        2019 APC
----------------------------------------------------------------------------------------------------------------
0012M............................  Oncology (urothelial), mRNA, gene  A                                      N/A
                                    expression profiling by real-
                                    time quantitative PCR of five
                                    genes (MDK, HOXA13, CDC2 [CDK1],
                                    IGFBP5, and XCR2), utilizing
                                    urine, algorithm reported as a
                                    risk score for having urothelial
                                    carcinoma.
0013M............................  Oncology (urothelial), mRNA, gene  A                                      N/A
                                    expression profiling by real-
                                    time quantitative PCR of five
                                    genes (MDK, HOXA13, CDC2 [CDK1],
                                    IGFBP5, and CXCR2), utilizing
                                    urine, algorithm reported as a
                                    risk score for having recurrent
                                    urothelial carcinoma.
0035U............................  Neurology (prion disease),         Q4                                     N/A
                                    cerebrospinal fluid, detection
                                    of prion protein by quaking-
                                    induced conformational
                                    conversion, qualitative.
0036U............................  Exome (i.e., somatic mutations),   A                                      N/A
                                    paired formalin-fixed paraffin-
                                    embedded tumor tissue and normal
                                    specimen, sequence analyses.
0037U............................  Targeted genomic sequence          A                                      N/A
                                    analysis, solid organ neoplasm,
                                    DNA analysis of 324 genes,
                                    interrogation for sequence
                                    variants, gene copy number
                                    amplifications, gene
                                    rearrangements, microsatellite
                                    instability and tumor mutational
                                    burden.
0038U............................  Vitamin D, 25 hydroxy D2 and D3,   Q4                                     N/A
                                    by LC-MS/MS, serum microsample,
                                    quantitative.
0039U............................  Deoxyribonucleic acid (DNA)        Q4                                     N/A
                                    antibody, double stranded, high
                                    avidity.
0040U............................  BCR/ABL1 (t(9;22)) (e.g., chronic  A                                      N/A
                                    myelogenous leukemia)
                                    translocation analysis, major
                                    breakpoint, quantitative.
0041U............................  Borrelia burgdorferi, antibody     Q4                                     N/A
                                    detection of 5 recombinant
                                    protein groups, by immunoblot,
                                    IgM.
0042U............................  Borrelia burgdorferi, antibody     Q4                                     N/A
                                    detection of 12 recombinant
                                    protein groups, by immunoblot,
                                    IgG.
0043U............................  Tick-borne relapsing fever         Q4                                     N/A
                                    Borrelia group, antibody
                                    detection to 4 recombinant
                                    protein groups, by immunoblot,
                                    IgM.
0044U............................  Tick-borne relapsing fever         Q4                                     N/A
                                    Borrelia group, antibody
                                    detection to 4 recombinant
                                    protein groups, by immunoblot,
                                    IgG.
----------------------------------------------------------------------------------------------------------------

2. Proposed Treatment of New HCPCS Codes That Were Effective July 1, 
2018 for Which we Are Soliciting Public Comments in This CY 2019 OPPS/
ASC Proposed Rule

    Through the July 2018 OPPS quarterly update CR (Transmittal 4075, 
Change Request 1078, dated June 15, 2018), we made 4 new Category III 
CPT codes and 10 Level II HCPCS codes effective July 1, 2018 (14 codes 
total), and assigned them to appropriate interim OPPS status indicators 
and APCs. As listed in Table 10 below, 13 of the 14 HCPCS codes are 
separately payable under the OPPS while 1 HCPCS code is not. 
Specifically, HCPCS code QQ994 is assigned to status indicator ``E1'' 
to indicate that the item is not payable by Medicare. In addition, we 
note that HCPCS code C9469 was deleted June 30, 2018, and replaced with 
HCPCS code Q9993 effective July 1, 2018. Because HCPCS code Q9993 
describes the same drug as HCPCS code C9469, we are proposing to 
continue the drug's pass-through payment status and to assign HCPCS 
code Q9993 to the same APC and status indicators as its predecessor 
HCPCS code C9469, as shown in Table 10 below.
    In this CY 2019 OPPS/ASC proposed rule, we are soliciting public 
comments on the proposed APC and status indicator assignments for CY 
2019 for the CPT and Level II HCPCS codes implemented on July 1, 2018, 
all of which are listed in Table 10 below.
    The proposed payment rates and status indicators for these codes, 
where applicable, can be found in Addendum B to this proposed rule 
(which is available via the internet on the CMS website).

                                Table 10--New HCPCS Codes Effective July 1, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
        CY 2018 HCPCS code              CY 2018 long descriptor           Proposed CY 2019 SI        2019 APC
----------------------------------------------------------------------------------------------------------------
C9030............................  Injection, copanlisib, 1 mg......  G                                     9030
C9031............................  Lutetium Lu 177, dotatate,         G                                     9067
                                    therapeutic, 1 mCi.
C9032............................  Injection, voretigene neparvovec-  G                                     9070
                                    rzyl, 1 billion vector genome.
Q5105............................  Injection, epoetin alfa,           K                                     9096
                                    biosimilar, (Retacrit) (for esrd
                                    on dialysis), 100 units.
Q5106............................  Injection, epoetin alfa,           K                                     9097
                                    biosimilar, (Retacrit) (for non-
                                    esrd use), 1000 units.
Q9991............................  Injection, buprenorphine extended- G                                     9073
                                    release (Sublocade), less than
                                    or equal to 100 mg.
Q9992............................  Injection, buprenorphine extended- G                                     9239
                                    release (Sublocade), greater
                                    than 100 mg.
Q9993 *..........................  Injection, triamcinolone           G                                     9469
                                    acetonide, preservative-free,
                                    extended-release, microsphere
                                    formulation, 1 mg.
Q9994............................  In-line cartridge containing       E1                                     N/A
                                    digestive enzyme(s) for enteral
                                    feeding, each.
Q9995............................  Injection, emicizumab-kxwh, 0.5    G                                     9257
                                    mg.
0505T............................  Endovenous femoral-popliteal       J1                                    5193
                                    arterial revascularization, with
                                    transcatheter placement of
                                    intravascular stent graft(s) and
                                    closure by any method, including
                                    percutaneous or open vascular
                                    access, ultrasound guidance for
                                    vascular access when performed,
                                    all catheterization(s) and
                                    intraprocedural roadmapping and
                                    imaging guidance necessary to
                                    complete the intervention, all
                                    associated radiological
                                    supervision and interpretation,
                                    when performed, with crossing of
                                    the occlusive lesion in an
                                    extraluminal fashion.
0506T............................  Macular pigment optical density    Q1                                    5733
                                    measurement by heterochromatic
                                    flicker photometry, unilateral
                                    or bilateral, with
                                    interpretation and report.
0507T............................  Near-infrared dual imaging (i.e.,  Q1                                    5733
                                    simultaneous reflective and
                                    trans-illuminated light) of
                                    meibomian glands, unilateral or
                                    bilateral, with interpretation
                                    and report.

[[Page 37087]]

 
0508T............................  Pulse-echo ultrasound bone         S                                     5522
                                    density measurement resulting in
                                    indicator of axial bone mineral
                                    density, tibia.
----------------------------------------------------------------------------------------------------------------
* HCPCS code C9469 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere
  formulation, 1 mg), which was effective April 1, 2018, was deleted June 30, 2018 and replaced with HCPCS code
  Q9993 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg)
  effective July 1, 2018.

    In addition, there are several new PLA codes (U codes) that will be 
effective July 1, 2018, but were too late to include in the July 2018 
OPPS Update. Consequently, these codes will instead be included in the 
October 2018 OPPS Update with an effective date of July 1, 2018. These 
CPT codes are listed below in Table 11 along with the proposed APC and 
status indicator assignment for these CPT codes. In this CY 2019 OPPS/
ASC proposed rule, we are soliciting public comments on the proposed 
APC and status indicator assignments for these CPT codes. 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 website).

              Table 11--New CPT Proprietary Laboratory Analyses (PLA) Codes Effective July 1, 2018
----------------------------------------------------------------------------------------------------------------
         CY 2018 HCPCS code            CY 2018 long descriptor      Proposed CY 2019 SI    Proposed CY 2019 APC
----------------------------------------------------------------------------------------------------------------
0045U..............................  Oncology (breast ductal      A                       N/A.
                                      carcinoma in situ), mRNA,
                                      gene expression profiling
                                      by real-time RT-PCR of 12
                                      genes (7 content and 5
                                      housekeeping), utilizing
                                      formalin-fixed paraffin-
                                      embedded tissue, algorithm
                                      reported as recurrence
                                      score.
0046U..............................  FLT3 (fms-related tyrosine   A                       N/A.
                                      kinase 3) (e.g., acute
                                      myeloid leukemia) internal
                                      tandem duplication (ITD)
                                      variants, quantitative.
0047U..............................  Oncology (prostate), mRNA,   A                       N/A.
                                      gene expression profiling
                                      by real-time RT-PCR of 17
                                      genes (12 content and 5
                                      housekeeping), utilizing
                                      formalin-fixed paraffin-
                                      embedded tissue, algorithm
                                      reported as a risk score.
0048U..............................  Oncology (solid organ        A                       N/A.
                                      neoplasia), DNA, targeted
                                      sequencing of protein-
                                      coding exons of 468 cancer-
                                      associated genes,
                                      including interrogation
                                      for somatic mutations and
                                      microsatellite
                                      instability, matched with
                                      normal specimens,
                                      utilizing formalin-fixed
                                      paraffin-embedded tumor
                                      tissue, report of
                                      clinically significant
                                      mutation(s).
0049U..............................  NPM1 (nucleophosmin) (e.g.,  A                       N/A.
                                      acute myeloid leukemia)
                                      gene analysis,
                                      quantitative.
0050U..............................  Targeted genomic sequence    A                       N/A.
                                      analysis panel, acute
                                      myelogenous leukemia, DNA
                                      analysis, 194 genes,
                                      interrogation for sequence
                                      variants, copy number
                                      variants or rearrangements.
0051U..............................  Prescription drug            Q4                      N/A.
                                      monitoring, evaluation of
                                      drugs present by LC-MS/MS,
                                      urine, 31 drug panel,
                                      reported as quantitative
                                      results, detected or not
                                      detected, per date of
                                      service.
0052U..............................  Lipoprotein, blood, high     Q4                      N/A.
                                      resolution fractionation
                                      and quantitation of
                                      lipoproteins, including
                                      all five major lipoprotein
                                      classes and subclasses of
                                      HDL, LDL, and VLDL by
                                      vertical auto profile
                                      ultracentrifugation.
0053U..............................  Oncology (prostate cancer),  A                       N/A.
                                      FISH analysis of 4 genes
                                      (ASAP1, HDAC9, CHD1 and
                                      PTEN), needle biopsy
                                      specimen, algorithm
                                      reported as probability of
                                      higher tumor grade.
0054U..............................  Prescription drug            Q4                      N/A.
                                      monitoring, 14 or more
                                      classes of drugs and
                                      substances, definitive
                                      tandem mass spectrometry
                                      with chromatography,
                                      capillary blood,
                                      quantitative report with
                                      therapeutic and toxic
                                      ranges, including steady-
                                      state range for the
                                      prescribed dose when
                                      detected, per date of
                                      service.
0055U..............................  Cardiology (heart            A                       N/A.
                                      transplant), cell-free
                                      DNA, PCR assay of 96 DNA
                                      target sequences (94
                                      single nucleotide
                                      polymorphism targets and
                                      two control targets),
                                      plasma.
0056U..............................  Hematology (acute            A                       N/A.
                                      myelogenous leukemia),
                                      DNA, whole genome next-
                                      generation sequencing to
                                      detect gene
                                      rearrangement(s), blood or
                                      bone marrow, report of
                                      specific gene
                                      rearrangement(s).
0057U..............................  Oncology (solid organ        A                       N/A.
                                      neoplasia), mRNA, gene
                                      expression profiling by
                                      massively parallel
                                      sequencing for analysis of
                                      51 genes, utilizing
                                      formalin-fixed paraffin-
                                      embedded tissue, algorithm
                                      reported as a normalized
                                      percentile rank.
0058U..............................  Oncology (Merkel cell        Q4                      N/A.
                                      carcinoma), detection of
                                      antibodies to the Merkel
                                      cell polyoma virus
                                      oncoprotein (small T
                                      antigen), serum,
                                      quantitative.
0059U..............................  Oncology (Merkel cell        Q4                      N/A.
                                      carcinoma), detection of
                                      antibodies to the Merkel
                                      cell polyoma virus capsid
                                      protein (VP1), serum,
                                      reported as positive or
                                      negative.
0060U..............................  Twin zygosity, genomic       A                       N/A.
                                      targeted sequence analysis
                                      of chromosome 2, using
                                      circulating cell-free
                                      fetal DNA in maternal
                                      blood.
0061U..............................  Transcutaneous measurement   Q4                      N/A.
                                      of five biomarkers (tissue
                                      oxygenation [StO2],
                                      oxyhemoglobin [ctHbO2],
                                      deoxyhemoglobin [ctHbR],
                                      papillary and reticular
                                      dermal hemoglobin
                                      concentrations [ctHb1 and
                                      ctHb2]), using spatial
                                      frequency domain imaging
                                      (SFDI) and multi-spectral
                                      analysis.
----------------------------------------------------------------------------------------------------------------


[[Page 37088]]

3. Proposed Process for New Level II HCPCS Codes That Will Be Effective 
October 1, 2018 and January 1, 2019 for Which We Will Be Soliciting 
Public Comments in the CY 2019 OPPS/ASC Final Rule With Comment Period
    As has been our practice in the past, we will solicit comments on 
those new Level II HCPCS codes that are effective October 1, 2018 and 
January 1, 2019 in the CY 2019 OPPS/ASC final rule with comment period, 
thereby allowing us to finalize the status indicators, APCs, and 
payment rates for the codes in the CY 2020 OPPS/ASC final rule with 
comment period. These codes will be released to the public through the 
October and January OPPS quarterly update CRs and via the CMS HCPCS 
website (for Level II HCPCS codes).
    For CY 2019, we are proposing to continue our established policy of 
assigning comment indicator ``NI'' in Addendum B to the OPPS/ASC final 
rule with comment period to those new Level II HCPCS codes that are 
effective October 1, 2018 and January 1, 2019 to indicate that we are 
assigning them an interim payment status, which is subject to public 
comment. We will be inviting public comments in the CY 2019 OPPS/ASC 
final rule with comment period on the status indicator, APC 
assignments, and payment rates for these codes, if applicable, which 
would then be finalized in the CY 2020 OPPS/ASC final rule with comment 
period.
4. Proposed Treatment of New and Revised CY 2019 Category I and III CPT 
Codes That Will Be Effective January 1, 2019 for Which We Are 
Soliciting Public Comments in This CY 2019 OPPS/ASC Proposed Rule
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 
through 66844), we finalized a revised process of assigning APC and 
status indicators for new and revised Category I and III CPT codes that 
would be effective January 1. Specifically, for the new/revised CPT 
codes that we receive in a timely manner from the AMA's CPT Editorial 
Panel, we finalized our proposal to include the codes that would be 
effective January 1 in the OPPS/ASC proposed rules, along with proposed 
APC and status indicator assignments for them, and to finalize the APC 
and status indicator assignments in the OPPS/ASC final rules beginning 
with the CY 2016 OPPS update. For those new/revised CPT codes that were 
received too late for inclusion in the OPPS/ASC proposed rule, we 
finalized our proposal to establish and use HCPCS G-codes that mirror 
the predecessor CPT codes and retain the current APC and status 
indicator assignments for a year until we can propose APC and status 
indicator assignments in the following year's rulemaking cycle. We note 
that even if we find that we need to create HCPCS G-codes in place of 
certain CPT codes for the PFS proposed rule, we do not anticipate that 
these HCPCS G-codes will always be necessary for OPPS purposes. We will 
make every effort to include proposed APC and status indicator 
assignments for all new and revised CPT codes that the AMA makes 
publicly available in time for us to include them in the proposed rule, 
and to avoid the resort to HCPCS G-codes and the resulting delay in 
utilization of the most current CPT codes. Also, we finalized our 
proposal to make interim APC and status indicator assignments for CPT 
codes that are not available in time for the proposed rule and that 
describe wholly new services (such as new technologies or new surgical 
procedures), solicit public comments, and finalize the specific APC and 
status indicator assignments for those codes in the following year's 
final rule.
    For the CY 2019 OPPS update, we received the CY 2019 CPT codes from 
AMA in time for inclusion in this CY 2019 OPPS/ASC proposed rule. The 
new, revised, and deleted CY 2019 Category I and III CPT codes can be 
found in Addendum B to this proposed rule (which is available via the 
internet on the CMS website). We note that the new and revised codes 
are assigned to new comment indicator ``NP'' to indicate that the code 
is new for the next calendar year or the code is an existing code with 
substantial revision to its code descriptor in the next calendar year 
as compared to current calendar year with a proposed APC assignment, 
and that comments will be accepted on the proposed APC assignment and 
status indicator.
    Further, we remind readers that the CPT code descriptors that 
appear in Addendum B are short descriptors and do not accurately 
describe the complete procedure, service, or item described by the CPT 
code. Therefore, we are including the 5-digit placeholder codes and 
their long descriptors for the new and revised CY 2019 CPT codes in 
Addendum O to this proposed rule (which is available via the internet 
on the CMS website) so that the public can adequately comment on our 
proposed APCs and status indicator assignments. The 5-digit placeholder 
codes can be found in Addendum O, specifically under the column labeled 
``CY 2019 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' to 
this proposed rule. The final CPT code numbers will be included in the 
CY 2019 OPPS/ASC final rule with comment period. We note that not every 
code listed in Addendum O is subject to comment. For the new and 
revised Category I and III CPT codes, we are requesting comments on 
only those codes that are assigned to comment indicator ``NP''.
    In summary, we are soliciting public comments on the proposed CY 
2019 status indicators and APC assignments for the new and revised 
Category I and III CPT codes that will be effective January 1, 2019. 
The CPT codes are listed in Addendum B to this proposed rule with short 
descriptors only. We list them again in Addendum O to this proposed 
rule with long descriptors. We also are proposing to finalize the 
status indicator and APC assignments for these codes (with their final 
CPT code numbers) in the CY 2019 OPPS/ASC final rule with comment 
period. The proposed status indicator and APC assignment for these 
codes can be found in Addendum B to this proposed rule (which is 
available via the internet on the CMS website).

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 regulations at 42 CFR[thinsp]419.31. 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

[[Page 37089]]

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 regulations at 42 CFR 419.2(b). A further 
discussion of packaged services is included in section II.A.3. of this 
proposed rule.
    Under the OPPS, we generally pay for covered hospital outpatient 
services on a rate-per-service basis, where the service may be reported 
with one or more HCPCS codes. Payment varies according to the APC group 
to which the independent service or combination of services is 
assigned. For CY 2019, we are proposing that 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 5012 
(Clinic Visits and Related Services). The APC relative payment weights 
are scaled to APC 5012 because it is the hospital clinic visit APC and 
clinic visits are among the most frequently furnished services in the 
hospital outpatient setting.
2. Application of the 2 Times Rule
    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less often than annually, and revise the APC 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. 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. We note that the HOP 
Panel recommendations for specific services for the CY 2019 OPPS update 
will be discussed in the relevant specific sections throughout the CY 
2019 OPPS/ASC final rule with comment period.
    In addition, 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). In determining the APCs with a 2 times 
rule violation, 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 both have more 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 or fewer 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 claims and that comprises less 
than 2 percent of the single major claims within an APC will have a 
negligible impact on the APC cost (75 FR 71832). In this section of 
this proposed rule, for CY 2019, we are proposing to make exceptions to 
this limit on the variation of costs within each APC group in unusual 
cases, such as for certain low-volume items and services.
    For the CY 2019 OPPS update, we have identified the APCs with 
violations of the 2 times rule. Therefore, we are proposing changes to 
the procedure codes assigned to these APCs 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 this CY 2019 OPPS/ASC 
proposed rule. Rather, it is published and made available via the 
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. To eliminate 
a violation of the 2 times rule and 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 
2019 included in this proposed rule are related to changes in costs of 
services that were observed in the CY 2017 claims data newly available 
for CY 2019 ratesetting. Addendum B to this CY 2019 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 July 1, 2018 
OPPS Addendum B Update (available via the internet on the CMS website 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html).
3. Proposed APC Exceptions to the 2 Times Rule
    Taking into account the APC changes that we are proposing to make 
for CY 2019, 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:
    <bullet> Resource homogeneity;
    <bullet> Clinical homogeneity;
    <bullet> Hospital outpatient setting utilization;
    <bullet> Frequency of service (volume); and
    <bullet> Opportunity for upcoding and code fragments.
    Based on the CY 2017 claims data available for this CY 2019 
proposed rule, we found 16 APCs with violations of the 2 times rule. We 
applied the criteria as described above to identify the APCs for which 
we are proposing to make exceptions under the 2 times rule for CY 2019, 
and found that all of the 16 APCs we identified meet the criteria for 
an exception to the 2 times rule based on the CY 2017 claims data 
available for this proposed rule. We did not include in that 
determination those APCs where a 2 times rule violation was not a 
relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS 
codes assigned to it that have a similar geometric mean costs and do 
not create a 2 time rule violation. Therefore, we have only identified 
those APCs, including those with criteria-based costs, such as device-
dependent CPT/HCPCS codes, with violations of the 2 times rule.
    We note that, for cases in which a recommendation by the HOP Panel 
appears to result in or allow a violation of the 2 times rule, we may 
accept the HOP Panel's recommendation because those recommendations are 
based on explicit consideration (that is, a review of the latest OPPS 
claims data and group discussion of the issue) of resource use, 
clinical homogeneity, site of service,

[[Page 37090]]

and the quality of the claims data used to determine the APC payment 
rates.
    Table 12 of this proposed rule lists the 16 APCs that we are 
proposing to make an exception for under the 2 times rule for CY 2019 
based on the criteria cited above and claims data submitted between 
January 1, 2017, and December 31, 2017, and processed on or before 
December 31, 2017. For the final rule with comment period, we intend to 
use claims data for dates of service between January 1, 2017, and 
December 31, 2017, that were processed on or before June 30, 2018, and 
updated CCRs, if available. The proposed geometric mean costs for 
covered 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 website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

                                            Table 12--Proposed APC Exceptions to the 2 Times Rule for CY 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Proposed CY 2019 APC                                                      Proposed CY 2019 APC title
--------------------------------------------------------------------------------------------------------------------------------------------------------
5071...........................................  Level 1 Excision/Biopsy/Incision and Drainage.
5113...........................................  Level 3 Musculoskeletal Procedures.
5521...........................................  Level 1 Imaging without Contrast.
5522...........................................  Level 2 Imaging without Contrast.
5523...........................................  Level 3 Imaging without Contrast.
5571...........................................  Level 1 Imaging with Contrast.
5612...........................................  Level 2 Therapeutic Radiation Treatment Preparation.
5691...........................................  Level 1 Drug Administration.
5692...........................................  Level 2 Drug Administration.
5721...........................................  Level 1 Diagnostic Tests and Related Services.
5724...........................................  Level 4 Diagnostic Tests and Related Services.
5731...........................................  Level 1 Minor Procedures.
5732...........................................  Level 2 Minor Procedures.
5735...........................................  Level 5 Minor Procedures.
5822...........................................  Level 2 Health and Behavior Services.
5823...........................................  Level 3 Health and Behavior Services.
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Proposed New Technology APCs

1. Background
    In the November 30, 2001 final rule (66 FR 59903), we finalized 
changes to the time period in which a service can be eligible for 
payment under a New Technology APC. Beginning in CY 2002, we retain 
services within New Technology APC groups until we gather sufficient 
claims data to enable us to assign the service to an appropriate 
clinical APC. This policy allows us to move a service from a New 
Technology APC in less than 2 years if sufficient data are available. 
It also allows us to retain a service in a New Technology APC for more 
than 2 years if sufficient data upon which to base a decision for 
reassignment have not been collected.
    In the CY 2004 OPPS final rule with comment period (68 FR 63416), 
we restructured the New Technology APCs to make the cost intervals more 
consistent across payment levels and refined the cost bands for these 
APCs to retain two parallel sets of New Technology APCs, one set with a 
status indicator of ``S'' (Significant Procedures, Not Discounted when 
Multiple. Paid under OPPS; separate APC payment) and the other set with 
a status indicator of ``T'' (Significant Procedure, Multiple Reduction 
Applies. Paid under OPPS; separate APC payment). These current New 
Technology APC configurations allow us to price new technology services 
more appropriately and consistently.
    For CY 2018, there were 52 New Technology APC levels, ranging from 
the lowest cost band assigned to APC 1491 (New Technology--Level 1A 
($0-$10)) through the highest cost band assigned to APC 1908 (New 
Technology--Level 52 ($145,001-$160,000)). We note that the cost bands 
for the New Technology APCs, specifically, APCs 1491 through 1599 and 
1901 through 1908, vary with increments ranging from $10 to $14,999. 
These cost bands identify the APCs to which new technology procedures 
and services with estimated service costs that fall within those cost 
bands are assigned under the OPPS. Payment for each APC is made at the 
mid-point of the APC's assigned cost band. For example, payment for New 
Technology APC 1507 (New Technology--Level 7 ($501-$600)) is made at 
$550.50.
    Under the OPPS, one of our goals is to make payments that are 
appropriate for the services that are necessary for the treatment of 
Medicare beneficiaries. The OPPS, like other Medicare payment systems, 
is budget neutral and increases are limited to the annual hospital 
inpatient market basket increase. We believe that our payment rates 
generally reflect the costs that are associated with providing care to 
Medicare beneficiaries. Furthermore, we believe that our payment rates 
are adequate to ensure access to services (80 FR 70374).
    For many emerging technologies, there is a transitional period 
during which utilization may be low, often because providers are first 
learning about the techniques and their clinical utility. Quite often, 
parties request that Medicare make higher payment amounts under the New 
Technology APCs for new procedures in that transitional phase. These 
requests, and their accompanying estimates for expected total patient 
utilization, often reflect very low rates of patient use of expensive 
equipment, resulting in high per use costs for which requesters believe 
Medicare should make full payment. Medicare does not, and we believe 
should not, assume responsibility for more than its share of the costs 
of procedures based on projected utilization for Medicare beneficiaries 
and does not set its payment rates based on initial projections of low 
utilization for services that require expensive capital equipment. For 
the OPPS, we rely on hospitals to make informed business decisions 
regarding the acquisition of high-cost capital equipment, taking into 
consideration their knowledge about their entire patient base (Medicare 
beneficiaries included) and an understanding of Medicare's and other 
payers' payment policies.

[[Page 37091]]

(We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68314) for further discussion regarding this payment 
policy.)
    We note that, in a budget neutral system, payments may not fully 
cover hospitals' costs in a particular circumstance, including those 
for the purchase and maintenance of capital equipment. We rely on 
hospitals to make their decisions regarding the acquisition of high-
cost equipment with the understanding that the Medicare program must be 
careful to establish its initial payment rates, including those made 
through New Technology APCs, for new services that lack hospital claims 
data based on realistic utilization projections for all such services 
delivered in cost-efficient hospital outpatient settings. As the OPPS 
acquires claims data regarding hospital costs associated with new 
procedures, we regularly examine the claims data and any available new 
information regarding the clinical aspects of new procedures to confirm 
that our OPPS payments remain appropriate for procedures as they 
transition into mainstream medical practice (77 FR 68314). For CY 2019, 
the proposed payment rates for New Technology APCs 1491 to 1599 and 
1901 through 1908 can be found in Addendum A to this proposed rule 
(which is available via the internet on the CMS website).
2. Establishing Payment Rates for Low-Volume New Technology Procedures
    Procedures that are assigned to New Technology APCs are typically 
new procedures that do not have sufficient claims history to establish 
an accurate payment for the procedures. One of the objectives of 
establishing New Technology APCs is to generate sufficient claims data 
for a new procedure so that it can be assigned to an appropriate 
clinical APC. Some procedures that are assigned to New Technology APCs 
have very low annual volume, which we consider to be fewer than 100 
claims. We consider procedures with fewer than 100 claims annually as 
low-volume procedures because there is a higher probability that the 
payment data for a procedure may not have a normal statistical 
distribution, which could affect the quality of our standard cost 
methodology that is used to assign services to an APC. In addition, 
services with fewer than 100 claims per year are not generally 
considered to be a significant contributor to the APC ratesetting 
calculations and, therefore, are not included in the assessment of the 
2 times rule. For these low-volume procedures, we are concerned that 
the methodology we use to estimate the cost of a procedure under the 
OPPS by calculating the geometric mean for all separately paid claims 
for a HCPCS procedure code from the most recent available year of 
claims data may not generate an accurate estimate of the actual cost of 
the procedure. In accordance with section 1833(t)(2)(B) of the Act, 
services classified within each APC must be comparable clinically and 
with respect to the use of resources. As described earlier, assigning a 
procedure to a new technology APC allows us to gather claims data to 
price the procedure and assign it to the APC with services that use 
similar resources and are clinically comparable. However, where 
utilization of services assigned to a New Technology APC is low, it can 
lead to wide variation in payment rates from year to year, resulting in 
even lower utilization and potential barriers to access to new 
technologies, which ultimately limits our ability to assign the service 
to the appropriate clinical APC. To mitigate these issues, we believe 
that it is appropriate to utilize our equitable adjustment authority at 
section 1833(t)(2)(E) of the Act to adjust how we determine the costs 
for low-volume services assigned to New Technology APCs. We have 
utilized our equitable adjustment authority at section 1833(t)(2)(E) of 
the Act, which states that the Secretary shall establish, in a budget 
neutral manner, other adjustments as determined to be necessary to 
ensure equitable payments, to estimate an appropriate payment amount 
for low-volume new technology procedures in the past (82 FR 59281). 
Although we have used this adjustment authority on a case-by-case basis 
in the past, we believe that it is appropriate to adopt an adjustment 
for low-volume services assigned to New Technology APCs in order 
mitigate the wide payment fluctuations that can occur for new 
technology services with fewer than 100 claims and to provide more 
predictable payment for these services.
    For purposes of this adjustment, we believe that it is appropriate 
to use up to 4 years of claims data in calculating the applicable 
payment rate for the prospective year, rather than using solely the 
most recent available year of claims data, when a service assigned to a 
New Technology APC has a low annual volume of claims, which, for 
purposes of this adjustment, we define as fewer than 100 claims 
annually. We consider procedures with fewer than 100 claims annually as 
low-volume procedures because there is a higher probability that the 
payment data for a procedure may not have a normal statistical 
distribution, which could affect the quality of our standard cost 
methodology that is used to assign services to an APC. For these low-
volume procedures, we are concerned that the methodology we use to 
estimate the cost of a procedure under the OPPS by calculating the 
geometric mean for all separately paid claims for a HCPCS procedure 
code from the most recent available year of claims data may not 
generate an accurate estimate of the actual cost of the procedure. 
Using multiple years of claims data will potentially allow for more 
than 100 claims to be used to set the payment rate, which would, in 
turn, create a more statistically reliable payment rate.
    In addition, to better approximate the cost of a low-volume service 
within a New Technology APC, we believe that using the median or 
arithmetic mean rather than the geometric mean (which ``trims'' the 
costs of certain claims out) may be more appropriate in some 
circumstances, given the extremely low volume of claims. Low claim 
volumes increase the impact of ``outlier'' claims; that is, claims with 
either a very low or very high payment rate as compared to the average 
claim, which would have a substantial impact on any statistical 
methodology used to estimate the most appropriate payment rate for a 
service. We believe that having the flexibility to utilize an 
alternative statistical methodology to calculate the payment rate in 
the case of low-volume new technology services would help to create a 
more stable payment rate. Therefore, we are proposing that, in each of 
our annual rulemakings, we will seek public comments on which 
statistical methodology should be used for each low-volume New 
Technology APC. In the preamble of each annual rulemaking (including 
this proposed rule), we will present the result of each statistical 
methodology and solicit public comment on which methodology should be 
used to establish the payment rate for a low-volume new technology 
service. In addition, we will use our assessment of the resources used 
to perform a service and guidance from the developer or manufacturer of 
the service, as well as other stakeholders, to determine the most 
appropriate payment rate. Once we identify the most appropriate payment 
rate for a service, we would assign the service to the New Technology 
APC with the cost band that includes its payment rate.
    Accordingly, for CY 2019, we are proposing to establish a different 
payment methodology for services assigned to New Technology APCs with 
fewer than 100 claims using our equitable adjustment authority under

[[Page 37092]]

section 1833(t)(2)(E) of the Act. Under this proposal, we are proposing 
to use up to 4 years of claims data to establish a payment rate for 
each applicable service both for purposes of assigning a service to a 
New Technology APC and for assigning a service to a regular APC at the 
conclusion of payment for the service through a New Technology APC. The 
goal of such a policy is to promote transparency and stability in the 
payment rates for these low-volume new technology procedures and to 
mitigate wide variation from year to year for such services. We also 
are proposing to use the geometric mean, the median, or the arithmetic 
mean to calculate the cost of furnishing the applicable service, 
present the result of each statistical methodology in our annual 
rulemaking, and solicit public comment on which methodology should be 
used to establish the payment rate. The geometric mean may not be 
representative of the actual cost of a service when fewer than 100 
claims are present because the payment amounts for the claims may not 
be distributed normally. Under this proposal, we would have the option 
to use the median payment amount or the arithmetic mean to assign a 
more representative payment for the service. Once we identify the 
payment rate for a service, we would assign the service to the New 
Technology APC with the cost band that includes its payment rate.
3. Proposed Procedures Assigned to New Technology APC Groups for CY 
2019
    As we explained in the CY 2002 OPPS final rule with comment period 
(66 FR 59902), we generally retain a procedure in the New Technology 
APC to which it is initially assigned until we have obtained sufficient 
claims data to justify reassignment of the procedure to a clinically 
appropriate APC.
    In addition, in cases where we find that our initial New Technology 
APC assignment was based on inaccurate or inadequate information 
(although it was the best information available at the time), where we 
obtain new information that was not available at the time of our 
initial New Technology APC assignment, or where the New Technology APCs 
are restructured, we may, based on more recent resource utilization 
information (including claims data) or the availability of refined New 
Technology APC cost bands, reassign the procedure or service to a 
different New Technology APC that more appropriately reflects its cost 
(66 FR 59903).
    Consistent with our current policy, for CY 2019, in this CY 2019 
OPPS/ASC proposed rule, we are proposing to retain services within New 
Technology APC groups until we obtain sufficient claims data to justify 
reassignment of the service to a clinically appropriate APC. The 
flexibility associated with this policy allows us to reassign a service 
from a New Technology APC in less than 2 years if sufficient claims 
data are available. It also allows us to retain a service in a New 
Technology APC for more than 2 years if sufficient claims data upon 
which to base a decision for reassignment have not been obtained (66 FR 
59902).
a. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 
1537, 5114, and 5414)
    Currently, there are four CPT/HCPCS codes that describe magnetic 
resonance image-guided, high-intensity focused ultrasound (MRgFUS) 
procedures, three of which we are proposing to continue to assign to 
standard APCs, and one that we are proposing to reassign to a different 
New Technology APC for CY 2019. These codes include CPT codes 0071T, 
0072T, and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T 
describe procedures for the treatment of uterine fibroids, CPT code 
0398T describes procedures for the treatment of essential tremor, and 
HCPCS code C9734 describes procedures for pain palliation for 
metastatic bone cancer.
    As shown in Table 13 of this proposed rule, and as listed in 
Addendum B to this CY 2019 OPPS/ASC proposed rule, we are proposing to 
continue to assign the procedures described by CPT codes 0071T and 
0072T to APC 5414 (Level 4 Gynecologic Procedures), with a proposed 
payment rate of approximately $2,410 for CY 2019. We also are proposing 
to continue to assign the APC to status indicator ``J1'' (Hospital Part 
B services paid through a comprehensive APC) to indicate that payment 
for all covered Part B services reported on the claim are packaged with 
the payment for the primary ``J1'' service for the claim, except for 
services assigned to OPPS status indicator ``F'', ``G'', ``H'', ``L'', 
and ``U''; ambulance services; diagnostic and screening mammography; 
all preventive services; and certain Part B inpatient services. In 
addition, we are proposing to continue to assign the services described 
by HCPCS code C9734 (Focused ultrasound ablation/therapeutic 
intervention, other than uterine leiomyomata, with magnetic resonance 
(mr) guidance) to APC 5115 (Level 5 Musculoskeletal Procedures), with a 
proposed payment rate of approximately $10,936 for CY 2019. We also are 
proposing to continue to assign HCPCS code C9734 to status indicator 
``J1''.
    For procedures described by CPT code 0398T, we have only identified 
one paid claim for a procedure in CY 2016 and two paid claims in CY 
2017, for a total of three paid claims. We note that the procedures 
described by CPT code 0398T were first assigned to a New Technology APC 
in CY 2016. Accordingly, there are only 2 years of claims data 
available for the OPPS ratesetting purposes. The payment amounts for 
the claims vary widely, with a cost of $29,254 for the sole CY 2016 
claim and a geometric mean cost of $4,647 for the two CY 2017 claims. 
We are concerned that the reported geometric mean cost for CY 2017, 
which we would normally use to determine the proposed payment rate for 
the procedures described by CPT code 0398T, is significantly lower than 
the reported cost of the claim received in CY 2016, as well as the 
payment rate for the procedures for CY 2016 ($9,750.50) and for CY 2017 
($17,500.50). In accordance with section 1833(t)(2)(B) of the Act, we 
must establish that services classified within each APC are comparable 
clinically and with respect to the use of resources.
    Therefore, as mentioned in section III.C.2. of this proposed rule, 
we are proposing to use our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act, which states that the Secretary shall 
establish, in a budget neutral manner, other adjustments as determined 
to be necessary to ensure equitable payments, to establish a payment 
rate that is more likely to be representative of the cost of the 
procedures described by CPT code 0398T, despite the low geometric mean 
costs for procedures described by CPT code 0398T available in the 
claims data used for this proposed rule. We continue to believe that 
this situation for the procedures described by CPT code 0398T is 
unique, given the very limited number of claims for the procedures and 
the high variability for the cost of the claims which makes it 
challenging to determine a reliable payment rate for the procedures.
    Our analysis found that the arithmetic mean of the three claims is 
$12,849.11, the geometric mean of the three claims is $8,579.91 
(compared to $4,646.56 for CY 2017), and the median of the claims is 
$4,676.77. Consistent with what we state in section III.C.2. of this 
proposed rule, we have presented the result of each statistical 
methodology in this preamble, and we are seeking public comments on 
which method should be used to establish payment for the

[[Page 37093]]

procedures described by CPT code 0398T. We believe that the arithmetic 
mean is the most appropriate representative cost of the procedures 
described by CPT code 0398T, which gives consideration to the payment 
rates established for the procedures in CY 2017 and CY 2018, without 
any trimming. The arithmetic mean also gives consideration to the range 
in cost for the three paid claims, which represent 2 years of claims 
data for the procedures. We are proposing to estimate the proposed 
payment rate for the procedures described by CPT code 0398T by 
calculating the arithmetic mean of the three paid claims for the 
procedures in CY 2016 and CY 2017, and assigning the procedures 
described by CPT code 0398T to the New Technology APC that includes the 
estimated cost. Accordingly, we are proposing to reassign the 
procedures described by CPT code 0398T from APC 1576 (New Technology--
Level 39 ($15,001-$20,000)) to APC 1575 (New Technology--Level 38 
($10,001-$15,000)), with a proposed payment rate of $12,500.50. We 
refer readers to Addendum B to this proposed rule for the proposed 
payment rates for all codes reportable under the OPPS. Addendum B is 
available via the internet on the CMS website.

    Table 13--Proposed CY 2019 Status Indicator (SI), APC Assignment, and Payment Rate for the Magnetic Resonance Image Guided High Intensity Focused
                                                             Ultrasound (MRgFUS) Procedures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CY 2018 OPPS    CY 2018 OPPS    Proposed CY 2019    Proposed CY     Proposed CY 2019
      CPT/HCPCS code         Long descriptor     CY 2018 OPPS SI        APC        payment rate        OPPS SI        2019 OPPS APC   OPPS payment rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
0071T....................  Focused ultrasound   J1                          5414       $2,272.77  J1                           5414  Refer to OPPS
                            ablation of                                                                                               Addendum B.
                            uterine
                            leiomyomata,
                            including mr
                            guidance; total
                            leiomyomata volume
                            less than 200 cc
                            of tissue.
0072T....................  Focused ultrasound   J1                          5414        2,272.77  J1                           5414  Refer to OPPS
                            ablation of                                                                                               Addendum B.
                            uterine
                            leiomyomata,
                            including mr
                            guidance; total
                            leiomyomata volume
                            greater or equal
                            to 200 cc of
                            tissue.
0398T....................  Magnetic resonance   S                           1576       17,500.50  S                            1575  Refer to OPPS
                            image guided high                                                                                         Addendum B.
                            intensity focused
                            ultrasound
                            (mrgfus),
                            stereotactic
                            ablation lesion,
                            intracranial for
                            movement disorder
                            including
                            stereotactic
                            navigation and
                            frame placement
                            when performed.
C9734....................  Focused ultrasound   J1                          5115        5,606.42  J1                           5115  Refer to OPPS
                            ablation/                                                                                                 Addendum B.
                            therapeutic
                            intervention,
                            other than uterine
                            leiomyomata, with
                            magnetic resonance
                            (mr) guidance.
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Retinal Prosthesis Implant Procedure
    CPT code 0100T (Placement of a subconjunctival retinal prosthesis 
receiver and pulse generator, and implantation of intra-ocular retinal 
electrode array, with vitrectomy) describes the implantation of a 
retinal prosthesis, specifically, a procedure involving the use of the 
Argus[supreg] II Retinal Prosthesis System. This first retinal 
prosthesis was approved by the Food and Drug Administration (FDA) in 
2013 for adult patients diagnosed with severe to profound retinitis 
pigmentosa. Pass-through payment status was granted for the 
Argus[supreg] II device under HCPCS code C1841 (Retinal prosthesis, 
includes all internal and external components) beginning October 1, 
2013, and this status expired on December 31, 2015. We note that after 
pass-through payment status expires for a medical device, the payment 
for the device is packaged into the payment for the associated surgical 
procedure. Consequently, for CY 2016, the device described by HCPCS 
code C1841 was assigned to OPPS status indicator ``N'' to indicate that 
payment for the device is packaged and included in the payment rate for 
the surgical procedure described by CPT code 0100T. For CY 2016, the 
procedure described by CPT code 0100T was assigned to New Technology 
APC 1599, with a payment rate of $95,000, which was the highest paying 
New Technology APC for that year. This payment includes both the 
surgical procedure (CPT code 0100T) and the use of the Argus[supreg] II 
device (HCPCS code C1841). However, stakeholders (including the device 
manufacturer and hospitals) believed that the CY 2016 payment rate for 
the procedure involving the Argus[supreg] II System was insufficient to 
cover the hospital cost of performing the procedure, which includes the 
cost of the retinal prosthesis at the retail price of approximately 
$145,000.
    For CY 2017, analysis of the CY 2015 OPPS claims data used for the 
CY 2017 final rule with comment period showed 9 single claims (out of 
13 total claims) for the procedure described by CPT code 0100T, with a 
geometric mean cost of approximately $142,003 based on claims submitted 
between January 1, 2015, through December 31, 2015, and processed 
through June 30, 2016. Based on the CY 2015 OPPS claims data available 
for the final rule with comment period and our understanding of the 
Argus[supreg] II procedure, we reassigned the procedure described by 
CPT code 0100T from New Technology APC 1599 to New Technology APC 1906, 
with a final payment rate of $150,000.50 for CY 2017. We noted that 
this payment rate included the cost of both the surgical procedure (CPT 
code 0100T) and the retinal prosthesis device (HCPCS code C1841).
    For CY 2018, the reported cost of the Argus[supreg] II procedure 
based on CY 2016 hospital outpatient claims data used for the CY 2018 
OPPS/ASC final rule with comment period was approximately $94,455, 
which was more than $55,000 less than the payment rate for the 
procedure in CY 2017. We noted that the costs of the Argus[supreg] II 
procedure are extraordinarily high compared to many other procedures 
paid under the OPPS. In addition, the number of claims submitted has 
been very low and has not exceeded 10 claims within a single year. We 
believed that it is important to mitigate significant payment 
differences, especially shifts of several tens of thousands of dollars, 
while also basing payment rates on available cost information and 
claims data. In CY 2016, the payment rate for the Argus[supreg] II 
procedure was $95,000.50. The payment rate increased to $150,000.50

[[Page 37094]]

in CY 2017. For CY 2018, if we had established the payment rate based 
on updated final rule claims data, the payment rate would have 
decreased to $95,000.50 for CY 2018, a decrease of $55,000 relative to 
CY 2017. We were concerned that these large changes in payment could 
potentially create an access to care issue for the Argus[supreg] II 
procedure, and we wanted to establish a payment rate to mitigate the 
potential sharp decline in payment from CY 2017 to CY 2018.
    In accordance with section 1833(t)(2)(B) of the Act, we must 
establish that services classified within each APC are comparable 
clinically and with respect to the use of resources. Therefore, we used 
our equitable adjustment authority under section 1833(t)(2)(E) of the 
Act, which states that the Secretary shall establish, in a budget 
neutral manner, other adjustments as determined to be necessary to 
ensure equitable payments, to maintain the payment rate for this 
procedure, despite the lower geometric mean costs available in the 
claims data used for the final rule with comment period. For CY 2018, 
we reassigned the Argus[supreg] II procedure to APC 1904 (New 
Technology--Level 50 ($115,001-$130,000)), which established a payment 
rate for the Argus[supreg] II procedure of $122,500.50, which was the 
arithmetic mean of the payment rates for the procedure for CY 2016 and 
CY 2017.
    For CY 2019, the reported cost of the Argus[supreg] II procedure 
based on CY 2017 hospital outpatient claims data used for this CY 2019 
OPPS/ASC proposed rule is approximately $152,021, which is $29,520 more 
than the payment rate for the procedure for CY 2018. We continue to 
note that the costs of the Argus[supreg] II procedure are 
extraordinarily high compared to many other procedures paid under the 
OPPS. In addition, the number of claims submitted has been very low and 
did not exceed 10 claims for CY 2017. We continue to believe that it is 
important to mitigate significant payment differences, especially 
shifts of several tens of thousands of dollars, while also basing 
payment rates on available cost information and claims data because we 
are concerned that large decreases in the payment rate could 
potentially create an access to care issue for the Argus[supreg] II 
procedure. In addition, we want to establish a payment rate to mitigate 
the potential sharp increase in payment from CY 2018 to CY 2019, and 
potentially ensure a more stable payment rate in future years.
    In accordance with section 1833(t)(2)(B) of the Act, we must 
establish that services classified within each APC are comparable 
clinically and with respect to the use of resources. Therefore, as 
discussed in section III.C.2. of this proposed rule, we are proposing 
to use our equitable adjustment authority under section 1833(t)(2)(E) 
of the Act, which states that the Secretary shall establish, in a 
budget neutral manner, other adjustments as determined to be necessary 
to ensure equitable payments, to establish a payment rate that is more 
representative of the likely cost of the service. We believe the likely 
cost of the Argus[supreg] II procedure is lower than the geometric mean 
cost calculated from the CY 2017 claims data used for this proposed 
rule and closer to the CY 2018 payment rate.
    We analyzed claims data for the Argus[supreg] II procedure using 
the last 3 years of available data from CY 2015 through CY 2017. These 
data include claims from the last year (CY 2015) that the Argus[supreg] 
II received transitional device pass-through payments and the first 2 
years since device pass-through payment status for the Argus[supreg] II 
expired. We found the geometric mean for the procedure to be $129,891 
(compared to $152,021 in CY 2017 alone), the arithmetic mean to be 
$134,619, and the median to be $133,679. As indicated in our proposal 
in section III.C.2. of this proposed rule, we have presented the result 
of each statistical methodology in this preamble, and are requesting 
public comment on which methodology should be used to establish a 
payment rate. We are proposing to use the arithmetic mean, which 
generates the highest payment rate of the three statistical 
methodologies, to estimate the cost of the Argus[supreg] II procedure 
as a means to balance the fluctuations in the costs of the procedure 
that have occurred from CY 2015 through CY 2017, while acknowledging 
the higher payment rates for the procedure in CY 2015 and CY 2017. 
Therefore, for CY 2019, we are proposing to reassign the Argus[supreg] 
II procedure from APC 1904 (New Technology--Level 50 ($115,001-
$130,000)) to APC 1906 (New Technology--Level 51 ($130,001-$145,000)), 
which would result in a proposed payment rate for the Argus[supreg] II 
procedure of $137,500.50.
    As we do each year, we acquired claims data regarding hospital 
costs associated with new procedures. We regularly examine the claims 
data and any available new information regarding the clinical aspects 
of new procedures to confirm that our OPPS payments remain appropriate 
for procedures like the Argus[supreg] II procedure as they transition 
into mainstream medical practice (77 FR 68314). We note that this 
proposed payment rate includes both the surgical procedure (CPT code 
0100T) and the use of the Argus[supreg] II device (HCPCS code C1841).
    The most recent claims data available have shown another payment 
issue with regard to the Argus[supreg] II procedure. We have found that 
payment for the Argus[supreg] II procedure is sometimes bundled into 
the payment for another procedure. We have identified two possible 
instances in the CY 2017 claims data in which this may have occurred. 
The bundling of payment for the Argus[supreg] II procedure occurs when 
the procedure is reported with other eye procedures assigned to a 
comprehensive APC (C-APC). A C-APC bundles payment for all services 
related to the primary service into one payment rate. We are concerned 
that when payment for new technology services is bundled into the 
payment for comprehensive procedures, there is not complete claims 
information to estimate accurately the cost of these services to allow 
their assignment to clinical APCs. Therefore, we are proposing to 
exclude payment for all procedures assigned to New Technology APCs from 
being bundled into the payment for procedures assigned to a C-APC. This 
action would allow for separate payment for the Argus[supreg] II 
procedure even when it is performed with another comprehensive service, 
which would provide more cost information regarding the procedure. This 
proposal is also discussed in section II.A.2.c. of this proposed rule.

D. Proposed OPPS APC-Specific Policies

    Section 1833(t)(9)(A) of the Act requires the Secretary to review, 
not less often than annually, and to revise the APC groups, the 
relative payment weights, and the wage and other adjustments to take 
into account changes in medical practices, changes in technology, the 
addition of new services, new cost data, and other relevant information 
and factors. Each year, under the OPPS, we revise and make changes to 
the APC groupings based on the latest hospital outpatient claims data 
to appropriately place procedures and services in APCs based on 
clinical characteristics and resource similarity. Although we do not 
discuss every APC change in the proposed and final rules, these changes 
are listed in the OPPS Addendum B of the proposed and final rules. 
Specifically, the procedure and service codes with revised APC and/or 
status indicator assignments are identified with comment indicator 
``CH'' (Active HCPCS code in current year and next

[[Page 37095]]

calendar year, status indicator and/or APC assignment has changed) in 
the OPPS Addendum B payment file.
1. Endovascular Procedures (APCs 5191 Through 5194)
    At the annual meeting for the HOP Panel held on August 21, 2017, 
the HOP Panel recommended that, for CY 2018, CMS examine the number of 
APCs for endovascular procedures. The HOP Panel also recommended that 
the appropriate Panel subcommittee review the APCs for endovascular 
procedures to determine whether more granularity (that is, more APCs) 
is warranted.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59293 
through 59294), we stated that we believed that the current C-APC 
levels for the Endovascular Procedures C-APC family provide an 
appropriate distinction between the resource costs at each level and 
clinical homogeneity. We also stated that we would continue to review 
the C-APC structure for endovascular procedures to determine if any 
additional granularity is necessary for this C-APC family.
    Using the most recent data available for this proposed rule, we 
have analyzed the four existing levels of the Endovascular Procedures 
C-APCs. We did not observe any violations of the 2 times rule within 
the current Endovascular Procedures C-APC structure. Some stakeholders 
have suggested that for certain procedures, such as angioplasty 
procedures involving the use of a drug-coated balloon in addition to a 
nondrug-coated balloon, resource costs are significantly higher than 
the geometric mean cost (and associated C-APC payment) for all of the 
angioplasty procedures combined. We recognize that the costs of a given 
procedure involving additional devices will be higher than the costs of 
the procedure when it does not involve such additional devices. 
However, the OPPS is a prospective payment system based on a system of 
averages in which the costs of some cases within an APC will be more 
costly than the APC payment rate, while the costs of other cases will 
be less costly. While we believe that there is sufficient granularity 
within the existing Endovascular Procedures C-APC structure and at 
least one stakeholder agrees, we have also received input from other 
stakeholders who have suggested alternative structures for this C-APC 
family that include a five-level structure and a six-level structure. 
An illustration of these proposed C-APC structure levels is displayed 
in Table 15 and Table 16, respectively. Because interested stakeholders 
have suggested a variety of options for the endovascular procedures C-
APC structure, including keeping the existing C-APC structure, in this 
CY 2019 OPPS/ASC proposed rule, we are proposing to maintain the 
existing four-level structure for this C-APC family listed in Table 14 
below. However, we are inviting public comments on our proposal, as 
well as the stakeholder-requested five-level and six-level structures 
displayed in the tables below. We note that the approximate geometric 
mean costs associated with the suggested five-level and six-level C-APC 
structures shown in Tables 15 and 16 are only estimates and, if either 
of the suggested structure levels are adopted, they would be subject to 
change, depending on the final rule with comment period data and the 
particular services that are assigned to each C-APC.

 Table 14--Proposed CY 2019 C-APC Structure for Endovascular Procedures
------------------------------------------------------------------------
                                                             Proposed
                          C-APC                           geometric mean
                                                               cost
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...................          $2,882
5192--Level 2 Endovascular Procedures...................           4,843
5193--Level 3 Endovascular Procedures...................           9,945
5194--Level 4 Endovascular Procedures...................          15,789
------------------------------------------------------------------------


   Table 15--Requested CY 2019 Five-Level Endovascular C-APC Structure
------------------------------------------------------------------------
                                                             Potential
                                                            approximate
                          C-APC                           geometric mean
                                                               cost
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...................          $2,881
5192--Level 2 Endovascular Procedures...................           4,476
5193--Level 3 Endovascular Procedures...................           9,207
5194--Level 4 Endovascular Procedures...................          13,524
5195--New Level 5 Endovascular Procedures...............          16,926
------------------------------------------------------------------------


   Table 16--Requested CY 2019 Six-Level Endovascular C-APC Structure
------------------------------------------------------------------------
                                                             Potential
                                                            approximate
                          C-APC                           geometric mean
                                                               cost
------------------------------------------------------------------------
5191--Level 1 Endovascular Procedures...................          $2,880
5192--Level 2 Endovascular Procedures...................           4,722
5193--New Level 3 Endovascular Procedures...............           7,743
5194--Level 4 Endovascular Procedures...................          10,128
5195--New Level 5 Endovascular Procedures...............          12,216
5196--Level 6 Endovascular Procedures...................          16,140
------------------------------------------------------------------------

2. Imaging Procedures and Services (APCs 5521 Through 5524 and 5571 
Through 5573)
    Section 1833(t)(2)(G) of the Act requires the Secretary to create 
additional groups of covered OPD services that classify separately 
those procedures that utilize contrast agents from those procedures 
that do not utilize contrast agents. In CY 2016, as a part of our 
comprehensive review of the structure of the APCs and procedure code 
assignments, we restructured the APCs that contain imaging services (80 
FR 70392). The purpose of this restructuring was to more appropriately 
reflect the resource costs and clinical characteristics of the services 
classified within the Imaging APCs. The restructuring of the Imaging 
APCs resulted in broader groupings that removed the excessive 
granularity of grouping imaging services according to organ or 
physiologic system, which did not necessarily reflect either 
significant differences in resources or how these services are 
delivered in the hospital outpatient setting. In CY 2017, in response 
to public comments on the CY 2017 OPPS/ASC proposed rule, we further 
consolidated the Imaging APCs from 17 APCs in CY 2016 to 7 APCs in CY 
2017 (81 FR 79633). These included four Imaging without Contrast APCs 
and three Imaging with Contrast APCs.
    For CY 2018, we proposed to establish a new Level 5 Imaging without 
Contrast APC to more appropriately group certain imaging services with 
higher resource costs and stated that our latest claims data supported 
splitting the CY 2017 Level 4 Imaging without Contrast APC into two 
APCs such that the Level 4 Imaging without Contrast APC would include 
high frequency, low-cost services and the proposed Level 5 Imaging 
without Contrast APC would include low frequency high-cost services. 
Therefore, for CY 2018, we proposed to add a fifth level within the

[[Page 37096]]

Imaging without Contrast APCs (82 FR 33608). However, based on public 
comments, we did not finalize this proposal. In general, commenters 
disagreed with CMS' proposal to add a fifth level within the Imaging 
without Contrast APC series because they believed that the addition of 
a fifth level would reduce payment for several imaging services, 
including vascular ultrasound procedures (82 FR 59309 through 59311). 
Commenters also noted that the lower payment rates under the OPPS would 
also apply under the PFS.
    For this CY 2019 proposed rule, we reviewed the services assigned 
to the seven imaging APCs listed below in Table 17. Specifically, we 
evaluated the resource costs and clinical coherence of the procedures 
associated with the four levels of Imaging without Contrast APCs and 
the three levels of Imaging with Contrast APCs, as well as identified 
for correction any 2 times rule violations, to the extent feasible. 
Based on the geometric mean cost for each APC, which is listed in Table 
17, for CY 2019, we are proposing to maintain the seven Imaging APCs, 
which consist of four levels of Imaging without Contrast APCs and three 
levels of Imaging with Contrast APCs, and to make minor reassignments 
to the HCPCS codes within this series to resolve or mitigate any 
violations of the 2 times rule, or both.

                                     Table 17--Proposed CY 2019 Imaging APCs
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
                                                                                    CY 2018 APC      2019 APC
              CY 2019 APC                           CY 2019 APC title             geometric mean  geometric mean
                                                                                       cost            cost
----------------------------------------------------------------------------------------------------------------
5521...................................  Level 1 Imaging without Contrast.......          $62.08          $64.02
5522...................................  Level 2 Imaging without Contrast.......          114.39          115.89
5523...................................  Level 3 Imaging without Contrast.......          232.17          236.05
5524...................................  Level 4 Imaging without Contrast.......          486.38          502.75
5571...................................  Level 1 Imaging with Contrast..........          252.58          206.94
5572...................................  Level 2 Imaging with Contrast..........          456.08          395.84
5573...................................  Level 3 Imaging with Contrast..........          681.45          699.02
----------------------------------------------------------------------------------------------------------------

    We are inviting public comments on our proposal to maintain the 
seven Imaging APCs and the current APC structure level of the imaging 
APCs. Moreover, we are specifically interested in receiving public 
comments and recommendations on the proposed HCPCS code reassignments 
associated with each of the seven Imaging APCs. We refer readers to 
Addendum B to this proposed rule (which is available via the internet 
on the CMS website) for the proposed list of specific codes that would 
be reassigned to each Imaging APC.
3. Musculoskeletal Procedures (APCs 5111 Through 5116)
    Prior to the CY 2016 OPPS, payment for musculoskeletal procedures 
was primarily divided according to anatomy and the type of 
musculoskeletal procedure. As part of the CY 2016 reorganization to 
better structure the OPPS payments towards prospective payment 
packages, we consolidated those individual APCs so that they became a 
general Musculoskeletal APC series (80 FR 70397 through 70398).
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59300), we continued to apply a six-level structure for the 
Musculoskeletal APCs because doing so provided an appropriate 
distinction for resource costs at each level and to provide clinical 
homogeneity. However, we also indicated that we would continue to 
review the structure of these APCs to determine whether additional 
granularity would be necessary.
    While we are not proposing any changes to the 2019 OPPS structure 
of the Musculoskeletal APC series in this proposed rule, we recognize 
that commenters have previously expressed concerns regarding the 
granularity of the current APC levels and requested establishment of 
additional levels. Therefore, we are soliciting comments on the 
creation of a new APC level between the current Level 5 and Level 6 
within the Musculoskeletal APC series.

                           Table 18--Proposed CY 2019 Musculoskeletal Procedures APCs
----------------------------------------------------------------------------------------------------------------
                                                                                    HCPCS codes    Proposed APC
                  APC                                  Group title                  assigned to   geometric mean
                                                                                        APC            cost
----------------------------------------------------------------------------------------------------------------
5111...................................  Level 1 Musculoskeletal Procedures.....             102         $229.40
5112...................................  Level 2 Musculoskeletal Procedures.....             133       $1,345.93
5113...................................  Level 3 Musculoskeletal Procedures.....             442       $2,673.08
5114...................................  Level 4 Musculoskeletal Procedures.....             287       $5,816.78
5115...................................  Level 5 Musculoskeletal Procedures.....              67      $10,935.83
5116...................................  Level 6 Musculoskeletal Procedures.....              15      $15,785.37
----------------------------------------------------------------------------------------------------------------

4. Level 5 Intraocular Procedures (APC 5495)
    In prior years, CPT code 0308T (Insertion of ocular telescope 
prosthesis including removal of crystalline lens or intraocular lens 
prosthesis) has been assigned to the APC 5495 (Level 5 Intraocular 
Procedures) based on its estimated costs. In addition, its relative 
payment weight has been based on its median under our payment policy 
for low-volume device-intensive procedures because the APC contained a 
low volume of claims. The low-volume device-intensive procedures policy 
is discussed in more detail in section III.C.2. of this proposed rule.

[[Page 37097]]

    In reviewing the claims data available for this proposed rule for 
CY 2019 OPPS ratesetting, there are only two claims containing 
procedures described by CPT code 0308T. Based on those two claims, APC 
5495 would have a proposed geometric mean of $5,438.99 and a proposed 
median of $8,237.56. Based on its estimated costs in the most recently 
available claims data, we believe that the procedure described by CPT 
code 0308T is more appropriately placed in the APC 5493, which has a 
geometric mean of $9,821.47, which is more comparable to that of CPT 
code 0308T. Therefore, for CY 2019, we are proposing to reassign the 
procedure described by CPT code 0308T from APC 5495 to APC 5493 (Level 
3 Intraocular Procedures) and to delete APC 5495. We will continue to 
monitor the volume of claims reporting a procedure described by CPT 
code 0308T available to us for future ratesetting.

IV. Proposed OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and 
Quarterly Expiration of Device Pass-Through Payments
a. Background
    Under section 1833(t)(6)(B)(iii) of the Act, the period for which a 
device category eligible for transitional pass-through payments under 
the OPPS can be in effect is at least 2 years but not more than 3 
years. Prior to CY 2017, our regulation at 42 CFR 419.66(g) provided 
that this pass-through payment eligibility period began on the date CMS 
established a particular transitional pass-through category of devices, 
and we based the pass-through status expiration date for a device 
category on the date on which pass-through payment was effective for 
the category. In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the 
Act, we amended Sec.  419.66(g) to provide that the pass-through 
eligibility period for a device category begins on the first date on 
which pass-through payment is made under the OPPS for any medical 
device described by such category. In addition, prior to CY 2017, our 
policy was to propose and finalize the dates for expiration of pass-
through status for device categories as part of the OPPS annual update. 
This means that device pass-through status would expire at the end of a 
calendar year when at least 2 years of pass-through payments have been 
made, regardless of the quarter in which the device was approved. In 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79655), we 
changed our policy to allow for quarterly expiration of pass-through 
payment status for devices, beginning with pass-through devices 
approved in CY 2017 and subsequent calendar years, to afford a pass-
through payment period that is as close to a full 3 years as possible 
for all pass-through payment devices. We refer readers to the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79648 through 79661) for 
a full discussion of the changes to the device pass-through payment 
policy. 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).
b. Expiration of Transitional Pass-Through Payments for Certain Devices
    As stated earlier, 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 years, but not more 
than 3 years. There currently are no device categories eligible for 
pass-through payment.
2. New Device Pass-Through Applications
a. Background
    Section 1833(t)(6) of the Act provides for pass-through payments 
for devices, and section 1833(t)(6)(B) of the Act requires CMS to use 
categories in determining the eligibility of devices for pass-through 
payments. As part of implementing the statute through regulations, we 
have continued to believe that it is important for hospitals to receive 
pass-through payments for devices that offer substantial clinical 
improvement in the treatment of Medicare beneficiaries to facilitate 
access by beneficiaries to the advantages of the new technology. 
Conversely, we have noted that the need for additional payments for 
devices that offer little or no clinical improvement over previously 
existing devices is less apparent. In such cases, these devices can 
still be used by hospitals, and hospitals will be paid for them through 
appropriate APC payment. Moreover, a goal is to target pass-through 
payments for those devices where cost considerations might be most 
likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 
70 FR 68629).
    As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3), 
to be eligible for transitional pass-through payment under the OPPS, a 
device must meet the following criteria: (1) If required by FDA, the 
device must have received FDA approval or clearance (except for a 
device that has received an FDA investigational device exemption (IDE) 
and has been classified as a Category B device by the FDA), or another 
appropriate FDA exemption; and the pass-through payment application 
must be submitted within 3 years from the date of the initial FDA 
approval or clearance, if required, unless there is a documented, 
verifiable delay in U.S. market availability after FDA approval or 
clearance is granted, in which case CMS will consider the pass-through 
payment application if it is submitted within 3 years from the date of 
market availability; (2) the device is determined to be reasonable and 
necessary for the diagnosis or treatment of an illness or injury or to 
improve the functioning of a malformed body part, as required by 
section 1862(a)(1)(A) of the Act; and (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. In addition, according to Sec.  419.66(b)(4), a 
device is not eligible to be considered for device pass-through payment 
if it is any of the following: (1) Equipment, an instrument, apparatus, 
implement, or item of this type for which depreciation and financing 
expenses are recovered as depreciation assets as defined in Chapter 1 
of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a 
material or supply furnished incident to a service (for example, a 
suture, customized surgical kit, or clip, other than a radiological 
site marker).
    Separately, we use the following criteria, as set forth under Sec.  
419.66(c), to determine whether a new category of pass-through payment 
devices should be established. The device to be included in the new 
category must--
    <bullet> Not be appropriately described by an existing category or 
by any category previously in effect established for transitional pass-
through payments, and was not being paid for as an outpatient service 
as of December 31, 1996;
    <bullet> Have an average cost that is not ``insignificant'' 
relative to the payment amount for the procedure or service with which 
the device is associated as determined under Sec.  419.66(d) by 
demonstrating: (1) The estimated average reasonable costs of devices in 
the category exceeds 25 percent of the applicable APC payment amount 
for the service related to the category of devices; (2) the estimated 
average

[[Page 37098]]

reasonable cost of the devices in the category exceeds the cost of the 
device-related portion of the APC payment amount for the related 
service by at least 25 percent; and (3) the difference between the 
estimated average reasonable cost of the devices in the category and 
the portion of the APC payment amount for the device exceeds 10 percent 
of the APC payment amount for the related service (with the exception 
of brachytherapy and temperature-monitored cryoblation, which are 
exempt from the cost requirements as specified at Sec. Sec.  
419.66(c)(3) and (e)); and
    <bullet> Demonstrate a substantial clinical improvement, that is, 
substantially improve the diagnosis or treatment of an illness or 
injury or improve the functioning of a malformed body part compared to 
the benefits of a device or devices in a previously established 
category or other available treatment.
    Beginning in CY 2016, we changed our device pass-through evaluation 
and determination process. Device pass-through applications are still 
submitted to CMS through the quarterly subregulatory process, but the 
applications will be subject to notice-and-comment rulemaking in the 
next applicable OPPS annual rulemaking cycle. Under this process, all 
applications that are preliminarily approved upon quarterly review will 
automatically be included in the next applicable OPPS annual rulemaking 
cycle, while submitters of applications that are not approved upon 
quarterly review will have the option of being included in the next 
applicable OPPS annual rulemaking cycle or withdrawing their 
application from consideration. Under this notice-and-comment process, 
applicants may submit new evidence, such as clinical trial results 
published in a peer-reviewed journal or other materials for 
consideration during the public comment process for the proposed rule. 
This process allows those applications that we are able to determine 
meet all the criteria for device pass-through payment under the 
quarterly review process to receive timely pass-through payment status, 
while still allowing for a transparent, public review process for all 
applications (80 FR 70417 through 70418).
    More details on the requirements for device pass-through payment 
applications are included on the CMS website in the application form 
itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the 
``Downloads'' section. In addition, CMS is amenable to meeting with 
applicants or potential applicants to discuss research trial design in 
advance of any device pass-through application or to discuss 
application criteria, including the substantial clinical improvement 
criterion.
b. Applications Received for Device Pass-Through Payment for CY 2019
    We received seven applications by the March 1, 2018 quarterly 
deadline, which is the last quarterly deadline for applications to be 
received in time to be included in this CY 2019 OPPS/ASC proposed rule. 
We received four of the applications in the second quarter of 2017, one 
of the applications in the third quarter of 2017, and two of the 
applications in the first quarter of 2018. None of the seven 
applications were approved for device pass-through payment during the 
quarterly review process.
    Applications received for the later deadlines for the remaining 
2018 quarters (June 1, September 1, and December 1), if any, will be 
presented in the CY 2020 OPPS/ASC proposed rule. We note that the 
quarterly application process and requirements have not changed in 
light of the addition of rulemaking review. Detailed instructions on 
submission of a quarterly device pass-through payment application are 
included on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. A 
discussion of the seven applications received by the March 1, 2018 
deadline is presented below.
(1) AquaBeam System
    PROCEPT BioRobotics Corporation submitted an application for a new 
device category for transitional pass-through payment status for the 
AquaBeam System. The AquaBeam System is intended for the resection and 
removal of prostate tissue in males suffering from lower urinary tract 
symptoms (LUTS) due to benign prostatic hyperplasia (BPH). The 
applicant stated that this is a very common condition typically 
occurring in elderly men. The clinical symptoms of this condition can 
include diminished urinary stream and partial urethral obstruction.\13\ 
According to the applicant, the AquaBeam system resects the prostate to 
relieve symptoms of urethral compression. The resection is performed 
robotically using a high velocity, nonheated sterile saline water jet 
(in a procedure called Aquablation). The applicant stated that the 
AquaBeam System utilizes real-time intra-operative ultrasound guidance 
to allow the surgeon to precisely plan the surgical resection area of 
the prostate and then the system delivers Aquablation therapy to 
accurately resect the obstructive prostate tissue without the use of 
heat. The materials submitted by the applicant state that the AquaBeam 
System consists of a disposable, single-use handpiece as well as other 
components that are considered capital equipment.
---------------------------------------------------------------------------

    \13\ Chungtai B. Forde JC. Thomas DDM et al. Benign Prostatic 
Hyperplasia. Nature Reviews Disease Primers 2 (2016) article 16031.
---------------------------------------------------------------------------

    With respect to the newness criterion at Sec.  419.66(b)(1), FDA 
granted a De Novo request classifying the AquaBeam System as a class II 
device under section 513(f)(2) of the Federal Food, Drug, and Cosmetic 
Act on December 21, 2017. The application for a new device category for 
transitional pass-through payment status for the AquaBeam System was 
received on March 1, 2018, which is within 3 years of the date of the 
initial FDA approval or clearance. We are inviting public comments on 
whether the AquaBeam System meets the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the AquaBeam System is integral to the 
service provided, is used for one patient only, comes in contact with 
human skin, and is applied in or on a wound or other skin lesion. The 
applicant also claimed the AquaBeam System meets the device eligibility 
requirements of Sec.  419.66(b)(4) because it is not an instrument, 
apparatus, implement, or items for which depreciation and financing 
expenses are recovered, and it is not a supply or material furnished 
incident to a service. However, in the CY 2000 interim final rule with 
comment period (65 FR 67804 through 67805), we explained how we 
interpreted Sec.  419.43(e)(4)(iv). We stated that we consider a device 
to be surgically implanted or inserted if is surgically inserted or 
implanted via a natural or surgically created orifice, or inserted or 
implanted via a surgically created incision. We also stated that we do 
not consider an item used to cut or otherwise create a surgical opening 
to be a device that is surgically implanted or inserted. We consider 
items used to create incisions, such as scalpels, electrocautery units, 
biopsy apparatuses, or other commonly used operating room instruments, 
to be supplies or capital equipment, not eligible for transitional 
pass-through payments. We stated that we believe the function of these 
items is different and distinct from that of devices that are

[[Page 37099]]

used for surgical implantation or insertion. Finally, we stated that, 
generally, we would expect that surgical implantation or insertion of a 
device occurs after the surgeon uses certain primary tools, supplies, 
or instruments to create the surgical path or site for implanting the 
device. In the CY 2006 final rule with comment period (70 FR 68329 and 
68630), we adopted as final our interpretation that surgical insertion 
or implantation criteria include devices that are surgically inserted 
or implanted via a natural or surgically created orifice, as well as 
those devices that are inserted or implanted via a surgically created 
incision. We reiterated that we maintain all of the other criteria in 
Sec.  419.66 of the regulations, namely, that we do not consider an 
item used to cut or otherwise create a surgical opening to be a device 
that is surgically implanted or inserted. We are inviting public 
comments on whether the AquaBeam System meets the eligibility criteria 
at Sec.  419.66(b).
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes the 
AquaBeam System. The applicant proposed a category descriptor for the 
AquaBeam System of ``Probe, image guided, robotic resection of 
prostate.'' We are inviting public comments on this issue.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to this criterion, the applicant 
submitted several articles that examined the use of a current standard 
treatment for BPH--transurethral prostatectomy (TURP), including 
complications associated with the procedure and the comparison of the 
effectiveness of TURP to other modalities used to treat BPH, including 
holmium laser enucleation of the prostate (HoLEP) \14\ and 
photoselective vaporization (PVP).\15\
---------------------------------------------------------------------------

    \14\ Montorsi, F. et al. (2004). Holmium Laser Enucleation 
Versus Transurethral Resection of The Prostate: Results from A 2-
Center, Prospective, Randomized Trial In Patients With Obstructive 
Benign Prostatic Hyperplasia. J. Urol. 172, 1926-1929.
    \15\ Bachmann A, et al. (2014). 180-W XPS GreenLight laser 
vaporisation versus transurethral resection of the prostate for the 
treatment of benign prostatic obstruction: 6-month safety and 
efficacy results of a European Multicentre Randomised Trial--the 
GOLIATH study. Eur Urol, 65(5): 931-42.
---------------------------------------------------------------------------

    The most recent clinical study involving the AquaBeam System was an 
accepted manuscript describing a double-blind trial that compared men 
treated with the AquaBeam System versus men treated with traditional 
TURP.\16\ This was a multicenter study in four countries with 17 sites, 
6 of which contributed 5 patients or fewer. Patients were randomized to 
receive either the AquaBeam System or TURP in a two-to-one ratio. With 
exclusions and dropouts, 117 patients were treated with the AquaBeam 
System and 67 patients with TURP. The data on efficacy supported the 
equivalence of the two procedures based upon noninferiority analysis. 
The safety data were reported as showing superiority of the AquaBeam 
System over TURP, although the data were difficult to track because 
adverse consequences were combined into categories. The applicant 
claimed that the International Prostate Symptom Scores (IPPS) were 
significantly improved in AquaBeam System patients as compared to TURP 
patients in men whose prostate was greater the 50 ml in size.
---------------------------------------------------------------------------

    \16\ Gilling P. Barber M. Anderson P et al.: WATER--A Double-
Blind Randomized Controlled Trial of Aquablation vs Transurethal 
Resection of the Prostate in Benign Prostatic Hyperplasia. J Urol. 
Accepted December 29, 2017 doi 10.1016/j.juro.2017.12.065.
---------------------------------------------------------------------------

    Although there may be some evidence of the improved safety of the 
AquaBeam System over TURP, we believe that the comparison of the 
AquaBeam System with TURP does not recognize that there are other 
treatment modalities available that are likely to have a similar safety 
profile as the AquaBeam System. No studies comparing other treatment 
modalities can be cited to show that AquaBeam System is a significant 
improvement over other available procedures.
    Based on the evidence submitted with the application, we have 
insufficient evidence that the AquaBeam System provides a substantial 
clinical improvement over other similar products. We are inviting 
public comments on whether the AquaBeam System meets the substantial 
clinical improvement criterion.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the AquaBeam 
System would be reported with CPT code 0421T. CPT code 0421T is 
assigned to APC 5375 (Level 5 Urology and Related Services). To meet 
the cost criterion for device pass-through payment, a device must pass 
all three tests of the cost criterion for at least one APC. For our 
calculations, we used APC 5375, which has a CY 2018 payment rate of 
$3,706.03. Beginning in CY 2017, we calculate the device offset amount 
at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT 
code 0421T had device offset amount of $0.00 at the time the 
application was received. According to the applicant, the cost of the 
handpiece for the AquaBeam System is $2,500.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,500 for the AquaBeam System exceeds 68 
percent of the applicable APC payment amount for the service related to 
the category of devices of $3,706.03 ($2,500/$3,706.03 x 100 = 67.5 
percent). Therefore, we believe the AquaBeam System meets the first 
cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $2,500 for the 
AquaBeam System exceeds the cost of the device-related portion of the 
APC payment amount for the related service of $0.00 by at least 25 
percent. Therefore, we believe that the AquaBeam System meets the 
second cost significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must

[[Page 37100]]

exceed 10 percent of the APC payment amount for the related service. 
The difference between the estimated average reasonable cost of $2,500 
for the AquaBeam System and the portion of the APC payment amount for 
the device of $0.00 exceeds the APC payment amount for the related 
service of $3,706.03 by 68 percent (($2,500-$0.00)/$3,706.03 x 100 = 
67.5 percent). Therefore, we believe that the AquaBeam System meets the 
third cost significance test.
    We are inviting public comments on whether the AquaBeam System 
meets the device pass-through payment criteria discussed in this 
section, including the cost criteria.
(2) BioBag[supreg] (Larval Debridement Therapy in a Contained Dressing)
    BioMonde US, LLC resubmitted an application for a new device pass-
through category for the BioBag[supreg] (larval debridement therapy in 
a contained dressing), hereinafter referred to as the BioBag[supreg]. 
The application submitted contained similar information to the previous 
application received in March 2016 that was evaluated in the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79650). The only new 
information provided by the applicant were additional studies completed 
since the original application addressing the substantial clinical 
improvement criterion.
    According to the applicant, BioBag[supreg] is a biosurgical wound 
treatment (``maggot therapy'') consisting of disinfected, living larvae 
(Lucilia sericata) in a polyester net bag; the larvae remove dead 
tissue from wounds. The BioBag[supreg] is indicated for debridement of 
nonhealing necrotic skin and soft tissue wounds, including pressure 
ulcers, venous stasis ulcers, neuropathic foot ulcers, and nonhealing 
traumatic or postsurgical wounds. Debridement, which is the action of 
removing devitalized tissue and bacteria from a wound, is required to 
treat or prevent infection and to allow the wound to progress through 
the healing process. This system contains disinfected, living larvae 
that remove the dead tissue from wounds and leave healthy tissue 
undisturbed. The larvae are provided in a sterile polyester net bag, 
available in different sizes. The only other similar product is free-
range (that is, uncontained) larvae. Free-range larvae are not widely 
used in the United States because application is time consuming, there 
is a fear of larvae escaping from the wound, and there are concerns 
about proper and safe handling of the larvae. The total number of 
treatment cycles depends on the characteristics of the wound, the 
response of the wound, and the aim of the therapy. Most ulcers are 
completely debrided within 1 to 6 treatment cycles.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for BioBag[supreg] through the 
premarket notification section 510(k) process on August 28, 2013, and 
the first U.S. sale of BioBag[supreg] occurred in April 2015. The June 
1, 2017 application is more than 3 years after FDA clearance but less 
than 3 years after its first U.S. sale. We are inviting public comments 
on whether BioBag[supreg] meets the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
the applicant claimed that the BioBag[supreg] is an integral part of 
the wound debridement, is used for one patient only, comes in contact 
with human skin, and is applied in or on a wound. In addition, the 
applicant stated that the BioBag[supreg] meets the device eligibility 
requirements of Sec.  419.66(b)(4) because it is not an instrument, 
apparatus, or item for which depreciation and financing expenses are 
recovered. We had also determined in the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79650) that the BioBag[supreg] is not a 
material or supply furnished incident to a service. We are inviting 
public comments on whether BioBag[supreg] meets the eligibility 
criterion.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any existing categories or 
by any category previously in effect, and was not being paid for as an 
outpatient service as of December 31, 1996. With respect to the 
existence of a previous pass-through device category that describes the 
BioBag[supreg], the applicant suggested a category descriptor of 
``Contained medicinal larvae for the debridement of necrotic non-
healing skin and soft tissue wounds.'' We have not identified an 
existing pass-through payment category that describes the 
BioBag[supreg].
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to the substantial clinical 
improvement criterion, the applicant provided substantial evidence that 
larval therapy may improve outcomes compared to other methods of wound 
debridement. However, given the existence of the Medical 
Maggots[supreg], another form of larval therapy that has been on the 
market since 2004, the relevant comparison is between the 
BioBag[supreg] and the Medical Maggots[supreg]. There are many reasons 
to suspect that the BioBag[supreg] could improve outcomes and be 
preferable to the Medical Maggots[supreg]. In essence, with the latter, 
the maggots are directly placed on the wound, which may result in 
escape, leading to infection control issues as well as dosing 
variability. In addition, there are the issues with patient comfort. 
With the Biobag[supreg], the maggots are in a sealed container so 
escape is not an issue. The applicant cited a study showing large 
decreases in maggot escape with the BioBag[supreg] as opposed to the 
Medical Maggots[supreg]. However, the applicant did not provide any 
data that clinical outcomes are improved using the BioBag[supreg] as 
opposed to the Medical Maggots[supreg]. Based on the studies presented, 
we believe there is insufficient data to determine whether the 
BioBag[supreg] offers a substantial clinical improvement over other 
treatments for wound care. We are inviting public comments on whether 
BioBag[supreg] meets the substantial clinical improvement criterion.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of device is not 
insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. With 
respect to the cost criterion, the applicant stated that the 
BioBag[supreg] would be reported with CPT code 97602 (Removal of 
devitalized tissue from wound(s), non-selective debridement, without 
anesthesia (e.g., wet-to-moist dressings, enzymatic, abrasion, larval 
therapy), including topical application(s), wound assessment, and 
instruction(s) for ongoing care, per session). CPT code 97602 is 
assigned to APC 5051 (Level 1 Skin Procedures), with a proposed CY 2019 
payment rate of $178.60, and the device offset is $0.02. The price of 
the BioBag[supreg] varies with the size of the bag ($375 to $435 per 
bag), and bag size selection is based on the size of the wound.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
reasonable cost of $435 for the BioBag[supreg]

[[Page 37101]]

exceeds the applicable APC amount for the service related to the 
category of devices of $178.60 by 243.56 percent ($435/$178.60 x 100 = 
243.56 percent). Thus, the BioBag[supreg] appears to meet the first 
cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of devices in the category 
must exceed the cost of the device-related portion of the APC payment 
amount by at least 25 percent, which means the device cost needs to be 
at least 125 percent of the device offset amount (the device-related 
portion of the APC found on the offset list). The estimated average 
reasonable cost of $435 for the BioBag[supreg] exceeds the device-
related portion of the APC amount for the related service of $0.02 by 
2,175,000 percent ($435/$0.02 x 100 = 2,175,000 percent). Thus, the 
BioBag[supreg] appears to meet the second cost significance test.
    Section 419.66(d)(3), the third cost significance test, requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
determined to be associated with the device exceeds 10 percent of the 
APC payment amount for the related service. The difference between the 
estimated average reasonable cost of $435 for the BioBag[supreg] and 
the portion of the APC payment for the device of $0.02 exceeds 10 
percent at 243.55 percent (($435 - $0.02)/$178.60 x 100 = 243.55 
percent). Thus, the BioBag[supreg] appears to meet the third cost 
significance test and satisfies the cost significance criterion. We are 
inviting public comments on whether the BioBag[supreg] Wound Matrix 
meets the device pass-through payment criteria discussed in this 
section, including the cost criteria.
(3) BlastX\TM\ Antimicrobial Wound Gel
    Next Science\TM\ has submitted an application for a new device 
category for transitional pass-through payment status for BlastX\TM\. 
According to the manufacturer, BlastX\TM\ is a PEG-based aqueous 
hydrogel which contains citric acid, sodium citrate, and benzalkonium 
chloride, buffered to a pH of 4.0 at 2.33 osmolarity. BlastX\TM\ 
received a 510(k) clearance from the FDA on March 6, 2017. BlastX\TM\ 
is indicated for the management of wounds such as Stage I-IV pressure 
ulcers, partial and full thickness wounds, diabetic foot and leg 
ulcers, postsurgical wounds, first and second degree burns, and grafted 
and donor sites.
    The manufacturer stated in its application for transitional pass-
through payment status that BlastX\TM\ works by disrupting the biofilm 
matrix in a wound and eliminating the bacteria absorbed within the gel. 
The manufacturer asserted that disrupting and eliminating the biofilm 
removes a major barrier to wound healing. The manufacturer also 
asserted that BlastX\TM\ is not harmful to host tissue and stated that 
BlastX\TM\ is applied to the wound every other day as a thin layer 
throughout the entire wound healing process.
    When used as an adjunct to debridement, BlastX\TM\ is applied 
immediately after debridement to eliminate any remaining biofilm and 
prevent the growth of new biofilm. Based on the evidence provided in 
the manufacturer's application, BlastX\TM\ is not a skin substitute and 
cannot be considered for transitional pass-through payment status as a 
device. To be considered a device for purposes of the medical device 
pass-through payment process under the OPPS, a skin substitute needs to 
be applied in or on a wound or other skin lesion based on 42 CFR 
419.66(b)(3). It should be a product that is primarily used in 
conjunction with the skin graft procedures described by CPT codes 15271 
through 15278 or HCPCS codes C5271 through C5278 (78 FR 74937). The 
skin substitute should only be applied a few times during a typical 
treatment episode. BlastX\TM\, according to the manufacturer, may be 
used in many other procedures other than skin graft procedures, 
including several debridement and active wound care management 
procedures. The manufacturer also stated that BlastX\TM\ would be used 
in association with any currently available skin substitute product and 
that the product should be applied every other day, which is not how 
skin substitute products for skin graft procedures are used to heal 
wounds. BlastX\TM\ is not a required component of the skin graft 
service, and is used as a supply that may assist with the wound healing 
process that occurs primarily because of the use of sheet skin 
substitute product in a skin graft procedure.
    Therefore, with respect to the eligibility criterion at Sec.  
419.66(b)(3), we have determined that BlastX\TM\ is not integral to the 
service provided (which is a skin graft procedure using a sheet skin 
substitute), is a material or supply furnished incidentally to a 
service, and is not surgically inserted into a patient. BlastX\TM\ does 
not meet the basic criterion of being an eligible device for 
transitional pass-through payment. Therefore, it is not feasible to 
evaluate the product on the other criteria required for transitional 
pass-through payment for devices, including the newness criterion, the 
substantial clinical improvement criterion, and the cost criterion. We 
are inviting public comments on the eligibility of BlastX\TM\ for 
transitional pass-through payment for devices.
(4) EpiCord[supreg]
    MiMedx[supreg] submitted an application for a new OPPS device 
category for transitional pass-through payment status for 
EpiCord[supreg], a skin substitute product. According to the applicant, 
EpiCord[supreg] is a minimally manipulated, dehydrated, devitalized 
cellular umbilical cord allograft for homologous use that provides a 
protective environment for the healing process. According to the 
applicant, EpiCord[supreg] is comprised of the protective elements of 
the umbilical cord with a thin amnion layer and a thicker Wharton's 
Jelly mucopolysaccharides component. The Wharton's Jelly contains 
collagen, hyaluronic acid, and chondroitin sulfate, which are the 
components principally responsible for its mechanical properties.
    The applicant stated that EpiCord[supreg] is packaged as an 
individual unit in two sizes, 2 cm x 3 cm and 3 cm x 5 cm. The 
applicant asserted that EpiCord[supreg] is clinically superior to other 
skin substitutes because it is much thicker than dehydrated amnion/
chorion allografts, which allows for application over exposed bone, 
tendon, nerves, muscle, joint capsule and hardware. According to the 
applicant, due to its unique thicker, stiffer structure, clinicians are 
able to apply or suture EpiCord[supreg] for deep, tunneling wounds 
where other products cannot fill the entire wound bed or dead spaces.
    With respect to the newness criterion at Sec.  419.66(b)(1), 
EpiCord[supreg] was added to the MiMedx[supreg] registration for human 
cells, tissues, and cellular and tissue-based products (HCT/Ps) on 
December 31, 2015. In adding EpiCord, MiMedx[supreg] asserted that 
EpiCord[supreg] conformed to the requirements for HCT/Ps regulated 
solely under section 361 of the Public Health Service Act and the 
regulations at 21 CFR part 1271. For these products, FDA requires that 
the manufacturer register and list its HCT/Ps with the FDA's Center for 
Biologics Evaluation and Research (CBER) within 5 days after beginning 
operations and update its registration annually, and MiMedx[supreg] 
provided documentation verifying that EpiCord[supreg] had been 
registered. However, no documentation regarding an FDA determination 
that EpiCord[supreg] is appropriate for regulation solely under section 
361 of the Public Health Service Act had been submitted. According to

[[Page 37102]]

the applicant, December 31, 2015 was the first date of sale within the 
United States for EpiCord[supreg]. Therefore, it appears that market 
availability of EpiCord[supreg] is within 3 years of this application.
    We note that a product that is regulated solely under section 361 
of the Public Health Service Act and the regulations in 21 CFR part 
1271 is not regulated as a device. The regulations at 21 CFR 1271.20 
state that ``If you are an establishment that manufactures an HCT/P 
that does not meet the criteria set out in Sec.  1271.10(a), and you do 
not qualify for any of the exceptions in Sec.  1271.15, your HCT/P will 
be regulated as a drug, device, and/or biological product . . . .''). 
The Federal Food, Drug, and Cosmetic Act requires that manufacturers of 
devices that are not exempt obtain marketing approval or clearance for 
their products from FDA before they may offer them for sale in the 
United States. We did not receive documentation from the applicant that 
EpiCord[supreg] is regulated as a device by FDA in accordance with 
Medicare regulations at 42 CFR 419.66(b)(1). We are inviting public 
comments on whether EpiCord[supreg] meets the newness criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, EpiCord[supreg] is a skin substitute 
product that is integral to the service provided, is used for one 
patient only, comes in contact with human tissue, and is surgically 
inserted into the patient. The applicant also claimed EpiCord[supreg] 
meets the device eligibility requirements of Sec.  419.66(b)(4) because 
EpiCord[supreg] is not an instrument, apparatus, implement, or item for 
which depreciation and financing expenses are recovered, and it is not 
a supply or material. We are inviting public comments on whether 
EpiCord[supreg] meets these eligibility criteria.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through category that describes 
EpiCord[supreg]. There are no present or previously established device 
categories for pass-through status that describe minimally manipulated, 
lyophilized, non-viable cellular umbilical membrane allografts. 
MiMedx[supreg] proposed a new device category descriptor of 
``Dehydrated Human Umbilical Cord Allografts'' for EpiCord[supreg].
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With regard to the substantial clinical 
improvement criterion, the applicant asserted that EpiCord[supreg] 
reduces the mortality rate with use of the device; reduces the rate of 
device-related complications; decreases the rate of subsequent 
diagnostic or therapeutic interventions; decreases the number of future 
hospitalizations or physician visits; provides more rapid beneficial 
resolution of the disease process treated because of the use of the 
device; decreases pain, bleeding, or other quantifiable symptom; and 
reduces recovery time.
    To determine if the product meets the substantial improvement 
criterion, we compared EpiCord[supreg] to other skin substitute 
products. Compared to NEOX CORD 1K Wound Allograft, EpiCord[supreg] has 
half the levels of Vascular Endothelial Growth Factor (VEGF) and 
insulin-like growth factor binding protein-4 (IGFBP-4) and lower levels 
of Glial Cell Line Derived Neurotrophic Factor (GDNF) and Epidermal 
Growth Factor (EGF). Despite EpiCord[supreg] having higher levels of 
other growth factors, the cumulative effect of these differences has 
not been sufficiently demonstrated in the application. Moreover, most 
professional opinions do not compare EpiCord[supreg] to specific 
alternative skin substitutes; the few that do are, for the most part, 
of limited specificity (in terms of foci of superiority to other skin 
substitutes). Studies demonstrated 41 percent higher relative rates 
(4.1 percent higher absolute rates) of severe complications for 
EpiCord[supreg] compared to standard of care. Additionally, the control 
group was moist dressings and offloading (instead of another umbilical 
or biologic product). Furthermore, 38 percent of EpiCord[supreg] 
patients in the study were smokers versus 58 percent of control 
patients (smoking impairs wound healing; thus, this important 
dissimilarity between intervention and study populations casts doubt on 
attributing observed benefit to the intervention).
    Based on the evidence submitted with the application, we have 
insufficient evidence that EpiCord[supreg] provides a substantial 
clinical improvement over other treatments for wound care. We are 
inviting public comments on whether EpiCord[supreg] meets the 
substantial clinical improvement criterion.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. EpiCord[supreg] would be reported with CPT 
code 15271 or 15275. CPT code 15271 describes the application of skin 
substitute graft to trunk, arms, legs, total wound surface area up to 
100 sq cm; first 25 sq cm or less wound surface area. CPT code 15275 
describes the application of skin substitute graft to face, scalp, 
eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or 
multiple digits, total wound surface area up to 100 sq cm; first 25 sq 
cm or less wound surface area. Both codes are assigned to APC 5054 
(Level 4 Skin Procedures). CPT codes 15271 through 15278 are assigned 
to either APC 5054 (Level 4 Skin Procedures), with a proposed CY 2019 
payment rate of $1,593.38 and a device offset of $4.62, or APC 5055 
(Level 5 Skin Procedures), with a proposed CY 2019 payment rate of 
$2,811.13 and a device offset of $37.11. The price of EpiCord[supreg] 
is $1,595 for the 2 cm x 3 cm and $3,695 for the 3 cm x 5 cm product 
size. To meet the cost criterion for device pass-through payment, a 
device must pass all three tests of the cost criterion for at least one 
APC. Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $3,695 for the 3 cm x 5 cm product exceeds 
the applicable APC amount for the service related to the category of 
devices of $1,593.38 by 231.90 percent ($3,695/$1,593.38 x 100 percent 
= 231.90 percent). Therefore, it appears that EpiCord[supreg] meets the 
first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The estimated

[[Page 37103]]

average reasonable cost of $3,695 for the 3 cm x 5 cm product exceeds 
the device-related portion of the APC payment amount for the related 
service of $4.62 by 79,978.35 percent ($3,695/$4.62 x 100 percent = 
79,978.35 percent). Therefore, it appears that EpiCord[supreg] meets 
the second cost significance test.
    Section 419.66(d)(3), the third cost significance test, requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $3,695 for the 3 cm x 5 cm product and the portion 
of the APC payment amount for the device of $4.62 exceeds 10 percent at 
231.61 percent (($3,695 - $4.62)/$1,593.38) x 100 percent = 231.61 
percent). Therefore, it appears that EpiCord[supreg] meets the third 
cost significance test. Based on the costs submitted by the applicant 
and the calculations noted earlier, it appears that EpiCord[supreg] 
meets the cost criterion at Sec.  419.66(c)(3) for new device 
categories. We are inviting public comments on whether EpiCord[supreg] 
meets the cost criterion for device pass-through payment.
(5) remed[emacr][supreg] System Transvenous Neurostimulator
    Respicardia, Inc. submitted an application for a new device 
category for transitional pass-through payment status for the 
remed[emacr][supreg] System Transvenous Neurostimulator. According to 
the applicant, the remed[emacr][supreg] System is an implantable 
phrenic nerve stimulator indicated for the treatment of moderate to 
severe central sleep apnea (CSA) in adult patients. The applicant 
stated that the remed[emacr][supreg] System is the first and only 
implantable neurostimulator to use transvenous sensing and stimulation 
technology. The applicant also stated that the remed[emacr][supreg] 
System consists of an implantable pulse generator, a transvenous lead 
to stimulate the phrenic nerve and a transvenous sensing lead to sense 
respiration via transthoracic impedance. Lastly, the applicant stated 
that the device stimulates a nerve located in the chest (phrenic nerve) 
that is responsible for sending signals to the diaphragm to stimulate 
breathing to restore normal sleep and respiration in patients with 
moderate to severe central sleep apnea (CSA).
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received a Category B Investigational Device Exemption (IDE) 
from FDA on April 18, 2013. Subsequently, the applicant received 
approval of its premarket approval (PMA) application from FDA on 
October 6, 2017. The application for a new device category for 
transitional pass-through payment status for the remed[emacr][supreg] 
System was received on May 31, 2017, which is within 3 years of the 
date of the initial FDA approval or clearance. We are inviting public 
comments on whether the remed[emacr][supreg] System meets the newness 
criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the remed[emacr][supreg] System is integral 
to the service provided, is used for one patient only, comes in contact 
with human skin, and is applied in or on a wound or other skin lesion. 
The applicant also claimed the remed[emacr][supreg] System meets the 
device eligibility requirements of Sec.  419.66(b)(4) because it is not 
an instrument, apparatus, implement, or items for which depreciation 
and financing expenses are recovered, and it is not a supply or 
material furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes the 
remed[emacr][supreg] System. The applicant proposed a category 
descriptor for the remed[emacr][supreg] System of ``generator, 
neurostimulator (implantable), non-rechargeable, with transvenous 
sensing and stimulation.'' We are inviting public comments on this 
issue.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to this criterion, the applicant 
submitted several journal articles that discussed the health effects of 
central sleep apnea (CSA) which include fatigue, decreased mental 
acuity, myocardial ischemia, and dysrhythmias. The applicant stated 
that patients with CSA may suffer from poor clinical outcomes, 
including myocardial infarction and congestive heart failure.\17\
---------------------------------------------------------------------------

    \17\ Costanzo, M.R., et al., Mechanisms and Clinical 
Consequences of Untreated Central Sleep Apnea in Heart Failure. 
Journal of the American College of Cardiology, 2015. 65(1): p. 72-
84.
---------------------------------------------------------------------------

    The applicant claims that the remed[emacr][supreg] System has been 
found to significantly improve apnea-hypopnea index (AHI), which is an 
index used to indicate the severity of sleep apnea. AHI is represented 
by the number of apnea and hypopnea events per hour of sleep and was 
used as the primary effectiveness endpoint in the remed[emacr][supreg] 
System pivotal trial. The applicant noted that the remed[emacr][supreg] 
System was shown to improve AHI in small, self-controlled studies as 
well as in larger trials.
    The applicant reported that in the pivotal study, a large, 
multicenter, randomized controlled trial of CSA patients, intention-to-
treat analysis found that 51 percent (35/68) of CSA patients using the 
remed[emacr][supreg] System had greater than 50 percent reduction of 
apnea-hypopnea index (AHI) from baseline at 6 months compared to 11 
percent (8/73) of the control group (p < 0.0001). Per-protocol analysis 
found that 60 percent (35/58) of remed[emacr][supreg] System patients 
had a greater than 50 percent reduction of AHI and in 74 percent (26/
35) of these patients AHI dropped to <20.\18\
---------------------------------------------------------------------------

    \18\ Costanzo, M.R., et al. (2016). Transvenous neurostimulation 
for central sleep apnoea: a randomised controlled trial. The Lancet, 
388(10048): p. 974-982.
---------------------------------------------------------------------------

    According to the applicant, an exploratory post-hoc analysis of 
patients with CSA and congestive heart failure (CHF) in the Pivotal 
trial found that, at 6 months, the remed[emacr][supreg] System group 
had a greater percentage of patients with >=50 percent reduction in AHI 
compared to control group (63 percent versus 4 percent, p < 0.001).\19\
---------------------------------------------------------------------------

    \19\ Goldberg, L.R., et al. (2017). In Heart Failure Patients 
with CSA, Stimulation of the Phrenic Nerve Improves Sleep and 
Quality of Life. Journal of Cardiac Failure, 23(8): p. S15.
---------------------------------------------------------------------------

    The applicant noted that patient symptoms and quality of life were 
improved with the remed[emacr][supreg] System therapy. The mean Epworth 
Sleepiness Scale (ESS) score significantly decreased in 
remed[emacr][supreg] System patients, indicating less daytime 
sleepiness.\20\ Adverse events associated with remed[emacr][supreg] 
System insertion and therapy included lead dislodgement/dislocation, 
hematoma, migraine, atypical chest pain, pocket perforation, pocket 
infection, extra-respiratory stimulation,

[[Page 37104]]

concomitant device interaction, and elevated transaminases.\21\ There 
were no patient deaths that were related to the device implantation or 
therapy.
---------------------------------------------------------------------------

    \20\ Costanzo, M.R., et al. (2016). Transvenous neurostimulation 
for central sleep apnoea: a randomised controlled trial. The Lancet, 
388(10048): p. 974-982.
    \21\ Costanzo, M.R., et al. (2016).Transvenous neurostimulation 
for central sleep apnoea: a randomised controlled trial. The Lancet, 
388(10048): p. 974-982.
---------------------------------------------------------------------------

    One concern regarding the remed[emacr][supreg] System is the 
potential for complications in patients with coexisting cardiac 
devices, such as pacemakers or ICDs, given that the 
remed[emacr][supreg] System device requires lead placement and 
generation of electric impulses. Another concern with the evidence of 
substantial clinical improvement is that there is limited long-term 
data on patients with remed[emacr][supreg] System implants. The pivotal 
trial included only 6 months of follow-up. Also, while the applicant 
reported a reduction in AHI in the treatment group, the applicant did 
not establish that that level of change was biologically meaningful in 
the population(s) being studied. The applicant did not conduct a power 
analysis to determine the necessary size of the study population and 
the necessary duration of the study to detect both early and late 
events.
    In addition, patients in the pivotal study were not characterized 
by the use of cardiac devices. Cardiac resynchronization therapy (CRT), 
in particular, is known to improve chronic sleep apnea in addition to 
its primary effects on heart failure, and central apnea is a marker of 
the severity of the congestive heart failure. The applicant did not 
conduct subset analyses to assess the impact of cardiac 
resynchronization therapy.
    Lastly, while evaluation of AHI and quality of life metrics show 
improvement with the remed[emacr][supreg] System, the translation of 
those effects to mortality benefit is yet to be determined. Further 
studies of the remed[emacr][supreg] System are likely needed to 
determine long-term effects of the device, and as well as its efficacy 
compared to existing treatments of CPAP or medications.
    Based on the evidence submitted with the application, we have 
insufficient evidence that the remed[emacr][supreg] System provides a 
substantial clinical improvement over other similar products. We are 
inviting public comments on whether the remed[emacr][supreg] System 
meets the substantial clinical improvement criterion.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
remed[emacr][supreg] System would be reported with CPT code 0424T. CPT 
code 0424T is assigned to APC 5464 (Level 4 Neurostimulator and Related 
Procedures). To meet the cost criterion for device pass-through 
payment, a device must pass all three tests of the cost criterion for 
at least one APC. For our calculations, we used APC 5464, which had a 
CY 2017 payment rate of $27,047.11 at the time the application was 
received. Beginning in CY 2017, we calculate the device offset amount 
at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT 
code 0424T had a device offset amount of $11,089 at the time the 
application was received. According to the applicant, the cost of the 
remed[emacr][supreg] System was $34,500. Section 419.66(d)(1), the 
first cost significance requirement, provides that the estimated 
average reasonable cost of devices in the category must exceed 25 
percent of the applicable APC payment amount for the service related to 
the category of devices. The estimated average reasonable cost of 
$34,500 for the remed[emacr][supreg] System exceeds 127 percent of the 
applicable APC payment amount for the service related to the category 
of devices of $27,047.11 ($34,500/$27,047.11 x 100 = 127.5 percent). 
Therefore, we believe the remed[emacr][supreg] System meets the first 
cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $34,500 for the 
remed[emacr][supreg] System exceeds the cost of the device-related 
portion of the APC payment amount for the related service of $11,089 by 
311 percent ($34,500/$11,089) x 100 = 311 percent). Therefore, we 
believe that the remed[emacr][supreg] System meets the second cost 
significance test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $34,500 for the remed[emacr][supreg] System and the 
portion of the APC payment amount for the device of $11,089 exceeds the 
APC payment amount for the related service of $27,047.11 by 87 percent 
(($34,500-$11,089)/$27,047.11 x 100 = 86.6 percent). Therefore, we 
believe that the remed[emacr][supreg] System meets the third cost 
significance test.
    We are inviting public comments on whether the remed[emacr][supreg] 
System meets the device pass-through payment criteria discussed in this 
section, including the cost criteria for device pass-through payment.
(6) Restrata[supreg] Wound Matrix
    Acera Surgical, Inc. submitted an application for a new device 
category for transitional pass-through payment status for 
Restrata[supreg] Wound Matrix. Restrata[supreg] Wound Matrix is a 
sterile, single-use product intended for use in local management of 
wounds. According to the applicant, Restrata[supreg] Wound Matrix is a 
soft, white, conformable, non-friable, absorbable matrix that works as 
a wound care management product by acting as a protective covering for 
wound defects, providing a moist environment for the body's natural 
healing process to occur. Restrata[supreg] Wound Matrix is made from 
synthetic biocompatible materials and was designed with a nanoscale 
non-woven fibrous structure with high porosity, similar to native 
extracellular matrix. Restrata[supreg] Wound Matrix allows for cellular 
infiltration, new tissue formation, neovascularization, and wound 
healing before completely degrading via hydrolysis. The product permits 
the ingress of cells and soft tissue formation in the defect space/
wound bed. Restrata[supreg] Wound Matrix can be used to manage wounds, 
including: Partial and full-thickness wounds, pressure sores/ulcers, 
venous ulcers, diabetic ulcers, chronic vascular ulcers, tunneled/
undermined wounds, surgical wounds (for example, donor site/grafts, 
post-laser surgery, post-Mohs surgery, podiatric wounds, wound 
dehiscence), trauma wounds (for example, abrasions, lacerations, 
partial thickness burns, skin tears), and draining wounds.
    With respect to the newness criterion at Sec.  419.66(b)(1), the 
applicant received FDA clearance for Restrata[supreg] Wound Matrix 
through the premarket notification section 510(k) process on April 26, 
2017 and its February 27, 2018 application for pass-through payment 
status was within 3 years of FDA clearance. We are inviting public

[[Page 37105]]

comment on whether Restrata[supreg] Wound Matrix meets the newness 
criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, Restrata[supreg] Wound Matrix is a product 
that is integral to the service provided, is used for one patient only, 
comes in contact with human skin, and is surgically inserted into the 
patient. The description of Restrata[supreg] Wound Matrix shows the 
product meets the device eligibility requirements of Sec.  419.66(b)(4) 
because Restrata[supreg] Wound Matrix is not an instrument, apparatus, 
implement, or item for which depreciation and financing expenses are 
recovered, and it is not a supply or material. We are inviting public 
comment on whether Restrata[supreg] Wound Matrix meets the eligibility 
criteria.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through category that describes 
Restrata[supreg] Wound Matrix. The applicant proposed a new device 
category descriptor of ``Nanofiber Skin Substitute'' for 
Restrata[supreg] Wound Matrix. We are inviting public comments on this 
issue.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With regard to the substantial clinical 
improvement criterion, the applicant submitted three clinical studies 
about Restrata[supreg] to address this criterion. The largest study is 
non-randomized, non-blinded, uncontrolled single site retrospective 
analysis of 70 patients with 82 wounds. This study has not been 
published but has been submitted to a journal. The study included 
different types of wounds including diabetic wounds, venous wounds, and 
other wounds. The study asserted that the wounds had not responded to 
other wound care treatments, but provides little information on the 
reasons for the failure of previous treatments.
    The study had no power analysis of the results. There were no 
corrections for multiple comparisons or peeks at the data, and the 
study did not address if participants dropped out or why there was a 
lack of drop-outs. The conclusions were descriptive statistics and were 
compared to the findings in another study where the average wound 
duration was nearly twice as long as in the original study. There was 
no previously established endpoint for the most important aspect of 
functionality, which would be the proportion of wounds with total 
closure that remained closed after six months despite weight bearing.
    The other two studies were extremely small. One study was performed 
on two non-human subjects (pigs) with a competitor skin matrix product 
compared to Restrata[supreg]. The results of the study were mixed with 
Restrata[supreg] performing better on some measures and the competitor 
product performing better on other measures. The other study was a case 
series of six patients that was non-randomized without a control group. 
It was not clear how the results of these non-randomly selected pre-
treated patients relate to the larger population of ulcer patients.
    Based on the evidence submitted, we believe there is insufficient 
data to determine whether Restrata[supreg] offers a substantial 
clinical improvement over other treatments for wound care. We are 
inviting public comments on whether Restrata[supreg] meets the 
substantial clinical improvement criterion.
    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires CMS to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. Restrata[supreg] Wound Matrix would be 
reported with CPT codes 15271 through 15278, which cover the 
application of skin substitute grafts to different areas of the body 
for high-cost skin substitutes. To meet the cost criterion for device 
pass-through payment, a device must pass all three tests of the cost 
criterion for at least one APC. CPT codes 15271 through 15278 are 
assigned to either APC 5054 (Level 4 Skin Procedures), with a proposed 
CY 2019 payment rate of $1,593.38 and a device offset of $4.62, or APC 
5055 (Level 5 Skin Procedures), with a proposed CY 2019 payment rate of 
$2,811.13 and a device offset of $37.11. According to the applicant, 
the highest retail cost of Restrata[supreg] Wound Matrix is $11,718.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $11,718 for Restrata[supreg] Wound Matrix 
exceeds the applicable APC amount for the service related to the 
category of devices of $1,593.38 by 735.42 percent ($11,718/$1,593.38 x 
100 percent = 735.42 percent). Therefore, it appears that 
Restrata[supreg] Wound Matrix meets the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means the device cost needs to be at least 125 percent of the offset 
amount (the device-related portion of the APC found on the offset 
list). The estimated average reasonable cost of $11,718 for 
Restrata[supreg] Wound Matrix exceeds the device-related portion of the 
APC payment amount for the related service of $4.62 by 253,636.36 
percent ($11,718/$4.62 x 100 percent = 253,636.36 percent). Therefore, 
it appears that Restrata[supreg] Wound Matrix meets the second cost 
significance test.
    Section 419.66(d)(3), the third cost significance test, requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $11,718 for Restrata[supreg] Wound Matrix and the 
portion of the APC payment amount for the device of $4.62 exceeds 10 
percent at 735.13 percent (($11,718-$4.62)/$1,593.38 x 100 percent = 
735.13 percent). Therefore, it appears that Restrata[supreg] Wound 
Matrix meets the third cost significance test. Based on the costs 
submitted by the applicant and the calculations noted earlier, we 
believe that Restrata[supreg] Wound Matrix appears to meet the cost 
criterion at Sec.  419.66(c)(3) for new device categories. We are 
inviting public comments on whether Restrata[supreg] Wound Matrix meets 
the device pass-through payment criteria discussed in this section, 
including the cost criteria.
(7) SpaceOAR[supreg] System
    Augmenix, Inc. submitted an application for a new device category 
for transitional pass-through payment status for the SpaceOAR[supreg] 
System. According to the applicant, the

[[Page 37106]]

SpaceOAR[supreg] System is a polyethylene glycol hydrogel spacer that 
temporarily positions the anterior rectal wall away from the prostate 
to reduce the radiation delivered to the anterior rectum during 
prostate cancer radiotherapy treatment. The applicant stated that the 
SpaceOAR[supreg] System reduces some of the side effects associated 
with radiotherapy, which are collectively known as ``rectal toxicity'' 
(diarrhea, rectal bleeding, painful defecation, and erectile 
dysfunction, among other conditions). The applicant also stated that 
the SpaceOAR[supreg] is implanted several weeks before radiotherapy; 
the hydrogel maintains space between the prostate and rectum for the 
entire course of radiotherapy and is completely absorbed by patient's 
body within 6 months.
    With respect to the newness criterion at Sec.  419.66(b)(1), FDA 
granted a De Novo request classifying the SpaceOAR[supreg] System as a 
class II device under section 513(f)(2) of the Federal Food, Drug, and 
Cosmetic Act on April 1, 2015. We received the application for a new 
device category for transitional pass-through payment status for the 
SpaceOAR[supreg] System on June 1, 2017, which is within 3 years of the 
date of the initial FDA approval or clearance. We are inviting public 
comments on whether the SpaceOAR[supreg] System meets the newness 
criterion.
    With respect to the eligibility criterion at Sec.  419.66(b)(3), 
according to the applicant, the SpaceOAR[supreg] System is integral to 
the service provided, is used for one patient only, comes in contact 
with human skin, and is applied in or on a wound or other skin lesion. 
The applicant also claimed the SpaceOAR[supreg] System meets the device 
eligibility requirements of Sec.  419.66(b)(4) because it is not an 
instrument, apparatus, implement, or item for which depreciation and 
financing expenses are recovered, and it is not a supply or material 
furnished incident to a service.
    The criteria for establishing new device categories are specified 
at Sec.  419.66(c). The first criterion, at Sec.  419.66(c)(1), 
provides that CMS determines that a device to be included in the 
category is not appropriately described by any of the existing 
categories or by any category previously in effect, and was not being 
paid for as an outpatient service as of December 31, 1996. We have not 
identified an existing pass-through payment category that describes the 
SpaceOAR[supreg] System. The applicant proposed a category descriptor 
for the SpaceOAR[supreg] System of ``Absorbable perirectal spacer''. We 
are inviting public comments on this issue.
    The second criterion for establishing a device category, at Sec.  
419.66(c)(2), provides that CMS determines that a device to be included 
in the category has demonstrated that it will substantially improve the 
diagnosis or treatment of an illness or injury or improve the 
functioning of a malformed body part compared to the benefits of a 
device or devices in a previously established category or other 
available treatment. With respect to this criterion, the applicant 
submitted several studies which generally discussed the benefits and 
techniques for using hydrogel spacers to limit radiation exposure to 
the rectum in prostate radiotherapy. The applicant also submitted 
several studies that specifically examined the effect that the 
SpaceOAR[supreg] System had on mitigating outcomes such as rectal dose, 
toxicity, and quality of life declines after image guided intensity 
modulated radiation therapy for prostate cancer. Articles by Hamstra et 
al.\22\ and Mariados et al.\23\ discussed the results of a single-blind 
phase III trial of image guided intensity modulated radiation therapy 
with 3 years of follow up. A total of 222 men were randomized 2:1 to 
the spacer or control group and received 79.2 Gy in 1.8-Gy fractions to 
the prostate with or without the seminal vesicles. The results of this 
study showed that after 3 years, compared with the control group, the 
participants who received the SpaceOAR[supreg] System injection had a 
statistically significant smaller volume of the rectum receiving a 
threshold radiation exposure, which was the primary effectiveness 
endpoint. The results also showed that in an extended follow up period, 
the control group experienced larger declines in bowel and urinary 
quality of life compared to participants who received the 
SpaceOAR[supreg] System treatment. Lastly, in an extended follow-up 
period, the probability of grade >=1 rectal toxicity was decreased in 
the SpaceOAR[supreg] System arm (9 percent control group, 2 percent 
SpaceOAR[supreg] System group, p<.03) and no >= grade 2 rectal toxicity 
was observed in the SpaceOAR[supreg] System arm. However, the control 
arm had low rates of rectal toxicity in general. The results of this 3-
year follow-up of these participants showed that the differences 
identified in the 15-month follow-up study were maintained or 
increased.\24\
---------------------------------------------------------------------------

    \22\ Hamstra DA, et al. (2017). Continued Benefit to Rectal 
Separation for Prostate Radiation Therapy: Final Results of a Phase 
III Trial. Int J Radiat Oncol Biol PhysApr 1;97(5):976-985. Epub 
2016 Dec 23. PMID:28209443.
    \23\ Mariados N, et al. (2015). Hydrogel Spacer Prospective 
Multicenter Randomized Controlled Pivotal Trial: Dosimetric and 
Clinical Effects of Perirectal Spacer Application in Men Undergoing 
Prostate Image Guided Intensity Modulated Radiation Therapy. Int J 
Radiat Oncol Biol Phys.92(5):971-977. Epub 2015 Apr 23. PMID: 
26054865.
    \24\ Ibid.
---------------------------------------------------------------------------

    The applicant also included a secondary analysis of the phase III 
trial data which showed that participants who received lower radiation 
doses to the penile bulb, associated with the SpaceOAR[supreg] System 
injection, reported similar erectile function compared with the control 
group based on patient-reported sexual quality of life.\25\ A 2017 
retrospective cohort study by Pinkawa et al.\26\ evaluated quality of 
life changes up to 5 years after RT for prostate cancer with the 
SpaceOAR[supreg] System and showed that 5 years after radiation 
therapy, no patients who received the SpaceOAR[supreg] System reported 
moderate/big problems with bowel urgency, losing control of stools, or 
with bowel habits overall. However, there were no statistically 
significant differences in mean score changes for urinary, bowel, or 
sexual bother between the percentage of participants in the 
SpaceOAR[supreg] System and control groups at either 1.5 or 5 years 
post radiation therapy. Concerns regarding the phase III trial include 
inclusion of only low to moderate risk prostate cancer in the study 
population and failing to use a clinical outcome as a primary endpoint, 
although the purpose of the spacer is to reduce the side effects of 
undesired radiation to the rectum including bleeding, diarrhea, 
fistula, pain, and/or stricture. Notwithstanding acknowledgement that 
rectal complications may be reduced using biodegradable biomaterials 
placed to increase the distance between the rectum and the prostate, it 
is not clear that SpaceOAR[supreg] System is superior to existing 
alternative biodegradable biomaterials currently utilized for spacing 
in the context of prostate radiotherapy.
---------------------------------------------------------------------------

    \25\ Hamstra, DA et al. (2018) Sexual quality of life following 
prostate intensity modulated radiation therapy (IMRT) with a rectal/
prostate spacer: secondary analysis of a phase 3 trial. Practical 
Radiation Oncology, 8, e7-e15.
    \26\ Pinkawa, M. et al. (2017). Quality of Life after Radiation 
Therapy for Prostate Cancer With a Hydrogel Spacer: Five Year 
Results. Int J Radiat Oncol Biol Phys., Vol. 99, No. 2, pp. 374e377.
---------------------------------------------------------------------------

    Based on the evidence submitted with the application, we have 
insufficient evidence that the SpaceOAR[supreg] System provides a 
substantial clinical improvement over other similar products. We are 
inviting public comments on whether the SpaceOAR[supreg] System meets 
the substantial clinical improvement criterion.

[[Page 37107]]

    The third criterion for establishing a device category, at Sec.  
419.66(c)(3), requires us to determine that the cost of the device is 
not insignificant, as described in Sec.  419.66(d). Section 419.66(d) 
includes three cost significance criteria that must each be met. The 
applicant provided the following information in support of the cost 
significance requirements. The applicant stated that the 
SpaceOAR[supreg] System would be reported with CPT code 0438T (which 
was deleted and replaced with CPT code 55874, effective January 1, 
2018). CPT code 0438T was assigned to APC 5374 (Level 4 Urology and 
Related Services). To meet the cost criterion for device pass-through 
payment, a device must pass all three tests of the cost criterion for 
at least one APC. For our calculations, we used APC 5374, which had a 
CY 2017 payment rate of $2,542.56 at the time the application was 
received. Beginning in CY 2017, we calculate the device offset amount 
at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT 
code 0438T had device offset amount of $587.07 at the time the 
application was received. According to the applicant, the cost of the 
SpaceOAR[supreg] System was $2,850.
    Section 419.66(d)(1), the first cost significance requirement, 
provides that the estimated average reasonable cost of devices in the 
category must exceed 25 percent of the applicable APC payment amount 
for the service related to the category of devices. The estimated 
average reasonable cost of $2,850 for the SpaceOAR[supreg] System 
exceeds 112 percent of the applicable APC payment amount for the 
service related to the category of devices of $2,542.56 ($2850/
$2,542.56 x 100 = 112 percent). Therefore, we believe the 
SpaceOAR[supreg] system meets the first cost significance test.
    The second cost significance test, at Sec.  419.66(d)(2), provides 
that the estimated average reasonable cost of the devices in the 
category must exceed the cost of the device-related portion of the APC 
payment amount for the related service by at least 25 percent, which 
means that the device cost needs to be at least 125 percent of the 
offset amount (the device-related portion of the APC found on the 
offset list). The estimated average reasonable cost of $2,850 for the 
SpaceOAR[supreg] System exceeds the cost of the device-related portion 
of the APC payment amount for the related service of $587.07 by 485 
percent ($2,850/$587.07) x 100 = 485 percent). Therefore, we believe 
that the SpaceOAR[supreg] System meets the second cost significance 
test.
    The third cost significance test, at Sec.  419.66(d)(3), requires 
that the difference between the estimated average reasonable cost of 
the devices in the category and the portion of the APC payment amount 
for the device must exceed 10 percent of the APC payment amount for the 
related service. The difference between the estimated average 
reasonable cost of $2,850 for the SpaceOAR[supreg] System and the 
portion of the APC payment amount for the device of $587.07 exceeds the 
APC payment amount for the related service of $2,542.56 by 89 percent 
(($2,850-$587.07)/$2,542.56 x 100 = percent). Therefore, we believe 
that the SpaceOAR[supreg] System meets the third cost significance 
test.
    We are inviting public comments on whether the SpaceOAR[supreg] 
System meets the device pass-through payment criteria discussed in this 
section, including the cost criteria.

B. Proposed Device-Intensive Procedures

1. Background
    Under the OPPS, prior to CY 2017, device-intensive status for 
procedures was determined at the APC level for APCs with a device 
offset percentage greater than 40 percent (79 FR 66795). Beginning in 
CY 2017, CMS began determining device-intensive status at the HCPCS 
code level. In assigning device-intensive status to an APC prior to CY 
2017, the device costs of all the procedures within the APC were 
calculated and the geometric mean device offset of all of the 
procedures had to exceed 40 percent. Almost all of the procedures 
assigned to device-intensive APCs utilized devices, and the device 
costs for the associated HCPCS codes exceeded the 40-percent threshold. 
The no cost/full credit and partial credit device policy (79 FR 66872 
through 66873) applied to device-intensive APCs and is discussed in 
detail in section IV.B.4. of this proposed rule. A related device 
policy was the requirement that certain procedures assigned to device-
intensive APCs require the reporting of a device code on the claim (80 
FR 70422). For further background information on the device-intensive 
APC policy, we refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70421 through 70426).
a. HCPCS Code-Level Device-Intensive Determination
    As stated earlier, prior to CY 2017, the device-intensive 
methodology assigned device-intensive status to all procedures 
requiring the implantation of a device that were assigned to an APC 
with a device offset greater than 40 percent and, beginning in CY 2015, 
that met the three criteria listed below. Historically, the device-
intensive designation was at the APC level and applied to the 
applicable procedures within that given APC. In the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79658), we changed our 
methodology to assign device-intensive status at an individual HCPCS 
code level rather than at the APC level. Under this policy, a procedure 
could be assigned device-intensive status regardless of its APC 
assignment, and device-intensive APCs were no longer employed under the 
OPPS or the ASC payment system.
    We believe that a HCPCS code-level device offset is, in most cases, 
a better representation of a procedure's device cost than an APC-wide 
average device offset based on the average device offset of all of the 
procedures assigned to an APC. Unlike a device offset calculated at the 
APC level, which is a weighted average offset for all devices used in 
all of the procedures assigned to an APC, a HCPCS code-level device 
offset is calculated using only claims for a single HCPCS code. We 
believe that this methodological change results in a more accurate 
representation of the cost attributable to implantation of a high-cost 
device, which ensures consistent device-intensive designation of 
procedures with a significant device cost. Further, we believe a HCPCS 
code-level device offset removes inappropriate device-intensive status 
for procedures without a significant device cost that are granted such 
status because of APC assignment.
    Under our existing policy, procedures that meet the criteria listed 
below are identified as device-intensive procedures and are subject to 
all the policies applicable to procedures assigned device-intensive 
status under our established methodology, including our policies on 
device edits and no cost/full credit and partial credit devices 
discussed in sections IV.B.3. and IV.B.4. of this proposed rule, 
respectively.
b. Use of the Three Criteria To Designate Device-Intensive Procedures
    We clarified our established policy in the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 52474), where we explained that device-
intensive procedures require the implantation of a device and 
additionally are subject to the following criteria:
    <bullet> All procedures must involve implantable devices that would 
be reported if device insertion procedures were performed;

[[Page 37108]]

    <bullet> 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
    <bullet> The device offset amount must be significant, which is 
defined as exceeding 40 percent of the procedure's mean cost.
    We changed our policy to apply these three criteria to determine 
whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66926), where we stated that we 
would apply the no cost/full credit and partial credit device policy--
which includes the three criteria listed above--to all device-intensive 
procedures beginning in CY 2015. We reiterated this position in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70424), where we 
explained that we were finalizing our proposal to continue using the 
three criteria established in the CY 2007 OPPS/ASC final rule with 
comment period for determining the APCs to which the CY 2016 device 
intensive policy will apply. Under the policies we adopted in CYs 2015, 
2016, and 2017, all procedures that require the implantation of a 
device and meet the above criteria are assigned device-intensive 
status, regardless of their APC placement.
2. Proposed Changes to the Device-Intensive Procedure Policy for CY 
2019
    As part of CMS' effort to better capture costs for procedures with 
significant device costs, for CY 2019, we are proposing to modify our 
criteria for device-intensive procedures. We have heard from 
stakeholders that the current criteria exclude some procedures that 
stakeholders believe should qualify as device-intensive procedures. 
Specifically, we were persuaded by stakeholder arguments that 
procedures requiring expensive surgically inserted or implanted devices 
that are not capital equipment should nonetheless qualify as device-
intensive procedures, regardless of whether the device remains in the 
patient's body after the conclusion of the procedure. We agree that a 
broader definition of device-intensive procedures is warranted, and are 
proposing two modifications to the current criteria. First, we are 
proposing to allow procedures that involve surgically inserted or 
implanted, single-use devices that meet the device offset percentage 
threshold to qualify as device-intensive procedures, regardless of 
whether the device remains in the patient's body after the conclusion 
of the procedure, because we no longer believe that whether a device 
remains in the patient's body should affect its designation as a 
device-intensive procedure because such devices could, nonetheless, 
comprise a large cost of the applicable procedure. Second, we are 
proposing to modify our criteria to lower the device offset percentage 
threshold from 40 percent to 30 percent, to allow a greater number of 
procedures to qualify as device-intensive. We believe allowing these 
additional procedures to qualify for device-intensive status will help 
ensure these procedures receive more appropriate payment in the ASC 
setting, which will help encourage the provision of these services in 
the ASC setting. In addition, this proposed change would help to ensure 
that more procedures containing relatively high-cost devices are 
subject to the device edits, which leads to more correctly coded claims 
and greater accuracy in our claims data. Specifically, for CY 2019 and 
subsequent years, we are proposing that device-intensive procedures 
would be subject to the following criteria:
    <bullet> All procedures must involve implantable devices assigned a 
CPT or HCPCS code;
    <bullet> The required devices (including single-use devices) must 
be surgically inserted or implanted; and
    <bullet> The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost.
    In addition, to further align the device-intensive policy with the 
criteria used for device pass-through status, we are proposing to 
specify, for CY 2019 and subsequent years, that for purposes of 
satisfying the device-intensive criteria, a device-intensive procedure 
must involve a device that:
    <bullet> Has received FDA marketing authorization, has received an 
FDA investigational device exemption (IDE) and has been classified as a 
Category B device by the FDA in accordance with 42 CFR 405.203 through 
405.207 and 405.211 through 405.215, or meets another appropriate FDA 
exemption from premarket review;
    <bullet> Is an integral part of the service furnished;
    <bullet> Is used for one patient only;
    <bullet> Comes in contact with human tissue;
    <bullet> Is surgically implanted or inserted (either permanently or 
temporarily); and
    <bullet> Is not any of the following:
    (a) Equipment, an instrument, apparatus, implement, or item of this 
type for which depreciation and financing expenses are recovered as 
depreciable assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or
    (b) A material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, scalpel, or clip, other 
than a radiological site marker).
    As part of this proposal, we also are soliciting public comment on 
these proposed revised criteria, including whether there are any 
devices that are not capital equipment that commenters believe should 
be deemed part of device-intensive procedures that would not meet the 
proposed definition of single-use devices. In addition, we are 
soliciting public comments on the full list of proposed CY 2019 OPPS 
device-intensive procedures provided in Addendum P to this proposed 
rule, which is available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html. Specifically, we are inviting public 
comment on whether any procedures proposed to receive device-intensive 
status for CY 2019 should not receive device-intensive status according 
to the proposed criteria, or if we did not assign device-intensive 
status for CY 2019 to any procedures commenters believed should receive 
device-intensive status based on the proposed criteria.
    In addition, for new HCPCS codes describing procedures requiring 
the implantation of medical devices that do not yet have associated 
claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79658), we finalized a policy for CY 2017 to apply device-intensive 
status with a default device offset set at 41 percent for new HCPCS 
codes describing procedures requiring the implantation or insertion of 
a medical device that do not yet have associated claims data until 
claims data are available to establish the HCPCS code-level device 
offset for the procedures. This default device offset amount of 41 
percent is not calculated from claims data; instead, it is applied as a 
default until claims data are available upon which to calculate an 
actual device offset for the new code. The purpose of applying the 41-
percent default device offset to new codes that describe procedures 
that implant or insert medical devices is to ensure ASC access for new 
procedures until claims data become available.
    In accordance with our proposal above to lower the device offset 
percentage threshold for procedures to qualify as device-intensive from 
greater than 40 percent to greater than 30 percent, for CY 2019 and 
subsequent years, we are proposing to modify this

[[Page 37109]]

policy and apply a 31-percent default device offset to new HCPCS codes 
describing procedures requiring the implantation of a medical device 
that do not yet have associated claims data until claims data are 
available to establish the HCPCS code-level device offset for the 
procedures. In conjunction with the proposal to lower the default 
device offset from 41 percent to 31 percent, we are proposing to 
continue our current policy of, in certain rare instances (for example, 
in the case of a very expensive implantable device), temporarily 
assigning a higher offset percentage if warranted by additional 
information such as pricing data from a device manufacturer (81 FR 
79658). Once claims data are available for a new procedure requiring 
the implantation of a medical device, device-intensive status will be 
applied to the code if the HCPCS code-level device offset is greater 
than 30 percent, according to our policy of determining device-
intensive status by calculating the HCPCS code-level device offset.
    In addition, we are clarifying that since the adoption of our 
current policy, the associated claims data used for purposes of 
determining whether or not to apply the default device offset are the 
associated claims data for either the new HCPCS code or any predecessor 
code, as described by CPT coding guidance, for the new HCPCS code. 
Additionally, for CY 2019 and subsequent years, in limited instances 
where a new HCPCS code does not have a predecessor code as defined by 
CPT, but describes a procedure that was previously described by an 
existing code, we are proposing to use clinical discretion to identify 
HCPCS codes that are clinically related or similar to the new HCPCS 
code but are not officially recognized as a predecessor code by CPT, 
and to use the claims data of the clinically related or similar code(s) 
for purposes of determining whether or not to apply the default device 
offset to the new HCPCS code. Clinically related and similar procedures 
for purposes of this policy are procedures that have little to no 
clinical differences and use the same devices as the new HCPCS code. In 
addition, clinically related and similar codes for purposes of this 
policy are codes that either currently or previously describe the 
procedure described by the new HCPCS code. Under this proposal, claims 
data from clinically related and similar codes will be included as 
associated claims data for a new code, and where an existing HCPCS code 
is found to be clinically related or similar to a new HCPCS code, we 
are proposing to apply the device offset percentage derived from the 
existing clinically related or similar HCPCS code's claims data to the 
new HCPCS code for determining the device offset percentage. We believe 
that claims data for HCPCS codes describing procedures that have very 
minor differences from the procedures described by new HCPCS codes 
would provide an accurate depiction of the cost relationship between 
the procedure and the device(s) that are used, and would be appropriate 
to use to set a new code's device offset percentage, in the same way 
that predecessor codes are used. For instance, for CY 2019, we are 
proposing to use the claims data from existing CPT code 36568 
(Insertion of peripherally inserted central venous catheter (PICC), 
without subcutaneous port or pump; younger than 5 years of age), for 
which the description as of January 1, 2019 is changing to ``(Insertion 
of peripherally inserted central venous catheter (PICC), without 
subcutaneous port or pump, without imaging guidance; younger than 5 
years of age)'', to determine the appropriate device offset percentage 
for new CPT code 36X72 (Insertion of peripherally inserted central 
venous catheter (PICC), without subcutaneous port or pump, including 
all imaging guidance, image documentation, and all associated 
radiological supervision and interpretation required to perform the 
insertion; younger than 5 years of age). We believe that although CPT 
code 36568 is not identified as a predecessor code by CPT, the 
procedure described by new CPT code 36X72 was previously described by 
CPT code 36568 and, therefore, CPT code 36X72 is clinically related and 
similar to CPT code 36568, and the device offset percentage for CPT 
code 36568 can be accurately applied to both codes. If a new HCPCS code 
has multiple predecessor codes, the claims data for the predecessor 
code that has the highest individual HCPCS-level device offset 
percentage will be used to determine whether the new HCPCS code 
qualifies for device-intensive status. Similarly, in the event that a 
new HCPCS code does not have a predecessor code but has multiple 
clinically related or similar codes, the claims data for the clinically 
related or similar code that has the highest individual HCPCS level 
device offset percentage will be used to determine whether the new 
HCPCS code qualifies for device-intensive status.
    Additional information for our consideration of an offset 
percentage higher than the proposed default of 31 percent for new HCPCS 
codes describing procedures requiring the implantation (or, in some 
cases, the insertion) of a medical device that do not yet have 
associated claims data, such as pricing data or invoices from a device 
manufacturer, should be directed to the Division of Outpatient Care, 
Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 7500 
Security Boulevard, Baltimore, MD 21244-1850, or electronically at 
<a href="/cdn-cgi/l/email-protection#bdd2c8c9cddcc9d4d8d3c9cdcdcefdded0ce93d5d5ce93dad2cb"><span class="__cf_email__" data-cfemail="bdd2c8c9cddcc9d4d8d3c9cdcdcefdded0ce93d5d5ce93dad2cb">[email protected]</span></a>. Additional information can be submitted 
prior to issuance of an OPPS/ASC proposed rule or as a public comment 
in response to an issued OPPS/ASC proposed rule. Device offset 
percentages will be set in each year's final rule.
    The full listing of proposed CY 2019 device-intensive procedures is 
included in Addendum P to this proposed rule (which is available via 
the internet on the CMS website).
3. Device Edit Policy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66795), we finalized a policy and implemented claims processing edits 
that require any of the device codes used in the previous device-to-
procedure edits to be present on the claim whenever a procedure code 
assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC 
final rule with comment period (the CY 2015 device-dependent APCs) is 
reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70422), we modified our previously existing 
policy and applied the device coding requirements exclusively to 
procedures that require the implantation of a device that are assigned 
to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with 
comment period, we also finalized our policy that the claims processing 
edits are such that any device code, when reported on a claim with a 
procedure assigned to a device-intensive APC (listed in Table 42 of the 
CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will 
satisfy the edit.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 
through 79659), we changed our policy for CY 2017 and subsequent years 
to apply the CY 2016 device coding requirements to the newly defined 
device-intensive procedures. For CY 2017 and subsequent years, we also 
specified that any device code, when reported on a claim with a device-
intensive procedure, will satisfy the edit. In addition, we created 
HCPCS code C1889 to recognize devices furnished during a device-
intensive procedure that are not described by a specific Level II HCPCS 
Category C-code. Reporting HCPCS code C1889

[[Page 37110]]

with a device-intensive procedure will satisfy the edit requiring a 
device code to be reported on a claim with a device-intensive 
procedure.
    We are not proposing any changes to this policy for CY 2019.
4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial 
Credit Devices
a. Background
    To ensure equitable OPPS payment when a hospital receives a device 
without cost or with full credit, in CY 2007, we implemented a policy 
to reduce the payment for specified 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 were 
instructed to report no cost/full credit device cases on the claim 
using the ``FB'' modifier on the line with the procedure code in which 
the no cost/full credit device is used. In cases in which the device is 
furnished without cost or with full credit, hospitals were instructed 
to report a token device charge of less than $1.01. In cases in which 
the device being inserted is an upgrade (either of the same type of 
device or to a different type of device) with a full credit for the 
device being replaced, hospitals were instructed to report as the 
device charge the difference between the hospital's usual charge for 
the device being implanted and the hospital's 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 were 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'' modifiers 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 reduced OPPS payment, for the applicable APCs, 
by the full or partial credit a hospital receives for a replaced 
device. Specifically, under this modified policy, hospitals are 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' (Credit Received from the Manufacturer 
for a Replaced Medical Device) when the hospital receives a credit for 
a replaced device that is 50 percent or greater than the cost of the 
device. For CY 2014, we also limited the OPPS payment deduction for the 
applicable APCs to the total amount of the device offset when the 
``FD'' value code appears on a claim. For CY 2015, we continued our 
existing policy of reducing OPPS payment for specified APCs when a 
hospital furnishes a specified device without cost or with a full or 
partial credit and to use the three criteria established in the CY 2007 
OPPS/ASC final rule with comment period (71 FR 68072 through 68077) for 
determining the APCs to which our CY 2015 policy will apply (79 FR 
66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70424), we finalized our policy to no longer specify a 
list of devices to which the OPPS payment adjustment for no cost/full 
credit and partial credit devices would apply and instead apply this 
APC payment adjustment to all replaced devices furnished in conjunction 
with a procedure assigned to a device-intensive APC when the hospital 
receives a credit for a replaced specified device that is 50 percent or 
greater than the cost of the device.
b. Proposed Policy for No Cost/Full Credit and Partial Credit Devices
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 
through 79660), for CY 2017 and subsequent years, we finalized our 
policy to reduce OPPS payment for device-intensive procedures, by the 
full or partial credit a provider receives for a replaced device, when 
a hospital furnishes a specified device without cost or with a full or 
partial credit. Under our current policy, hospitals continue to be 
required to report on the claim the amount of the credit in the amount 
portion for value code ``FD'' when the hospital receives a credit for a 
replaced device that is 50 percent or greater than the cost of the 
device.
    For CY 2019 and subsequent years, we are proposing to apply our no 
cost/full credit and partial credit device policies to all procedures 
that qualify as device-intensive under our proposed modified criteria 
discussed in section IV.B.2. of this proposed rule.
5. Payment Policy for Low-Volume Device-Intensive Procedures
    In CY 2016, we used our equitable adjustment authority under 
section 1833(t)(2)(E) of the Act and used the median cost (instead of 
the geometric mean cost per our standard methodology) to calculate the 
payment rate for the implantable miniature telescope procedure 
described by CPT code 0308T (Insertion of ocular telescope prosthesis 
including removal of crystalline lens or intraocular lens prosthesis), 
which is the only code assigned to APC 5494 (Level 4 Intraocular 
Procedures) (80 FR 70388). We note that, as stated in the CY 2017 OPPS/
ASC proposed rule (81 FR 45656), we proposed to reassign the procedure 
described by CPT code 0308T to APC 5495 (Level 5 Intraocular 
Procedures) for CY 2017, but it would be the only procedure code 
assigned to APC 5495. The payment rates for a procedure described by 
CPT code 0308T (including the predecessor HCPCS code C9732) were 
$15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The 
procedure described by CPT code 0308T is a high-cost device-intensive 
surgical procedure that has a very low volume of claims (in part 
because most of the procedures described by CPT code 0308T are 
performed in ASCs), and we believe that the median cost is a more 
appropriate measure of the central tendency for purposes of calculating 
the cost and the payment rate for this procedure because the median 
cost is impacted to a lesser degree than the geometric mean cost by 
more extreme observations. We stated that, in future rulemaking, we 
would consider proposing a general policy for the payment rate 
calculation for very low-volume device-intensive APCs (80 FR 70389).
    For CY 2017, we proposed and finalized a payment policy for low-
volume device-intensive procedures that is similar to the policy 
applied to the procedure described by CPT code 0308T in CY 2016. In the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 
79661), we established our current policy that the payment rate for any 
device-intensive procedure that is assigned to a clinical APC with 
fewer than 100 total claims for all procedures in the APC be calculated 
using the median cost instead

[[Page 37111]]

of the geometric mean cost, for the reasons described above for the 
policy applied to the procedure described by CPT code 0308T in CY 2016. 
The CY 2018 final rule geometric mean cost for the procedure described 
by CPT code 0308T (based on 19 claims containing the device HCPCS C-
code, in accordance with the device-intensive edit policy) was 
approximately $21,302, and the median cost was approximately $19,521. 
The final CY 2018 payment rate (calculated using the median cost) was 
approximately $17,560.
    For CY 2019, we are proposing to continue with our current policy 
of establishing the payment rate for any device-intensive procedure 
that is assigned to a clinical APC with fewer than 100 total claims for 
all procedures in the APC based on calculations using the median cost 
instead of the geometric mean cost. For CY 2019, there are no 
procedures to which this policy would apply. Due to the proposed change 
in APC assignment for CPT code 0308T to APC 5493 (Level 3 Intraocular 
Procedures) from APC 5495 (Level 5 Intraocular Procedures), our payment 
policy for low-volume device-intensive procedures would not apply to 
CPT code 0308T for CY 2019 because there are now more than 100 total 
claims for the APC to which CPT code 0308T is assigned. For more 
information on the proposed APC assignment change for CPT code 0308T, 
we refer readers to section III.D.4. of this proposed rule.

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

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

1. Background
    Section 1833(t)(6) of the Act provides for temporary additional 
payments or ``transitional pass-through payments'' for certain drugs 
and biologicals. Throughout this proposed rule, the term ``biological'' 
is used because this is the term that appears in section 1861(t) of the 
Act. A ``biological'' as used in this proposed rule includes (but is 
not necessarily limited to) a ``biological product'' or a ``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 pass-through payment provision requires 
the Secretary to make additional payments to hospitals for: Current 
orphan drugs, as designated under section 526 of the Federal Food, 
Drug, and Cosmetic Act; current drugs and biologicals and brachytherapy 
sources used in cancer therapy; and current radiopharmaceutical drugs 
and biologicals. ``Current'' refers to those types of drugs or 
biologicals mentioned above that are hospital outpatient services under 
Medicare Part B for which transitional pass-through 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 2019 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 website). 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. The 
methodology for determining the pass-through payment amount is set 
forth in regulations at 42 CFR 419.64. These regulations specify that 
the pass-through payment equals the amount determined under section 
1842(o) of the Act minus the portion of the APC payment that CMS 
determines is associated with the drug or biological.
    Section 1847A of the Act establishes the average sales price (ASP) 
methodology, which is used for payment for drugs and biologicals 
described in section 1842(o)(1)(C) of the Act furnished on or after 
January 1, 2005. The ASP methodology, as applied under the OPPS, uses 
several sources of data as a basis for payment, including the ASP, the 
wholesale acquisition cost (WAC), and the average wholesale price 
(AWP). In this proposed rule, the term ``ASP methodology'' and ``ASP-
based'' are inclusive of all data sources and methodologies described 
therein. Additional information on the ASP methodology can be found on 
the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
    The pass-through application and review process for drugs and 
biologicals is described on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
2. Three-Year Transitional Pass-Through Payment Period for All Pass-
Through Drugs, Biologicals, and Radiopharmaceuticals and Quarterly 
Expiration of Pass-Through Status
    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. Our current policy is to 
accept pass-through applications on a quarterly basis and to begin 
pass-through payments for newly approved pass-through drugs and 
biologicals on a quarterly basis through the next available OPPS 
quarterly update after the approval of a product's pass-through status. 
However, prior to CY 2017, we expired pass-through status for drugs and 
biologicals on an annual basis through notice-and-comment rulemaking 
(74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79662), we finalized a policy change, beginning with pass-
through drugs and biologicals newly approved in CY 2017 and subsequent 
calendar years, to allow for a quarterly expiration of pass-through 
payment status for drugs, biologicals, and radiopharmaceuticals to 
afford a pass-through payment period that is as close to a full 3 years 
as possible for all pass-through drugs, biologicals, and 
radiopharmaceuticals.
    This change eliminated the variability of the pass-through payment 
eligibility period, which previously varied based on when a particular 
application was initially received. We adopted this change for pass-
through approvals beginning on or after CY 2017, to allow, on a 
prospective basis, for the maximum pass-through payment period for each 
pass-through drug without exceeding the statutory limit of 3 years.

[[Page 37112]]

3. Proposed Drugs and Biologicals With Expiring Pass-Through Payment 
Status in CY 2018
    We are proposing that the pass-through payment status of 23 drugs 
and biologicals would expire on December 31, 2018, as listed in Table 
19 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, 2018. These drugs and biologicals were approved for pass-
through payment status on or before January 1, 2017. In accordance with 
the policy finalized in CY 2017 and described earlier, pass-through 
payment status for drugs and biologicals newly approved in CY 2017 and 
subsequent years will expire on a quarterly basis, with a pass-through 
payment period as close to 3 years as possible. With the exception of 
those groups of drugs and biologicals that are always packaged when 
they do not have pass-through payment status (specifically, anesthesia 
drugs; drugs, biologicals, and radiopharmaceuticals that function as 
supplies when used in a diagnostic test or procedure (including 
diagnostic radiopharmaceuticals, contrast agents, and stress agents); 
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 payment 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 to be $125 for CY 2019), as discussed 
further in section V.B.2. of this proposed rule. We are proposing that 
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 are proposing to provide separate payment at 
the applicable relative ASP-based payment amount (which is proposed at 
ASP+6 percent for CY 2019, as discussed further in section V.B.3. of 
this proposed rule).

    Table 19--Proposed Drugs and Biologicals for Which PasS-Through Payment Status Expires December 31, 2018
----------------------------------------------------------------------------------------------------------------
                                                                        CY 2018                    Pass- through
        CY 2018 HCPCS code              CY 2018 long descriptor         status      CY 2018 APC       payment
                                                                       indicator                  effective date
----------------------------------------------------------------------------------------------------------------
A9515............................  Choline C 11, diagnostic, per              G             9461      04/01/2016
                                    study dose.
C9460............................  Injection, cangrelor, 1 mg.......          G             9460      01/01/2016
C9482............................  Injection, sotalol hydrochloride,          G             9482      10/01/2016
                                    1 mg.
J1942............................  Injection, aripiprazole lauroxil,          G             9470      04/01/2016
                                    1 mg.
J2182............................  Injection, mepolizumab, 1 mg.....          G             9473      04/01/2016
J2786............................  Injection, reslizumab, 1 mg......          G             9481      10/01/2016
J2840............................  Injection, sebelipase alfa, 1 mg.          G             9478      07/01/2016
J7202............................  Injection, Factor IX, albumin              G             9171      10/01/2016
                                    fusion protein (recombinant),
                                    Idelvion, 1 i.u..
J7207............................  Injection, Factor VIII                     G             1844      04/01/2016
                                    (antihemophilic factor,
                                    recombinant) PEGylated, 1 I.U..
J7209............................  Injection, Factor VIII                     G             1846      04/01/2016
                                    (antihemophilic factor,
                                    recombinant) (Nuwiq), per i.u..
J7322............................  Hyaluronan or derivative,                  G             9471      04/01/2016
                                    Hymovis, for intra-articular
                                    injection, 1 mg.
J7342............................  Instillation, ciprofloxacin otic           G             9479      07/01/2016
                                    suspension, 6 mg.
J7503............................  Tacrolimus, extended release,              G             1845      04/01/2016
                                    (envarsus xr), oral, 0.25 mg.
J9022............................  Injection, atezolizumab, 10 mg...          G             9483      10/01/2016
J9145............................  Injection, daratumumab, 10 mg....          G             9476      07/01/2016
J9176............................  Injection, elotuzumab, 1 mg......          G             9477      07/01/2016
J9205............................  Injection, irinotecan liposome, 1          G             9474      04/01/2016
                                    mg.
J9295............................  Injection, necitumumab, 1 mg.....          G             9475      04/01/2016
J9325............................  Injection, talimogene                      G             9472      04/01/2016
                                    laherparepvec, 1 million plaque
                                    forming units (PFU).
J9352............................  Injection, trabectedin, 0.1 mg...          G             9480      07/01/2016
Q5101............................  Injection, filgrastim-sndz,                G             1822      07/01/2015
                                    biosimilar, (zarxio), 1
                                    microgram.
Q9982............................  Flutemetamol F18, diagnostic, per          G             9459      01/01/2016
                                    study dose, up to 5 millicuries.
Q9983............................  Florbetaben F18, diagnostic, per           G             9458      01/01/2016
                                    study dose, up to 8.1
                                    millicuries.
----------------------------------------------------------------------------------------------------------------

    The proposed packaged or separately payable status of each of these 
drugs or biologicals is listed in Addendum B to this proposed rule 
(which is available via the internet on the CMS website).
4. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or 
Continuing Pass-Through Payment Status in CY 2019
    We are proposing to continue pass-through payment status in CY 2019 
for 45 drugs and biologicals. These drugs and biologicals, which were 
approved for pass-through payment status between January 1, 2017, and 
July 1, 2018, are listed in Table 20 below. The APCs and HCPCS codes 
for these drugs and biologicals approved for pass-through payment 
status through December 31, 2018 are assigned status indicator ``G'' in 
Addenda A and B to this proposed rule (which are available via the 
internet on the CMS website). In addition, there are four drugs and 
biologicals that have already had 3 years of pass-through payment 
status but for which pass-through payment status is required to be 
extended for an additional 2 years under section 1833(t)(6)(G) of the 
Act, as added by section 1301(a)(1)(C) of the Consolidated 
Appropriations Act of 2018 (Pub. L. 115-141). Because of this 
requirement, these drugs and biologicals are also included in Table 20, 
which brings the total number of drugs and biologicals with proposed 
pass-through payment status in CY 2019 to 49. The requirements of 
section 1301 of Pub. L. 115-141 are described in further detail in 
section V.A.5. of this proposed rule.
    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

[[Page 37113]]

Act and the portion of the otherwise applicable OPD fee schedule that 
the Secretary determines is associated with the drug or biological. For 
CY 2019, we are proposing to continue to pay for pass-through drugs and 
biologicals at ASP+6 percent, equivalent to the payment rate these 
drugs and biologicals would receive in the physician's office setting 
in CY 2019. We are proposing that a $0 pass-through payment amount 
would be paid for pass-through drugs and biologicals under the CY 2019 
OPPS because the difference between the amount authorized under section 
1842(o) of the Act, which is proposed at ASP+6 percent, and the portion 
of the otherwise applicable OPD fee schedule that the Secretary 
determines is appropriate, which is proposed at ASP+6 percent, is $0.
    In the case of policy-packaged drugs (which include the following: 
Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 
function as supplies when used in a diagnostic test or procedure 
(including contrast agents, diagnostic radiopharmaceuticals, and stress 
agents); 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 2019 minus a 
payment offset for any predecessor drug products contributing to the 
pass-through payment as described in section V.A.6. of this proposed 
rule. We are making this proposal because, if not for the pass-through 
payment status of these policy-packaged products, payment for these 
products would be packaged into the associated procedure.
    We are proposing to continue to update pass-through payment rates 
on a quarterly basis on the CMS website during CY 2019 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 
payment 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).
    For CY 2019, consistent with our CY 2018 policy for diagnostic and 
therapeutic radiopharmaceuticals, we are proposing to provide payment 
for both diagnostic and therapeutic radiopharmaceuticals that are 
granted pass-through payment status based on the ASP methodology. As 
stated earlier, for purposes of pass-through payment, we consider 
radiopharmaceuticals to be drugs under the OPPS. Therefore, if a 
diagnostic or therapeutic radiopharmaceutical receives pass-through 
payment status during CY 2019, we are proposing to follow the standard 
ASP methodology to determine the pass-through payment rate that drugs 
receive under section 1842(o) of the Act, which is proposed at ASP+6 
percent. If ASP data are not available for a radiopharmaceutical, we 
are proposing to provide pass-through payment at WAC+3 percent 
(consistent with our proposed policy in section V.B.2.b. of this 
proposed rule), the equivalent payment provided to pass-through payment 
drugs and biologicals without ASP information. If WAC information also 
is not available, we are proposing to provide payment for the pass-
through radiopharmaceutical at 95 percent of its most recent AWP.
    The 49 drugs and biologicals that we are proposing to continue to 
have pass-through payment status for CY 2019 or have been granted pass-
through payment status as of July 2018 are shown in Table 20 below.

              Table 20--Proposed Drugs and Biologicals With Pass-Through Payment Status in CY 2019
----------------------------------------------------------------------------------------------------------------
                                                                       Proposed
                                                    CY 2019 long        CY 2019     Proposed CY    Pass- through
  CY 2018 HCPCS code      CY 2019 HCPCS code         descriptor         status       2019 APC         payment
                                                                       indicator                  effective date
----------------------------------------------------------------------------------------------------------------
A9586.................  A9586                  Florbetapir f18,               G             9084      10/01/2018
                                                diagnostic, per
                                                study dose, up to 10
                                                millicuries.
A9587.................  A9587                  Gallium ga-68,                 G             9056      01/01/2017
                                                dotatate,
                                                diagnostic, 0.1
                                                millicurie.
A9588.................  A9588                  Fluciclovine f-18,             G             9052      01/01/2017
                                                diagnostic, 1
                                                millicurie.
C9014.................  C9014                  Injection,                     G             9014      01/01/2018
                                                cerliponase alfa, 1
                                                mg.
C9015.................  C9015                  Injection, c-1                 G             9015      01/01/2018
                                                esterase inhibitor
                                                (human), Haegarda,
                                                10 units.
C9016.................  C9016                  Injection,                     G             9016      01/01/2018
                                                triptorelin extended
                                                release, 3.75 mg.
C9024.................  C9024                  Injection, liposomal,          G             9302      01/01/2018
                                                1 mg daunorubicin
                                                and 2.27 mg
                                                cytarabine.
C9028.................  C9028                  Injection, inotuzumab          G             9028      01/01/2018
                                                ozogamicin, 0.1 mg.
C9029.................  C9029                  Injection,                     G             9029      01/01/2018
                                                guselkumab, 1 mg.
C9030.................  C9030                  Injection,                     G             9030      07/01/2018
                                                copanlisib, 1 mg.
C9031.................  C9031                  Lutetium Lu 177,               G             9067      07/01/2018
                                                dotatate,
                                                therapeutic, 1 mCi.
C9032.................  C9032                  Injection, voretigene          G             9070      07/01/2018
                                                neparvovec-rzyl, 1
                                                billion vector
                                                genome.
C9447.................  C9447                  Injection,                     G             9083      10/01/2018
                                                phenylephrine and
                                                ketorolac, 4 ml vial.
C9462.................  C9462                  Injection,                     G             9462      04/01/2018
                                                delafloxacin, 1 mg.
C9463.................  C9463                  Injection,                     G             9463      04/01/2018
                                                aprepitant, 1 mg.
C9465.................  C9465                  Hyaluronan or                  G             9465      04/01/2018
                                                derivative,
                                                Durolane, for intra-
                                                articular injection,
                                                per dose.
C9466.................  C9466                  Injection,                     G             9466      04/01/2018
                                                benralizumab, 1 mg.
C9467.................  C9467                  Injection, rituximab           G             9467      04/01/2018
                                                and hyaluronidase,
                                                10 mg.
C9468.................  C9468                  Injection, factor ix           G             9468      04/01/2018
                                                (antihemophilic
                                                factor,
                                                recombinant),
                                                glycopegylated,
                                                Rebinyn, 1 i.u..
C9469.................  C9469                  Injection,                     G             9469      04/01/2018
                                                triamcinolone
                                                acetonide,
                                                preservative-free,
                                                extended-release,
                                                microsphere
                                                formulation, 1 mg.
C9488.................  C9488                  Injection, conivaptan          G             9488      04/01/2017
                                                hydrochloride, 1 mg.
C9492.................  C9492                  Injection,                     G             9492      10/01/2017
                                                durvalumab, 10 mg.
C9493.................  C9493                  Injection, edaravone,          G             9493      10/01/2017
                                                1 mg.
J0565.................  J0565                  Injection,                     G             9490      07/01/2017
                                                bezlotoxumab, 10 mg.
J0570.................  J0570                  Buprenorphine                  G             9058      01/01/2017
                                                implant, 74.2 mg.

[[Page 37114]]

 
J0606.................  J0606                  Injection,                     G             9031      01/01/2018
                                                etelcalcetide, 0.1
                                                mg.
J1428.................  J1428                  Injection,                     G             9484      04/01/2017
                                                eteplirsen, 10 mg.
J1627.................  J1627                  Injection,                     G             9486      04/01/2017
                                                granisetron extended
                                                release, 0.1 mg.
J2326.................  J2326                  Injection,                     G             9489      07/01/2017
                                                nusinersen, 0.1 mg.
J2350.................  J2350                  Injection,                     G             9494      10/01/2017
                                                ocrelizumab, 1 mg.
J3358.................  J3358                  Ustekinumab, for               G             9487      04/01/2017
                                                Intravenous
                                                Injection, 1 mg.
J7179.................  J7179                  Injection, von                 G             9059      01/01/2017
                                                willebrand factor
                                                (recombinant),
                                                (Vonvendi), 1 i.u.
                                                vwf:rco.
J7210.................  J7210                  Injection, factor              G             9043      01/01/2017
                                                viii,
                                                (antihemophilic
                                                factor,
                                                recombinant),
                                                (afstyla), 1 i.u.
J7328.................  J7328                  Hyaluronan or                  G             1862      01/01/2016
                                                derivative, gelsyn-
                                                3, for intra-
                                                articular injection,
                                                0.1 mg.
J7345.................  J7345                  Aminolevulinic acid            G             9301      01/01/2018
                                                hcl for topical
                                                administration, 10%
                                                gel, 10 mg.
J9023.................  J9023                  Injection, avelumab,           G             9491      10/01/2017
                                                10 mg.
J9034.................  J9034                  Injection,                     G             1861      01/01/2017
                                                bendamustine hcl
                                                (Bendeka), 1 mg.
J9203.................  J9203                  Injection, gemtuzumab          G             9495      01/01/2018
                                                ozogamicin, 0.1 mg.
J9285.................  J9285                  Injection,                     G             9485      04/01/2017
                                                olaratumab, 10 mg.
Q2040.................  Q2040                  Tisagenlecleucel, up           G             9081      01/01/2018
                                                to 250 million car-
                                                positive viable t
                                                cells, including
                                                leukapheresis and
                                                dose preparation
                                                procedures, per
                                                infusion.
Q2041.................  Q2041                  Axicabtagene                   G             9035      04/01/2018
                                                Ciloleucel, up to
                                                200 Million
                                                Autologous Anti-CD19
                                                CAR T Cells,
                                                Including
                                                Leukapheresis And
                                                Dose Preparation
                                                Procedures, Per
                                                Infusion.
Q4172.................  Q4172                  PuraPly, and PuraPly           G             9082      10/01/2018
                                                Antimicrobial, any
                                                type, per square
                                                centimeter.
Q5103.................  Q5103                  Injection, infliximab-         G             1847      04/01/2018
                                                dyyb, biosimilar,
                                                (inflectra), 10 mg.
Q5104.................  Q5104                  Injection, infliximab-         G             9036      04/01/2018
                                                abda, biosimilar,
                                                (renflexis), 10 mg.
Q9950.................  Q9950                  Injection, sulfur              G             9085      10/01/2018
                                                hexafluoride lipid
                                                microsphere, per ml.
Q9991.................  Q9991                  Injection,                     G             9073      07/01/2018
                                                buprenorphine
                                                extended-release
                                                (Sublocade), less
                                                than or equal to 100
                                                mg.
Q9992.................  Q9992                  Injection,                     G             9239      07/01/2018
                                                buprenorphine
                                                extended-release
                                                (Sublocade), greater
                                                than 100 mg.
Q9993.................  Q9993                  Injection,                     G             9464      04/01/2018
                                                rolapitant, 0.5 mg.
Q9995.................  Q9995                  Injection, emicizumab-         G             9257      07/01/2018
                                                kxwh, 0.5 mg.
----------------------------------------------------------------------------------------------------------------

5. Proposed Drugs, Biologicals, and Radiopharmaceuticals With Pass-
Through Status as a Result of Section 1301 of the Consolidated 
Appropriations Act of 2018 (Pub. L. 115-141)
    As mentioned earlier, section 1301(a)(1) of the Consolidated 
Appropriations Act of 2018 (Pub. L. 115-141) amended section 1833(t)(6) 
of the Act and added a new section 1833(t)(6)(G), which provides that 
for drugs or biologicals whose period of pass-through payment status 
ended on December 31, 2017 and for which payment was packaged into a 
covered hospital outpatient service furnished beginning January 1, 
2018, such pass-through payment status shall be extended for a 2-year 
period beginning on October 1, 2018 through September 30, 2020. There 
are four products whose period of drugs and biologicals pass-through 
payment status ended on December 31, 2017. These products are listed in 
Table 21 below. For CY 2019, we are proposing to continue pass-through 
payment status for the drugs and biologicals listed in Table 21 (we 
note that these drugs and biologicals are also listed in Table 20 
above). The APCs and HCPCS codes for these drugs and biologicals 
approved for pass-through payment status are assigned status indicator 
``G'' in Addenda A and B to this proposed rule (which are available via 
the internet on the CMS website).
    In addition, new section 1833(t)(6)(H) of the Act specifies that 
the payment amount for such drug or biological under this subsection 
that is furnished during the period beginning on October 1, 2018, and 
ending on March 31, 2019, shall be the greater of: (i) The payment 
amount that would otherwise apply under section 1833(t)(6)(D)(i) of the 
Act for such drug or biological during such period; or (ii) the payment 
amount that applied under section 1833(t)(6)(D)(i) of the Act for such 
drug or biological on December 31, 2017. We intend to address pass-
through payment for these drugs and biologicals for the last quarter of 
CY 2018 through program instruction. For January 1, 2019 through March 
31, 2019, we are proposing that pass-through payment for these four 
drugs and biologicals would be the greater of: (1) ASP+6 percent based 
on current ASP data; or (2) the payment rate for the drug or biological 
on December 31, 2017. We also are proposing for the period of April 1, 
2019 through December 31, 2019 that the pass-through payment amount for 
these drugs and biologicals would be the amount that applies under 
section 1833(t)(6)(D)(i) of the Act.
    We are proposing to continue to update pass-through payment rates 
for these four drugs and biologicals on a quarterly basis on the CMS 
website during CY 2019 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).

[[Page 37115]]

    The four drugs and biologicals that we are proposing would have 
pass-through payment status for CY 2019 under section 1833(t)(6)(G) of 
the Act, as added by section 1301(a)(1)(C) of the Consolidated 
Appropriations Act of 2018, are shown in Table 21 below. Included as 
one of the four drugs and biologicals with pass-through payment status 
for CY 2019 is HCPCS code Q4172 (PuraPly, and PuraPly Antimicrobial, 
any type, per square centimeter). PuraPly is a skin substitute product 
that was approved for pass-through payment status on January 1, 2015, 
through the drug and biological pass-through payment process. Beginning 
on April 1, 2015, skin substitute products are evaluated for pass-
through payment status through the device pass-through payment process. 
However, we stated in the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66887) that skin substitutes that are approved for pass-
through payment status as biologicals effective on or before January 1, 
2015 would continue to be paid as pass-through biologicals for the 
duration of their pass-through payment period. Because PuraPly was 
approved for pass-through payment status through the drug and 
biological pass-through payment pathway, we are proposing to consider 
PuraPly to be a drug or biological as described by section 
1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the 
Consolidated Appropriations Act of 2018, and to be eligible for 
extended pass-through payment under our proposal for CY 2019.

 Table 21--Proposed Drugs and Biologicals With Pass-Through Payment Status in CY 2019 in Accordance With Public
                                                   Law 115-141
----------------------------------------------------------------------------------------------------------------
                                                                       Proposed
                                                    CY 2019 long        CY 2019     Proposed CY    Pass- through
  CY 2018 HCPCS code      CY 2019 HCPCS code         descriptor         status       2019 APC         payment
                                                                       indicator                  effective date
----------------------------------------------------------------------------------------------------------------
A9586.................  A9586                  Florbetapir f18,               G             9084      10/01/2018
                                                diagnostic, per
                                                study dose, up to 10
                                                millicuries.
C9447.................  C9447                  Injection,                     G             9083      10/01/2018
                                                phenylephrine and
                                                ketorolac, 4 ml vial.
Q4172.................  Q4172                  PuraPly, and PuraPly           G             9082      10/01/2018
                                                Antimicrobial, any
                                                type, per square
                                                centimeter.
Q9950.................  Q9950                  Injection, sulfur              G             9085      10/01/2018
                                                hexafluoride lipid
                                                microsphere, per ml.
----------------------------------------------------------------------------------------------------------------

6. Proposed Provisions for Reducing Transitional Pass-Through Payments 
for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To 
Offset Costs Packaged Into APC Groups
    Under the regulations at 42 CFR 419.2(b), nonpass-through drugs, 
biologicals, and radiopharmaceuticals that function as supplies when 
used in a diagnostic test or procedure are packaged in the OPPS. This 
category includes diagnostic radiopharmaceuticals, contrast agents, 
stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), 
nonpass-through drugs and biologicals that function as supplies in a 
surgical procedure are packaged in the OPPS. This category includes 
skin substitutes and other surgical-supply drugs and biologicals. As 
described earlier, section 1833(t)(6)(D)(i) of the Act specifies that 
the transitional pass-through payment amount for pass-through drugs and 
biologicals is the difference between the amount paid under section 
1842(o) of the Act and the otherwise applicable OPD fee schedule 
amount. Because a payment offset is necessary in order to provide an 
appropriate transitional pass-through payment, we deduct from the pass-
through payment for policy-packaged drugs, biologicals, and 
radiopharmaceuticals an amount reflecting the portion of the APC 
payment associated with predecessor products in order to ensure no 
duplicate payment is made. This amount reflecting the portion of the 
APC payment associated with predecessor products is called the payment 
offset.
    The payment offset policy applies to all policy packaged drugs, 
biologicals, and radiopharmaceuticals. For a full description of the 
payment offset policy as applied to diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and skin substitutes, we refer readers 
to the discussion in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70430 through 70432). For CY 2019, as we did in CY 2018, 
we are proposing to continue to apply the same policy packaged offset 
policy to payment for pass-through diagnostic radiopharmaceuticals, 
pass-through contrast agents, pass-through stress agents, and pass-
through skin substitutes. The proposed APCs to which a payment offset 
may be applicable for pass-through diagnostic radiopharmaceuticals, 
pass-through contrast agents, pass-through stress agents, and pass-
through skin substitutes are identified in Table 22 below.

       Table 22--Proposed APCS To Which a Policy-Packaged Drug or
         Radiopharmaceutical Offset May Be Applicable in CY 2019
------------------------------------------------------------------------
         Proposed CY 2019 APC              Proposed CY 2019 APC title
------------------------------------------------------------------------
                     Diagnostic Radiopharmaceutical
------------------------------------------------------------------------
5591..................................  Level 1 Nuclear Medicine and
                                         Related Services.
5592..................................  Level 2 Nuclear Medicine and
                                         Related Services.
5593..................................  Level 3 Nuclear Medicine and
                                         Related Services.
5594..................................  Level 4 Nuclear Medicine and
                                         Related Services.
------------------------------------------------------------------------
                             Contrast Agent
------------------------------------------------------------------------
5571..................................  Level 1 Imaging with Contrast.
5572..................................  Level 2 Imaging with Contrast.
5573..................................  Level 3 Imaging with Contrast.
------------------------------------------------------------------------
                              Stress Agent
------------------------------------------------------------------------
5722..................................  Level 2 Diagnostic Tests and
                                         Related Services.
5593..................................  Level 3 Nuclear Medicine and
                                         Related Services.
------------------------------------------------------------------------
                             Skin Substitute
------------------------------------------------------------------------
5054..................................  Level 4 Skin Procedures.
5055..................................  Level 5 Skin Procedures.
------------------------------------------------------------------------


[[Page 37116]]

    We are proposing to continue to post annually on the CMS website 
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.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 payment device 
categories and drugs and biologicals and establishing any appropriate 
APC offset amounts. Specifically, the file will continue to provide the 
amounts and percentages of APC payment associated with packaged 
implantable devices, policy-packaged drugs, and threshold packaged 
drugs and biologicals for every OPPS clinical APC.

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

1. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and 
Radiopharmaceuticals
a. Proposed Packaging Threshold
    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 $120 for CY 
2018 (82 FR 59343).
    Following the CY 2007 methodology, for this CY 2019 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 2019 and rounded the 
resulting dollar amount ($126.03) to the nearest $5 increment, which 
yielded a figure of $125. 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 series code WPUSI07003) from CMS' Office of the Actuary. 
Based on these calculations, we are proposing a packaging threshold for 
CY 2019 of $125.
b. Proposed Packaging of Payment for HCPCS Codes That Describe Certain 
Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals Under 
the Cost Threshold (``Threshold-Packaged Drugs'')
    To determine the proposed CY 2019 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 2017 
and were paid (via packaged or separate payment) under the OPPS. We 
used data from CY 2017 claims processed before January 1, 2018 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.1.d. of this proposed rule, or for 
the following policy-packaged items that we are proposing to continue 
to package in CY 2019: 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 2019, we used the methodology that was described in detail 
in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and 
finalized in the CY 2006 OPPS final rule with comment period (70 FR 
68636 through 68638). For each drug and biological HCPCS code, we used 
an estimated payment rate of ASP+6 percent (which is the payment rate 
we are proposing for separately payable drugs and biologicals for CY 
2019, as discussed in more detail in section V.B.2.b. of this proposed 
rule) to calculate the CY 2019 proposed rule per day costs. We used the 
manufacturer submitted ASP data from the fourth quarter of CY 2017 
(data that were used for payment purposes in the physician's office 
setting, effective April 1, 2018) to determine the proposed rule per 
day cost. As is our standard methodology, for CY 2019, we are proposing 
to use payment rates based on the ASP data from the first quarter of CY 
2018 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 website) 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, 2018. 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 
2017 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 $125, and identify items with a per day cost greater than $125 
as separately payable unless they are policy-packaged. Consistent with 
our past practice, we cross-walked historical OPPS claims data from the 
CY 2017 HCPCS codes that were reported to the CY 2018 HCPCS codes that 
we display in Addendum B to this proposed rule (which is available via 
the internet on the CMS website) for proposed payment in CY 2019.
    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 this CY 2019 OPPS/ASC 
proposed rule, we are proposing to use ASP data from the fourth quarter 
of CY 2017, which is the basis for calculating payment rates for drugs 
and biologicals in the physician's office setting using the ASP 
methodology, effective April 1, 2018, along with updated hospital 
claims data from CY 2017. We note that we also are proposing to use 
these data for budget neutrality estimates and impact analyses for this 
CY 2019 OPPS/ASC proposed rule.
    Payment rates for HCPCS codes for separately payable drugs and 
biologicals included in Addenda A and B for the final rule with comment 
period will be based on ASP data from the third quarter of CY 2018. 
These data will be the basis for calculating payment rates for drugs 
and biologicals in the physician's office setting using the ASP

[[Page 37117]]

methodology, effective October 1, 2018. These payment rates would then 
be updated in the January 2019 OPPS update, based on the most recent 
ASP data to be used for physician's office and OPPS payment as of 
January 1, 2019. 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 2017 claims data and updated cost report information 
available for the CY 2019 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 proposed rule 
may be different from the same drug HCPCS code's packaging status 
determined based on the data used for the 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 2019 OPPS drug packaging 
threshold and the drug's payment status (packaged or separately 
payable) in CY 2018. These established policies have not changed for 
many years and are the same as described in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70434). Specifically, for CY 2019, 
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:
    <bullet> HCPCS codes for drugs and biologicals that were paid 
separately in CY 2018 and that were proposed for separate payment in CY 
2019, and that then have per day costs equal to or less than the CY 
2019 final rule drug packaging threshold, based on the updated ASPs and 
hospital claims data used for the CY 2019 final rule, would continue to 
receive separate payment in CY 2019.
    <bullet> HCPCS codes for drugs and biologicals that were packaged 
in CY 2018 and that were proposed for separate payment in CY 2019, and 
that then have per day costs equal to or less than the CY 2019 final 
rule drug packaging threshold, based on the updated ASPs and hospital 
claims data used for the CY 2019 final rule, would remain packaged in 
CY 2019.
    <bullet> HCPCS codes for drugs and biologicals for which we 
proposed packaged payment in CY 2019 but then have per day costs 
greater than the CY 2019 final rule drug packaging threshold, based on 
the updated ASPs and hospital claims data used for the CY 2019 final 
rule, would receive separate payment in CY 2019.
c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals
    As mentioned earlier in this section, in the OPPS, we package 
several categories of drugs, biologicals, and radiopharmaceuticals, 
regardless of the cost of the products. Because the products are 
packaged according to the policies in 42 CFR 419.2(b), we refer to 
these packaged drugs, biologicals, and radiopharmaceuticals as 
``policy-packaged'' drugs, biologicals, and radiopharmaceuticals. These 
policies are either longstanding or based on longstanding principles 
and inherent to the OPPS and are as follows:
    <bullet> Anesthesia, certain drugs, biologicals, and other 
pharmaceuticals; medical and surgical supplies and equipment; surgical 
dressings; and devices used for external reduction of fractures and 
dislocations (Sec.  419.2(b)(4));
    <bullet> Intraoperative items and services (Sec.  419.2(b)(14));
    <bullet> Drugs, biologicals, and radiopharmaceuticals that function 
as supplies when used in a diagnostic test or procedure (including but 
not limited to, diagnostic radiopharmaceuticals, contrast agents, and 
pharmacologic stress agents (Sec.  419.2(b)(15)); and
    <bullet> 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) (Sec.  419.2(b)(16)).
    The policy at Sec.  419.2(b)(16) is broader than that at Sec.  
419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with 
comment period: ``We consider all items related to the surgical outcome 
and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy'' (79 FR 66875). The category described by Sec.  
419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, 
contrast agents, stress agents, and some other products. The category 
described by Sec.  419.2(b)(16) includes skin substitutes and some 
other products. We believe it is important to reiterate that cost 
consideration is not a factor when determining whether an item is a 
surgical supply (79 FR 66875).
d. Proposed High Cost/Low Cost Threshold for Packaged Skin Substitutes
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 
74938), we unconditionally packaged skin substitute products into their 
associated surgical procedures as part of a broader policy to package 
all drugs and biologicals that function as supplies when used in a 
surgical procedure. As part of the policy to finalize the packaging of 
skin substitutes, we also finalized a methodology that divides the skin 
substitutes into a high cost group and a low cost group, in order to 
ensure adequate resource homogeneity among APC assignments for the skin 
substitute application procedures (78 FR 74933).
    Skin substitutes assigned to the high cost group are described by 
HCPCS codes 15271 through 15278. Skin substitutes assigned to the low 
cost group are described by HCPCS codes C5271 through C5278. Geometric 
mean costs for the various procedures are calculated using only claims 
for the skin substitutes that are assigned to each group. Specifically, 
claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to 
calculate the geometric mean costs for procedures assigned to the high 
cost group, and claims billed with HCPCS code C5271, C5273, C5275, or 
C5277 are used to calculate the geometric mean costs for procedures 
assigned to the low cost group (78 FR 74935).
    Each of the HCPCS codes described above are assigned to one of the 
following three skin procedure APCs according to the geometric mean 
cost for the code: APC 5053 (Level 3 Skin Procedures) (HCPCS codes 
C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures) (HCPCS 
codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin 
Procedures) (HCPCS code 15273). In CY 2018, the payment rate for APC 
5053 (Level 3 Skin Procedures) was $488.20, the payment rate for APC 
5054 (Level 4 Skin Procedures) was $1,568.43, and the payment rate for 
APC 5055 (Level 5 Skin Procedures) was $2,710.48. This information also 
is available in Addenda A and B of the CY 2018 OPPS/ASC final rule with 
comment period (which is available via the internet on the CMS 
website).
    We have continued the high cost/low cost categories policy since CY 
2014, and we are proposing to continue it for CY 2019. Under this 
current policy, skin substitutes in the high cost category are reported 
with the skin substitute application CPT codes, and skin substitutes in 
the low cost category are reported with the analogous skin substitute 
HCPCS C-codes. For a

[[Page 37118]]

discussion of the CY 2014 and CY 2015 methodologies for assigning skin 
substitutes to either the high cost group or the low cost group, we 
refer readers to the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74932 through 74935) and the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66882 through 66885).
    For a discussion of the high cost/low cost methodology that was 
adopted in CY 2016 and has been in effect since then, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 
through 70435). For CY 2019, as with our policy since CY 2016, we are 
proposing to continue to determine the high cost/low cost status for 
each skin substitute product based on either a product's geometric mean 
unit cost (MUC) exceeding the geometric MUC threshold or the product's 
per day cost (PDC) (the total units of a skin substitute multiplied by 
the mean unit cost and divided by the total number of days) exceeding 
the PDC threshold. For CY 2019, as for CY 2018, we are proposing to 
assign each skin substitute that exceeds either the MUC threshold or 
the PDC threshold to the high cost group. In addition, as described in 
more detail later in this section, for CY 2019, as for CY 2018, we are 
proposing to assign any skin substitute with a MUC or a PDC that does 
not exceed either the MUC threshold or the PDC threshold to the low 
cost group. For CY 2019, we are proposing that any skin substitute 
product that was assigned to the high cost group in CY 2018 would be 
assigned to the high cost group for CY 2019, regardless of whether it 
exceeds or falls below the CY 2019 MUC or PDC threshold.
    For this CY 2019 OPPS/ASC proposed rule, consistent with the 
methodology as established in the CY 2014 through CY 2017 final rules 
with comment period, we analyzed CY 2017 claims data to calculate the 
MUC threshold (a weighted average of all skin substitutes' MUCs) and 
the PDC threshold (a weighted average of all skin substitutes' PDCs). 
The proposed CY 2019 MUC threshold is $49 per cm\2\ (rounded to the 
nearest $1) and the proposed CY 2019 PDC threshold is $895 (rounded to 
the nearest $1).
    For CY 2019, we are proposing to continue to assign skin 
substitutes with pass-through payment status to the high cost category. 
We are proposing to assign skin substitutes with pricing information 
but without claims data to calculate a geometric MUC or PDC to either 
the high cost or low cost category based on the product's ASP+6 percent 
payment rate as compared to the MUC threshold. If ASP is not available, 
we are proposing to use WAC+3 percent to assign a product to either the 
high cost or low cost category. Finally if neither ASP nor WAC is 
available, we would use 95 percent of AWP to assign a skin substitute 
to either the high cost or low cost category. We are proposing to use 
WAC+3 percent instead of WAC+6 percent to conform to our proposed 
policy described in section V.B.2.b. of this proposed rule to establish 
a payment rate of WAC+3 percent for separately payable drugs and 
biologicals that do not have ASP data available. New skin substitutes 
without pricing information would be assigned to the low cost category 
until pricing information is available to compare to the CY 2019 MUC 
threshold. For a discussion of our existing policy under which we 
assign skin substitutes without pricing information to the low cost 
category until pricing information is available, we refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436).
    Some skin substitute manufacturers have raised concerns about 
significant fluctuation in both the MUC threshold and the PDC threshold 
from year to year. The fluctuation in the thresholds may result in the 
reassignment of several skin substitutes from the high cost group to 
the low cost group which, under current payment rates, can be a 
difference of approximately $1,000 in the payment amount for the same 
procedure. In addition, these stakeholders were concerned that the 
inclusion of cost data from skin substitutes with pass-through payment 
status in the MUC and PDC calculations would artificially inflate the 
thresholds. Skin substitute stakeholders requested that CMS consider 
alternatives to the current methodology used to calculate the MUC and 
PDC thresholds and also requested that CMS consider whether it might be 
appropriate to establish a new cost group in between the low cost group 
and the high cost group to allow for assignment of moderately priced 
skin substitutes to a newly created middle group.
    We share the goal of promoting payment stability for skin 
substitute products and their related procedures as price stability 
allows hospitals using such products to more easily anticipate future 
payments associated with these products. We have attempted to limit 
year to year shifts for skin substitute products between the high cost 
and low cost groups through multiple initiatives implemented since CY 
2014, including: Establishing separate skin substitute application 
procedure codes for low-cost skin substitutes (78 FR 74935); using a 
skin substitute's MUC calculated from outpatient hospital claims data 
instead of an average of ASP+6 percent as the primary methodology to 
assign products to the high cost or low cost group (79 FR 66883); and 
establishing the PDC threshold as an alternate methodology to assign a 
skin substitute to the high cost group (80 FR 70434 through 70435).
    To allow additional time to evaluate concerns and suggestions from 
stakeholders about the volatility of the MUC and PDC thresholds, in the 
CY 2018 OPPS/ASC proposed rule (82 FR 33627), for CY 2018, we proposed 
that a skin substitute that was assigned to the high cost group for CY 
2017 would be assigned to the high cost group for CY 2018, even if it 
does not exceed the CY 2018 MUC or PDC thresholds. We finalized this 
policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59347). We stated in the CY 2018 OPPS/ASC proposed rule that the goal 
of our proposal to retain the same skin substitute cost group 
assignments in CY 2018 as in CY 2017 was to maintain similar levels of 
payment for skin substitute products for CY 2018 while we study our 
skin substitute payment methodology to determine whether refinement to 
the existing policies is consistent with our policy goal of providing 
payment stability for skin substitutes.
    We stated in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59347) that we would continue to study issues related to the 
payment of skin substitutes and take these comments into consideration 
for future rulemaking. We received many responses to our requests for 
comments in the CY 2018 OPPS/ASC proposed rule about possible 
refinements to the existing payment methodology for skin substitutes 
that would be consistent with our policy goal of providing payment 
stability for these products. In addition, several stakeholders have 
made us aware of additional concerns and recommendations since the 
release of the CY 2018 OPPS/ASC final rule with comment period. We have 
identified four potential methodologies that have been raised to us 
that we encourage the public to review and provide comments on. We are 
especially interested in any specific feedback on policy concerns with 
any of the options presented as they relate to skin substitutes with 
differing per day or per episode costs and sizes and other factors that 
may differ among the dozens of skin substitutes currently on the 
market. We also are interested in any new ideas that are not 
represented below along with an analysis of how different skin

[[Page 37119]]

substitute products would fare under such ideas. We intend to explore 
the full array of public comments on these ideas for the CY 2020 
rulemaking, and we will consider the feedback received in response to 
this proposed rule in developing proposals for CY 2020.
    <bullet> Establish a lump-sum ``episode-based'' payment for a wound 
care episode. Under this option, a hospital would receive a lump sum 
payment for all wound care services involving procedures using skin 
substitutes. The payment would be made for a wound care ``episode'' 
(such as 12 weeks) for one wound. The lump sum payment could be the 
same for all skin substitutes or could vary based on the estimated 
number of applications for a given skin substitute during the wound 
care episode. Under this option, payment to the provider could be made 
at the start of treatment, or at a different time, and could be made 
once or split into multiple payments. Quality metrics, such as using 
the recommended number of treatments for a given skin substitute during 
a treatment episode, and establishing a plan of care for patients who 
do not experience 30-percent wound healing after 4 weeks, could be 
established to ensure the beneficiary receives appropriate care while 
limiting excessive additional applications of skin substitute products.
    <bullet> Eliminate the high cost/low cost categories for skin 
substitutes and only have one payment category and set of procedure 
codes for all skin substitute products. This option would reduce the 
financial incentives to use expensive skin substitutes and would 
provide incentives to use less costly skin substitute products that 
have been shown to have similar efficacy treating wounds as more 
expensive skin substitute products. A single payment category would 
likely have a payment rate that is between the current rates paid for 
high cost and low cost skin substitute procedures. Initially, a single 
payment category may lead to substantially higher payment for skin 
graft procedures performed with cheaper skin substitutes as compared to 
their costs. However, over time, payment for skin graft procedures 
using skin substitutes might reflect the lower cost of the procedures.
    <bullet> Allow for the payment of current add-on codes or create 
additional procedure codes to pay for skin graft services between 26 
cm\2\ and 99 cm\2\ and substantially over 100 cm\2\. Under this option, 
payment for skin substitutes would be made more granularly based on the 
size of the skin substitute product being applied. This option also 
would reduce the risk that hospitals may not use enough of a skin 
substitute to save money when performing a procedure. However, such 
granularity in the use of skin substitutes could conflict with the 
goals of a prospective payment system, which is based on a system of 
averages. Specifically, it is expected that some skin graft procedures 
will be less than 25 cm\2\ or around 100 cm\2\ and will receive higher 
payments compared to the cost of the services. Conversely, services 
between 26 cm\2\ and 99 cm\2\ or those that are substantially larger 
than 100 cm\2\ will receive lower payments compared to the cost of the 
services, but the payments will average over many skin graft procedures 
to an appropriate payment rate for the provider.
    <bullet> Keep the high cost/low cost skin substitute categories, 
but change the threshold used to assign skin substitutes in the high-
cost or low-cost group. Consider using other benchmarks that would 
establish more stable thresholds for the high cost and low cost groups. 
Ideas include, but are not limited to, fixing the MUC or PDC threshold 
at amount from a prior year, or setting global payment targets for high 
cost and low cost skin substitutes and establishing a threshold that 
meets the payment targets. Establishing different thresholds for the 
high cost and low cost groups could allow for the use of a mix of lower 
cost and higher cost skin substitute products that acknowledges that a 
large share of skin substitutes products used by Medicare providers are 
higher cost products but still providing substantial cost savings for 
skin graft procedures. Different thresholds may also reduce the number 
of skin substitute products that switch between the high cost and low 
cost groups in a given year to give more payment stability for skin 
substitute products.
    To allow stakeholders time to analyze and comment on the potential 
ideas raised above, for CY 2019, we are proposing to continue our 
policy established in CY 2018 to assign skin substitutes to the low 
cost or high cost group. However, for CY 2020, we may revise our policy 
to reflect one of the potential new methodologies discussed above or a 
new methodology included in public comments in response to this 
proposed rule. Specifically, for CY 2019, we are proposing to assign a 
skin substitute with a MUC or a PDC that does not exceed either the MUC 
threshold or the PDC threshold to the low cost group, unless the 
product was assigned to the high cost group in CY 2018, in which case 
we will assign the product to the high cost group for CY 2019, 
regardless of whether it exceeds the CY 2019 MUC or PDC threshold. We 
also are proposing to assign to the high cost group any skin substitute 
product that exceeds the CY 2019 MUC or PDC threshold and assign to the 
low cost group any skin substitute product that does not exceed the CY 
2019 MUC or PDC thresholds and were not assigned to the high cost group 
in CY 2018. We are proposing to continue to use payment methodologies 
including ASP+6 percent and 95 percent of AWP for skin substitute 
products that have pricing information but do not have claims data to 
determine if their costs exceed the CY 2019 MUC. In addition, we are 
proposing to use WAC+3 percent instead of WAC+6 percent for skin 
substitute products that do not have ASP pricing information or have 
claims data to determine if those products' costs exceed the CY 2019 
MUC. We also are proposing to retain our established policy to assign 
new skin substitute products with pricing information to the low cost 
group.
    Table 23 below displays the proposed CY 2019 high cost or low cost 
category assignment for each skin substitute product.

           Table 23--Proposed Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2019
----------------------------------------------------------------------------------------------------------------
                                                                 CY 2018 high/low      Proposed CY 2019 high/low
     CY 2019 HCPCS code         CY 2019 short descriptor            assignment                 assignment
----------------------------------------------------------------------------------------------------------------
C9363.......................  Integra Meshed Bil Wound Mat  High.....................  High.
Q4100.......................  Skin Substitute, NOS........  Low......................  Low.
Q4101.......................  Apligraf....................  High.....................  High.
Q4102.......................  Oasis Wound Matrix..........  Low......................  Low.
Q4103.......................  Oasis Burn Matrix...........  High.....................  High.*
Q4104.......................  Integra BMWD................  High.....................  High.

[[Page 37120]]

 
Q4105.......................  Integra DRT.................  High.....................  High.*
Q4106.......................  Dermagraft..................  High.....................  High.
Q4107.......................  GraftJacket.................  High.....................  High.
Q4108.......................  Integra Matrix..............  High.....................  High.
Q4110.......................  Primatrix...................  High.....................  High.*
Q4111.......................  Gammagraft..................  Low......................  Low.
Q4115.......................  Alloskin....................  Low......................  Low.
Q4116.......................  Alloderm....................  High.....................  High.
Q4117.......................  Hyalomatrix.................  Low......................  Low.
Q4121.......................  Theraskin...................  High.....................  High.*
Q4122.......................  Dermacell...................  High.....................  High.
Q4123.......................  Alloskin....................  High.....................  High.
Q4124.......................  Oasis Tri-layer Wound Matrix  Low......................  Low.
Q4126.......................  Memoderm/derma/tranz/integup  High.....................  High.*
Q4127.......................  Talymed.....................  High.....................  High.
Q4128.......................  Flexhd/Allopatchhd/Matrixhd.  High.....................  High.
Q4131.......................  Epifix......................  High.....................  High.
Q4132.......................  Grafix core and grafixpl      High.....................  High.
                               core, per square centimeter.
Q4133.......................  Grafix prime and grafixpl     High.....................  High.
                               prime, per square
                               centimeter.
Q4134.......................  hMatrix.....................  Low......................  Low.
Q4135.......................  Mediskin....................  Low......................  Low.
Q4136.......................  Ezderm......................  Low......................  Low.
Q4137.......................  Amnioexcel or Biodexcel, 1cm  High.....................  High.
Q4138.......................  Biodfence DryFlex, 1cm......  High.....................  High.
Q4140.......................  Biodfence 1cm...............  High.....................  High.
Q4141.......................  Alloskin ac, 1cm............  High.....................  High.*
Q4143.......................  Repriza, 1cm................  High.....................  High.
Q4146.......................  Tensix, 1CM.................  High.....................  High.
Q4147.......................  Architect ecm, 1cm..........  High.....................  High.*
Q4148.......................  Neox cord 1k, neox cord rt,   High.....................  High.
                               or clarix cord 1k, per
                               square centimeter.
Q4150.......................  Allowrap DS or Dry 1 sq cm..  High.....................  High.
Q4151.......................  AmnioBand, Guardian 1 sq cm.  High.....................  High.
Q4152.......................  Dermapure 1 square cm.......  High.....................  High.
Q4153.......................  Dermavest 1 square cm.......  High.....................  High.
Q4154.......................  Biovance 1 square cm........  High.....................  High.
Q4156.......................  Neox 100 or clarix 100, per   High.....................  High.
                               square centimeter.
Q4157.......................  Revitalon 1 square cm.......  High.....................  High.*
Q4158.......................  Kerecis omega3, per square    High.....................  High.*
                               centimeter.
Q4159.......................  Affinity 1 square cm........  High.....................  High.
Q4160.......................  NuShield 1 square cm........  High.....................  High.
Q4161.......................  Bio-Connekt per square cm...  High.....................  High.
Q4163.......................  Woundex, bioskin, per square  High.....................  High.
                               centimeter.
Q4164.......................  Helicoll, per square cm.....  High.....................  High.*
Q4165.......................  Keramatrix, per square cm...  Low......................  Low.
Q4166.......................  Cytal, per square cm........  Low......................  Low.
Q4167.......................  Truskin, per square cm......  Low......................  Low.
Q4169.......................  Artacent wound, per square    High.....................  High.*
                               cm.
Q4170.......................  Cygnus, per square cm.......  Low......................  Low.
Q4172 \+\...................  PuraPly, PuraPly antimic....  High.....................  High.
Q4173.......................  Palingen or palingen xplus,   High.....................  High.
                               per sq cm.
Q4175.......................  Miroderm, per square cm.....  High.....................  High.
Q4176.......................  Neopatch, per square          Low......................  Low.
                               centimeter.
Q4178.......................  Floweramniopatch, per square  High.....................  High.
                               centimeter.
Q4179.......................  Flowerderm, per square        Low......................  Low.
                               centimeter.
Q4180.......................  Revita, per square            High.....................  High.
                               centimeter.
Q4181.......................  Amnio wound, per square       Low......................  Low.
                               centimeter.
Q4182.......................  Transcyte, per square         Low......................  Low.
                               centimeter.
----------------------------------------------------------------------------------------------------------------
* These products do not exceed either the MUC or PDC threshold for CY 2019, but are assigned to the high cost
  group because they were assigned to the high cost group in CY 2018.
+ Pass-through payment status in CY 2019.


[[Page 37121]]

e. Proposed Packaging Determination for HCPCS Codes That Describe the 
Same Drug or Biological But Different Dosages
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 
through 60491), we finalized a policy to make a single packaging 
determination for a drug, rather than an individual HCPCS code, when a 
drug has multiple HCPCS codes describing different dosages because we 
believed that adopting the standard HCPCS code-specific packaging 
determinations for these codes could lead to inappropriate payment 
incentives for hospitals to report certain HCPCS codes instead of 
others. We continue to believe that making packaging determinations on 
a drug-specific basis eliminates payment incentives for hospitals to 
report certain HCPCS codes for drugs and allows hospitals flexibility 
in choosing to report all HCPCS codes for different dosages of the same 
drug or only the lowest dosage HCPCS code. Therefore, we are proposing 
to continue our policy to make packaging determinations on a drug-
specific basis, rather than a HCPCS code-specific basis, for those 
HCPCS codes that describe the same drug or biological but different 
dosages in CY 2019.
    For CY 2019, 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 2017 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 2019 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 2017 claims data to make the proposed 
packaging determinations for these drugs: HCPCS code J1840 (Injection, 
kanamycin sulfate, up to 500 mg); HCPCS code J1850 (Injection, 
kanamycin sulfate, up to 75 mg); HCPCS code J3472 (Injection, 
hyaluronidase, ovine, preservative free, per 1000 usp units); HCPCS 
code J7100 (Infusion, dextran 40, 500 ml); and HCPCS code J7110 
(Infusion, dextran 75, 500 ml).
    For all other drugs and biologicals that have HCPCS codes 
describing different doses, we then multiplied the proposed 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 the proposed CY 2019 drug packaging threshold of 
$125 (so that all HCPCS codes for the same drug or biological would be 
packaged) or greater than the proposed CY 2019 drug packaging threshold 
of $125 (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 in CY 2019 
is displayed in Table 24 below.

    Table 24--Proposed HCPCS Codes to Which the CY 2019 Drug-Specific
             Packaging Determination Methodology Would Apply
------------------------------------------------------------------------
                                                           Proposed CY
     CY 2019 HCPCS code        CY 2019 long descriptor     2019 status
                                                          indicator (SI)
------------------------------------------------------------------------
C9257......................  Injection, bevacizumab,                  K
                              0.25 mg.
J9035......................  Injection, bevacizumab, 10               K
                              mg.
J1020......................  Injection,                               N
                              methylprednisolone
                              acetate, 20 mg.
J1030......................  Injection,                               N
                              methylprednisolone
                              acetate, 40 mg.
J1040......................  Injection,                               N
                              methylprednisolone
                              acetate, 80 mg.
J1460......................  Injection, gamma globulin,               K
                              intramuscular, 1 cc.
J1560......................  Injection, gamma globulin,               K
                              intramuscular over 10 cc.
J1642......................  Injection, heparin sodium,               N
                              (heparin lock flush), per
                              10 units.
J1644......................  Injection, heparin sodium,               N
                              per 1000 units.
J1840......................  Injection, kanamycin                     N
                              sulfate, up to 500 mg.
J1850......................  Injection, kanamycin                     N
                              sulfate, up to 75 mg.
J2788......................  Injection, rho d immune                  N
                              globulin, human,
                              minidose, 50 micrograms
                              (250 i.u.).
J2790......................  Injection, rho d immune                  N
                              globulin, human, full
                              dose, 300 micrograms
                              (1500 i.u.).
J2920......................  Injection,                               N
                              methylprednisolone sodium
                              succinate, up to 40 mg.
J2930......................  Injection,                               N
                              methylprednisolone sodium
                              succinate, up to 125 mg.
J3471......................  Injection, hyaluronidase,                N
                              ovine, preservative free,
                              per 1 usp unit (up to 999
                              usp units).
J3472......................  Injection, hyaluronidase,                N
                              ovine, preservative free,
                              per 1000 usp units.
J7030......................  Infusion, normal saline                  N
                              solution, 1000 cc.
J7040......................  Infusion, normal saline                  N
                              solution, sterile (500
                              ml=1 unit).
J7050......................  Infusion, normal saline                  N
                              solution, 250 cc.
J7100......................  Infusion, dextran 40, 500                N
                              ml.
J7110......................  Infusion, dextran 75, 500                N
                              ml.
J7515......................  Cyclosporine, oral, 25 mg.               N
J7502......................  Cyclosporine, oral, 100 mg               N
J8520......................  Capecitabine, oral, 150 mg               N
J8521......................  Capecitabine, oral, 500 mg               N
J9250......................  Methotrexate sodium, 5 mg.               N
J9260......................  Methotrexate sodium, 50 mg               N
------------------------------------------------------------------------


[[Page 37122]]

2. 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--
    <bullet> 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.
    <bullet> A drug or biological for which a temporary HCPCS code has 
not been assigned.
    <bullet> 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 for purposes of paragraph (14). We refer to this alternative 
methodology as the ``statutory default.'' Most physician Part B drugs 
are paid at ASP+6 percent in accordance with 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.\27\
---------------------------------------------------------------------------

    \27\ Medicare Payment Advisory Committee. June 2005 Report to 
the Congress. Chapter 6: Payment for pharmacy handling costs in 
hospital outpatient departments. Available at: http://www.medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    It has been our policy since CY 2006 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 2019 
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.
    For a detailed discussion of our OPPS drug payment policies from CY 
2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule 
with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/
ASC final rule with comment period (77 FR 68386 through 68389), we 
first adopted the statutory default policy to pay for separately 
payable drugs and biologicals at ASP+6 percent based on section 
1833(t)(14)(A)(iii)(II) of the Act. We continued this policy of paying 
for separately payable drugs and biologicals at the statutory default 
for CYs 2014 through 2018.
b. Proposed CY 2019 Payment Policy
    For CY 2019, we are proposing to continue our payment policy that 
has been in effect since CY 2013 to pay for separately payable drugs 
and biologicals at ASP+6 percent in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We are 
proposing to continue to pay for separately payable nonpass-through 
drugs acquired with a 340B discount at a rate of ASP minus 22.5 
percent. We refer readers to section V.A.7. of this proposed rule for 
more information about how the payment rate for drugs acquired with a 
340B discount was established.
    In the case of a drug or biological during an initial sales period 
in which data on the prices for sales for the drug or biological are 
not sufficiently available from the manufacturer, section 1847A(c)(4) 
of the Act permits the Secretary to make payments that are based on 
WAC. Under section 1833(t)(14)(A)(iii)(II), the amount of payment for a 
separately payable drug equals the average price for the drug for the 
year established under, among other authorities, section 1847A of the 
Act. As explained in greater detail in the CY 2019 PFS proposed rule, 
under section 1847A(c)(4), although payments may be based on WAC, 
unlike section 1847A(b) of the Act (which specifies that certain 
payments must be made with a 6-percent add-on), section 1847A(c)(4) of 
the Act does not require that a particular add-on amount be applied to 
partial quarter WAC-based pricing. Consistent with section 1847A(c)(4) 
of the Act, in the CY 2019 PFS proposed rule, we are proposing that, 
effective January 1, 2019, WAC-based payments for Part B drugs made 
under section 1847A(c)(4) of the Act would utilize a 3-percent add-on 
in place of the 6-percent add-on that is currently being used. For the 
OPPS, we also are proposing to utilize a 3-percent add-on instead of a 
6-percent add-on for WAC-based drugs pursuant to our authority under 
section 1833(t)(14)(A)(iii)(II) of the Act, which provides, in part, 
that the amount of payment for a SCOD is the average price of the drug 
in the year established under section 1847A of the Act. We also apply 
this provision to non-SCOD separately payable drugs. Because we are 
proposing to establish the average price for a WAC-based drug under 
section 1847A of the Act as WAC+3 percent instead of WAC+6 percent, we 
believe it is appropriate to price separately payable WAC-based drugs 
at the same amount under the OPPS. We are proposing that, if finalized, 
our proposal to pay for drugs or biologicals at WAC+3 percent, rather 
than WAC+6 percent, would apply whenever WAC-based pricing is used for 
a drug or biological. For drugs and biologicals that would otherwise be 
subject to a payment

[[Page 37123]]

reduction because they were acquired under the 340B Program, the 340B 
Program rate (in this case, WAC minus 22.5 percent) would continue to 
apply. We refer readers to the CY 2019 PFS proposed rule for additional 
background on this anticipated proposal.
    We 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. We also are 
proposing that the budget neutral weight scalar is not applied in 
determining payments for these separately paid drugs and biologicals. 
We note that separately payable drug and biological payment rates 
listed in Addenda A and B to this proposed rule (available via the 
internet on the CMS website), which illustrate the proposed CY 2019 
payment of ASP+6 percent for separately payable nonpass-through drugs 
and biologicals and ASP+6 percent for pass-through drugs and 
biologicals, reflect either ASP information that is the basis for 
calculating payment rates for drugs and biologicals in the physician's 
office setting effective April 1, 2018, or WAC, AWP, or mean unit cost 
from CY 2017 claims data and updated cost report information available 
for this proposed rule. In general, these published payment rates are 
not the same as the actual January 2019 payment rates. This is because 
payment rates for drugs and biologicals with ASP information for 
January 2019 will be determined through the standard quarterly process 
where ASP data submitted by manufacturers for the third quarter of CY 
2018 (July 1, 2018 through September 30, 2018) will be used to set the 
payment rates that are released for the quarter beginning in January 
2019 near the end of December 2018. In addition, payment rates for 
drugs and biologicals in Addenda A and B to this proposed rule for 
which there was no ASP information available for April 2018 are based 
on mean unit cost in the available CY 2017 claims data. If ASP 
information becomes available for payment for the quarter beginning in 
January 2019, we will price payment for these drugs and biologicals 
based on their newly available ASP information. Finally, there may be 
drugs and biologicals that have ASP information available for this 
proposed rule (reflecting April 2018 ASP data) that do not have ASP 
information available for the quarter beginning in January 2019. These 
drugs and biologicals would then be paid based on mean unit cost data 
derived from CY 2017 hospital claims. Therefore, the proposed payment 
rates listed in Addenda A and B to this proposed rule are not for 
January 2019 payment purposes and are only illustrative of the proposed 
CY 2019 OPPS payment methodology using the most recently available 
information at the time of issuance of this proposed rule.
c. Biosimilar Biological Products
    For CY 2016 and CY 2017, we finalized a policy to pay for 
biosimilar biological products based on the payment allowance of the 
product as determined under section 1847A of the Act and to subject 
nonpass-through biosimilar biological products to our annual threshold-
packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY 
2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 
33630), for CY 2018, we proposed to continue this same payment policy 
for biosimilar biological products.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59351), we noted that, with respect to comments we received regarding 
OPPS payment for biosimilar biological products, in the CY 2018 PFS 
final rule, CMS finalized a policy to implement separate HCPCS codes 
for biosimilar biological products. Therefore, consistent with our 
established OPPS drug, biological, and radiopharmaceutical payment 
policy, HCPCS coding for biosimilar biological products will be based 
on policy established under the CY 2018 PFS final rule.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59351), after consideration of the public comments we received, we 
finalized our proposed payment policy for biosimilar biological 
products, with the following technical correction: All biosimilar 
biological products will be eligible for pass-through payment and not 
just the first biosimilar biological product for a reference product. 
For CY 2019, we are proposing to continue the policy in place from CY 
2018 to make all biosimilar biological products eligible for pass-
through payment and not just the first biosimilar biological product 
for a reference product.
    In addition, in CY 2018, we adopted a policy that biosimilars 
without pass-through payment status that were acquired under the 340B 
Program would be paid ASP (of the biosimilar) minus 22.5 percent of the 
reference product (82 FR 59367). We adopted this policy in the CY 2018 
OPPS/ASC final rule with comment period because we believe that 
biosimilars without pass-through payment status acquired under the 340B 
Program should be treated in the same manner as other drugs and 
biologicals acquired through the 340B Program. As noted earlier, 
biosimilars with pass-through payment status are paid their own ASP+6 
percent of the reference's product ASP. Biosimilars that do not have 
pass-through payment status and are not acquired under the 340B Program 
also are paid their own ASP+6 percent of the reference product's ASP.
    Several stakeholders raised concerns to us that the current payment 
policy for biosimilars acquired under the 340B Program could unfairly 
lower the OPPS payment for biosimilars not on pass-through payment 
status because the payment reduction would be based on the reference 
product's ASP, which would generally be expected to be priced higher 
than the biosimilar, thus resulting in a more significant reduction in 
payment than if the 22.5 percent was calculated based on the 
biosimilar's ASP. We agree with stakeholders that the current payment 
policy could unfairly lower the price of biosimilars without pass-
through payment status that are acquired under the 340B Program. In 
addition, we believe that these changes would better reflect the 
resources and production costs that biosimilar manufacturers incur, and 
we also believe this approach is more consistent with the payment 
methodology for 340B-acquired drugs and biologicals, for which the 22.5 
percent reduction is calculated based on the drug or biological's ASP, 
rather than the ASP of another product. In addition, we believe that 
paying for biosimilars acquired under the 340B Program at ASP minus 
22.5 percent of the biosimilar's ASP, rather than 22.5 percent of the 
reference product's ASP, will more closely approximate hospitals' 
acquisition costs for these products.
    Accordingly, for CY 2019, we are proposing changes to our Medicare 
Part B drug payment methodology for biosimilars acquired under the 340B 
Program. Specifically, for CY 2019 and subsequent years, in accordance 
with section 1833(t)(14)(A)(iii)(II) of the Act, we are proposing to 
pay nonpass-through biosimilars acquired under the 340B Program at ASP 
minus 22.5 percent of the biosimilar's ASP instead of the biosimilar's 
ASP minus 22.5 percent of the reference product's ASP.
3. Proposed Payment Policy for Therapeutic Radiopharmaceuticals
    For CY 2019, we are proposing to continue the payment policy for 
therapeutic radiopharmaceuticals that began in CY 2010. We pay for 
separately payable therapeutic radiopharmaceuticals under the ASP 
methodology adopted for separately

[[Page 37124]]

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 2019. Therefore, we are proposing for CY 2019 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 2017 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 unavailable. 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 2019 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 website).
4. Proposed Payment Adjustment Policy for Radioisotopes Derived From 
Non-Highly Enriched Uranium Sources
    Radioisotopes are widely used in modern medical imaging, 
particularly for cardiac imaging and predominantly for the Medicare 
population. Some of the Technetium-99 (Tc-99m), the radioisotope used 
in the majority of such diagnostic imaging services, is produced in 
legacy reactors outside of the United States using highly enriched 
uranium (HEU).
    The United States would like to eliminate domestic reliance on 
these reactors, and is promoting the conversion of all medical 
radioisotope production to non-HEU sources. Alternative methods for 
producing Tc-99m without HEU are technologically and economically 
viable, and conversion to such production has begun. We expect that 
this change in the supply source for the radioisotope used for modern 
medical imaging will introduce new costs into the payment system that 
are not accounted for in the historical claims data.
    Therefore, beginning in CY 2013, we finalized a policy to provide 
an additional payment of $10 for the marginal cost for radioisotopes 
produced by non-HEU sources (77 FR 68323). Under this policy, hospitals 
report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium 
source, full cost recovery add-on per study dose) once per dose along 
with any diagnostic scan or scans furnished using Tc-99m as long as the 
Tc-99m doses used can be certified by the hospital to be at least 95 
percent derived from non-HEU sources (77 FR 68321).
    We stated in the CY 2013 OPPS/ASC final rule with comment period 
(77 FR 68321) that our expectation is that this additional payment will 
be needed for the duration of the industry's conversion to alternative 
methods to producing Tc-99m without HEU. We also stated that we would 
reassess, and propose if necessary, on an annual basis whether such an 
adjustment continued to be necessary and whether any changes to the 
adjustment were warranted (77 FR 68316). A 2016 report from the 
National Academies of Sciences, Engineering, and Medicine anticipates 
the conversion of Tc-99m production from non-HEU sources will not be 
complete until the end of 2019.\28\ In addition, one of the 
manufacturers of Tc-99m generators supports continuing the payment 
adjustment at the current level because approximately 30 percent of Tc-
99m continues to be produced from non-HEU sources. We also received 
comments from a trade group of nuclear pharmacies and cyclotron 
operators supporting an increase in the payment adjustment by the rate 
of inflation to cover more of the cost of Tc-99m from non-HEU sources.
---------------------------------------------------------------------------

    \28\ National Academies of Sciences, Engineering, and Medicine. 
2016. Molybdenum-99 for Medical Imaging. Washington, DC: The 
National Academies Press. Available at: https://doi.org/10.17226/23563.
---------------------------------------------------------------------------

    We appreciate the feedback from stakeholders. However, we continue 
to believe that the current adjustment is sufficient for the reasons we 
have outlined in this and prior rulemakings. The information from 
stakeholders and the National Academies of Sciences, Engineering, and 
Medicine indicates that the conversion of the production of Tc-99m from 
non-HEU sources may take more than 1 year after CY 2018. Therefore, for 
CY 2019 and subsequent years, we are proposing to continue to provide 
an additional $10 payment for radioisotopes produced by non-HEU 
sources. We intend to reassess this payment policy once conversion to 
non-HEU sources is closer to completion or has been completed.
5. Proposed Payment for Blood Clotting Factors
    For CY 2018, 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 (82 FR 59353). That is, for CY 2018, 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 2018 updated furnishing fee was $0.215 per unit.
    For CY 2019, we are proposing to pay for blood clotting factors at 
ASP+6 percent, consistent with our proposed payment policy for other 
nonpass-through, separately payable drugs and biologicals, and to 
continue our policy for payment of the furnishing fee using an updated 
amount. Our policy to pay for a furnishing fee for blood clotting 
factors under the OPPS is consistent with the methodology applied in 
the physician's office and in the inpatient hospital setting. These 
methodologies were 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 PFS 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 period (72 FR 66765), we are proposing to announce the actual 
figure for the percent change in the

[[Page 37125]]

applicable CPI and the updated furnishing fee calculated based on that 
figure through applicable program instructions and posting on the CMS 
website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.
6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 
Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims 
Data
    For CY 2019, we are proposing to continue to use the same payment 
policy as in CY 2018 for nonpass-through drugs, biologicals, and 
radiopharmaceuticals with HCPCS codes but without OPPS hospital claims 
data, which describes how we determine the payment rate for drugs, 
biologicals, or radiopharmaceuticals without an ASP. For a detailed 
discussion of the payment policy and methodology, we refer readers to 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70442 
through 70443). The proposed CY 2019 payment status of each of the 
nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS 
codes but without OPPS hospital claims data is listed in Addendum B to 
this proposed rule, which is available via the internet on the CMS 
website.
7. CY 2019 Proposed OPPS Payment Methodology for 340B Purchased Drugs
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33558 through 33724), 
we proposed changes to the Medicare Part B drug payment methodology for 
340B hospitals. We proposed these changes to better, and more 
appropriately, reflect the resources and acquisition costs that these 
hospitals incur. We believed that such changes would allow Medicare 
beneficiaries (and the Medicare program) to pay less when hospitals 
participating in the 340B Program furnish drugs to Medicare 
beneficiaries that are purchased under the 340B Program. Subsequently, 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 
through 59370), we finalized our proposal and adjusted the payment rate 
for separately payable drugs and biologicals (other than drugs on pass-
through payment status and vaccines) acquired under the 340B Program 
from average sales price (ASP) plus 6 percent to ASP minus 22.5 
percent. Our goal is to make Medicare payment for separately payable 
drugs more aligned with the resources expended by hospitals to acquire 
such drugs, while recognizing the intent of the 340B Program to allow 
covered entities, including eligible hospitals, to stretch scarce 
resources in ways that enable hospitals to continue providing access to 
care for Medicare beneficiaries and other patients. Critical access 
hospitals (CAHs) are not included in this 340B policy change because 
they are paid under section 1834(g) of the Act. We also excepted rural 
sole community hospitals (SCHs), children's hospitals, and PPS-exempt 
cancer hospitals from the 340B payment adjustment in CY 2018. In 
addition, as stated in the CY 2018 OPPS/ASC final rule with comment 
period, this policy change does not apply to drugs on pass-through 
payment status, which are required to be paid based on the ASP 
methodology or vaccines, which are excluded from the 340B Program.
    Another topic that has been brought to our attention since we 
finalized the payment adjustment for 340B-acquired drugs in the CY 2018 
OPPS/ASC final rule with comment period is whether drugs that do not 
have ASP pricing but instead receive WAC or AWP pricing are subject to 
the 340B payment adjustment. We did not receive public comments on this 
topic in response to the CY 2018 OPPS/ASC proposed rule. However, we 
have since heard from stakeholders that there has been some confusion 
about this issue. We want to clarify that the 340B payment adjustment 
does apply to drugs that are priced using either WAC or AWP, and it has 
been our policy to subject 340B-acquired drugs that use these pricing 
methodologies to the 340B payment adjustment since the policy was first 
adopted. The 340B payment adjustment for WAC-priced drugs is WAC minus 
22.5 percent and AWP-priced drugs have a payment rate of 69.46 percent 
of AWP when the 340B payment adjustment is applied. The 69.46 percent 
of AWP is calculated by first reducing the original 95 percent of AWP 
price by 6 percent to generate a value that is similar to ASP or WAC 
with no percentage markup. Then we apply the 22.5 percent reduction to 
ASP/WAC-similar AWP value to obtain the 69.46 percent of AWP, which is 
similar to either ASP minus 22.5 percent or WAC minus 22.5 percent. The 
number of separately payable drugs receiving WAC or AWP pricing that 
are affected by the 340B payment adjustment is small--consisting of 
less than 10 percent of all separately payable Medicare Part B drugs in 
April 2018.
    Data limitations inhibit our ability to identify which drugs were 
acquired under the 340B Program in the Medicare OPPS claims data. This 
lack of information within the claims data has limited researchers' and 
our ability to precisely analyze differences in acquisition cost of 
340B and non-340B acquired drugs with Medicare claims data. 
Accordingly, in the CY 2018 OPPS/ASC proposed rule (82 FR 33633), we 
stated our intent to establish a modifier, to be effective January 1, 
2018, for hospitals to report with separately payable drugs that were 
not acquired under the 340B Program. Because a significant portion of 
hospitals paid under the OPPS participate in the 340B Program, we 
stated our belief that it is appropriate to presume that a separately 
payable drug reported on an OPPS claim was purchased under the 340B 
Program, unless the hospital identifies that the drug was not purchased 
under the 340B Program. We stated in the proposed rule that we intended 
to provide further details about this modifier in the CY 2018 OPPS/ASC 
final rule with comment period and/or through subregulatory guidance, 
including guidance related to billing for dually eligible beneficiaries 
(that is, beneficiaries covered under Medicare and Medicaid) for whom 
covered entities do not receive a discount under the 340B Program. As 
discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59369 through 59370), to effectuate the payment adjustment for 340B-
acquired drugs, CMS implemented modifier ``JG'', effective January 1, 
2018. Hospitals paid under the OPPS, other than a type of hospital 
excluded from the OPPS (such as CAHs or those hospitals paid under the 
Maryland waiver), or excepted from the 340B drug payment policy for CY 
2018, are required to report modifier ``JG'' on the same claim line as 
the drug HCPCS code to identify a 340B-acquired drug. For CY 2018, 
rural SCHs, children's hospitals and PPS-exempt cancer hospitals are 
excepted from the 340B payment adjustment. These hospitals are required 
to report informational modifier ``TB'' for 340B-acquired drugs, and 
continue to be paid ASP+6 percent.
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59353 through 59370) for a full discussion and rationale 
for the CY 2018 policies and use of modifier ``JG''.
    For CY 2019, we are proposing to continue the 340B Program policies 
that were implemented in CY 2018 with the exception of the way we are 
calculating payment for 340B-acquired biosimilars. We are proposing, in 
accordance with section 1833(t)(14)(A)(iii)(II) of the Act, to pay for 
separately payable Medicare Part B drugs (assigned status indicator 
``K''), other than vaccines and drugs on pass-through payment status, 
that meet

[[Page 37126]]

the definition of ``covered outpatient drug'' as defined in the section 
1927(k) of the Act, that are acquired through the 340B Program at ASP 
minus 22.5 percent when billed by a hospital paid under the OPPS that 
is not excepted from the payment adjustment. Medicare Part B drugs or 
biologicals excluded from the 340B payment adjustment include vaccines 
(assigned status indicator ``L'' or ``M'') and drugs with OPPS 
transitional pass-through payment status (assigned status indicator 
``G''). As discussed in section V.A.2.c. of this proposed rule, we are 
proposing to pay nonpass-through biosimilars acquired under the 340B 
Program at ASP minus 22.5 percent of the biosimilar's ASP. We also are 
proposing that Medicare would continue to pay for drugs or biologicals 
that were not purchased with a 340B discount at ASP+6 percent.
    As stated earlier, to effectuate the payment adjustment for 340B-
acquired drugs, CMS implemented modifier ``JG'', effective January 1, 
2018. For CY 2019, we are proposing that hospitals paid under the OPPS, 
other than a type of hospital excluded from the OPPS, or excepted from 
the 340B drug payment policy for CY 2018, continue to be required to 
report modifier ``JG'' on the same claim line as the drug HCPCS code to 
identify a 340B-acquired drug. We also are proposing for CY 2019 that 
rural sole community hospitals (SCHs), children's hospitals, and PPS-
exempt cancer hospitals continue to be excepted from the 340B payment 
adjustment. We are proposing that these hospitals be required to report 
informational modifier ``TB'' for 340B-acquired drugs, and continue to 
be paid ASP+6 percent.

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

A. Background

    Section 1833(t)(6)(E) of the Act limits the total projected amount 
of transitional pass-through payments for drugs, biologicals, 
radiopharmaceuticals, and categories of devices for a given year to an 
``applicable percentage,'' currently not to exceed 2.0 percent of total 
program payments estimated to be made for all covered services under 
the OPPS furnished for that year. If we estimate before the beginning 
of the calendar year that the total amount of pass-through payments in 
that year would exceed the applicable percentage, section 
1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 
in the amount of each of the transitional pass-through payments made in 
that year to ensure that the limit is not exceeded. We estimate the 
pass-through spending to determine whether payments exceed the 
applicable percentage and the appropriate prorata reduction to the 
conversion factor for the projected level of pass-through spending in 
the following year to ensure that total estimated pass-through spending 
for the prospective payment year is budget neutral, as required by 
section 1833(t)(6)(E) of the Act.
    For devices, developing a proposed estimate of pass-through 
spending in CY 2019 entails estimating spending for two groups of 
items. The first group of items consists of device categories that are 
currently eligible for pass-through payment and that will continue to 
be eligible for pass-through payment in CY 2019. The CY 2008 OPPS/ASC 
final rule with comment period (72 FR 66778) describes the methodology 
we have used in previous years to develop the pass-through spending 
estimate for known device categories continuing into the applicable 
update year. The second group of items consists of items that we know 
are newly eligible, or project may be newly eligible, for device pass-
through payment in the remaining quarters of CY 2018 or beginning in CY 
2019. The sum of the proposed CY 2019 pass-through spending estimates 
for these two groups of device categories equals the proposed total CY 
2019 pass-through spending estimate for device categories with pass-
through payment 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) use the 
device pass-through process and payment methodology (74 FR 60476). As 
has been our past practice (76 FR 74335), in this proposed rule, 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. Similarly, we finalized a policy in CY 2015 that 
applications for pass-through payment for skin substitutes and similar 
products be evaluated using the medical device pass-through process and 
payment methodology (76 FR 66885 through 66888). Therefore, as we did 
beginning in CY 2015, for CY 2019, we also are proposing to include an 
estimate of any skin substitutes and similar products in our estimate 
of pass-through spending for devices.
    For drugs and biologicals eligible for pass-through payment, 
section 1833(t)(6)(D)(i) of the Act establishes the pass-through 
payment amount as the amount 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. Our estimate of drug and biological pass-through payment 
for CY 2019 for this group of items is $0, as discussed below, because 
we are proposing to pay for most nonpass-through separately payable 
drugs and biologicals under the CY 2019 OPPS at ASP+6 percent (with the 
exception of 340B-acquired separately payable drugs, for which we do 
not yet have sufficient data to estimate a share of total drug 
payments), and because we are proposing to pay for CY 2019 pass-through 
payment drugs and biologicals at ASP+6 percent, as we discuss in 
section V.A. of this proposed rule.
    Furthermore, payment for certain drugs, specifically diagnostic 
radiopharmaceuticals and contrast agents without pass-through payment 
status, is packaged into payment for the associated procedures, and 
these products will not be separately paid. In addition, we policy-
package all nonpass-through drugs, biologicals, and 
radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure and drugs and biologicals that function as 
supplies when used in a surgical procedure, as discussed in section 
II.A.3. of this proposed rule. We are proposing that all of these 
policy-packaged drugs and biologicals with pass-through payment status 
would be paid at ASP+6 percent, like other pass-through drugs and 
biologicals, for CY 2019. Therefore, our proposed estimate of pass-
through payment for policy-packaged drugs and biologicals with pass-
through payment status approved prior to CY 2019 is not $0, as 
discussed below. In section V.A.5. of this proposed rule, we discussed 
our policy to determine if the costs of certain

[[Page 37127]]

policy-packaged drugs or biologicals are already packaged into the 
existing APC structure. If we determine that a policy-packaged drug or 
biological approved for pass-through payment resembles predecessor 
drugs or biologicals already included in the costs of the APCs that are 
associated with the drug receiving pass-through payment, we are 
proposing to offset the amount of pass-through payment for the policy-
packaged drug or biological. For these drugs or biologicals, the APC 
offset amount is the portion of the APC payment for the specific 
procedure performed with the pass-through drug or biological, which we 
refer to as the policy-packaged drug APC offset amount. If we determine 
that an offset is appropriate for a specific policy-packaged drug or 
biological receiving pass-through payment, we are proposing to reduce 
our estimate of pass-through payments for these drugs or biologicals by 
this amount.
    Similar to pass-through spending estimates for devices, the first 
group of drugs and biologicals requiring a pass-through payment 
estimate consists of those products that were recently made eligible 
for pass-through payment and that will continue to be eligible for 
pass-through payment in CY 2019. 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 2018 or beginning in CY 2019. 
The sum of the CY 2019 pass-through spending estimates for these two 
groups of drugs and biologicals equals the total CY 2019 pass-through 
spending estimate for drugs and biologicals with pass-through payment 
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 2019, consistent with section 1833(t)(6)(E)(ii)(II) of the Act 
and our OPPS policy from CY 2004 through CY 2018 (82 FR 59371 through 
59373).
    For the first group, consisting of device categories that are 
currently eligible for pass-through payment and will continue to be 
eligible for pass-through payment in CY 2019, there are no active 
categories for CY 2019. Because there are no active device categories 
for CY 2019, we are proposing an estimate for the first group of 
devices of $0. In estimating our proposed CY 2019 pass-through spending 
for device categories in the second group, we included: Device 
categories that we knew at the time of the development of the proposed 
rule will be newly eligible for pass-through payment in CY 2019; 
additional device categories that we estimated could be approved for 
pass-through status subsequent to the development of the proposed rule 
and before January 1, 2019; and contingent projections for new device 
categories established in the second through fourth quarters of CY 
2019. 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 proposed 
estimate of CY 2019 pass-through spending for this second group of 
device categories is $10 million.
    To estimate proposed CY 2019 pass-through spending for drugs and 
biologicals in the first group, specifically those drugs and 
biologicals recently made eligible for pass-through payment and 
continuing on pass-through payment status for CY 2019, we are proposing 
to use the most recent Medicare hospital outpatient claims data 
regarding their utilization, information provided in the respective 
pass-through applications, historical hospital claims data, 
pharmaceutical industry information, and clinical information regarding 
those drugs or biologicals to project the CY 2019 OPPS utilization of 
the products.
    For the known drugs and biologicals (excluding policy-packaged 
diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, 
and radiopharmaceuticals that function as supplies when used in a 
diagnostic test or procedure, and drugs and biologicals that function 
as supplies when used in a surgical procedure) that will be continuing 
on pass-through payment status in CY 2019, we estimated the pass-
through payment amount as the difference between ASP+6 percent and the 
payment rate for nonpass-through drugs and biologicals that will be 
separately paid at ASP+6 percent, which is zero for this group of 
drugs. Because payment for policy-packaged drugs and biologicals is 
packaged if the product was not paid separately due to its pass-through 
payment status, we are proposing to include in the CY 2019 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 2019 proposed spending estimate for this first group of 
drugs and biologicals of approximately $61.5 million.
    To estimate proposed CY 2019 pass-through spending for drugs and 
biologicals in the second group (that is, drugs and biologicals that we 
knew at the time of development of this proposed rule were newly 
eligible for pass-through payment in CY 2019, additional drugs and 
biologicals that we estimated could be approved for pass-through status 
subsequent to the development of this proposed rule and before January 
1, 2018, and projections for new drugs and biologicals that could be 
initially eligible for pass-through payment in the second through 
fourth quarters of CY 2019), we are proposing to use utilization 
estimates from pass-through applicants, pharmaceutical industry data, 
clinical information, recent trends in the per unit ASPs of hospital 
outpatient drugs, and projected annual changes in service volume and 
intensity as our basis for making the CY 2019 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 2019 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 $55.2 million.
    In summary, in accordance with the methodology described earlier 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 
2019 and those device categories, drugs, and biologicals that first 
become eligible for pass-through payment during CY 2019 is 
approximately $126.7 million (approximately $10 million for device 
categories and approximately $116.7 million for drugs and biologicals) 
which represents 0.18 percent of total projected OPPS payments for CY 
2019 (approximately $70 billion). Therefore, we estimate that pass-
through spending in CY 2019 would not amount to 2.0 percent of total 
projected OPPS CY 2019 program spending.

[[Page 37128]]

VII. Proposed OPPS Payment for Hospital Outpatient Visits and Critical 
Care Services

    As we did in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59373), for CY 2019, we are proposing to continue with our 
current clinic and emergency department (ED) hospital outpatient visits 
payment policies. For a description of the current clinic and ED 
hospital outpatient visits policies, we refer readers to the CY 2016 
OPPS/ASC final rule with comment period (80 FR 70448). We also are 
proposing to continue our payment policy for critical care services for 
CY 2019. For a description of the current payment policy for critical 
care services, we refer readers to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70449), and 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 this proposed rule, we 
are seeking public comments on any changes to these codes that we 
should consider for future rulemaking cycles. We continue to encourage 
those commenters to provide the data and analysis necessary to justify 
any suggested changes.
    In section X.V. of this proposed rule, we are proposing a method to 
control unnecessary increases in the volume of covered outpatient 
department services under section 1833(t)(2)(F) of the Act by utilizing 
a Medicare Physician Fee Schedule (MPFS)-equivalent payment rate for 
the hospital outpatient clinic visit (HCPCS code G0463) when it is 
furnished by excepted off-campus provider-based departments. For a full 
discussion of this proposal as well as the comment solicitation on 
potential methods to control for unnecessary increases in the volume of 
covered outpatient department services, we refer readers to section 
X.B. of this proposed rule.

VIII. Proposed Payment for Partial Hospitalization Services

A. Background

    A partial hospitalization program (PHP) is an intensive outpatient 
program of psychiatric services provided as an alternative to inpatient 
psychiatric care for individuals who have an acute mental illness, 
which includes, but is not limited to, conditions such as depression, 
schizophrenia, and substance use disorders. 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 PHP is a program 
furnished by a hospital to its outpatients or by a community mental 
health center (CMHC), as a distinct and organized intensive ambulatory 
treatment service, offering less than 24-hour-daily care, in a location 
other than an individual's home or inpatient or residential setting. 
Section 1861(ff)(3)(B) of the Act defines a CMHC for purposes of this 
benefit.
    Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the 
authority to designate the outpatient department (OPD) services to be 
covered under the OPPS. The Medicare regulations that implement this 
provision specify, at 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 requires the Secretary, in part, 
to establish relative payment weights for covered OPD services (and any 
groups of such services described in section 1833(t)(2)(B) of the Act) 
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, section 1833(t)(2)(B) of the 
Act 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. 
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 were used to calculate the 
relative payment weights for 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 section 1833(t)(2) of the Act 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.
    We began efforts to strengthen the PHP benefit through extensive 
data analysis, along with policy and payment changes finalized in the 
CY 2008 OPPS/ASC final rule with comment period (72 FR 66670 through 
66676). In that final rule with comment period, 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.
    In CY 2009, we implemented several regulatory, policy, and payment 
changes, including a two-tier payment approach for partial 
hospitalization services under which we paid one amount for days with 3 
services under PHP APC 0172 (Level 1 Partial Hospitalization) and a 
higher amount for days with 4 or more services under PHP APC 0173 
(Level 2 Partial Hospitalization) (73 FR 68688 through 68693). We also 
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). We also revised the partial 
hospitalization benefit to include several coding updates (73 FR 68695 
through 68697).
    For CY 2010, we retained the two-tier payment approach for partial 
hospitalization services and used only hospital-based PHP data in 
computing the PHP APC per diem costs, upon which PHP APC per diem 
payment rates are based. 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

[[Page 37129]]

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 the CY 2011 OPPS/ASC final rule with comment period (75 FR 
71994), we established four separate PHP APC per diem payment rates: 
two for CMHCs (APC 0172 (for Level 1 services) and APC 0173 (for Level 
2 services)) and two for hospital-based PHPs (APC 0175 (for Level 1 
services) and 0176 (for Level 2 services)), based on each provider 
type's own unique data. For CY 2011, we also instituted a 2-year 
transition period for CMHCs to the CMHC APC per diem payment rates 
based solely on CMHC data. Under the transition methodology, CMHC APCs 
Level 1 and Level 2 per diem costs were calculated by taking 50 percent 
of the difference between the CY 2010 final hospital-based PHP median 
costs and the CY 2011 final CMHC median costs and then adding that 
number to the CY 2011 final CMHC median costs. A 2-year transition 
under this methodology moved us in the direction of our goal, which is 
to pay appropriately for partial hospitalization 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 
Medicare 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.
    In addition, 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 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 (75 FR 71990).
    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 partial hospitalization services provided by CMHCs 
based on data derived solely from CMHCs and the relative payment 
weights for partial hospitalization services provided by hospital-based 
PHPs based exclusively on hospital data.
    In the CY 2013 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 (APCs 0172, 0173, 
0175, and 0176), on geometric mean costs rather than on the median 
costs. We established these four PHP APC per diem payment rates based 
on geometric mean cost levels calculated using the most recent claims 
and cost data for each provider type. For a detailed discussion on this 
policy, we refer readers to the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68406 through 68412).
    In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622), 
we solicited comments on possible future initiatives that may help to 
ensure the long-term stability of PHPs and further improve the accuracy 
of payment for PHP services, but proposed no changes. In the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75050 through 75053), we 
summarized the comments received on those possible future initiatives. 
We also continued 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. For a 
detailed discussion on this policy, we refer readers to the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75047 through 75050).
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 
through 66908), we continued to apply our established policies to 
calculate the four PHP APC per diem payment rates based on PHP APC 
geometric mean per diem costs, using the most recent claims and cost 
data for each provider type.
    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455 
through 70465), we described our extensive analysis of the claims and 
cost data and ratesetting methodology. We found aberrant data from some 
hospital-based PHP providers that were not captured using the existing 
OPPS <plus-minus>3 standard deviation trims for extreme cost-to-charge 
ratios (CCRs) and excessive CMHC charges resulting in CMHC geometric 
mean costs per day that were approximately the same as or more than the 
daily payment for inpatient psychiatric facility services. 
Consequently, we implemented a trim to remove hospital-based PHP 
service days that use a CCR that was greater than 5 to calculate costs 
for at least one of their component services, and a trim on CMHCs with 
a geometric mean cost per day that is above or below 2 (<plus-minus>2) 
standard deviations from the mean. We stated in the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70456) that, without using a 
trimming process, the data from these providers would inappropriately 
skew the geometric mean per diem cost for Level 2 CMHC services.
    In addition, in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70459 through 70460), we corrected a cost inversion that 
occurred in the final rule data with respect to hospital-based PHP 
providers. We corrected the cost inversion with an equitable adjustment 
to the actual geometric mean per diem costs by increasing the Level 2 
hospital-based PHP APC geometric mean per diem costs and decreasing the 
Level 1 hospital-based PHP APC geometric mean per diem costs by the 
same factor, to result in a percentage difference equal to the average 
percent difference between the hospital-based Level 1 PHP APC and the 
Level 2 PHP APC for partial hospitalization services from CY 2013 
through CY 2015.
    Finally, we renumbered the PHP APCs, which were previously 0172, 
0173, 0175, and 0176, to 5851, 5852, 5861, and 5862, respectively. For 
a detailed discussion of the PHP ratesetting process, we refer readers 
to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462 
through 70467).
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 
through 79691), we continued to apply our established policies to 
calculate the PHP APC per diem payment rates based on geometric mean 
per diem costs using the most recent claims and cost data for each 
provider type. However, we finalized a policy to combine the Level 1 
and Level 2 PHP APCs for CMHCs and to combine the Level 1 and Level 2 
APCs for hospital-based PHPs because we believed this would best 
reflect actual geometric mean per diem costs going forward, provide 
more predictable per diem costs, particularly given the small number of 
CMHCs, and generate more appropriate payments for these services, for 
example by avoiding the cost inversions for hospital-based PHPs 
addressed in the CY 2016 and CY 2017 OPPS/ASC final rules with comment 
period (80 FR 70459 and 81 FR 79682). We implemented an 8-percent 
outlier cap for CMHCs to mitigate potential outlier billing 
vulnerabilities by limiting the impact of inflated CMHC charges on 
outlier payments. We will continue to monitor the trends in outlier 
payments

[[Page 37130]]

and consider policy adjustments as necessary.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59373 
through 59381), we continued to apply our established policies to 
calculate the PHP APC per diem payment rates based on geometric mean 
per diem costs using the most recent claims and cost data for each 
provider type. We continued to designate a portion of the estimated 1.0 
percent hospital outpatient outlier threshold specifically for CMHCs, 
consistent with the percentage of projected payments to CMHCs under the 
OPPS, excluding outlier payments.
    For a comprehensive description of PHP payment policy, including a 
detailed methodology for determining PHP per diem amounts, we refer 
readers to the CY 2016 and CY 2017 OPPS/ASC final rules with comment 
period (80 FR 70453 through 70455 and 81 FR 79678 through 79680).

B. Proposed PHP APC Update for CY 2019

1. Proposed PHP APC Geometric Mean per Diem Costs
    For CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are 
proposing to continue to apply our established policies to calculate 
the PHP APC per diem payment rates based on geometric mean per diem 
costs using the most recent claims and cost data for each provider 
type. Specifically, we are proposing to continue to use CMHC APC 5853 
(Partial Hospitalization (3 or More Services Per Day)) and hospital-
based PHP APC 5863 (Partial Hospitalization (3 or More Services Per 
Day)). We are proposing to continue to calculate the geometric mean per 
diem costs for CY 2019 for APC 5853 for CMHCs using only CY 2017 CMHC 
claims data and the most recent CMHC cost data, and the CY 2019 
geometric mean per diem costs for APC 5863 for hospital-based PHPs 
using only CY 2017 hospital-based PHP claims data and the most recent 
hospital cost data.
2. Development of the Proposed PHP APC Geometric Mean per Diem Costs
    In this CY 2019 OPPS/ASC proposed rule, we are proposing that for 
CY 2019 and subsequent years, to follow the PHP ratesetting methodology 
described in section VIII.B.2. of the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70462 through 70466) to determine the PHP APCs' 
proposed geometric mean per diem costs and to calculate the proposed 
payment rates for APCs 5853 and 5863, incorporating the modifications 
made in our CY 2017 OPPS/ASC final rule with comment period. As 
discussed in section VIII.B.1. of the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79680 through 79687), the proposed geometric mean 
per diem cost for hospital-based PHP APC 5863 would be based upon 
actual hospital-based PHP claims and costs for PHP service days 
providing 3 or more services. Similarly, the proposed geometric mean 
per diem cost for CMHC APC 5853 would be based upon actual CMHC claims 
and costs for CMHC service days providing 3 or more services.
    The CMHC or hospital-based PHP APC per diem costs are the provider-
type specific costs derived from the most recent claims and cost data. 
The CMHC or hospital-based PHP APC per diem payment rates are the 
national unadjusted payment rates calculated from the CMHC or hospital-
based PHP APC per diem costs, after applying the OPPS budget neutrality 
adjustments described in section II.A.4. of this proposed rule.
    We are proposing to apply our established methodologies in 
developing the CY 2019 proposed geometric mean per diem costs and 
payment rates, including the application of a <plus-minus>2 standard 
deviation trim on costs per day for CMHCs and a CCR greater than 5 
hospital service day trim for hospital-based PHP providers. These two 
trims were finalized in the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70455 through 70462) for CY 2016 and subsequent years.
a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments
    For this CY 2019 proposed rule, prior to calculating the proposed 
geometric mean per diem cost for CMHC APC 5853, we prepared the data by 
first applying trims and data exclusions, and assessing CCRs as 
described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70463 through 70465), so that ratesetting is not skewed by providers 
with extreme data. Before any trims or exclusions were applied, there 
were 44 CMHCs in the PHP claims data file. Under the <plus-minus>2 
standard deviation trim policy, we exclude any data from a CMHC for 
ratesetting purposes when the CMHC's geometric mean cost per day is 
more than <plus-minus>2 standard deviations from the geometric mean 
cost per day for all CMHCs. By applying this trim for CY 2019 
ratesetting, in this proposed rule, we excluded 4 CMHCs with geometric 
mean costs per day below the trim's lower limit of $53.33 and 4 CMHCs 
with geometric mean costs per day above the trim's upper limit of 
$274.43 from the proposed ratesetting for CY 2019. This standard 
deviation trim removed 8 providers from the ratesetting whose data 
would have skewed the calculation of the proposed geometric mean per 
diem costs for CMHCs.
    In accordance with our PHP ratesetting methodology, we also remove 
service days with no wage index values because we use the wage index 
data to remove the effects of geographic variation in costs prior to 
APC geometric mean per diem cost calculation (80 FR 70465). For this CY 
2019 proposed rule ratesetting, no CMHCs were missing wage index data 
for all of their service days. Therefore, we did not exclude any CMHCs 
due to the lack of wage index data.
    In addition to our trims and data exclusions, before determining 
the proposed PHP APC geometric mean per diem costs, we also assess CCRs 
(80 FR 70463). Our longstanding PHP OPPS ratesetting methodology 
defaults any CMHC CCR greater than 1 to the statewide hospital 
ancillary CCR (80 FR 70457). For this CY 2019 proposed rule 
ratesetting, we identified 3 CMHCs that had CCRs greater than 1. These 
CMHCs' CCRs were 1.053, 1.009, and 1.025, and each was defaulted to its 
appropriate statewide hospital ancillary CCR for CY 2019 ratesetting 
purposes.
    In summary, these data preparation steps adjusted the CCR for 3 
CMHCs by defaulting to the appropriate statewide hospital ancillary CCR 
and excluded 8 CMHCs, resulting in the inclusion of a total of 36 CMHCs 
(44 total--8 excluded) in our CY 2019 proposed rule ratesetting 
modeling. The trims removed 645 CMHC claims out of a total of 13,152 
CMHC claims, resulting in 12,507 CMHC claims used for ratesetting 
purposes. We believe that excluding providers with extremely low or 
high geometric mean costs per day or extremely low or high CCRs 
protects CMHCs from having that data inappropriately skew the 
calculation of the proposed CMHC APC geometric mean per diem cost. 
Moreover, we believe that these trims, exclusions, and adjustments help 
prevent inappropriate fluctuations in the proposed PHP APC geometric 
mean per diem payment rates.
    After applying all of the above trims, exclusions, and adjustments, 
we followed the methodology described in the CY 2016 OPPS/ASC final 
rule with comment period (80 FR 70464 through 70465) and modified in 
the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 
through 79688, and 79691) to calculate the proposed PHP APC geometric 
mean per diem cost.\29\

[[Page 37131]]

The proposed CY 2019 geometric mean per diem cost for all CMHCs for 
providing 3 or more services per day (CMHC PHP APC 5853) is $119.51.
---------------------------------------------------------------------------

    \29\ Each revenue code on the CMHC claim must have a HCPCS code 
and charge associated with it. We multiply each claim service line's 
charges by the CMHC's overall CCR (or statewide ancillary CCR, where 
the overall CCR was greater than 1) to estimate CMHC costs. Only the 
claims service lines containing PHP allowable HCPCS codes and PHP 
allowable revenue codes from the CMHC claims remaining after 
trimming are retained for CMHC cost determination. The costs, 
payments, and service units for all service lines occurring on the 
same service date, by the same provider, and for the same 
beneficiary are summed. CMHC service days must have 3 or more 
services provided to be assigned to CMHC APC 5853. The geometric 
mean per diem cost for CMHC APC 5853 is calculated by taking the nth 
root of the product of n numbers, for days where 3 or more services 
were provided. CMHC service days with costs <plus-minus>3 standard 
deviations from the geometric mean costs within APC 5853 are deleted 
and removed from modeling. The remaining PHP service days are used 
to calculate the geometric mean per diem cost for each PHP APC by 
taking the nth root of the product of n numbers for days where 3 or 
more services were provided.
---------------------------------------------------------------------------

b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions
    For this CY 2019 proposed rule, we followed a data preparation 
process for hospital-based PHP providers that is similar to that used 
for CMHCs by applying trims and data exclusions as described in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70463 through 
70465) so that our ratesetting is not skewed by providers with extreme 
data. Before any trimming or exclusions were applied, there were 394 
hospital-based PHP providers in the CY 2017 PHP claims data used in 
this CY 2019 OPPS/ASC proposed rule.
    For hospital-based PHP providers, we applied a trim on hospital 
service days when the CCR was greater than 5 at the cost center level. 
This trim removed hospital-based PHP service days that use a CCR 
greater than 5 to calculate costs for at least one of their component 
services. Unlike the <plus-minus>2 standard deviation trim, which 
excluded CMHC providers that failed the trim, the CCR greater than 5 
trim excluded any hospital-based PHP service day where any of the 
services provided on that day were associated with a CCR greater than 5 
(in other words, the CCR greater than 5 trim is a (service) day-level 
trim in contrast to the CMHC <plus-minus>2 standard deviation trim, 
which is a provider-level trim). Applying this CCR greater than 5 trim 
removed from our proposed rule ratesetting affected service days from 4 
hospital-based PHP providers with CCRs ranging from 5.2024 to 13.1952. 
However, 100 percent of the service days for 3 of these affected 
hospital-based PHP providers had at least 1 service associated with a 
CCR greater than 5, so the trim removed these 3 providers entirely from 
our proposed rule ratesetting. The fourth provider remained in the 
ratesetting data, but with affected service days trimmed out. In 
addition, 16 hospital-based PHPs reported zero daily costs and, 
therefore, were removed for having no days with PHP payment; no 
hospital-based PHPs were removed for missing wage index data; and 1 
hospital-based PHP was removed by the OPPS <plus-minus>3 standard 
deviation trim on costs per day.
    Therefore, we excluded 20 hospital-based PHP providers [(3 with 
CCRs greater than 5) + (16 with zero daily costs) + (1 after applying 
the <plus-minus>3 standard deviation trim)], resulting in 374 (394 
total--20 excluded) hospital-based PHP providers in the data used for 
proposed rule ratesetting. In addition, 5 hospital-based PHP providers 
were defaulted to using their overall hospital ancillary CCRs due to 
outlier cost center CCR values, which ranged from 0.0331 to 72.7320. 
After completing these data preparation steps, we calculated the 
proposed CY 2019 geometric mean per diem cost for hospital-based PHP 
APC 5863 for hospital-based PHP services by following the methodology 
described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70464 through 70465) and modified in the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79687 and 79691) to calculate the geometric 
mean per diem cost.\30\ The proposed CY 2019 geometric mean per diem 
cost for hospital-based PHP providers that provide 3 or more services 
per service day (hospital-based PHP APC 5863) is $220.52.
---------------------------------------------------------------------------

    \30\ Each revenue code on the hospital-based PHP claim must have 
a HCPCS code and charge associated with it. We multiply each claim 
service line's charges by the hospital's department-level CCR; that 
CCR is determined by using the OPPS Revenue-code-to-cost-center 
crosswalk. Only the claims service lines containing PHP-allowable 
HCPCS codes and PHP-allowable revenue codes from the hospital-based 
PHP claims remaining after trimming are retained for hospital-based 
PHP cost determination. The costs, payments, and service units for 
all service lines occurring on the same service date, by the same 
provider, and for the same beneficiary are summed. Hospital-based 
PHP service days must have 3 or more services provided to be 
assigned to hospital-based PHP APC 5863. The geometric mean per diem 
cost for hospital-based PHP APC 5863 is calculated by taking the nth 
root of the product of n numbers, for days where 3 or more services 
were provided. Hospital-based PHP service days with costs <plus-
minus>3 standard deviations from the geometric mean costs within APC 
5863 are deleted and removed from modeling. The remaining hospital-
based PHP service days are used to calculate the geometric mean per 
diem cost for hospital-based PHP APC 5863.
---------------------------------------------------------------------------

    The proposed CY 2019 PHP APC geometric mean per diem costs for CMHC 
PHP APC 5853 are $119.51 and for hospital-based PHP APC 5863 are 
$220.52, as stated above and shown in Table 25. The proposed PHP APCs 
payment rates, which are derived from these proposed PHP APCs geometric 
mean per diem costs, are included in Addendum A to this proposed rule 
(which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html).\31\
---------------------------------------------------------------------------

    \31\ As discussed in section II.A. of this CY 2019 OPPS/ASC 
proposed rule, OPPS APC geometric mean per diem costs (including PHP 
APC geometric mean per diem costs) are divided by the geometric mean 
per diem costs for APC 5012 (Clinic Visits and Related Services) to 
calculate each PHP APC's unscaled relative payment weight. An 
unscaled relative payment weight is one that is not yet adjusted for 
budget neutrality. Budget neutrality is required under section 
1833(t)(9)(B) of the Act, and ensures that the estimated aggregate 
weight under the OPPS for a calendar year is neither greater than 
nor less than the estimated aggregate weight that would have been 
made without the changes. To adjust for budget neutrality (that is, 
to scale the weights), we compare the estimated aggregated weight 
using the scaled relative payment weights from the previous calendar 
year at issue. We refer readers to the ratesetting procedures 
described in Part 2 of the OPPS Claims Accounting narrative and in 
section II. of this proposed rule for more information on scaling 
the weights, and for details on the final steps of the process that 
lead to PHP APC per diem payment rates. The OPPS Claims Accounting 
narrative is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

    Table 25--CY 2019 Proposed PHP APC Geometric Mean Per Diem Costs
------------------------------------------------------------------------
                                                       Proposed PHP APC
       CY 2019 APC                Group title         geometric mean per
                                                          diem costs
------------------------------------------------------------------------
5853.....................  Partial Hospitalization               $119.51
                            (3 or more services per
                            day) for CMHCs.
5863.....................  Partial Hospitalization                220.52
                            (3 or more services per
                            day) for hospital-based
                            PHPs.
------------------------------------------------------------------------


[[Page 37132]]

3. Proposed Changes to the Revenue-Code-to-Cost Center Crosswalk
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79691), we received public comments identifying an issue that may have 
contributed to a decreased PHP median [sic] cost for hospital-based 
PHPs. The commenters noted that the lack of a required standardized PHP 
cost center on the Medicare cost report may be creating some cost-
finding nuances in the cost report itself--that hospital-based PHP 
costs are combined with the costs of less expensive non-PHP outpatient 
mental health services during CCR calculation, thus ``diluting'' the 
CCR values. We agreed with the commenters that, if PHP costs are 
combined with other less intensive outpatient mental health treatment 
costs in the same cost center, the CCR values could be diluted, leading 
to lower geometric mean per diem costs being calculated. We stated in 
response that we would consider adding a cost center to the hospital 
cost report for PHP costs only.
    On November 17, 2017, in Transmittal No. 12, we added a new cost 
center, ``Partial Hospitalization Program,'' on Line 93.99 of Worksheet 
A (Line 93.99 is also displayed on Worksheets B, Parts I and II, B-1; 
and C, Parts I and II) for hospital-based PHPs, for cost reporting 
periods ending on or after August 31, 2017 (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R12P240.pdf). On January 30, 2018, in Transmittal No. 13, we changed 
the implementation date from cost reporting periods ending on or after 
August 31, 2017, to cost reporting periods ending on or after September 
30, 2017 (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R12P240.pdf). The instructions for this new 
PHP cost center (Line 93.99) indicate that effective for cost reporting 
periods ending on or after September 30, 2017, the provider is to enter 
the costs of providing hospital-based partial hospitalization program 
(PHP) services as defined in section 1861(ff) of the Act. Therefore, 
this cost center is to include all costs associated with providing PHP 
services, as defined in the statute (for example, occupational therapy, 
individual and group therapy, among others). It should not include 
costs for non-PHP outpatient mental health services, such as costs from 
what providers refer to as ``Intensive Outpatient Programs.''
    During current hospital-based-PHP ratesetting, costs are estimated 
by multiplying revenue code charges on the claim by the appropriate 
cost center-level CCR from the hospital cost report (80 FR 70465). Each 
PHP revenue code is associated with particular cost centers on the cost 
report (80 FR 70464). The appropriate cost center-level CCR is 
identified by using the OPPS Revenue-Code-to-Cost-Center crosswalk; the 
current crosswalk is discussed in the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59228) and is available on the CMS website at: 
https://www.cms.gov/apps/ama/license.asp?file=/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/CMS-1678-FC-2018-OPPS-FR-Revenue-Code-to-Cost-Center-Crosswalk.zip. The Revenue-Code-to-
Cost-Center crosswalk identifies the primary, secondary (if any), and 
tertiary (if any) cost centers that are associated with each PHP 
revenue code, and which are the source for the CCRs used in PHP 
ratesetting. As discussed in the CY 2002 OPPS interim final rule (66 FR 
59885), hospital-based PHP CCRs are assessed by applying the existing 
OPPS <plus-minus>3 standard deviation trim to hospital-based PHP CCRs 
within each cost center and to the overall hospital ancillary CCR. In 
the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464), we 
stated that, if the primary cost center has no CCR or if it fails the 
<plus-minus>3 standard deviation trim, the ratesetting system will look 
for a CCR in the secondary cost center. If the secondary cost center 
has no CCR or if it fails the <plus-minus>3 standard deviation trim, 
the system will move to the tertiary cost center to look for a CCR. If 
the tertiary cost center has no CCR or if it fails the <plus-minus>3 
standard deviation trim, the ratesetting system will default to using 
the hospital's overall ancillary CCR. If the hospital's overall 
ancillary CCR fails the <plus-minus>3 standard deviation trim, we 
exclude the hospital from ratesetting. While the hierarchy requires a 
primary cost center to be associated with a given revenue code, it is 
optional for there to be secondary or tertiary cost centers.
    With the new PHP cost center, the crosswalk must be updated for 
hospital-based PHP cost estimation to correctly match hospital-based 
PHP revenue code charges with the PHP cost center CCR for future 
ratesetting. However, because the PHP-allowable revenue codes are also 
used for reporting non-PHP mental health services, we could not 
designate the PHP cost center as the primary cost center in the 
existing OPPS Revenue-Code-to-Cost-Center crosswalk. Therefore, we are 
proposing to create a separate PHP-only Revenue-Code-to-Cost-Center 
crosswalk for use in CY 2019 and subsequent years, which would provide 
a more accurate and operationally simpler method of matching hospital-
based PHP charges to the correct hospital-based PHP cost center CCR 
without affecting non-PHP ratesetting. We note that, because CMHCs have 
their own cost reports, we use each CMHC's overall CCR in estimating 
costs for PHP ratesetting (80 FR 70463 and 70464). As such, CMHCs do 
not have a crosswalk and, therefore, this proposal to create a PHP-only 
crosswalk does not apply to CMHCs. Therefore, we are proposing that, 
for CY 2019 and subsequent years, hospital-based PHPs would follow a 
new Revenue-Code-to-Cost-Center crosswalk that only applies to 
hospital-based PHPs. We are proposing that this new PHP-only Revenue-
Code-to-Cost-Center crosswalk would be comprised of the existing PHP 
allowable revenue codes and would map each of those PHP-allowable 
revenue codes to the new PHP cost center Line 93.99 as the primary cost 
center source for the CCR. We also are proposing to designate as the 
new secondary cost center the cost center that is currently listed as 
the existing primary cost center, and to designate as the new tertiary 
cost center the cost center that is listed as the existing secondary 
cost center.
    In addition, we are proposing one exception to this policy for the 
mapping for revenue code 0904, which is the only PHP-allowable revenue 
code in the existing crosswalk with a tertiary cost center source for 
the CCR. We are proposing that for revenue code 0904, the secondary 
cost center for CY 2019 and subsequent years would be the existing 
secondary cost center 3550 (``Psychiatric/Psychological Services''). 
Similarly, we are proposing that for revenue code 0904, the tertiary 
cost center for CY 2019 and subsequent years would be existing tertiary 
cost center 9000 (``Clinic''). We considered expanding the Revenue-
Code-to-Cost-Center crosswalk hierarchy to add a 4th or quaternary 
level to the hierarchy, before the system would default to the overall 
hospital ancillary CCR. However, we evaluated the usage of the current 
hierarchy for revenue code 0904 for the CY 2017, CY 2018, and CY 2019 
PHP ratesetting modelling, and found that expanding the hierarchy would 
not be necessary. Our analysis showed that the existing primary cost 
center 3580 (``Recreational Therapy'') for revenue code 0904 had not 
been used during any of the past 3 years.
    Our current and proposed PHP-only Revenue-Code-to-Cost-Center 
Crosswalks are shown in Table 26 below.

[[Page 37133]]



                                     Table 26--Current and Proposed PHP-Only Revenue--Code-To-Cost-Center Crosswalks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               Current hierarchy (applicable in CY 2018)             Proposed new PHP-only hierarchy (applicable in CY 2019 and beyond)
                    ------------------------------------------------------------------------------------------------------------------------------------
   PHP allowable       Primary cost     Secondary cost                                                          Secondary cost
    revenue code       center source     center source      Tertiary cost center       Primary cost center      center source     Tertiary cost center
                          for CCR           for CCR            source for CCR             source for CCR           for CCR           source for CCR
--------------------------------------------------------------------------------------------------------------------------------------------------------
0430...............  6700              ................  .........................  9399 (PHP)...............  6700             ........................
                      Occupational                                                                              Occupational
                      Therapy.                                                                                  Therapy.
0431...............  6700              ................  .........................  9399 (PHP)...............  6700             ........................
                      Occupational                                                                              Occupational
                      Therapy.                                                                                  Therapy.
0432...............  6700              ................  .........................  9399 (PHP)...............  6700             ........................
                      Occupational                                                                              Occupational
                      Therapy.                                                                                  Therapy.
0433...............  6700              ................  .........................  9399 (PHP)...............  6700             ........................
                      Occupational                                                                              Occupational
                      Therapy.                                                                                  Therapy.
0434...............  6700              ................  .........................  9399 (PHP)...............  6700             ........................
                      Occupational                                                                              Occupational
                      Therapy.                                                                                  Therapy.
0435...............  RESERVED.                                                                                                  ........................
0436...............  RESERVED.                                                                                                  ........................
0437...............  RESERVED.                                                                                                  ........................
0438...............  RESERVED.                                                                                                  ........................
0439...............  6700              ................  .........................  9399 (PHP)...............  6700             ........................
                      Occupational                                                                              Occupational
                      Therapy.                                                                                  Therapy.
0900...............  3550              9000 (Clinic)...  .........................  9399 (PHP)...............  3550             9000 (Clinic).
                      (Psychiatric/                                                                             (Psychiatric/
                      Psychological                                                                             Psychological
                      Services.                                                                                 Services).
0904...............  3580              3550              9000 (Clinic)............  9399 (PHP)...............  3550             9000 (Clinic).
                      (Recreational     (Psychiatric/                                                           (Psychiatric/
                      Therapy).         Psychological                                                           Psychological
                                        Services.                                                               Services).
0914...............  3550              9000 (Clinic)...  .........................  9399 (PHP)...............  3550             9000 (Clinic).
                      (Psychiatric/                                                                             (Psychiatric/
                      Psychological                                                                             Psychological
                      Services.                                                                                 Services).
0915...............  3550              9000 (Clinic)...  .........................  9399 (PHP)...............  3550             9000 (Clinic).
                      (Psychiatric/                                                                             (Psychiatric/
                      Psychological                                                                             Psychological
                      Services.                                                                                 Services).
0916...............  3550              9000 (Clinic)...  .........................  9399 (PHP)...............  3550             9000 (Clinic).
                      (Psychiatric/                                                                             (Psychiatric/
                      Psychological                                                                             Psychological
                      Services.                                                                                 Services).
0918...............  3550              9000 (Clinic)...  .........................  9399 (PHP)...............  3550             9000 (Clinic).
                      (Psychiatric/                                                                             (Psychiatric/
                      Psychological                                                                             Psychological
                      Services.                                                                                 Services).
0942...............  9000 (Clinic)...  ................  .........................  9399 (PHP)...............  9000 (Clinic)..  ........................
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. PHP Service Utilization Updates
    While we are not proposing any changes to this policy, we will 
continue to monitor the provision of days with only 3 services. In the 
CY 2016 OPPS/ASC final rule with comment period (81 FR 79684 through 
79685), we expressed concern over the low frequency of individual 
therapy provided to beneficiaries. The CY 2017 claims data used for 
this CY 2019 proposed rule revealed some changes in the provision of 
individual therapy compared to CY 2016 and CY 2015 claims data as shown 
in the table below.

 Table 27--Provision of Individual Therapy, by Provider Type and Claims
                                  Year
------------------------------------------------------------------------
                                            Percent of      Percent of
                                            days with 3   days with 4 or
                                           services only   more services
------------------------------------------------------------------------
CMHCs:
    CY 2015 Claims......................             7.9             4.4
    CY 2016 Claims......................             8.5             5.0
    CY 2017 Claims......................             4.8             4.2
Hospital-based PHPs:
    CY 2015 Claims......................             4.0             6.2
    CY 2016 Claims......................             4.7             5.8
    CY 2017 Claims......................             4.1            12.2
------------------------------------------------------------------------

    As shown in Table 27, CMHCs have decreased the provision of 
individual therapy, based on the CY 2017 claims used for this proposed 
rule. In contrast, the CY 2017 claims data show that hospital-based 
PHPs have greatly increased the provision of individual therapy.
    In the CY 2018 OPPS/ASC proposed rule and final rule with comment 
period (82 FR 33640 and 59378), we stated that we are aware that our 
single-tier

[[Page 37134]]

payment policy may influence a change in service provision because 
providers are able to obtain payment that is heavily weighted to the 
cost of providing 4 or more services when they provide only 3 services. 
We indicated that we are interested in ensuring that providers furnish 
an appropriate number of services to beneficiaries enrolled in PHPs. 
Therefore, with the CY 2017 implementation of APC 5853 and APC 5863 for 
providing 3 or more PHP services per day, we are continuing to monitor 
utilization of days with only 3 PHP services. Table 28 below shows the 
utilization findings based on the most recent claims data.

                           Table 28--Percentage of PHP Days by Service Unit Frequency
----------------------------------------------------------------------------------------------------------------
                                                                                                    % Change **
                                                    CY 2015 (%)    CY 2016 * (%)   CY 2017 * (%)        (%)
----------------------------------------------------------------------------------------------------------------
CMHCs:
    Percent of Days with 3 services.............             4.7             4.8             4.8             0.0
    Percent of Days with 4 services.............            62.9            70.3            76.3             8.5
    Percent of Days with 5 or more services.....            32.4            24.9            18.9           -24.1
Hospital-based PHPs:
    Percent of Days with 3 services.............            12.4           10.95             9.3           -14.7
    Percent of Days with 4 services.............            69.8            64.9            56.1           -13.6
    Percent of Days with 5 or more services.....            17.8            24.1            34.6            43.6
----------------------------------------------------------------------------------------------------------------
* May not sum to 100 percent by provider type due to rounding.
** (CY 2017-CY 2016)/CY 2016.

    As shown in Table 28, the CY 2017 claims data used for this 
proposed rule showed that PHPs maintained an appropriately low 
utilization of 3 service days compared to CY 2016 and CY 2015. Compared 
to CY 2016, hospital-based PHPs have provided fewer days with 3 
services only, fewer days with 4 services only, and more days with 5 or 
more services. Compared to CY 2016, CMHCs have remained steady in 
providing an appropriately low level of 3 service days, increased their 
provision of days with 4 services, but have decreased their provision 
of days with 5 or more services.
    As we noted in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79685), we will continue to monitor the provision of days with 
only 3 services, particularly now that the single-tier PHP APCs 5853 
and 5863 are in place for providing 3 or more services per day to CMHCs 
and hospital-based PHPs, respectively. The CY 2017 data are the first 
year of claims data to reflect the change to the single-tier PHP APCs, 
and the level of utilization of days with 3 services only indicates 
providers are not reducing care for this patient population by 
providing more days with only 3 services.
    It is important to reiterate our expectation that days with only 3 
services are meant to be an exception and not the typical PHP day. In 
the CY 2009 OPPS/ASC final rule with comment period (73 FR 68694), we 
clearly stated that we consider the acceptable minimum units of PHP 
services required in a PHP day to be 3 and explained that it was never 
our intention that 3 units of service represent the number of services 
to be provided in a typical PHP day. PHP is furnished in lieu of 
inpatient psychiatric hospitalization and is intended to be more 
intensive than a half-day program. We further indicated that a typical 
PHP day should generally consist of 5 to 6 units of service (73 FR 
68689). We explained that days with only 3 units of services may be 
appropriate to bill in certain limited circumstances, such as when a 
patient might need to leave early for a medical appointment and, 
therefore, would be unable to complete a full day of PHP treatment. At 
that time, we noted that if a PHP were to only provide days with 3 
services, it would be difficult for patients to meet the eligibility 
requirement in 42 CFR 410.43(c)(1), that patients must require a 
minimum of 20 hours per week of therapeutic services as evidenced in 
their plan of care (73 FR 68689).

C. Outlier Policy for CMHCs

    In this proposed rule, for CY 2019, we are proposing to continue to 
calculate the CMHC outlier percentage, cutoff point and percentage 
payment amount, outlier reconciliation, outlier payment cap, and fixed-
dollar threshold according to previously established policies. These 
topics are discussed in more detail below. We refer readers to section 
II.G. of this proposed rule for our general policies for hospital 
outpatient outlier payments.
1. Background
    As discussed in the CY 2004 OPPS final rule with comment period (68 
FR 63469 through 63470), we noted a significant difference in the 
amount of outlier payments made to hospitals and CMHCs for PHP 
services. Given the difference in PHP charges between hospitals and 
CMHCs, we did not believe it was appropriate to make outlier payments 
to CMHCs using the outlier percentage target amount and threshold 
established for hospitals. Therefore, beginning in CY 2004, we created 
a separate outlier policy specific to the estimated costs and OPPS 
payments provided to CMHCs. We designated a portion of the estimated 
OPPS outlier threshold 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. This 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 (82 FR 59381). In 
contrast, in CY 2003, more than $30 million was paid to CMHCs in 
outlier payments (82 FR 59381).
2. CMHC Outlier Percentage
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 
through 59268), we described the current outlier policy for hospital 
outpatient payments and CMHCs. We note that we also discussed our 
outlier policy for CMHCs in more detail in section VIII. C. of that 
same final rule (82 FR 59381). For CMHCs, we set our projected target 
for aggregate outlier payments at 1.0 percent of the estimated 
aggregate total payments under the OPPS (82 FR 59267). We estimate CMHC 
per diem payments and outlier payments by using the most recent 
available utilization and charges from CMHC claims, updated CCRs, and 
the updated payment rate for APC 5853. For increased transparency, we 
are providing a more detailed explanation of the existing calculation 
process for determining the CMHC outlier

[[Page 37135]]

percentages below. As previously stated, we are proposing to continue 
to calculate the CMHC outlier percentage according to previously 
established policies, and we are not proposing any changes to our 
current methodology for calculating the CMHC outlier percentage for CY 
2019. To calculate the CMHC outlier percentage, we follow three steps:
    <bullet> Step 1: We multiply the OPPS outlier threshold, which is 
1.0 percent, by the total estimated OPPS Medicare payments (before 
outliers) for the prospective year to calculate the estimated total 
OPPS outlier payments: (0.01 x Estimated Total OPPS Payments) = 
Estimated Total OPPS Outlier Payments.
    <bullet> Step 2: We estimate CMHC outlier payments by taking each 
provider's estimated costs (based on their allowable charges multiplied 
by the provider's CCR) minus each provider's estimated CMHC outlier 
multiplier threshold (we refer readers to section VIII.C.3. of this 
proposed rule). That threshold is determined by multiplying the 
provider's estimated paid days by 3.4 times the CMHC PHP APC payment 
rate. If the provider's costs exceed the threshold, we multiply that 
excess by 50 percent, as described in section VIII.C.3. of this 
proposed rule, to determine the estimated outlier payments for that 
provider. CMHC outlier payments are capped at 8 percent of the 
provider's estimated total per diem payments (including the 
beneficiary's copayment), as described in section VIII.C.5. of this 
proposed rule, so any provider's costs that exceed the CMHC outlier cap 
would have its payments adjusted downward. After accounting for the 
CMHC outlier cap, we sum all of the estimated outlier payments to 
determine the estimated total CMHC outlier payments.
    (Each Provider's Estimated Costs-Each Provider's Estimated 
Multiplier Threshold) = A. If A > 0, then (A x 0.50) = Estimated CMHC 
Outlier Payment (before cap) = B. If B > (0.08 x Provider's Total 
Estimated Per Diem Payments), then cap-adjusted B = (0.08 x Provider's 
Total Estimated Per Diem Payments); otherwise, B = B. Sum (B or cap-
adjusted B) for Each Provider = Total CMHC Outlier Payments.
    <bullet> Step 3: We determine the percentage of all OPPS outlier 
payments that CMHCs represent by dividing the estimated CMHC outlier 
payments from Step 2 by the total OPPS outlier payments from Step 1: 
(Estimated CMHC Outlier Payments/Total OPPS Outlier Payments).
    In CY 2018, we designated approximately 0.03 percent of that 
estimated 1.0 percent hospital outpatient outlier threshold for CMHCs 
(82 FR 59381), based on this methodology. In this proposed rule, we are 
proposing to continue to use the same methodology for CY 2019. 
Therefore, based on our CY 2019 payment estimates, CMHCs are projected 
to receive 0.02 percent of total hospital outpatient payments in CY 
2019, excluding outlier payments. We are proposing to designate 
approximately less than 0.01 percent of the estimated 1.0 percent 
hospital outpatient outlier threshold for CMHCs. This percentage is 
based upon the formula given in Step 3 above.

3. Cutoff Point and Percentage Payment Amount

    As described in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59381), our policy has been to pay CMHCs for outliers if the 
estimated cost of the day exceeds a cutoff point. In CY 2006, we set 
the cutoff point for outlier payments at 3.4 times the highest CMHC PHP 
APC payment rate implemented for that calendar year (70 FR 68551). This 
cutoff point is sometimes called a multiplier threshold (70 FR 68550). 
For CY 2018, the highest CMHC PHP APC payment rate is the payment rate 
for CMHC PHP APC 5853. In addition, in 2002, the final OPPS outlier 
payment percentage for costs above the multiplier threshold was set at 
50 percent (66 FR 59889). In CY 2018, we continued to apply the same 50 
percent outlier payment percentage that applies to hospitals to CMHCs 
and continued to use the existing cutoff point (82 FR 59381). 
Therefore, for CY 2018, we continued to pay for partial hospitalization 
services that exceeded 3.4 times the CMHC PHP APC payment rate at 50 
percent of the amount of CMHC PHP APC geometric mean per diem costs 
over the cutoff point. For example, for CY 2018, if a CMHC's cost for 
partial hospitalization services paid under CMHC PHP APC 5853 exceeds 
3.4 times the CY 2018 payment rate for CMHC PHP APC 5853, the outlier 
payment would be calculated as 50 percent of the amount by which the 
cost exceeds 3.4 times the CY 2018 payment rate for CMHC PHP APC 5853 
[0.50 x (CMHC Cost-(3.4 x APC 5853 rate))].
    In this proposed rule, for CY 2019, in accordance with our existing 
policy, we are proposing to continue to pay for partial hospitalization 
services that exceed 3.4 times the proposed CMHC PHP APC payment rate 
at 50 percent of the CMHC PHP APC geometric mean per diem costs over 
the cutoff point. That is, for CY 2019, if a CMHC's cost for partial 
hospitalization services paid under CMHC PHP APC 5853 exceeds 3.4 times 
the proposed payment rate for CMHC APC 5853, the outlier payment would 
be calculated as [0.50 x (CMHC Cost-(3.4 x APC 5853 rate))].
4. Outlier Reconciliation
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 
through 68599), we established an outlier reconciliation policy to 
address charging aberrations related to OPPS outlier payments. We 
addressed vulnerabilities in the OPPS outlier payment system that lead 
to differences between billed charges and charges included in the 
overall CCR, which are used to estimate cost and would apply to all 
hospitals and CMHCs paid under the OPPS. The main vulnerability in the 
OPPS outlier payment system is the time lag between the update of the 
CCRs that are based on the latest settled cost report and the current 
charges that creates the potential for hospitals and CMHCs to set their 
own charges to exploit the delay in calculating new CCRs. CMS initiated 
steps to ensure that outlier payments appropriately account for the 
financial risk when providing an extraordinarily costly and complex 
service, but are only being made for services that legitimately qualify 
for the additional payment.
    The current outlier reconciliation policy requires that providers 
whose outlier payments meet a specified threshold (currently $500,000 
for hospitals and any outlier payments for CMHCs) and whose overall 
ancillary CCRs change by plus or minus 10 percentage points or more, 
are subject to outlier reconciliation, pending approval of the CMS 
Central Office and Regional Office (73 FR 68596 through 68599). The 
policy also includes provisions related to CCRs and to calculating the 
time value of money for reconciled outlier payments due to or due from 
Medicare, as detailed in the CY 2009 OPPS/ASC final rule with comment 
period and in the Medicare Claims Processing Manual (73 FR 68595 
through 68599 and Medicare Claims Processing internet Only Manual, 
Chapter 4, Section 10.7.2 and its subsections, available online at: 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf).
    In this proposed rule, we are proposing to continue these policies 
for CY 2019.
5. Outlier Payment Cap
    In the CY 2017 OPPS/ASC final rule with comment period, we 
implemented a CMHC outlier payment cap to be applied at the provider 
level, such that

[[Page 37136]]

in any given year, an individual CMHC will receive no more than a set 
percentage of its CMHC total per diem payments in outlier payments (81 
FR 79692 through 79695). We finalized the CMHC outlier payment cap to 
be set at 8 percent of the CMHC's total per diem payments (81 FR 79694 
through 79695). This outlier payment cap only affects CMHCs, does not 
affect other provider types (that is, hospital-based PHPs), and is in 
addition to and separate from the current outlier policy and 
reconciliation policy in effect. For CY 2018, we continued this policy 
in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59381).
    In this proposed rule, we are proposing to continue this policy for 
CY 2019, such that the CMHC outlier payment cap would be 8 percent of 
the CMHC's total per diem payments.
6. Fixed-Dollar Threshold
    Finally, in the CY 2018 OPPS/ASC final rule with comment period (82 
FR 59267 through 59268), for the hospital outpatient outlier payment 
policy, we set a fixed-dollar threshold in addition to an APC 
multiplier threshold. Fixed-dollar thresholds are typically used to 
drive outlier payments for very costly items or services, such as 
cardiac pacemaker insertions. CMHC PHP APC 5853 is the only APC for 
which CMHCs may receive payment under the OPPS, and is for providing a 
defined set of services that are relatively low cost when compared to 
other OPPS services. Because of the relatively low cost of CMHC 
services that are used to comprise the structure of CMHC PHP APC 5853, 
it is not necessary to also impose a fixed-dollar threshold on CMHCs. 
Therefore, in the CY 2018 OPPS/ASC final rule with comment period, we 
did not set a fixed-dollar threshold for CMHC outlier payments (82 FR 
59381).
    In this proposed rule, we are proposing to continue this policy for 
CY 2019.

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 only (IPO) list) and, therefore, will not be paid by Medicare 
under the OPPS, and on the criteria that we use to review the IPO list 
each year to determine whether or not any procedures should be removed 
from the list. The complete list of codes that describe procedures that 
would be paid by Medicare in CY 2019 as inpatient only procedures is 
included as Addendum E to this proposed rule (which is available via 
the internet on the CMS website).

B. Proposed Changes to the Inpatient Only (IPO) List

1. Methodology for Identifying Appropriate Changes to IPO List
    In this proposed rule, for CY 2019, we are proposing to use the 
same methodology (described in the November 15, 2004 final rule with 
comment period (69 FR 65834)) of reviewing the current list of 
procedures on the IPO list to identify any procedures that may be 
removed from the list. We have established five criteria that are part 
of this methodology. As noted in the CY 2012 OPPS/ASC final rule with 
comment period (76 FR 74353), we utilize these criteria when reviewing 
procedures to determine whether or not they should be removed from the 
IPO list and assigned to an APC group for payment under the OPPS when 
provided in the hospital outpatient setting. We note that a procedure 
is not required to meet all of the established criteria to be removed 
from the IPO list. The criteria include the following:
    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 IPO 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 the above-listed criteria, for the CY 2019 OPPS, we have 
identified two procedures described by the following codes that we are 
proposing to remove from the IPO list for CY 2019: CPT code 31241 
(Nasal/sinus endoscopy, surgical; with ligation of sphenopalatine 
artery) and CPT code 01402 (Anesthesia for open or surgical 
arthroscopic procedures on knee joint; total knee arthroplasty). We 
also are proposing to add to the IPO list for CY 2019 the procedure 
described by HCPCS code C9606 (Percutaneous transluminal 
revascularization of acute total/subtotal occlusion during acute 
myocardial infarction, coronary artery or coronary artery bypass graft, 
any combination of drug-eluting intracoronary stent, atherectomy and 
angioplasty, including aspiration thrombectomy when performed, single 
vessel). The procedures that we are proposing to remove from the IPO 
list for CY 2019 and subsequent years, including the HCPCS codes, long 
descriptors, and the proposed CY 2019 payment indicators, are displayed 
in Table 29 of this proposed rule.
    As noted earlier, we are proposing to remove the procedure 
described by CPT code 31241 from the IPO list for CY 2019. After 
reviewing the clinical characteristics of the procedure described by 
CPT code 31241 and consulting with stakeholders and our clinical 
advisors regarding this procedure, we believe that this procedure meets 
criterion 3--the procedure is related to codes that we have already 
removed from the IPO list. We are proposing that the procedure 
described by CPT code 31241 be assigned to C-APC 5153 (Level 3 Airway 
Endoscopy) with a status indicator of ``J1''. We are seeking comment on 
whether the public believes that the procedure described by CPT code 
31241 meets criterion 3 and whether the procedure meets any of the 
other five criteria for removal from the IPO list.
    We also are proposing to remove the procedure described by CPT code 
01402 from the IPO list. After reviewing the clinical characteristics 
of the procedure described by CPT code 01402, we believe that this 
procedure meets criteria 3 and 4. This procedure is typically billed 
with the procedure described by CPT code 27447 (Arthroplasty, knee, 
condyle and plateau; medical and lateral compartments with or without 
patella resurfacing (total knee arthroplasty)), which was removed from 
the IPO list for CY 2018 (82 FR 52526). We are seeking public comment 
on whether the procedure described by CPT code 01402 meets criteria 3 
and 4 and whether the procedure meets any of the other five criteria 
for removal from the IPO list.
    In addition, we are proposing to add the procedure described by 
HCPCS code C9606 (Percutaneous transluminal revascularization of acute 
total/subtotal occlusion during acute myocardial infarction, coronary 
artery or coronary artery bypass graft, any combination of drug-eluting 
intracoronary stent, atherectomy and angioplasty, including aspiration 
thrombectomy when

[[Page 37137]]

performed, single vessel) to the IPO list for CY 2019. The IPO list 
specifies those procedures and services for which the hospital will be 
paid only when the procedures are provided in the inpatient setting 
because of the nature of the procedure, the underlying physical 
condition of the patient, or the need for at least 24 hours of 
postoperative recovery time or monitoring before the patient can be 
safely discharged (76 FR 74353). After evaluating the procedure 
described by HCPCS code C9606 against the criteria described above, we 
believe that the procedure should be added to the IPO list because this 
procedure is performed during acute myocardial infarction and it is 
similar to the procedure described by CPT code 92941 (Percutaneous 
transluminal revascularization of acute total/subtotal occlusion during 
acute myocardial infarction, coronary artery or coronary artery bypass 
graft, any combination of intracoronary stent, artherectomy and 
angioplasty, including aspiration thrombectomy when performed, single 
vessel), which was added to the IPO list for CY 2018 (82 FR 52526). We 
are seeking public comment on whether the procedure described by HCPCS 
code C9606 should be added to the IPO list for CY 2019.
2. Solicitation of Public Comments on the Potential Removal of 
Procedure Described by CPT Code 0266T From the IPO List
    CPT code 0266T describes the implantation or replacement of carotid 
sinus baroreflex activation device; total system (includes generator 
placement, unilateral or bilateral lead placement, intra-operative 
interrogation, programming, and repositioning, when performed). The 
procedure described by CPT code 0266T has been included on the IPO list 
since the procedure code became effective in CY 2011.
    There are several codes that describe procedures that are similar 
to the procedure described by CPT code 0266T that are not on the IPO 
list, including: CPT code 0267T (Implantation or replacement of carotid 
sinus baroreflex activation device; lead only, unilateral (includes 
intra-operative interrogation, programming, and repositioning, when 
performed)) and CPT code 0268T (Implantation or replacement of carotid 
sinus baroreflex activation device; pulse generator only (includes 
intra-operative interrogation, programming, and repositioning, when 
performed)). The device that is billed with these two procedures has 
been granted a Category B Investigational Device Exemption (IDE) from 
FDA.\32\ Currently, there is limited information available to determine 
the typical site of service and the ability for the procedure to be 
safely performed in the outpatient setting. At this time, we do not 
believe that we have adequate information to determine whether the 
procedure described by CPT code 0266T should be removed from the IPO 
list. Therefore, we are seeking public comments on the removal of the 
procedure described by CPT code 0266T from the IPO list. Specifically, 
we are seeking public comments on whether the procedure described by 
CPT code 0266T meets any of the criteria to be removed from the IPO 
list and the APC assignment and status indicator for this code.
---------------------------------------------------------------------------

    \32\ Available at: https://www.cms.gov/Medicare/Coverage/IDE/Approved-IDE-Studies.html.

                        Table 29--Proposed Changes to the Inpatient Only List for CY 2019
----------------------------------------------------------------------------------------------------------------
                                                                    Proposed CY 2019 OPPS  Proposed CY 2019 OPPS
   CY 2019 CPT code    CY 2019 long descriptor    Proposed action       APC assignment        status indicator
----------------------------------------------------------------------------------------------------------------
31241................  Nasal/sinus endoscopy,   Remove from IPO     5153.................  J1
                        surgical; with           list.
                        ligation of
                        sphenopalatine artery.
01402................  Anesthesia for open or   Remove from IPO     N/A..................  N
                        surgical arthroscopic    list.
                        procedures on knee
                        joint; total knee
                        arthroplasty.
C9606................  Percutaneous             Add to IPO list...  N/A..................  C
                        transluminal
                        revascularization of
                        acute total/subtotal
                        occlusion during acute
                        myocardial infarction,
                        coronary artery or
                        coronary artery bypass
                        graft, any combination
                        of drug-eluting
                        intracoronary stent,
                        atherectomy and
                        angioplasty, including
                        aspiration
                        thrombectomy when
                        performed, single
                        vessel.
----------------------------------------------------------------------------------------------------------------

    The complete list of codes (the IPO list) that are proposed to be 
placed on the IPO list for CY 2019 are included as Addendum E to this 
proposed rule (which is available via the internet on the CMS website).

X. Proposed Nonrecurring Policy Changes

A. Collecting Data on Services Furnished in Off-Campus Provider-Based 
Emergency Departments

    The June 2017 Report to Congress \33\ by the Medicare Payment 
Advisory Commission (MedPAC) states that, in recent years, there has 
been significant growth in the number of health care facilities located 
apart from hospitals that are devoted primarily to emergency department 
services. This includes both off-campus provider-based emergency 
departments that are eligible for payment under the OPPS and 
independent freestanding emergency departments not affiliated with a 
hospital that are not eligible for payment under the OPPS. Since 2010, 
we have observed a noticeable increase in the number of hospital 
outpatient emergency department visits furnished under the OPPS. MedPAC 
and other entities have expressed concern that services may be shifting 
to the higher acuity and higher cost emergency department setting due 
to: (1) Higher payment rates for services performed in off-campus 
provider-based emergency departments compared to similar services 
provided in other settings (that is, physician offices or urgent care 
clinics); and (2) the exemption for services provided in an emergency 
department included under section 603 of the Bipartisan Budget Act of 
2015 (Pub. L. 114-25), whereby all items and services (emergency and 
nonemergency) furnished in an emergency department are excepted from 
the payment implications of section 603, as long as the department 
maintains its status as an emergency department under the regulation at 
42 CFR 489.24(b).
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    \33\ Available at: http://www/medpac.gov/docs/default-source/
reports/jun17_reporttocongress_sec.pdf.
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    MedPAC and other entities are concerned that these payment

[[Page 37138]]

incentives may be a key contributing factor to the growth in the number 
of emergency departments located off-campus from a hospital. MedPAC 
recommended in its March 2017 \34\ and June 2017 Reports to Congress 
that CMS require hospitals to append a modifier to claims for all 
services furnished in off-campus provider-based emergency departments, 
so that CMS can track the growth of OPPS services provided in this 
setting.
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    \34\ Available at: http://medpac.gov/docs/default-souce/reports/mar17_entirereport.pdf.
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    In order to participate in Medicare as a hospital, the facility 
must meet the statutory definition of a hospital at section 1861(e) of 
the Act, which requires a facility to be primarily engaged in providing 
care and services to inpatients. In addition, 42 CFR 482.55 requires 
hospital emergency department services (to include off-campus provider-
based emergency departments) to be fully integrated with departments 
and services of the hospital. The integration must be such that the 
hospital can immediately make available the full extent of its patient 
care resources to assess and furnish appropriate care for an emergency 
patient. Such services would include, but are not limited to, surgical 
services, laboratory services, and radiology services, among others. 
The emergency department must also be integrated with inpatient 
services, which means the hospital must have a sufficient number of 
inpatient beds and nursing units to support the volume of emergency 
department patients that could require inpatient services. The 
provision of services, equipment, personnel and resources of other 
hospital departments and services to emergency department patients must 
be within timeframes that protect the health and safety of patients and 
is within acceptable standards of practice.
    We agree with MedPAC's recommendation and believe we need to 
develop data to assess the extent to which OPPS services are shifting 
to off-campus provider-based emergency departments. Therefore, we are 
announcing in this proposed rule that we are implementing through the 
subregulatory HCPCS modifier process a new modifier for this purpose 
effective beginning January 1, 2019.
    We will create a HCPCS modifier (ER--Items and services furnished 
by a provider-based off-campus emergency department) that is to be 
reported with every claim line for outpatient hospital services 
furnished in an off-campus provider-based emergency department. The 
modifier would be reported on the UB-04 form (CMS Form 1450) for 
hospital outpatient services. Critical access hospitals (CAHs) would 
not be required to report this modifier.

B. Proposal and Comment Solicitation on Method To Control for 
Unnecessary Increases in the Volume of Outpatient Services

    When the Medicare program was first implemented, payment for 
hospital services (inpatient and outpatient) was based on hospital-
specific reasonable costs attributable to furnishing services to 
Medicare beneficiaries. Although payment for most Medicare hospital 
inpatient services became subject to a prospective payment system (PPS) 
under section 1886(d) of the Act in 1983, Medicare hospital outpatient 
services continued to be paid based on hospital-specific costs. This 
methodology for payment provided little incentive for hospitals to 
furnish such outpatient services efficiently and in a cost effective 
manner. At the same time, advances in medical technology and changes in 
practice patterns were bringing about a shift in the site of medical 
care from the hospital inpatient setting to the hospital outpatient 
setting.
    In the Omnibus Budget Reconciliation Act of 1986 (OBRA 1986) (Pub. 
L. 99-509), the Congress paved the way for development of a PPS for 
hospital outpatient services. Section 9343(g) of OBRA 1986 mandated 
that fiscal intermediaries require hospitals to report claims for 
services under the Healthcare Common Procedure Coding System (HCPCS). 
Section 9343(c) of OBRA 1986 extended the prohibition against 
unbundling of hospital services under section 1862(a)(14) of the Act to 
include outpatient services as well as inpatient services. The codes 
under the HCPCS enabled us to determine which specific procedures and 
services were billed, while the extension of the prohibition against 
unbundling ensured that all nonphysician services provided to hospital 
outpatients were reported on hospital bills and captured in the 
hospital outpatient data that were used to develop an outpatient PPS.
    The brisk increase in hospital outpatient services further led to 
an interest in creating payment incentives to promote more efficient 
delivery of hospital outpatient services through a Medicare outpatient 
PPS. Section 9343(f) of OBRA 1986 and section 4151(b)(2) of the Omnibus 
Budget Reconciliation Act of 1990 (OBRA 1990) (Pub. L. 101-508) 
required that we develop a proposal to replace the existing hospital 
outpatient payment system with a PPS and submit a report to the 
Congress on a new proposed system. The statutory framework for the 
Outpatient Prospective Payment System (OPPS) was established by section 
4523 of the Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33), which 
amended section 1833 of the Act by adding subsection (t), which 
establishes a PPS for hospital outpatient department services, and by 
section 201 of the Balanced Budget Reconciliation Act (BBRA) of 1999 
(Pub. L. 106-113), which amended section 1833(t) of the Act to require 
outlier and transitional pass-through payments. At the onset of the 
OPPS, there was significant concern over observed increases in the 
volume of outpatient services and corresponding rapidly growing 
beneficiary coinsurance. Accordingly, most of the focus was on finding 
ways to address those issues.
    When section 4523 of the BBA of 1997 established the OPPS, it 
included specific authority under section 1833(t)(2)(F) of the Act that 
requires the Secretary to develop a method for controlling unnecessary 
increases in the volume of covered outpatient department (OPD) 
services.\35\ In the initial rule that proposed to implement the OPPS 
(63 FR 47585 through 47587), we discussed several possible approaches 
for controlling the volume of covered outpatient department services 
furnished in subsequent years, solicited comments on those options, and 
stated that the agency would propose an appropriate ``volume control'' 
mechanism for services furnished in CY 2001 and beyond after completing 
further analysis. For the CY 2000 OPPS, we proposed to implement a 
method that was similar to the one used under the Medicare Physician 
Fee Schedule (PFS) (known as the sustainable growth rate or ``SGR''), 
which would be triggered when expenditure targets, based on such 
factors as volume, intensity, and beneficiary enrollment, were exceeded 
(63 FR 47586 through 47587). However, as we discussed in the CY 2001 
OPPS final rule (65 FR 18503) and the CY 2002 OPPS final rule (66 FR 
59908), we delayed the implementation of the proposed volume control 
method as suggested by the ``President's Plan to Modernize and 
Strengthen Medicare for the 21st Century'' to give hospitals time to 
adjust to the OPPS and CMS time to continue to examine methods to 
control unnecessary increases in the volume of covered OPD services.
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    \35\ Available at: https://www.ssa.gov/OP_Home/ssact/title18/1833.htm.
---------------------------------------------------------------------------

    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66611 
through 66612), we noted that we had

[[Page 37139]]

significant concerns about the growth in program expenditures for 
hospital outpatient services, and that while the OPPS was developed in 
order to address some of those concerns, its implementation had not 
generally slowed that growth in expenditures. To address some of those 
concerns, we established a set of packaging policies beginning in the 
CY 2008 that would explicitly encourage efficiency in the provision of 
services in the hospital outpatient setting and potentially control 
future growth in the volume of OPPS services (72 FR 66612). 
Specifically, in the CY 2008 OPPS/ASC final rule with comment period 
(72 FR 66580), we adopted a policy to package seven categories of items 
and services into the payment for the primary diagnostic or therapeutic 
modality to which we believe these items are typically ancillary or 
supportive.
    Similarly, in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 74925 through 74948), we expanded our packaging policies to 
include more categories of packaged items and services as part of a 
broader initiative to make the OPPS more like a prospective payment 
system and less like a per service fee schedule. Packaging can 
encourage hospitals to furnish services efficiently while also enabling 
hospitals to manage their resources with the maximum flexibility, 
thereby encouraging long-term cost containment, which is an essential 
component of a prospective payment system. While most of the packaging 
policies established in the CY 2014 OPPS focused on ancillary services 
that were part of a primary procedure, we also introduced the concept 
of comprehensive APCs (C-APCs) (78 FR 74861 through 74910), which were 
implemented beginning in the CY 2015 OPPS (79 FR 66798 through 66810). 
Comprehensive APCs package payment for adjunctive and secondary items, 
services, and procedures into the most costly primary procedure under 
the OPPS at the claim level.
    While we have developed many payment policies with these goals in 
mind, growth in program expenditures for hospital outpatient services 
paid under the OPPS continues. As illustrated in Table 30 below, total 
spending has been growing at a rate of roughly 8 percent per year under 
the OPPS, and total spending under the OPPS is projected to further 
increase by more than $5 billion from approximately $70 billion in CY 
2018 through CY 2019 to nearly $75 billion. This is approximately twice 
the total estimated spending in CY 2008, a decade ago. We continue to 
be concerned with this rate of increase in program expenditures under 
the OPPS for several reasons. The OPPS was originally designed to 
manage Medicare spending growth. What was once a cost-based system was 
mandated by law to become a prospective payment system, which arguably 
should have slowed the increases in program spending. To the contrary, 
the OPPS has been the fastest growing sector of Medicare payments out 
of all payment systems under Medicare Parts A and B. Furthermore, we 
are concerned that the rate of growth suggests that payment incentives, 
rather than patient acuity or medical necessity, may be affecting site-
of-service decision-making. This site-of-service selection has an 
impact on not only the Medicare program, but also on Medicare 
beneficiary out-of-pocket spending. Therefore, to the extent that there 
are lower-cost sites-of-service available, we believe that 
beneficiaries and the physicians treating them should have that choice 
and not be encouraged to receive or provide care in higher paid 
settings solely for financial reasons. For example, to provide for 
easier comparisons between hospital outpatient departments and ASCs, as 
previously discussed in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59389), we also will make available a website that 
provides comparison information between the OPPS and ASC payment and 
copayment rates, as required under section 4011 of the 21st Century 
Cures Act (Pub. L. 114-255). Making this information available can help 
beneficiaries and their physicians determine the cost and 
appropriateness of receiving care at different sites of service. 
Although resources such as this website will help beneficiaries and 
physicians select a site of service, we do not believe this information 
alone is enough to control unnecessary volume increases. The growth in 
OPPS expenditures and the increase in the volume and intensity of 
hospital outpatient services are illustrated in Tables 30 and 31 below, 
respectively.

Table 30--Growth in Expenditures Under OPPS From CY 2010 Through CY 2019
                                    *
                              [In millions]
------------------------------------------------------------------------
       Calendar year (CY)            Incurred cost     Percent increase
------------------------------------------------------------------------
CY 2010.........................             $36,774  ..................
CY 2011.........................              39,781                 8.2
CY 2012.........................              43,154                 8.5
CY 2013.........................              46,462                 7.7
CY 2014.........................              52,425                12.8
CY 2015.........................              56,274                 7.3
CY 2016.........................              59,896                 6.4
CY 2017.........................              64,770                 8.1
CY 2018.........................              69,642                 7.5
CY 2019 (Estimated).............              75,315                 8.1
------------------------------------------------------------------------
* Includes Medicare Part B Drug Expenditures.


    Table 31--Percentage Increase in Volume and Intensity of Hospital
                          Outpatient Services *
------------------------------------------------------------------------
                                                          Percentage
                 Calendar year (CY)                        increase
------------------------------------------------------------------------
CY 2011.............................................                 3.7
CY 2012.............................................                 5.1
CY 2013.............................................                 5.5
CY 2014.............................................                 8.0
CY 2015.............................................                 3.5

[[Page 37140]]

 
CY 2016.............................................                 6.5
CY 2017.............................................                 5.8
CY 2018.............................................                 5.4
CY 2019 (Estimated).................................                 5.3
------------------------------------------------------------------------
* Includes Medicare Part B Drug Expenditures.

    As noted in its March 2018 Report to Congress, the Medicare Payment 
Advisory Commission (MedPAC) found that, from 2011 through 2016, 
combined program spending and beneficiary cost-sharing on services 
covered under the OPPS increased by 51 percent, from $39.8 billion to 
$60.0 billion, an average of 8.6 percent per year.\36\ In its 2018 
report, MedPAC also noted that ``A large source of growth in spending 
on services furnished in hospital outpatient departments (HOPDs) 
appears to be the result of the unnecessary shift of services from 
(lower cost) physician offices to (higher cost) HOPDs''.\37\ We would 
consider these shifts in the sites of service unnecessary if the 
beneficiary can safely receive the same services in a lower cost 
setting but instead receives care in a higher cost setting.
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    \36\ Available at: http://www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf?sfvrsn=0.
    \37\ http://www.medpac.gov/docs/default-source/reports/mar18_medpac_entirereport_sec.pdf?sfvrsn=0.
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    As noted in MedPAC's March 2017 Report to Congress, ``from 2014 to 
2015, the use of outpatient services increased by 2.2 percent per 
Medicare FFS beneficiary. Over the decade ending in 2015, volume per 
beneficiary grew by 47 percent. One-third of the growth in outpatient 
volume from 2014 to 2015 was due to an increase in the number of 
evaluation and management (E&M) visits billed as outpatient services. 
This growth in part reflects hospitals purchasing freestanding 
physician practices and converting the billing from the Physician Fee 
Schedule to higher paying hospital outpatient department (HOPD) visits. 
The conversions shift market share from freestanding physician offices 
to HOPDs. From 2012 to 2015, hospital-based E&M visits per beneficiary 
grew by 22 percent, compared with a 1-percent decline in physician 
office-based visits.'' \38\
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    \38\ Available at: http://www.medpac.gov/docs/default-source/reports/mar17_medpac_ch3.pdf?sfvrsn=0.
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    MedPAC has documented how the billing for these services has 
shifted from physician offices to higher-cost outpatient sites of care 
for several years. At the same time, MedPAC has repeated its 
recommendation that the difference in payment rates between hospital 
outpatient departments and physician offices should be reduced or 
eliminated. It specifically recommended in its 2012 Report to Congress 
that the payment rates for E&M visits provided in hospital outpatient 
departments be reduced so that total payment rates for these visits are 
the same, whether the service is provided in a hospital outpatient 
department or a physician office. In its 2014 Report to Congress, 
MedPAC recommended that Congress direct the Secretary to reduce or 
eliminate differences in payment rates between hospital outpatient 
departments and physician offices for selected APCs. Both of these 
recommendations were reiterated in MedPAC's March 2017 Report to 
Congress.
    As previously noted, in addition to the concern that the difference 
in payment is leading to unnecessary increases in the volume of covered 
outpatient department services, we also are concerned that this shift 
in care setting increases beneficiary cost-sharing liability because 
Medicare payment rates for the same or similar services are generally 
higher in hospital outpatient departments than in freestanding 
physician offices. For example, MedPAC estimates that ``the Medicare 
program spent $1.0 billion more in 2009, $1.3 billion more in 2014, and 
$1.6 billion more in 2015 than it would have if payment rates for E&M 
office visits in HOPDs were the same as freestanding office rates. 
Relatedly, beneficiaries' cost-sharing was $260 million higher in 2009, 
$325 million higher in 2014, and $400 million higher in 2015 than it 
would have been because of the higher rates paid in HOPD settings.'' 
\39\ We believe that this volume growth and the resulting increase in 
beneficiary cost-sharing is unnecessary because it appears to have been 
incentivized by the difference in payment for each setting rather than 
patient acuity. If there was not a difference in payment rates, we 
believe that we would not have seen the increase in beneficiaries' 
cost-sharing and the shift in site-of-service.
---------------------------------------------------------------------------

    \39\ Ibid.
---------------------------------------------------------------------------

    In the CY 2015 OPPS/ASC proposed rule (79 FR 41013), we stated that 
we continued to seek a better understanding of how the growing trend 
toward hospital acquisition of physicians' offices and subsequent 
treatment of those locations as off-campus provider-based departments 
(PBDs) of hospitals affects payments under the PFS and the OPPS, as 
well as beneficiary cost-sharing obligations. We noted that MedPAC 
continued to question the appropriateness of increased Medicare payment 
and beneficiary cost-sharing when physicians' offices become hospital 
outpatient departments and that MedPAC recommended that Medicare pay 
selected hospital outpatient services at PFS rates (MedPAC March 2012 
and June 2013 Reports to Congress).
    To understand how this trend was affecting Medicare, we explained 
that we needed information on the extent to which this shift was 
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' services and hospital outpatient 
services furnished in off-campus PBDs of hospitals (78 FR 75061 through 
75062 and 78 FR 74427 through 74428). Based on our analysis of the 
public comments we received, we believed that the most efficient and 
equitable means of gathering this important information across two 
different payment systems would be to create a HCPCS modifier to be 
reported with every code for physicians' services and hospital 
outpatient services furnished in an off-campus PBD of a hospital on 
both the CMS-1500 claim form for physicians' services and the UB-04 
form (CMS Form 1450 and OMB Control Number 0938-0997) for hospital 
outpatient services. We noted that a main provider may treat an off-
campus facility as provider-based if certain requirements at 42 CFR 
413.65 are satisfied, and we define a ``campus'' at 42 CFR 413.65(a)(2) 
to be the physical

[[Page 37141]]

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.
    In 2015, the Congress took steps to address the higher Medicare 
payments for services furnished by certain off-campus provider-based 
departments (PBDs) that may be associated with hospital acquisition of 
physicians' offices through section 603 of the Bipartisan Budget Act of 
2015 (Pub. L. 114-74), enacted on November 2, 2015. In the CY 2017 
OPPS/ASC proposed rule, we discussed the provision of section 603 of 
the Bipartisan Budget Act of 2015, which amended section 1833(t) of the 
Act. For the full discussion of our initial implementation of this 
provision, we refer readers to the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79699 through 79719) and interim final rule with 
comment period (79720 through 79729).
    Section 603 of the Bipartisan Budget Act of 2015 (Section 603) 
amended section 1833(t) of the Act by amending paragraph (1)(B) and 
adding a new paragraph (21). As a general matter, under sections 
1833(t)(1)(B)(v) and (t)(21) of the Act, applicable items and services 
furnished by certain off-campus outpatient departments of a provider on 
or after January 1, 2017 are not considered covered OPD services as 
defined under section 1833(t)(1)(B) of the Act for purposes of payment 
under the OPPS and are instead paid ``under the applicable payment 
system'' under Medicare Part B if the requirements for such payment are 
otherwise met. We note that, in order to be considered part of a 
hospital, an off-campus department of a hospital must meet the 
provider-based criteria established under 42 CFR 413.65.
    Section 603 amended section 1833(t)(1)(B) of the Act by adding a 
new clause (v), which excludes from the definition of ``covered OPD 
services'' applicable items and services (defined in paragraph (21)(A) 
of the section) that are furnished on or after January 1, 2017, by an 
off-campus PBD, as defined in paragraph (21)(B) of the section. Section 
603 also added a new paragraph (21) to section 1833(t) of the Act, 
which defines the terms ``applicable items and services'' and ``off-
campus outpatient department of a provider,'' requires the Secretary to 
make payments for such applicable items and services furnished by an 
off-campus PBD under an applicable payment system (other than the 
OPPS), provides that hospitals shall report on information as needed 
for implementation of the provision, and establishes a limitation on 
administrative and judicial review of the Secretary's determinations of 
applicable items and services, applicable payment system, whether a 
department meets the definition of an off-campus outpatient department 
of a provider, and information hospitals are required to report. In 
defining the term ``off-campus outpatient department of a provider,'' 
section 1833(t)(21)(B)(i) of the Act specifies that the term means a 
department of a provider (as defined at 42 CFR 413.65(a)(2) as that 
regulation was in effect on November 2, 2015, the date of enactment of 
Pub. L. 114-74) that is not located on the campus of such provider, or 
within the distance from a remote location of a hospital facility. 
Section 1833(t)(21)(B)(ii) of the Act excepts from the definition of 
``off-campus outpatient department of a provider,'' for purposes of 
paragraphs (1)(B)(v) and (21)(B) of the section, an off-campus PBD that 
was billing under section 1833(t) of the Act with respect to covered 
OPD services furnished prior to the date of enactment of the Bipartisan 
Budget Act of 2015, that is, November 2, 2015. We note that the 
definition of ``applicable items and services'' specifically excludes 
items and services furnished by a dedicated emergency department as 
defined at 42 CFR 489.24(b) and the definition of ``off-campus 
outpatient department of a provider'' does not include PBDs located on 
the campus of a hospital or within the distance (described in the 
definition of campus at Sec.  413.65(a)(2)) from a remote location of a 
hospital facility; the items and services furnished by these excepted 
off-campus PBDs on or after January 1, 2017 continued to be paid under 
the OPPS.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79699 
through 79720), we established a number of policies to implement 
section 603 of the Bipartisan Budget Act of 2015. Broadly, we: (1) 
Defined applicable items and services in accordance with section 
1833(t)(21)(A) of the Act for purposes of determining whether such 
items and services are covered OPD services under section 
1833(t)(1)(B)(v) of the Act or whether payment for such items and 
services will instead be made under the applicable payment system 
designated under section 1833(t)(21)(C) of the Act; (2) defined off-
campus PBD for purposes of sections 1833(t)(1)(B)(v) and (t)(21) of the 
Act; and (3) established policies for payment for applicable items and 
services furnished by an off-campus PBD (nonexcepted items and 
services) under section 1833(t)(21)(C) of the Act. To do so, we 
finalized policies that define whether certain items and services 
furnished by a given off-campus PBD may be considered excepted and, 
thus, continue to be paid under the OPPS; established the requirements 
for the off-campus PBDs to maintain excepted status (both for the 
excepted off-campus PBDs and for the items and services furnished by 
such excepted off-campus PBDs); and described the applicable payment 
system for nonexcepted items and services (generally, the PFS).
    As part of developing policies to implement the section 603 
amendments to section 1833(t) of the Act, we solicited public comments 
on information collection requirements for implementing this provision 
in accordance with section 1833(t)(21)(D) of the Act (81 FR 45686; 81 
FR 79709 through 79710). In the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79719 and 79725), we created modifier ``PN'' to 
collect data for purposes of implementing section 603 but also to 
trigger payment under the newly adopted PFS rates for nonexcepted items 
and services.
    While the changes required by the section 603 amendments to section 
1833(t) of the Act address some of the concerns related to shifts in 
settings of care and overutilization in the hospital outpatient 
setting, the majority of hospital off-campus departments continue to 
receive full OPPS payment (including off-campus emergency departments 
and excepted off-campus departments of a hospital), which is often 
higher than the payment that would have been made if a similar service 
had been furnished in the physician office setting. Therefore, the 
current site-based payment creates an incentive for the misallocation 
of capital toward higher cost sites of care that could result in higher 
costs for providers, taxpayers, beneficiaries, and the Medicare 
program. Likewise, the differences in payment rates have unnecessarily 
shifted services away from the physician's office to the higher paying 
hospital outpatient department. We believe that the higher payment that 
is made under the OPPS, as compared to payment under the PFS, is likely 
to be incentivizing providers to furnish care in the hospital 
outpatient setting rather than the physician office setting. In 2012, 
Medicare was paying approximately 80 percent more for a 15-minute 
office visit in a hospital outpatient department than in a

[[Page 37142]]

freestanding physician office.\40\ Under current policy, Medicare still 
pays more using the G-code for a clinic visit than it would under the 
PFS. In the CY 2017 OPPS/ASC interim final rule, we noted that the most 
frequently billed service with the ``PO'' modifier was described by 
HCPCS code G0463 (Hospital outpatient clinic visit for assessment and 
management of a patient), which is paid under APC 5012 (Clinic Visits 
and Related Services); the total number of CY 2017 claim lines for this 
service was approximately 10.7 million as of May 2017. When services 
are furnished in the hospital outpatient setting, an additional payment 
for the professional services is generally made under the PFS using the 
``facility'' rate. For example, in CY 2017, the OPPS payment rate for 
APC 5012, which is the APC to which the outpatient clinic visit code 
was assigned, was $106.56. The CY 2017 PFS ``facility'' payment rate 
for a Level 3 visit, a service that commonly corresponds to the OPPS 
clinic visit, was $77.88 for a new patient and $51.68 for an 
established patient.
---------------------------------------------------------------------------

    \40\ Available at: http://www.medpac.gov/docs/default-source/reports/march-2012-report-to-the-congress-medicare-payment-policy.pdf.
---------------------------------------------------------------------------

    However, when services are furnished in the physician office 
setting, only one payment is made--typically, the ``nonfacility'' rate 
under the PFS. The CY 2017 PFS nonfacility payment rates for a Level 3 
visit, a commonly billed service under the PFS, was $109.46 for a new 
patient and $73.93 for an established patient. Therefore, the total 
Medicare Part B payment rate (for the hospital and professional 
service) for a new patient when the service was furnished in the 
hospital outpatient setting was $184.44 ($106.56 + $77.88) compared to 
$109.46 in the physician office setting, or for an established patient, 
$158.24 ($106.56 + $51.68) in the hospital outpatient setting compared 
to $73.93 in the physician office setting. Under these examples, the 
payment rate was approximately $75 to $85 more for the same service 
when furnished in the hospital outpatient setting instead of the 
physician office setting, 20 percent of which was the responsibility of 
the beneficiary.
    We have heard that many off-campus departments converted from 
physicians' offices to hospital outpatient departments, without a 
change in either the physical location or a change in the acuity of the 
patients seen. To the extent that similar services can be safely 
provided in more than one setting, we do not believe it is prudent for 
the Medicare program to pay more for these services in one setting than 
another. We believe the difference in payment for these services is a 
significant factor in the shift in services from the physician's office 
to the hospital outpatient department, thus unnecessarily increasing 
hospital outpatient department volume and Medicare program and 
beneficiary expenditures.
    We consider the shift of services from the physician office to the 
hospital outpatient department unnecessary if the beneficiary can 
safely receive the same services in a lower cost setting but is instead 
receiving services in the higher paid setting due to payment 
incentives. We believe the increase in the volume of clinic visits is 
due to the payment incentive that exists to provide this service in the 
higher cost setting. Because these services could likely be safely 
provided in a lower cost setting, we believe that the growth in clinic 
visits paid under the OPPS is unnecessary. Further, we believe that 
capping the OPPS payment at the PFS-equivalent rate would be an 
effective method to control the volume of these unnecessary services 
because the payment differential that is driving the site-of-service 
decision will be removed. In particular, we believe this method of 
capping payment will control unnecessary volume increases as manifested 
both in terms of numbers of covered outpatient department services 
furnished and costs of those services.
    Therefore, given the unnecessary increases in the volume of clinic 
visits in hospital outpatient departments, for the CY 2019 OPPS, we are 
proposing to use our authority under section 1833(t)(2)(F) of the Act 
to apply an amount equal to the site-specific PFS payment rate for 
nonexcepted items and services furnished by a nonexcepted off-campus 
PBD (the PFS payment rate) for the clinic visit service, as described 
by HCPCS code G0463, when provided at an off-campus PBD excepted from 
section 1833(t)(21) of the Act (departments that bill the modifier 
``PO'' on claim lines). Off-campus PBDs that are not excepted from 
section 603 (departments that bill the modifier ``PN'') already receive 
a PFS-equivalent payment rate for the clinic visit. In CY 2019, for an 
individual Medicare beneficiary, the standard unadjusted Medicare OPPS 
proposed payment for the clinic visit is approximately $116, with 
approximately $23 being the average copayment. The proposed PFS 
equivalent rate for Medicare payment for a clinic visit would be 
approximately $46 and the copayment would be approximately $9. This 
would save beneficiaries an average of $14 per visit. Under this 
proposal, an excepted off-campus PBD would continue to bill HCPCS code 
G0463 with the ``PO'' modifier in CY 2019, but the payment rate for 
services described by HCPCS code G0463 when billed with modifier ``PO'' 
would now be equivalent to the payment rate for services described by 
HCPCS code G0463 when billed with modifier ``PN''. For a discussion of 
the PFS relativity adjuster that will now also be used to pay for all 
outpatient clinic visits provided at all off-campus PBDs, we refer 
readers to the CY 2018 PFS final rule (82 FR 53023 through 53024), as 
well as the CY 2019 PFS proposed rule.
    In addition, we are proposing to implement this proposed method in 
a non-budget neutral manner. Specifically, while section 1833(t)(9)(B) 
of the Act generally requires that changes made under the OPPS be made 
in a budget neutral manner, we note that this section does not apply to 
the volume control method under section 1833(t)(2)(F) of the Act. In 
particular, section 1833(t)(9)(A) of the Act, titled ``Periodic 
review,'' provides, in part, that the Secretary must annually review 
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 
(emphasis added).'' Section 1833(t)(9)(B) of the Act, titled ``Budget 
neutrality adjustment'' provides that if ``the Secretary makes 
adjustments under subparagraph (A), then the adjustments for a year may 
not cause the estimated amount of expenditures under this part for the 
year to increase or decrease from the estimated amount of expenditures 
under this part that would have been made if the adjustments had not 
been made (emphasis added).'' However, section 1833(t)(2)(F) of the Act 
is not an ``adjustment'' under paragraph (2). Unlike the wage 
adjustment under section 1833(t)(2)(D) of the Act and the outlier, 
transitional pass-through, and equitable adjustments under section 
1833(t)(2)(E) of the Act, section 1833(t)(2)(F) of the Act refers to a 
``method'' for controlling unnecessary increases in the volume of 
covered OPD services, not an adjustment. Likewise, sections 
1833(t)(2)(D) and (E) of the Act also explicitly require the 
adjustments authorized by those paragraphs to be budget neutral, while 
the volume control method authority at section 1833(t)(2)(F) of the Act 
does not. Therefore, the volume control method proposed under section 
1833(t)(2)(F) of the Act is not one of the adjustments

[[Page 37143]]

under section 1833(t)(2) of the Act that is referenced under section 
1833(t)(9)(A) of the Act that must be included in the budget neutrality 
adjustment under section 1833(t)(9)(B) of the Act. Moreover, section 
1833(t)(9)(C) of the Act specifies that if the Secretary determines 
under methodologies described in paragraph (2)(F) that the volume of 
services paid for under this subsection increased beyond amounts 
established through those methodologies, the Secretary may 
appropriately adjust the update to the conversion factor otherwise 
applicable in a subsequent year. We interpret this provision to mean 
that the Secretary will have implemented a volume control method under 
section 1833(t)(2)(F) of the Act in a nonbudget neutral manner in the 
year in which the method is implemented, and that the Secretary may 
then make further adjustments to the conversion factor in a subsequent 
year to account for volume increases that are beyond the amounts 
estimated by the Secretary under the volume control method.
    We believe implementing a volume control method in a budget neutral 
manner would not appropriately reduce the overall unnecessary volume of 
covered OPD services, and instead would simply shift the movement of 
the volume within the OPPS system in the aggregate, a concern similar 
to the one we discussed in the CY 2008 OPPS final rule with comment 
period (72 FR 66613). This estimated payment impact is displayed in 
Column 5 of Table 42--Estimated Impact of the Proposed Changes for the 
Hospital Outpatient Prospective Payment System in this proposed rule. 
An estimate that includes the effects of estimated changes in 
enrollment, utilization, and case-mix based on the FY 2019 President's 
budget approximates the estimated savings at $760 million, with $610 
million of the savings accruing to Medicare, and $150 million saved by 
Medicare beneficiaries in the form of reduced copayments. In order to 
effectively establish a method for controlling the unnecessary growth 
in the volume of clinic visits furnished by excepted off-campus PBDs 
that does not simply reallocate expenditures that are unnecessary 
within the OPPS, we believe that this method must be adopted in a non-
budget neutral manner. The impact associated with this proposal is 
further described in section XXI. of this proposed rule.
    While we are developing a method to systematically control for 
unnecessary increases in the volume of other hospital outpatient 
department services, we continue to recognize the importance of not 
impeding development or beneficiary access to new innovations. We are 
soliciting public comments on how to maintain access to new innovations 
while controlling for unnecessary increases in the volume of covered 
hospital OPD services.
    In addition, we are soliciting public comments on how to expand the 
application of the Secretary's statutory authority under section 
1833(t)(2)(F) of the Act to additional items and services paid under 
the OPPS that may represent unnecessary increases in OPD utilization. 
Therefore, we are seeking public comment on the following:
    <bullet> How might Medicare define the terms ``unnecessary'' and 
``increase'' for services (other than the clinic visit) that can be 
performed in multiple settings of care? Should the method to control 
for unnecessary increases in the volume of covered OPD services include 
consideration of factors such as enrollment, severity of illness, and 
patient demographics?
    <bullet> While we are proposing to pay the PFS payment rate for 
clinic visits beginning in CY 2019, we also are interested in other 
methods to control for unnecessary increases in the volume of 
outpatient services. Prior authorization is a requirement that a health 
care provider obtain approval from the insurer prior to providing a 
given service in order for the insurer to cover the service. Private 
health insurance plans often require prior authorization for certain 
services. Should prior authorization be considered as a method for 
controlling overutilization of services?
    <bullet> For what reasons might it ever be appropriate to pay a 
higher OPPS rate for services that can be performed in lower cost 
settings?
    <bullet> Several private health plans use utilization management as 
a cost-containment strategy. How might Medicare use the authority at 
section 1833(t)(2)(F) of the Act to implement an evidence-based, 
clinical support process to assist physicians in evaluating the use of 
medical services based on medical necessity, appropriateness, and 
efficiency?
    Could utilization management help reduce the overuse of 
inappropriate or unnecessary services?
    <bullet> How should we account for providers that serve Medicare 
beneficiaries in provider shortage areas, which may include certain 
rural areas? With respect to rural providers, should there be 
exceptions from this policy, such as for providers who are at risk of 
hospital closure or that are sole community hospitals?
    <bullet> What impact on beneficiaries and the health care market 
would such a method to control for unnecessary increases in the volume 
of covered OPD services have?
    <bullet> What exceptions, if any, should be made if additional 
proposals to control for unnecessary increases in the volume of 
outpatient services are made?

C. Proposal To Apply the 340B Drug Payment Policy to Nonexcepted Off-
Campus Departments of a Hospital

1. Historical Perspective
a. Section 603 of the Bipartisan Budget Act of 2015
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79699), we discussed implementation of section 603 of the Bipartisan 
Budget Act of 2015 (Pub. L. 114-74), enacted on November 2, 2015, which 
amended section 1833(t) of the Act. Specifically, this provision 
amended section 1833(t) of the Act by amending paragraph (1)(B) and 
adding a new paragraph (21). As a general matter, under sections 
1833(t)(1)(B)(v) and (t)(21) of the Act, applicable items and services 
furnished by certain off-campus outpatient departments of a provider on 
or after January 1, 2017 are not considered covered OPD services as 
defined under section 1833(t)(1)(B) of the Act for purposes of payment 
under the OPPS and will instead be paid ``under the applicable payment 
system'' under Medicare Part B if the requirements for such payment are 
otherwise met. We indicated that, in order to be considered part of a 
hospital, an off-campus department of a hospital must meet the 
provider-based criteria established under 42 CFR 413.65. Accordingly, 
we refer to an ``off-campus outpatient department of a provider,'' 
which is the term used in section 603 of the Bipartisan Budget Act of 
2015, as an ``off-campus outpatient provider-based department'' or an 
``off-campus PBD.'' For a detailed discussion of the legislative 
history and statutory authority related to payments under section 603 
of the Bipartisan Budget Act of 2015, we refer readers to the CY 2017 
OPPS/ASC final rule with comment period (81 FR 79699 through 79719) and 
interim final rule with comment period (81 FR 79720 through 79729).
b. Applicable Payment System
    To implement the amendments made by section 603 of Public Law 114-
74, we issued an interim final rule with comment period (81 FR 79720) 
which accompanied the CY 2017 OPPS/ASC final rule with comment period 
to establish the PFS as the ``applicable payment system'' that applies 
in most

[[Page 37144]]

cases, and we established payment rates under the PFS for those 
nonexcepted items and services furnished by nonexcepted off-campus 
PBDs. As we discussed in the CY 2017 OPPS/ASC interim final rule with 
comment period (81 FR 79718) and reiterated in the CY 2018 PFS final 
rule with comment period (82 FR 53028), payment for Medicare Part B 
drugs that would be separately payable under the OPPS (assigned a 
status indicator of ``K'') but are not payable under the OPPS because 
they are furnished by nonexcepted off-campus PBDs is made in accordance 
with section 1847A of the Act (generally, at a rate of ASP plus 6 
percent), consistent with Part B drug payment policy for items or 
services furnished in the physician office (nonfacility) setting. We 
did not propose or make an adjustment to payment for 340B-acquired 
drugs in nonexcepted off-campus PBDs in CY 2018, but indicated we may 
consider doing so through future notice-and-comment rulemaking.
    In the interim final rule with comment period that accompanied the 
CY 2017 OPPS/ASC final rule with comment period, we established payment 
policies under the PFS for nonexcepted items and services furnished by 
a nonexcepted off-campus PBD on or after January 1, 2017. In accordance 
with sections 1848(b) and (c) of the Act, PFS payment is based on the 
relative value of the resources involved in furnishing particular 
services (81 FR 79790). Resource-based relative values are established 
for each item and service (described by a HCPCS code) based on the work 
(time and intensity), practice expense (such as clinical staff, 
supplies and equipment, office rent, and overhead), and malpractice 
expense required to furnish the typical case of the service. Because 
Medicare makes separate payment under institutional payment systems 
(such as the OPPS) for the facility costs associated with many of the 
same services that are valued under the PFS, we establish two different 
PFS payment rates for many of these services--one that applies when the 
service is furnished in a location where a facility bills and is paid 
for the service under a Medicare payment system other than the PFS (the 
facility rate), and another that applies when the billing practitioner 
or supplier furnishes and bills for the entire service (the nonfacility 
rate). Consistent with the long-established policy under the PFS to 
make payment to the billing practitioner at the facility rate when 
Medicare makes a corresponding payment to the facility (under the OPPS, 
for instance) for the same service, physicians and nonphysician 
practitioners furnishing services in nonexcepted PBDs continue to 
report their services on a professional claim form and are paid for 
their services at the PFS facility rate.
    Similarly, there are many (mostly diagnostic) services paid under 
the PFS that have two distinct portions of the service: A technical 
component (TC) and a professional component (PC). These components can 
be furnished independently in time or by different suppliers, or they 
may be furnished and billed together as a ``global'' service (82 FR 
52981). Payment for these services can also be made under a combination 
of payment systems; for example, under the PFS for the professional 
component and the OPPS for the facility portion. For instance, for a 
diagnostic CT scan, the technical component relates to the portion of 
the service during which the image is captured and might be furnished 
in an office or HOPD setting, and the professional component relates to 
the interpretation and report by a radiologist.
    In the CY 2017 interim final rule with comment period, we stated 
that we continue to believe that it is operationally infeasible for 
nonexcepted off-campus PBDs to bill directly under the PFS for the 
subset of PFS services for which there is a separately valued technical 
component (81 FR 79721). In addition, we explained that we believe 
hospitals that furnish nonexcepted items and services are likely to 
furnish a broader range of services than other provider or supplier 
types for which there is a separately valued technical component under 
the PFS. We stated that we therefore believe it is necessary to 
establish a new set of payment rates under the PFS that reflect the 
relative resource costs of furnishing the technical component of a 
broad range of services to be paid under the PFS that is specific to 
one site of service (the off-campus PBD of a hospital) with the 
packaging (bundling) rules that are significantly different from 
current PFS rules (81 FR 79721).
    In continuing to implement the requirements of sections 
1833(t)(1)(B) and (t)(21) of the Act, we recognize that there is no 
established mechanism for allowing hospitals to report and bill under 
the PFS for the portion of resources incurred in furnishing the full 
range of nonexcepted items and services. This is because hospitals with 
nonexcepted off-campus PBDs that furnish nonexcepted items and services 
generally furnish a broader range of services than other provider or 
supplier types for which there is a separately valued technical 
component under the PFS. As such, we established a new set of payment 
rates under the PFS that reflected the relative resource costs of 
furnishing the technical component of a broad range of services to be 
paid under the PFS specific to the nonexcepted off-campus PBDs of a 
hospital. Specifically, we established a PFS relativity adjuster that 
is applied to the OPPS rate for the billed nonexcepted items and 
services furnished in a nonexcepted off-campus PBD in order to 
calculate payment rates under the PFS. The PFS relativity adjuster 
reflects the estimated overall difference between the payment that 
would otherwise be made to a hospital under the OPPS for the 
nonexcepted items and services furnished in nonexcepted off-campus PBDs 
and the resource-based payment under the PFS for the technical aspect 
of those services with reference to the difference between the facility 
and nonfacility (office) rates and policies under the PFS. The current 
PFS relativity adjuster is set at 40 percent of the amount that would 
have been paid under the OPPS (82 FR 53028). These PFS rates 
incorporate the same packaging rules that are unique to the hospital 
outpatient setting under the OPPS, including the packaging of drugs 
that are unconditionally packaged under the OPPS. This includes 
packaging certain drugs and biologicals that would ordinarily be 
separately payable under the PFS when furnished in the physician office 
setting.
    Nonexcepted off-campus PBDs continue to bill for nonexcepted items 
and services on the institutional claim utilizing a new claim line 
(modifier ``PN'') to indicate that an item or service is a nonexcepted 
item or service. For a detailed discussion of the current PFS 
relativity adjuster related to payments under section 603 of Public Law 
114-74, we refer readers to the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 52356 through 52637), the CY 2018 PFS final rule 
with comment period (82 FR 53019 through 53025), and the CY 2019 PFS 
proposed rule.
c. Section 340B of the Public Health Service Act
    The 340B Program, which was established by section 340B of the 
Public Health Service Act by the Veterans Health Care Act of 1992, is 
administered by the Health Resources and Services Administration (HRSA) 
within HHS. The 340B Program allows participating hospitals and other 
health care providers to purchase certain ``covered outpatient drugs'' 
(as defined under section 1927(k) of the Act and interpreted by HRSA 
through various

[[Page 37145]]

guidance documents) at discounted prices from drug manufacturers.
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33632 through 33635), 
we proposed changes to the payment methodology under the OPPS for 
separately payable drugs and biologicals acquired under the 340B 
Program. We stated that these changes would better, and more 
appropriately, reflect the resources and acquisition costs that these 
hospitals incur. Such changes would allow Medicare beneficiaries (and 
the Medicare program) to pay less when hospitals participating in the 
340B Program furnish drugs that are purchased under the 340B Program to 
Medicare beneficiaries. Subsequently, in the CY 2018 OPPS/ASC final 
rule with comment period, we finalized our proposal that separately 
payable, covered outpatient drugs and biologicals (other than drugs on 
pass-through payment status and vaccines) acquired under the 340B 
Program will be paid ASP minus 22.5 percent, rather than ASP plus 6 
percent, when billed by a hospital paid under the OPPS that is not 
excepted from the payment adjustment. CAHs are not subject to this 340B 
policy change because they are paid under section 1834(g) of the Act. 
Rural sole community hospitals, children's hospitals, and PPS-exempt 
cancer hospitals are excepted from the alternative payment methodology 
for 340B-acquired drugs and biologicals. In addition, as stated in the 
CY 2018 OPPS/ASC final rule with comment period, this policy change 
does not apply to drugs with pass-through payment status, which are 
required to be paid based on the ASP methodology, or to vaccines, which 
are excluded from the 340B Program.
2. Proposal To Pay an Adjusted Amount for 340B-Acquired Drugs and 
Biologicals Furnished in Nonexcepted Off-Campus PBDs in CY 2019 and 
Subsequent Years
    As noted in the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79716), prior to the implementation of the payment adjustment under 
the OPPS for drugs and biologicals acquired under the 340B program, 
separately payable drugs and biologicals were paid the same rate at 
both excepted and nonexcepted off-campus departments of a hospital. The 
policy we finalized in the CY 2018 OPPS/ASC final rule with comment 
period, in which we adjust the payment rate for separately payable 
drugs and biologicals (other than drugs on pass-through payment status 
and vaccines) acquired under the 340B Program from ASP plus 6 percent 
to ASP minus 22.5 percent, applies to separately payable drugs and 
biologicals paid under the OPPS (81 FR 59353 through 59369). Under 
sections 1833(t)(1)(B)(v) and (t)(21) of the Act, however, nonexcepted 
items and services furnished by nonexcepted off-campus PBDs are no 
longer covered outpatient department services and, therefore, are not 
payable under the OPPS. This means that nonexcepted off-campus PBDs are 
not subject to the payment changes finalized in the CY 2018 OPPS/ASC 
final rule with comment period that apply to hospitals and PBDs paid 
under the OPPS. Because the separately payable drugs and biologicals 
acquired under the 340B Program and furnished in nonexcepted off campus 
PBDs are no longer covered outpatient department services, these drugs 
and biologicals are currently paid in the same way Medicare Part B 
drugs are paid in the physician office and other nonhospital settings--
typically at ASP plus 6 percent--regardless of whether they are 
acquired under the 340B Program.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59367 
through 59368), we discussed public comments that we received that 
noted that the alternative payment methodology for 340B-acquired drugs 
and biologicals did not apply to nonexcepted off-campus PBDs of a 
hospital and could result in behavioral changes that may undermine CMS' 
policy goals of reducing beneficiary cost-sharing liability and 
undercut the goals of section 603 of the Public Law 114-74. Commenters 
recommended that, if CMS adopted a final policy to establish an 
alternative payment methodology for 340B drugs in CY 2018, CMS should 
also apply the same adjustment to payment rates for drugs furnished in 
nonexcepted off-campus PBDs of a hospital if such drugs were acquired 
under the 340B Program (82 FR 59367). While we did not propose to 
adjust payment for 340B-acquired drugs in nonexcepted off-campus PBDs 
in CY 2018, we indicated that we would consider adopting such a policy 
in future rulemaking.
    The current PFS payment policies for nonexcepted items and services 
incorporate a significant number of payment policies and adjustments 
made under the OPPS (81 FR 79726; 82 FR 53024 through 53025). In 
establishing these policies in prior rulemaking, we pointed out that 
the adoption of these policies was necessary in order to maintain the 
integrity of the PFS relativity adjuster because it adjusts payment 
rates developed under the OPPS (81 FR 79726). For example, it is 
necessary to incorporate OPPS packaging rules into the site-specific 
PFS rate because the PFS relativity adjuster is applied to OPPS rates 
that were developed based on those packaging rules. In addition, many 
of the OPPS policies and adjustments are replicated under the 
nonexcepted off-campus PBD site-specific PFS rates because they are 
specifically applicable to hospitals as a setting of care. For example, 
we adopted the geographic adjustments used for hospitals instead of the 
adjustments developed for the PFS localities, which reflect cost 
differences calculated for professionals and suppliers rather than 
hospitals (81 FR 79726).
    We agree with commenters that the difference in the payment amounts 
for 340B-acquired drugs furnished by hospital outpatient departments--
excepted off-campus PBDs versus nonexcepted off-campus PBDs--creates an 
incentive for hospitals to move drug administration services for 340B-
acquired drugs to nonexcepted off-campus PBDs to receive a higher 
payment amount for these drugs, thereby undermining our goals of 
reducing beneficiary cost-sharing for these drugs and biologicals and 
moving towards site neutrality through the section 603 amendments to 
section 1833(t) of the Act. Therefore, for CY 2019, we are proposing 
changes to the Medicare Part B drug payment methodology for drugs and 
biologicals furnished and billed by nonexcepted off-campus departments 
of a hospital that were acquired under the 340B Program. Specifically, 
for CY 2019 and subsequent years, we are proposing to pay under the PFS 
the adjusted payment amount of ASP minus 22.5 percent for separately 
payable drugs and biologicals (other than drugs on pass-through payment 
status and vaccines) acquired under the 340B Program when they are 
furnished by nonexcepted off-campus PBDs of a hospital. Furthermore, in 
this CY 2019 OPPS/ASC proposed rule, we are proposing to except rural 
sole community hospitals, children's hospitals, and PPS-exempt cancer 
hospitals from this payment adjustment. We believe that our proposed 
payment policy would better reflect the resources and acquisition costs 
that nonexcepted off-campus PBDs incur for these drugs and biologicals.
    We note that, ordinarily, Medicare pays for drugs and biologicals 
furnished in the physician's office setting at ASP plus 6 percent. This 
is because section 1842(o)(1)(A) of the Act provides that if a 
physician's, supplier's, or any other person's bill or request for 
payment for services includes a charge for a drug or biological for 
which payment may be

[[Page 37146]]

made under Medicare Part B and the drug or biological is not paid on a 
cost or prospective payment basis as otherwise provided in this part, 
the amount for the drug or biological is equal to the following: The 
amount provided under section 1847, section 1847A, section 1847B, or 
section 1881(b)(13) of the Act, as the case may be for the drug or 
biological.
    Generally, in the hospital outpatient department setting, low-cost 
drugs and biologicals are packaged into the payment for other services 
billed under the OPPS. Separately payable drugs (1) have pass-through 
payment status, (2) have a cost per day exceeding a threshold, or (3) 
are not policy-packaged or packaged in a C-APC. As described in section 
V.A.1. of this proposed rule, section 1847A of the Act establishes the 
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 
WAC, and the AWP (82 FR 59337). As noted in section V.B.2.b. of this 
proposed rule, since CY 2013, our policy has been to pay for separately 
payable drugs and biologicals at ASP plus 6 percent in accordance with 
section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default) (82 
FR 59350). Consequently, in the case of services furnished in a 
hospital outpatient department, Medicare pays ASP plus 6 percent for 
separately payable Part B drugs and biologicals unless those drugs or 
biologicals are acquired under the 340B Program, in which case they are 
paid at ASP minus 22.5 percent. For a detailed discussion of our 
current OPPS drug payment policies, we refer readers to the CY 2018 
OPPS/ASC final rule with comment period (82 FR 59343 through 59371).
    As a general matter, in the nonexcepted off-campus PBD setting, we 
pay hospitals under the PFS for all drugs and biologicals that are 
packaged under the OPPS based on a percentage of the OPPS payment rate, 
which is determined using the PFS relativity adjuster. Because OPPS 
packaging rules apply to the PFS payments to nonexcepted off-campus 
PBDs, the PFS payment for some nonexcepted items and services that are 
packaged includes payment for some drugs and biologicals that would be 
separately billable under the PFS if a similar service had been 
furnished in the office-based setting. As we noted in the CY 2017 final 
rule with comment period, in analyzing the term ``applicable payment 
system,'' we considered whether and how the requirements for payment 
could be met under alternative payment systems in order to pay for 
nonexcepted items and services, and considered several payment systems 
under which payment is made for similar items and services (81 FR 
79712). Because the PFS relativity adjuster that is applied to 
calculate payment to hospitals for nonexcepted items and services 
furnished in nonexcepted off-campus PBDs is based on a percentage (40 
percent) of the amount determined under the OPPS for a particular item 
or service, and the OPPS is a prospective payment system, we believe 
that items and services furnished by nonexcepted off-campus PBDs paid 
under the PFS are payable on a prospective payment basis. Therefore, we 
believe we have flexibility to pay for separately-payable drugs and 
biologicals furnished in nonexcepted off-campus PBDs at an amount other 
than the amount dictated by sections 1842(o)(1)(C) and 1847A of the 
Act.
    As we discussed in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59354), several recent studies and reports on Medicare 
Part B payments for 340B-acquired drugs highlight a difference in 
Medicare Part B drug spending between 340B hospitals and non-340B 
hospitals as well as varying differences in the amount by which the 
Part B payment exceeds the drug acquisition cost. When we initially 
developed the policy for nonexcepted off-campus PBDs, most separately 
payable drugs and biologicals were paid, both in the OPPS and in other 
Part B settings, such as physician offices, through similar 
methodologies under section 1847A/1842(o) of the Act. For drugs and 
biologicals that are packaged in the OPPS, we adopted similar packaging 
payment policies for purposes of making the site-specific payment under 
the PFS for nonexcepted off-campus PBDs. Because hospitals can, in some 
cases, acquire drugs and biologicals under the 340B Program for use in 
nonexcepted off-campus PBDs, we believe that not adjusting payment 
exclusively for these departments would present a significant 
incongruity between the payment amounts for these drugs depending upon 
where (for example, excepted or nonexcepted PBD) they are furnished. 
This incongruity would distort the relative accuracy of the resource-
based payment amounts under the site-specific PFS rates and could 
result in significant perverse incentives for hospitals to acquire 
drugs and biologicals under the 340B Program and avoid Medicare payment 
adjustments that account for the discount by providing these drugs to 
patients predominantly in nonexcepted off-campus PBDs. In light of the 
significant drug payment differences between excepted and nonexcepted 
off-campus PBDs, in combination with the potential eligibility for 
discounts, which result in reduced costs under the 340B Program for 
both kinds of departments, our current payment policy could undermine 
the validity of the use of the OPPS payment structure in nonexcepted 
off campus PBDs. In order to avoid such perverse incentives and the 
resulting distortions, we are proposing, pursuant to our authority at 
section 1833(t)(21)(C) of the Act to identify the PFS as the 
``applicable payment system'' for 340B-acquired drugs and biologicals 
and, accordingly, to pay under the PFS instead of under section 1847A/
1842(o) of the Act an amount equal to ASP minus 22.5 percent for drugs 
and biologicals acquired under the 340B Program that are furnished by 
nonexcepted off-campus PBDs. We believe this proposed change in policy 
would eliminate the significant incongruity between the payment amounts 
for these drugs, depending upon whether they are furnished by excepted 
off-campus PBDs or nonexcepted off-campus PBDs, which we believe is an 
unnecessary difference in payment where the 340B Program does not 
differentiate between PBDs paid under the OPPS and PBDs paid under the 
PFS using the PFS relativity adjuster.

D. Expansion of Clinical Families of Services at Excepted Off-Campus 
Departments of a Provider

1. Background
a. Section 603 of the Bipartisan Budget Act of 2015
    We refer readers to section X.C.1.a. of this proposed rule for a 
discussion of the provisions of section 603 of the Bipartisan Budget 
Act of 2015 (Pub. L. 114-74), as implemented in the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79699 through 79719). As 
discussed in the CY 2017 OPPS/ASC final rule with comment period, we 
adopted the PFS as the applicable payment system for nonexcepted items 
and services furnished and billed by off-campus PBDs. In addition, we 
indicated that, in order to be considered part of a hospital, an off-
campus department of a hospital must meet the provider-based criteria 
established under 42 CFR 413.65. For a detailed discussion of the 
history and statutory authority related to payments under section 603 
of Public Law 114-74, we refer readers to the CY 2017 OPPS/ASC final 
rule with

[[Page 37147]]

comment period (81 FR 79699 through 79719) and the interim final rule 
with comment period (81 FR 79720 through 79729).
b. Expansion of Services at an Off-Campus PBD Excepted Under Section 
1833(t)(21)(B)(ii) of the Act
    In the CY 2017 OPPS/ASC proposed rule (81 FR 45685), we noted that 
we had received questions from some hospitals regarding whether an 
excepted off-campus PBD could expand the number or type of services the 
department furnishes and maintain excepted status for purposes of 
paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act. We 
indicated that we were concerned that if excepted off-campus PBDs could 
expand the types of services provided at the excepted off-campus PBDs 
and also be paid OPPS rates for these new types of services, hospitals 
may be able to purchase additional physician practices and expand 
services furnished by existing excepted off-campus PBDs as a result (81 
FR 45685). This could result in newly purchased physician practices 
furnishing services that are paid at OPPS rates, which we believed 
these amendments to section 1833(t) of the Act were intended to address 
(81 FR 45685). We believed section 1833(t)(21)(B)(ii) of the Act 
excepted off-campus PBDs and the items and services that are furnished 
by such excepted off-campus PBDs for purposes of paragraphs (1)(B)(v) 
and (21) of section 1833(t) of the Act as they were being furnished on 
the date of enactment of section 603 of the Bipartisan Budget Act of 
2015, as guided by our regulatory definition at Sec.  413.65(a)(2) of a 
department of a provider (81 FR 45685). Thus, in the CY 2017 OPPS/ASC 
proposed rule, we proposed that if an excepted off-campus PBD furnished 
items and services from a clinical family of services (clinical 
families of services were identified in Table 21 of the CY 2017 
proposed rule (81 FR 45685 through 45686)) that it did not furnish 
prior to November 2, 2015, and thus did not also bill for, services 
from these new expanded clinical families of services would not be 
covered OPD services, and instead would be subject to paragraphs 
(1)(B)(v) and (21) of section 1833(t) of the Act as described in 
section X.A.1.c. of the proposed rule. In addition, in that rule, we 
proposed not to limit the volume of excepted items and services within 
a clinical family of services that an excepted off-campus PBD could 
furnish (81 FR 45685).
    The majority of commenters, including several hospital 
associations, regional health systems, and medical equipment 
manufacturers opposed the proposals primarily because they believed: 
(1) CMS exceeded its statutory authority, as the statutory language 
included in section 603 does not address changes in service mix by 
excepted off-campus PBDs; (2) CMS' proposal does not account for 
evolving technologies and would hinder beneficiary access to those 
innovative technologies; (3) the term ``clinical families of service'' 
appeared to be a new term created by CMS for the purpose of 
implementing section 603 and it would be difficult for CMS and 
hospitals to manage changes in the composition of APCs and HCPCS code 
changes contained in those APCs; and (4) the proposal created 
significant operational challenges and administrative burden for both 
CMS and hospitals because commenters believed it was unnecessarily 
complex (81 FR 79706 through 79707).
    In addition, MedPAC explained in its comment letter that the 
proposal was unnecessarily complex and instead suggested that CMS adopt 
a different approach by determining how much the Medicare program had 
paid an excepted off-campus PBD for services billed under the OPPS 
during a 12-month baseline period that preceded November 2, 2015 and to 
cap the OPPS payment made to the off-campus PBD at the amount paid 
during the baseline period.\41\ Some commenters, including physician 
group stakeholders, supported CMS' intent to monitor service line 
expansion and changes in billing patterns by excepted off-campus PBDs. 
These commenters urged CMS to work to operationalize a method that 
would preclude an excepted off-campus PBD from expanding the excepted 
services for which it is paid under the OPPS into wholly new clinical 
areas, as they believed an excepted, off-campus PBD should only be able 
to bill under the OPPS for those items and services for which it 
submitted claims prior to November 2, 2015 (82 FR 33647).
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    \41\ Available at: http://medpac.gov/docs/default-source/comment-letters/08172016_opps_asc_comment_2017_medpac_sec.pdf?sfvrsn=0.
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    In response to public comments, we did not finalize our proposal to 
limit the expansion of excepted services at excepted off-campus PBDs. 
However, we stated our intent to monitor this issue and expressed 
interest in additional feedback to help us consider whether excepted 
off-campus PBDs that expand the types of services offered after 
November 2, 2015 should be paid for furnishing those items and services 
under the applicable payment system (that is, the PFS) instead of the 
OPPS. Specifically, we requested comments on how either a limitation on 
volume or a limitation on lines of service would work in practice (81 
FR 79707).
    In addition, in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79707), we sought public comments on how either a limitation on 
volume of services, or a limitation on lines of service, as we laid out 
in the CY 2017 OPPS/ASC proposed rule, could be implemented. 
Specifically, we stated that we were interested in what data were 
available or could be collected that would have allowed us to implement 
a limitation on the expansion of excepted services.
    We provided a summary of and responses to comments received in 
response to the CY 2017 OPPS/ASC final rule with comment period in the 
CY 2018 OPPS/ASC proposed rule. As stated in that rule, several of the 
public comments received in response to the comment solicitation 
included in the CY 2017 OPPS/ASC final rule with comment period were 
repeated from the same stakeholders in response to the CY 2017 OPPS/ASC 
proposed rule. These commenters again expressed concern regarding CMS' 
authority to address changes in service-mix; that a limitation on 
service expansion or volume would stifle innovative care delivery and 
use of new technologies; and that limiting service line expansion using 
clinical families of service was not workable. Because these commenters 
did not provide new information, we referred readers to the CY 2017 
OPPS/ASC final rule with comment period for our responses to comments 
on statutory authority and concerns about hindering access to 
innovative technologies (81 FR 79707 and 82 FR 59388). A summary of and 
our responses to the other comments received in response to the comment 
solicitation included in the CY 2017 OPPS/ASC final rule with comment 
period were included in the CY 2018 OPPS/ASC proposed rule (82 FR 33645 
through 33648).
    In the CY 2018 OPPS/ASC proposed rule, we did not propose any 
policies related to clinical service line expansion or volume increases 
at excepted off-campus PBDs. However, we stated that we would continue 
to monitor claims data for changes in billing patterns and utilization, 
and we again invited public comments on the issue of service line 
expansion. In response to the CY 2018 comment solicitation, MedPAC 
largely reiterated the comments it submitted in response to the CY 2017 
OPPS/ASC rulemaking and acknowledged the challenges of implementing its 
recommended approach as such

[[Page 37148]]

approach would necessitate CMS requiring hospitals to report the amount 
of OPPS payments received by each excepted off-campus PBD during the 
baseline period (such as November 2014 through November 2015) because 
CMS was not collecting data on payments made to each individual PBD 
during that period. In its comments, MedPAC recommended that, to help 
ensure the accuracy of these data, CMS could selectively audit 
hospitals.\42\ Another commenter expressed support for CMS' efforts to 
continue to implement and expand site-neutral payment policies for 
services where payment differentials are not warranted, such as between 
HOPDs and ASCs or physician offices.
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    \42\ Available at: http://medpac.gov/docs/default-source/comment-letters/09082017_opps_asc_2018_medpac_comment_sec.pdf?sfvrsn=0.
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2. CY 2019 Proposal
    As previously expressed in CYs 2017 and 2018 OPPS/ASC rulemaking, 
we continue to be concerned that if excepted off-campus PBDs are 
allowed to furnish new types of services that were not provided at the 
excepted off-campus PBDs prior to the date of enactment of the 
Bipartisan Budget Act of 2015 and can be paid OPPS rates for these new 
types of services, hospitals may be able to purchase additional 
physician practices and add those physicians to existing excepted off-
campus PBDs. This could result in newly purchased physician practices 
furnishing services that are paid at OPPS rates, which we believe the 
section 603 amendments to section 1833(t) of the Act are intended to 
prevent. Of note, these statutory amendments ``came after years of 
nonpartisan economists, health policy experts, and providers expressing 
concern over the Medicare program's [OPPS] paying more for the same 
services provided at HOPDs than in other settings--such as an 
ambulatory surgery center, physician office, or community outpatient 
facility.'' \43\ Experts raised concerns that this payment inequity 
drove the acquisition of ``standalone or independent practices and 
facilities by hospitals, resulted in higher costs for the Medicare 
system and taxpayers, and also resulted in beneficiaries needlessly 
facing higher cost-sharing in some settings than in others.'' \44\ In 
addition, some experts argued that, ``to the extent this payment 
differential accelerated consolidation of providers, this would result 
in reduced competition among both hospitals and nonaffiliated 
outpatient service providers. This, in turn, could reduce large 
hospital systems' incentives to reduce costs, increase efficiency, or 
focus on patient outcomes.'' \45\
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    \43\ Available at: https://archives-energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/114/Letters/20160205SiteNeutralLetter%5b1%5d.pdf.
    \44\ Ibid.
    \45\ Ibid.
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    The Government Accountability Office (GAO) stated in its December 
2015 Report to Congress that ``from 2007 through 2013, the number of 
vertically consolidated physicians nearly doubled, with faster growth 
in more recent years.'' GAO concluded that, ``regardless of what has 
driven hospitals and physicians to vertically consolidate, paying 
substantially more for the same service when performed in an HOPD 
rather than a physician office provides an incentive to shift services 
that were once performed in physician offices to HOPDs after 
consolidations have occurred.'' \46\
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    \46\ GA0-16-189, ``Increasing Hospital-Physician Consolidation 
Highlights Need for Payment Reform.'' Available at: https://www.gao.gov/assets/680/674347.pdf.
---------------------------------------------------------------------------

    While there is no congressional record available for section 603 of 
the Bipartisan Budget Act of 2015, we do not believe that Congress 
intended to allow for new service lines to be paid OPPS rates because 
providing for such payment would allow for excepted off-campus PBDs to 
be paid higher rates for types of services they were not performing 
prior to enactment of the Bipartisan Budget Act of 2015 that would be 
paid at lower rates if performed in a nonexcepted PBD. Similarly, we 
are concerned that a potential shift of services from nonexcepted PBDs 
to excepted PBDs, or to excepted PBDs generally, may be occurring, 
given the higher payment rate in this setting. We believe that the 
growth of service lines in currently excepted off-campus PBDs may be an 
unintended consequence of our current policy, which allows continued 
full OPPS payment for any services furnished by excepted off-campus 
PBDs, including services in new service lines.
    In prior rulemaking, and as discussed in section X.A. of this 
proposed rule, we noted our concerns and discussed our efforts to begin 
collecting data and monitoring billing patterns for off-campus PBDs. 
Specifically, as described in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66910 through 66914), we created HCPCS modifier 
``PO'' (Services, procedures, and/or surgeries furnished at off-campus 
provider-based outpatient departments) for hospital claims to be 
reported with every code for outpatient hospital items and services 
furnished in an off-campus PBD of a hospital. Reporting of this new 
modifier was voluntary for CY 2015, with reporting required beginning 
on January 1, 2016. In addition, we established modifier ``PN'' 
(Nonexcepted service provided at an off-campus, outpatient, provider-
based department of a hospital) to identify and pay nonexcepted items 
and services billed on an institutional claim. Effective January 1, 
2017, nonexcepted off-campus PBDs of a hospital were required to report 
this modifier on each claim line for nonexcepted items and services to 
trigger payment under the PFS instead of the OPPS. As a conforming 
revision, effective January 1, 2017, the modifier ``PO'' descriptor was 
revised to ``excepted service provided at an off-campus, outpatient, 
provider-based department of a hospital'' and this modifier continued 
to be used to identify items and services furnished by an excepted off-
campus PBD of a hospital.
    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33647), a 
few commenters supported CMS' intent to monitor service line expansion 
and changes in billing patterns by excepted off-campus PBDs. These 
commenters urged CMS to work to operationalize a method that would 
preclude an excepted off-campus PBD from increasing its payment 
advantage under the OPPS by expanding into wholly new clinical areas 
(82 FR 33647). Moreover, a few commenters urged CMS to pursue a 
limitation on service line expansion to ensure designation as an 
excepted off-campus PBD is not ``abused'' (82 FR 33647). One commenter 
suggested that CMS evaluate outpatient claims with the ``PO'' modifier 
to develop a list of ``grandfathered'' items and services for which the 
excepted off-campus PBD may continue to be paid under the OPPS (82 FR 
33647). In response to these comments, we stated that we were concerned 
with the practicality of developing a list of excepted items and 
services for each excepted off-campus PBD, given the magnitude of such 
a list (82 FR 33647). We noted in the CY 2018 OPPS/ASC final rule with 
comment period, however, that we continued to monitor claims data for 
changes in billing patterns and utilization, and invited comments on 
this issue (82 FR 59388).
    In light of our prior stated concerns about the expansion of 
services in excepted off-campus PBDs, for CY 2019 and subsequent years, 
we are proposing that if an excepted off-campus PBD furnishes services 
from any clinical family of services (as clinical families of services 
are defined in Table 32 of this proposed rule) from which it did not

[[Page 37149]]

furnish an item or service during a baseline period from November 1, 
2014 through November 1, 2015 (and subsequently bill under the OPPS for 
that item or service), items and services from these new clinical 
families of services would not be excepted items and services and, 
thus, would not be covered OPD services, and instead would be subject 
to paragraphs (1)(B)(v) and (21) of section 1833(t) of the Act and paid 
under the PFS. Furthermore, in this CY 2019 OPPS/ASC proposed rule, we 
are proposing to revise 42 CFR 419.48 to limit the definition of 
``excepted items and services'' in accordance with this proposal. 
Generally, excepted items and services are items or services that are 
furnished on or after January 1, 2017 by an excepted off-campus PBD (as 
defined in Sec.  419.48) that has not impermissibly relocated or 
changed ownership. Beginning on January 1, 2019, excepted items and 
services would be items or services that are furnished and billed by an 
excepted off-campus PBD (defined in Sec.  419.48) only from the 
clinical families of services (described later in this section) for 
which the excepted off-campus PBD furnished (and subsequently billed 
under the OPPS) for at least one item or service from November 1, 2014 
through November 1, 2015. Further, for purposes of this section, ``new 
clinical families of services'' would be items or services: (1) That 
are furnished and billed by an excepted off-campus PBD; (2) that are 
otherwise paid under the OPPS through one of the APCs included in Table 
32 of this proposed rule; and (3) that belong to a clinical family 
listed in Table 32 from which the excepted off-campus PBD did not 
furnish an item or service during the baseline period from November 1, 
2014 through November 1, 2015 (and subsequently bill for that service 
under the OPPS). In addition, for CY 2019, we are proposing that if an 
excepted off-campus PBD furnishes a new item or service from a clinical 
family of services listed in Table 32 from which the off-campus PBD 
furnished a service from November 1, 2014 through November 1, 2015, 
such service would continue to be paid under the OPPS because items and 
services from within a clinical family of services for which the 
nonexcepted off-campus PBD furnished an item or service during the 
baseline period would not be considered a ``service expansion.''
    In order to determine the types of services provided at an excepted 
off-campus PBD, for purposes of OPPS payment eligibility, excepted off-
campus PBDs will be required to ascertain the clinical families from 
which they furnished services from November 1, 2014 through November 1, 
2015 (that were subsequently billed under the OPPS). In addition, items 
and services furnished by an excepted off campus PBD that are not 
identified below in Table 32 of this proposed rule must be reported 
with modifier ``PN''. We selected the year prior to the date of 
enactment of the Bipartisan Budget Act of 2015 as the baseline period 
because it is the most recent year preceding the date of enactment of 
section 603 and we believe that a full year of claims data would 
adequately reflect the types of service lines furnished and billed by 
an excepted off-campus PBD. We considered expanding the baseline period 
to include a timeframe prior to November 2014, but are not proposing 
this alternative due to the possibility that hospital claims data for 
an earlier time period may not be readily available and reviewing 
claims from a longer timeframe may impose undue burden. If an excepted 
off-campus PBD did not furnish services under the OPPS until after 
November 1, 2014, we are proposing that the 1-year baseline period 
begins on the first date the off-campus PBD furnished covered OPD 
services prior to November 2, 2015. For providers that met the mid-
build requirement (as defined at section 1833(t)(21)(B)(v) of the Act), 
we are proposing to establish a 1-year baseline period that begins on 
the first date the off-campus PBDs furnished a service billed under the 
OPPS. We are proposing changes to our regulation at 42 CFR 419.48 to 
include these alternative baseline periods. For guidance on the 
implementation of sections 16001 and 16002 of the 21st Century Cures 
Act, we refer readers to the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/Sections-16001-16002.pdf. We are concerned that a 1-year 
baseline may be unnecessarily long to the extent that such baseline 
would be, at least in part, a prospective period during which such 
departments would have time and an incentive to bill services from as 
many service lines as possible, thereby limiting the effect of this 
policy. We welcome public comment on whether a different baseline 
period, such as 3 or 6 months, should be used for off-campus PBDs that 
began furnishing services and billing after November 1, 2014, or that 
met the mid-build requirement.
    We are aware of past stakeholder concern regarding limiting service 
line expansion for excepted off-campus PBDs using the 19 clinical 
families identified below in Table 32 of this proposed rule. However, 
we believe that the proposed clinical families recognize all clinically 
distinct service lines for which a PBD might bill under the OPPS, while 
at the same time allow for new services within a clinical family of 
services to be considered for designation as ``excepted items and 
services'', as defined in the regulations at 42 CFR 419.48 where the 
types of services within a clinical family expand due to new technology 
or innovation. We believe that requiring excepted off-campus PBDs to 
limit their services to the exact same services they furnished during 
the proposed baseline period would be too restrictive and 
administratively burdensome. We are requesting public comments on the 
proposed clinical families. We also are soliciting public comments on 
whether any specific groups of hospitals should be excluded from our 
proposal to limit the expansion of excepted services, such as certain 
rural hospitals (for example, rural sole community hospitals), in light 
of recent reports of hospital closures in rural areas.
    In addition, we are soliciting public comments on alternate 
methodologies to limit the expansion of excepted services in excepted 
off-campus PBDs for CY 2019. Specifically, we are inviting public 
comments on the adoption and implementation of other methodologies, 
such as the approach recommended by MedPAC (discussed earlier in this 
section) in response to the CY 2017 and CY 2018 proposals whereby CMS 
would establish a baseline service volume for each applicable off-
campus PBD, cap excepted services (regardless of clinical family) at 
that limit, and when the hospital reaches the annual cap for that 
location, additional services furnished by that off-campus PBD would no 
longer be considered covered OPD services and would instead be paid 
under the PFS (the annual cap could be updated based on the annual 
updates to the OPPS payment rates). Under such alternate approach, 
hospitals would need to report service volume for each off-campus PBD 
for the applicable period (such as November 1, 2014-November 1, 2015) 
and such applicable periods would be subject to audit.

[[Page 37150]]



Table 32--Proposed Clinical Families of Services for Purposes of Section
                           603 Implementation
------------------------------------------------------------------------
           Clinical families                           APCs
------------------------------------------------------------------------
Airway Endoscopy.......................  5151-5155.
Blood Product Exchange.................  5241-5244.
Cardiac/Pulmonary Rehabilitation.......  5771; 5791.
Diagnostic/Screening Test and Related    5721-5724; 5731-5735; 5741-
 Procedures.                              5743.
Drug Administration and Clinical         5691-5694.
 Oncology.
Ear, Nose, Throat (ENT)................  5161-5166.
General Surgery and Related Procedures.  5051-5055; 5061; 5071-5073;
                                          5091-5094; 5361-5362.
Gastrointestinal (GI)..................  5301-5303; 5311-5313; 5331;
                                          5341.
Gynecology.............................  5411-5416.
Major Imaging..........................  5523-5525; 5571-5573; 5593-
                                          5594.
Minor Imaging..........................  5521-5522; 5591-5592.
Musculoskeletal Surgery................  5111-5116; 5101-5102.
Nervous System Procedures..............  5431-5432; 5441-5443; 5461-
                                          5464; 5471.
Ophthalmology..........................  5481, 5491-5495; 5501-5504.
Pathology..............................  5671-5674.
Radiation Oncology.....................  5611-5613; 5621-5627; 5661.
Urology................................  5371-5377.
Vascular/Endovascular/Cardiovascular...  5181-5184; 5191-5194; 5200;
                                          5211-5213; 5221-5224; 5231-
                                          5232.
Visits and Related Services............  5012; 5021-5025; 5031-5035;
                                          5041; 5045; 5821-5823.
------------------------------------------------------------------------

XI. Proposed CY 2019 OPPS Payment Status and Comment Indicators

A. Proposed CY 2019 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.
    For CY 2019, we are not proposing to make any changes to the 
definitions of status indicators that were listed in Addendum D1 to the 
CY 2018 OPPS/ASC final rule with comment period available on the CMS 
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices-Items/CMS-1656-FC.html?DLPage=1&DLEntries=10&DLSort=2&DLSortDir=descending.
    The complete list of the payment status indicators and their 
definitions that would apply for CY 2019 is displayed in Addendum D1 to 
this proposed rule, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
    The proposed CY 2019 payment status indicator assignments for APCs 
and HCPCS codes are shown in Addendum A and Addendum B, respectively, 
to this proposed rule, which are available on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

B. Proposed CY 2019 Comment Indicator Definitions

    In this proposed rule, we are proposing to use four comment 
indicators for the CY 2019 OPPS. These comment indicators, ``CH'', 
``NC'', ``NI'', and ``NP'', are in effect for CY 2018 and we are 
proposing to continue their use in CY 2019. The proposed CY 2019 OPPS 
comment indicators are as follows:
    <bullet> ``CH''--Active HCPCS code in current and next calendar 
year, status indicator and/or APC assignment has changed; or active 
HCPCS code that will be discontinued at the end of the current calendar 
year.
    <bullet> ``NC''--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 for which we 
requested comments in the proposed rule, final APC assignment; comments 
will not be accepted on the final APC assignment for the new code.
    <bullet> ``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.
    <bullet> ``NP''--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, proposed APC 
assignment; comments will be accepted on the proposed APC assignment 
for the new code.
    The definitions of the proposed OPPS comment indicators for CY 2019 
are listed in Addendum D2 to this proposed rule, which is available on 
the CMS website at: https://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 payments to ASCs under Medicare, we refer readers 
to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74377 
through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 
32292). For a discussion of prior rulemaking on the ASC payment system, 
we refer readers to the CYs 2012, 2013, 2014, 2015, 2016, 2017 and 2018 
OPPS/ASC final rules with comment period (76 FR 74378 through 74379; 77 
FR 68434 through 68467; 78 FR 75064 through 75090; 79 FR 66915 through 
66940; 80 FR 70474 through 70502; 81 FR 79732 through 79753; and 82 FR 
59401 through 59424, respectively).
2. Policies Governing Changes to the Lists of Codes and Payment Rates 
for ASC Covered Surgical Procedures and Covered Ancillary Services
    Under 42 CFR 416.2 and 416.166 of the Medicare regulations, subject 
to certain exclusions, covered surgical procedures in an ASC are 
surgical procedures that are separately paid under the OPPS, that would 
not be expected to pose a significant risk to

[[Page 37151]]

beneficiary safety when performed in an ASC, and for which standard 
medical practice dictates that the beneficiary would not typically be 
expected to require active medical 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 procedures in the CPT surgical range that 
we have determined do not pose a significant safety risk, that we would 
not expect to require an overnight stay when performed in ASCs, and 
that are separately paid under the OPPS (72 FR 42478).
    In the August 2, 2007 final rule (72 FR 42495), we also established 
our policy to make separate ASC payments for the following ancillary 
items and services when they are provided integral to ASC covered 
surgical procedures: (1) Brachytherapy sources; (2) certain implantable 
items that have pass-through payment status under the OPPS; (3) certain 
items and services that we designate as contractor-priced, including, 
but not limited to, procurement of corneal tissue; (4) certain drugs 
and biologicals for which separate payment is allowed under the OPPS; 
and (5) certain radiology services for which separate payment is 
allowed under the OPPS. In the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66932 through 66934), we expanded the scope of ASC 
covered ancillary services to include certain diagnostic tests within 
the medicine range of CPT codes for which separate payment is allowed 
under the OPPS when they are provided integral to an ASC covered 
surgical procedure. Covered ancillary services are specified in Sec.  
416.164(b) and, as stated previously, are eligible for separate ASC 
payment. Payment for ancillary items and services that are not paid 
separately under the ASC payment system is packaged into the ASC 
payment for the covered surgical procedure. We update the lists of, and 
payment rates for, covered surgical procedures and covered ancillary 
services in ASCs in conjunction with the annual proposed and final 
rulemaking process to update the OPPS and the ASC payment system (Sec.  
416.173; 72 FR 42535). We base ASC payment and policies for most 
covered surgical procedures, drugs, biologicals, and certain other 
covered ancillary services on the OPPS payment policies, and we use 
quarterly change requests (CRs) to update services covered under the 
OPPS. We also provide quarterly update CRs for ASC covered surgical 
procedures and covered ancillary services throughout the year (January, 
April, July, and October). We release new and revised Level II HCPCS 
codes and recognize the release of new and revised CPT codes by the AMA 
and make these codes effective (that is, the codes are recognized on 
Medicare claims) via these ASC quarterly update CRs. We recognize the 
release of new and revised Category III CPT codes in the July and 
January CRs. These updates implement newly created and revised Level II 
HCPCS and Category III CPT codes for ASC payments and update the 
payment rates for separately paid drugs and biologicals based on the 
most recently submitted ASP data. New and revised Category I CPT codes, 
except vaccine codes, are released only once a year, and are 
implemented only through the January quarterly CR update. New and 
revised Category I CPT vaccine codes are released twice a year and are 
implemented through the January and July quarterly CR updates. We refer 
readers to Table 41 in the CY 2012 OPPS/ASC proposed rule for an 
example of how this process, which we finalized in the CY 2012 OPPS/ASC 
final rule with comment period, is used to update HCPCS and CPT codes 
(76 FR 42291; 76 FR 74380 through 74381).
    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 codes, and codes with revised descriptors, 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 many 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.
3. Definition of ASC Covered Surgical Procedures
    Since the implementation of the ASC prospective payment system, we 
have defined a ``surgical'' procedure under the payment system as any 
procedure described within the range of Category I CPT codes that the 
CPT Editorial Panel of the American Medical Association (AMA) defines 
as ``surgery'' (CPT codes 10000 through 69999) (72 FR 42478). We also 
have included as ``surgical,'' procedures that are described by Level 
II HCPCS codes or by Category III CPT codes that directly crosswalk or 
are clinically similar to procedures in the CPT surgical range that we 
have determined do not pose a significant safety risk, would not expect 
to require an overnight stay when performed in an ASC, and are 
separately paid under the OPPS (72 FR 42478).
    As we noted in the CY 2008 final rule that implemented the revised 
ASC payment system, using this definition of surgery would exclude from 
ASC payment certain invasive, ``surgery-like'' procedures, such as 
cardiac catheterization or certain radiation treatment services that 
are assigned codes outside the CPT surgical range (72 FR 42477). We 
stated in that final rule that we believed continuing to rely on the 
CPT definition of surgery is administratively straightforward, is 
logically related to the categorization of services by physician 
experts who both establish the codes and perform the procedures, and is 
consistent with a policy to allow ASC payment for all outpatient 
surgical procedures (72 FR 42477).
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59402 
through 59403), we noted that some stakeholders have suggested that 
certain procedures that are outside the CPT surgical range but that are 
similar to surgical procedures currently covered in an ASC setting 
should be ASC covered surgical procedures. For example, some 
stakeholders have recommended adding certain cardiovascular procedures 
to the ASC Covered Procedures List (CPL) due to their similarity to 
currently-covered peripheral endovascular procedures in the surgical 
code range for surgery and cardiovascular system. Further, stakeholders 
also noted that the AMA's CPT code manual states that the listing of a 
procedure in a specific section of the book may reflect historical or 
other considerations and should not be interpreted as strictly 
classifying the

[[Page 37152]]

procedure as ``surgery'' or ``not surgery'' for insurance purposes. As 
the CPT codebook states: ``It is equally important to recognize that as 
techniques in medicine and surgery have evolved, new types of services, 
including minimally invasive surgery, as well as endovascular, 
percutaneous, and endoscopic interventions have challenged the 
traditional distinction of Surgery vs Medicine. Thus, the listing of a 
service or procedure in a specific section of this book should not be 
interpreted as strictly classifying the service or procedure as 
`surgery' or `not surgery' for insurance or other purposes. The 
placement of a given service in a specific section of the book may 
reflect historical or other considerations (e.g., placement of the 
percutaneous peripheral vascular endovascular interventions in the 
Surgery/Cardiovascular System section, while the percutaneous coronary 
interventions appear in the Medicine/Cardiovascular section)'' 
(emphasis added) (CPT[reg] 2018 Professional Edition, ``Instructions 
for Use of the CPT Code Book,'' page xii.). While we continue to 
believe that using the CPT code range to define surgery represents a 
logical, appropriate, and straightforward approach to defining a 
surgical procedure, we also believe it may be appropriate for us to use 
the CPT surgical range as a guide rather than a strict determinant as 
to whether a procedure is surgical, which would give us more 
flexibility to include ``surgery-like'' procedures on the ASC CPL.
    We also are cognizant of the dynamic nature of ambulatory surgery 
and the continued shift of services from the inpatient setting to the 
outpatient setting over the past decade. In the CY 2018 OPPS/ASC final 
rule with comment period (82 FR 59402 through 59403), we responded to 
public comments that we had solicited regarding services that are 
described by Category I CPT codes outside of the surgical range, or 
Level II HCPCS codes or Category III CPT codes that do not directly 
crosswalk and are not clinically similar to procedures in the CPT 
surgical range, but that nonetheless may be appropriate to include as 
covered surgical procedures that are payable when furnished in the ASC 
setting. Commenters offered mixed views for changing the current 
definition of surgery; however, most commenters were supportive of 
changing the definition. Some commenters recommended broadening the 
definition of surgery to include procedures not described by the CPT 
surgical range. Another commenter recommended making all surgical codes 
payable in a hospital outpatient department payable in an ASC and 
further suggested that CMS at least redefine surgical procedures to 
include invasive procedures such as percutaneous transluminal 
angioplasty and cardiac catheterization.
    One commenter recommended using a definition of surgery developed 
by the AMA Specialty Society Relative Value Scale Update Society for 
use in the agency's Physician Fee Schedule (PFS) professional liability 
insurance relative values. In calculating the professional liability 
insurance relative values, certain cardiology codes outside the CPT 
surgical range are considered surgical codes for both the calculation 
and assignment of the surgery-specific malpractice risk factors. 
However, we note that the distinction between ``surgical'' and ``non-
surgical'' codes developed by the AMA Specialty Society Relative Value 
Scale Update Society is used by CMS to calculate professional liability 
risk factors and not necessarily to define surgery. The codes 
considered surgeries by the AMA Society Relative Value Scale Update 
Society were most recently displayed on the CMS website for the CY 2018 
MPFS final rule under the file ``Invasive Cardiology Services Outside 
of Surgical HCPCS Code Range Considered Surgery.'' We refer readers to 
that file, which is available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/CY2018-PFS-FR-Invasive-Cardiology.zip.
    After further consideration of comments we received in response to 
the CY 2018 OPPS/ASC final rule with comment period, we are proposing 
to revise our definition of ``surgery'' for CY 2019 to account for 
``surgery-like'' procedures that are assigned codes outside the CPT 
surgical range (10000-69999). We believe it is appropriate to expand 
our definition of covered surgical procedures to include Category I CPT 
codes that are not in the Category I CPT surgical range but that 
directly crosswalk or are clinically similar to procedures in the 
Category I CPT code surgical range because, as commenters have noted, 
the CPT Codebook's classification of certain procedures as ``surgical'' 
should not be considered dispositive of whether a procedure is or is 
not surgery. We also believe that considering these codes for potential 
inclusion on the covered surgical procedures list is consistent with 
our policy for Level II HCPCS codes and Category III CPT codes.
    For CY 2019, we are proposing that these newly-eligible ``surgery-
like'' procedures are procedures that are described by Category I CPT 
codes that are not in the surgical range but, like procedures described 
by Level II HCPCS codes or by Category III CPT codes under our current 
policy, directly crosswalk or are clinically similar to procedures in 
the Category I CPT surgical range. These Category I CPT codes would be 
limited to those that we have determined do not pose a significant 
safety risk, would not be expected to require an overnight stay when 
performed in an ASC, and are separately paid under the OPPS.
    We are inviting comments on our proposal to revise the definition 
of surgery for the ASC prospective payment system. We also are 
soliciting comments on whether we should expand our definition of 
``surgery'' to include procedures that fall outside the CPT surgical 
range, but fall within the definition of ``surgery'' developed by the 
AMA Specialty Society Relative Value Scale Update Society for use in 
the agency's Physician Fee Schedule (PFS) professional liability 
insurance relative values, that we determine do not pose a significant 
safety risk, would not be expected to require an overnight stay when 
performed in an ASC, and are separately paid under the OPPS.

B. Proposed Treatment of New and Revised Codes

1. Background on Current Process for Recognizing New and Revised 
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:
    <bullet> Category I CPT codes, which describe surgical procedures 
and vaccine codes;
    <bullet> Category III CPT codes, which describe new and emerging 
technologies, services, and procedures; and
    <bullet> Level II HCPCS codes, which are used primarily to identify 
items, supplies, temporary procedures, and services not described by 
CPT codes.
    We finalized a policy in the August 2, 2007 final rule (72 FR 42533 
through 42535) to evaluate each year all new and revised 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

[[Page 37153]]

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. In addition, we identify new and revised codes as ASC 
covered ancillary services based upon the final payment policies of the 
revised ASC payment system. In prior rulemakings, we refer to this 
process as recognizing new codes. However, this process has always 
involved the recognition of new and revised codes. We consider revised 
codes to be new when they have substantial revision to their code 
descriptors that necessitate a change in the current ASC payment 
indicator. To clarify, we refer to these codes as new and revised in 
this CY 2018 OPPS/ASC proposed rule.
    We have separated our discussion below based on when the codes are 
released and whether we are proposing to solicit public comments in 
this proposed rule (and respond to those comments in the CY 2019 OPPS/
ASC final rule with comment period) or whether we will be soliciting 
public comments in the CY 2019 OPPS/ASC final rule with comment period 
(and responding to those comments in the CY 2020 OPPS/ASC final rule 
with comment period).
    We note that we sought public comments in the CY 2018 OPPS/ASC 
final rule with comment period (82 FR 59405 through 59406) on the new 
and revised Level II HCPCS codes effective October 1, 2017, or January 
1, 2018. These new and revised codes, with an effective date of October 
1, 2017, or January 1, 2018, were flagged with comment indicator ``NI'' 
in Addenda AA and BB to the CY 2018 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 2018 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 2019 
OPPS/ASC final rule with comment period.
    In Table 33 below, we summarize our process for updating codes 
through our ASC quarterly update CRs, seeking public comments, and 
finalizing the treatment of these new codes under the OPPS.

                  Table 33--Comment and Finalization Timeframes for New or Revised HCPCS Codes
----------------------------------------------------------------------------------------------------------------
 ASC quarterly update CR      Type of code           Effective date         Comments sought     When finalized
----------------------------------------------------------------------------------------------------------------
April 1, 2018............  Level II HCPCS      April 1, 2018............  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            Codes.                                         proposed rule.      final rule with
                                                                                               comment period.
July 1, 2018.............  Level II HCPCS      July 1, 2018.............  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            Codes.                                         proposed rule.      final rule with
                                                                                               comment period.
                           Category I          July 1, 2018.............  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            (certain vaccine                               proposed rule.      final rule with
                            codes) and III                                                     comment period.
                            CPT codes.
October 1, 2018..........  Level II HCPCS      October 1, 2018..........  CY 2019 OPPS/ASC    CY 2020 OPPS/ASC
                            Codes.                                         final rule with     final rule with
                                                                           comment period.     comment period.
January 1, 2019..........  Category I and III  January 1, 2019..........  CY 2019 OPPS/ASC    CY 2019 OPPS/ASC
                            CPT Codes.                                     proposed rule.      final rule with
                                                                                               comment period.
                           Level II HCPCS      January 1, 2019..........  CY 2019 OPPS/ASC    CY 2020 OPPS/ASC
                            Codes.                                         final rule with     final rule with
                                                                           comment period.     comment period.
----------------------------------------------------------------------------------------------------------------
Note: In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised
  process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be
  effective January 1. We refer readers to section III.A.3. of this CY 2019 OPPS/ASC proposed rule for further
  discussion of this issue.

2. Proposed Treatment of New and Revised Level II HCPCS Codes 
Implemented in April 2018 for Which We Are Soliciting Public Comments 
in This Proposed Rule
    In the April 2018 ASC quarterly update (Transmittal 3996, CR 10530, 
dated March 09, 2018), we added nine new Level II HCPCS codes to the 
list of covered surgical procedures and ancillary services. Table 34 
below lists the new Level II HCPCS codes that were implemented April 1, 
2018, along with their proposed payment indicators for CY 2019. The 
proposed payment rates, where applicable, for these April codes can be 
found in Addendum AA and Addendum BB to this proposed rule (which are 
available via the internet on the CMS website).

 Table 34--New Level II HCPCS Codes for Covered Surgical Procedures and
              Ancillary Services Effective on April 1, 2018
------------------------------------------------------------------------
                                                           Proposed CY
     CY 2018 HCPCS code        CY 2019 long descriptor     2019 payment
                                                            indicator
------------------------------------------------------------------------
C9462......................  Injection, delafloxacin, 1              K2
                              mg.
C9463......................  Injection, aprepitant, 1                K2
                              mg.
C9464......................  Injection, rolapitant, 0.5              K2
                              mg.
C9465......................  Hyaluronan or derivative,               K2
                              Durolane, for intra-
                              articular injection, per
                              dose.
C9466......................  Injection, benralizumab, 1              K2
                              mg.
C9467......................  Injection, rituximab and                K2
                              hyaluronidase, 10 mg.
C9468......................  Injection, factor ix                    K2
                              (antihemophilic factor,
                              recombinant),
                              glycopegylated, Rebinyn,
                              1 i.u.
C9469 *....................  Injection, triamcinolone                K2
                              acetonide, preservative-
                              free, extended-release,
                              microsphere formulation,
                              1 mg.
C9749......................  Repair of nasal vestibular              J8
                              lateral wall stenosis
                              with implant(s).
------------------------------------------------------------------------
* HCPCS code C9469 (Injection, triamcinolone acetonide, preservative-
  free, extended-release, microsphere formulation, 1 mg), which was
  effective April 1, 2018, was deleted June 30, 2018 and replaced with
  HCPCS code Q9993 (Injection, triamcinolone acetonide, preservative-
  free, extended-release, microsphere formulation, 1 mg) effective July
  1, 2018.


[[Page 37154]]

    We are inviting public comments on these proposed payment 
indicators and the proposed payment rates for the new HCPCS codes that 
were recognized as ASC covered surgical procedures and ancillary 
services in April 2018 through the quarterly update CRs, as listed in 
Table 34 above. We are proposing to finalize their payment indicators 
and their payment rates in the CY 2019 OPPS/ASC final rule with comment 
period.
3. Proposed Treatment of New and Revised Level II HCPCS Codes 
Implemented in July 2018 for Which We Are Soliciting Public Comments in 
This Proposed Rule
    In the July 2018 ASC quarterly update (Transmittal 4076, Change 
Request 10788, dated June 26, 2018), we added eight new Level II HCPCS 
codes to the list of covered ancillary services. Table 35 below lists 
the new HCPCS codes that are effective July 1, 2018. The proposed 
payment rates, where applicable, for these July codes can be found in 
Addendum BB to this proposed rule (which is available via the internet 
on the CMS website).

    Table 35--New Level II HCPCS Codes for Covered Ancillary Services
                        Effective on July 1, 2018
------------------------------------------------------------------------
                                                           Proposed CY
     CY 2018 HCPCS code        CY 2018 long descriptor     2019 payment
                                                            indicator
------------------------------------------------------------------------
C9030......................  Injection, copanlisib, 1                K2
                              mg.
C9032......................  Injection, voretigene                   K2
                              neparvovec-rzyl, 1
                              billion vector genome.
Q5105......................  Injection, epoetin alfa,                K2
                              biosimilar, (Retacrit)
                              (for esrd on dialysis),
                              100 units.
Q5106......................  Injection, epoetin alfa,                K2
                              biosimilar, (Retacrit)
                              (for non-esrd use), 1000
                              units.
Q9991......................  Injection, buprenorphine                K2
                              extended-release
                              (Sublocade), less than or
                              equal to 100 mg.
Q9992......................  Injection, buprenorphine                K2
                              extended-release
                              (Sublocade), greater than
                              100 mg.
Q9993 *....................  Injection, triamcinolone                K2
                              acetonide, preservative-
                              free, extended-release,
                              microsphere formulation,
                              1 mg.
Q9995......................  Injection, emicizumab-                  K2
                              kxwh, 0.5 mg.
------------------------------------------------------------------------
* HCPCS code C9469 (Injection, triamcinolone acetonide, preservative-
  free, extended-release, microsphere formulation, 1 mg), which was
  effective April 1, 2018, was deleted June 30, 2018 and replaced with
  HCPCS code Q9993 (Injection, triamcinolone acetonide, preservative-
  free, extended-release, microsphere formulation, 1 mg) effective July
  1, 2018.

    Through the July 2018 quarterly update CR, we are also implementing 
an ASC payment for one new Category III CPT code as an ASC covered 
ancillary service, effective July 1, 2018. This code is listed in Table 
36 below, along with its proposed payment indicator. The CY 2019 
proposed payment rate for this new Category III CPT code can be found 
in Addendum BB to this proposed rule (which is available via the 
internet on the CMS website).

    Table 36--New Category III CPT Code for Covered Ancillary Service
                        Effective on July 1, 2018
------------------------------------------------------------------------
                                                           Proposed CY
     CY 2018 HCPCS code        CY 2018 long descriptor     2019 payment
                                                            indicator
------------------------------------------------------------------------
0508T......................  Pulse-echo ultrasound bone              Z2
                              density measurement
                              resulting in indicator of
                              axial bone mineral
                              density, tibia.
------------------------------------------------------------------------

    We are inviting public comments on these proposed payment 
indicators and the proposed payment rates for the new Category III CPT 
code and Level II HCPCS codes that were or are expected to be newly 
recognized as ASC covered surgical procedures or covered ancillary 
services in July 2018 through the quarterly update CRs, as listed in 
Tables 34, 35 and 36 above. We are proposing to finalize their payment 
indicators and their payment rates in the CY 2019 OPPS/ASC final rule 
with comment period.
4. Proposed Process for New and Revised Level II HCPCS Codes That Will 
Be Effective October 1, 2018 and January 1, 2019 for Which We Will Be 
Soliciting Public Comments in the CY 2019 OPPS/ASC Final Rule With 
Comment Period
    As has been our practice in the past, we incorporate those new and 
revised Level II HCPCS codes that are effective January 1 in the final 
rule with comment period, thereby updating the OPPS and the ASC payment 
system for the following calendar year. These codes are released to the 
public via the CMS HCPCS website, and also through the January OPPS 
quarterly update CRs. In the past, we also released new and revised 
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.
    For CY 2019, consistent with our established policy, we are 
proposing that the Level II HCPCS codes that will be effective October 
1, 2018, and January 1, 2019, would be flagged with comment indicator 
``NI'' in Addendum B to the CY 2019 OPPS/ASC final rule with comment 
period to indicate that we have assigned the codes an interim OPPS 
payment status for CY 2019. We will invite public comments in the CY 
2019 OPPS/ASC final rule with comment period on the interim status 
indicator and APC assignments, and payment rates for these codes that 
will be finalized in the CY 2020 OPPS/ASC final rule with comment 
period.
5. Proposed Process for Recognizing New and Revised Category I and 
Category III CPT Codes That Will Be Effective January 1, 2019 for Which 
We Are Soliciting Public Comments in This CY 2019 OPPS/ASC Proposed 
Rule
    For new and revised CPT codes effective January 1, 2019, that were 
received in time to be included in this proposed rule, we are proposing 
APC and status indicator assignments. We will accept comments and 
finalize the APC and status indicator assignments in the OPPS/ASC final 
rule with comment period. For those new/revised CPT codes that are 
received too late for inclusion in this OPPS/ASC proposed rule, we may 
either make interim final assignments in the final rule with

[[Page 37155]]

comment period or possibly use HCPCS G-codes that mirror the 
predecessor CPT codes and retain the current APC and status indicator 
assignments for a year until we can propose APC and status indicator 
assignments in the following year's rulemaking cycle.
    For the CY 2019 ASC update, the new and revised CY 2019 Category I 
and III CPT codes will be effective on January 1, 2019, and can be 
found in ASC Addendum AA and Addendum BB to this proposed rule (which 
are available via the internet on the CMS website). The new and revised 
CY 2019 Category I and III CPT codes are assigned to comment indicator 
``NP'' to indicate that the code is new for the next calendar year or 
the code is an existing code with substantial revision to its code 
descriptor in the next calendar year as compared to current calendar 
year and that comments will be accepted on the proposed payment 
indicator. Further, we remind readers that the CPT code descriptors 
that appear in Addendum AA and Addendum BB are short descriptors and do 
not describe the complete procedure, service, or item described by the 
CPT code.
    Therefore, we include the 5-digit placeholder codes and their long 
descriptors for the new and revised CY 2019 CPT codes in Addendum O to 
this proposed rule (which is available via the internet on the CMS 
website) so that the public can comment on our proposed payment 
indicator assignments. The 5-digit placeholder codes can be found in 
Addendum O, specifically under the column labeled ``CY 2019 OPPS/ASC 
Proposed Rule 5-Digit Placeholder Code,'' to this proposed rule. The 
final CPT code numbers will be included in the CY 2019 OPPS/ASC final 
rule with comment period. We note that not every code listed in 
Addendum O is subject to comment. For the new/revised Category I and 
III CPT codes, we are requesting comments on only those codes that are 
assigned to comment indicator ``NP''.
    In summary, we are soliciting public comments on the proposed CY 
2019 payment indicators for the new and revised Category I and III CPT 
codes that will be effective January 1, 2019. The CPT codes are listed 
in Addendum AA and Addendum BB to this proposed rule with short 
descriptors only. We list them again in Addendum O to this proposed 
rule with long descriptors. We also are proposing to finalize the 
payment indicator for these codes (with their final CPT code numbers) 
in the CY 2019 OPPS/ASC final rule with comment period. The proposed 
payment indicator for these codes can be found in Addendum AA and 
Addendum BB to this proposed rule (which are available via the internet 
on the CMS website).

C. Proposed Update to the List of ASC Covered Surgical Procedures and 
Covered Ancillary Services

1. Covered Surgical Procedures
a. Covered Surgical Procedures Designated as Office-Based
(1) Background
    In the August 2, 2007 ASC final rule, we finalized our policy to 
designate as ``office-based'' those procedures that are added to the 
ASC list of covered surgical procedures in CY 2008 or later years that 
we determine are performed predominantly (more than 50 percent of the 
time) in physicians' offices based on consideration of the most recent 
available volume and utilization data for each individual procedure 
code and/or, if appropriate, the clinical characteristics, utilization, 
and volume of related codes. In that rule, we also finalized our policy 
to exempt all procedures on the CY 2007 ASC list from application of 
the office-based classification (72 FR 42512). The procedures that were 
added to the ASC list of covered surgical procedures beginning in CY 
2008 that we determined were office-based were identified in Addendum 
AA to that rule by payment indicator ``P2'' (Office-based surgical 
procedure added to ASC list in CY 2008 or later with MPFS nonfacility 
PE RVUs; payment based on OPPS relative payment weight); ``P3'' 
(Office-based surgical procedures added to ASC list in CY 2008 or later 
with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE 
RVUs); or ``R2'' (Office-based surgical procedure added to ASC list in 
CY 2008 or later without MPFS nonfacility PE RVUs; payment based on 
OPPS relative payment weight), depending on whether we estimated the 
procedure would be paid according to the standard ASC payment 
methodology based on its OPPS relative payment weight or at the MPFS 
nonfacility PE RVU-based amount.
    Consistent with our final policy to annually review and update the 
list of covered surgical procedures eligible for payment in ASCs, each 
year we identify covered surgical procedures as either temporarily 
office-based (these are new procedure codes with little or no 
utilization data that we have determined are clinically similar to 
other procedures that are permanently office-based), permanently 
office-based, or nonoffice-based, after taking into account updated 
volume and utilization data.
(2) Proposed Changes for CY 2019 to Covered Surgical Procedures 
Designated as Office-Based
    In developing this proposed rule, we followed our policy to 
annually review and update the covered surgical procedures for which 
ASC payment is made and to identify new procedures that may be 
appropriate for ASC payment, including their potential designation as 
office-based. We reviewed CY 2017 volume and utilization data and the 
clinical characteristics for all covered surgical procedures that are 
assigned payment indicator ``G2'' (nonoffice-based surgical procedure 
added in CY 2008 or later; payment based on OPPS relative payment 
weight) in CY 2017, as well as for those procedures assigned one of the 
temporary office-based payment indicators, specifically ``P2'', ``P3'', 
or ``R2'' in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59406 through 59408).
    Our review of the CY 2017 volume and utilization data resulted in 
our identification of 4 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 we believe that the services are of a level of 
complexity consistent with other procedures performed routinely in 
physicians' offices. The CPT codes that we are proposing to permanently 
designate as office-based for CY 2019 are listed in Table 37 below.

[[Page 37156]]



  Table 37--ASC Covered Surgical Procedures Proposed to be Newly Designated as Permanently Office-Based for CY
                                                      2019
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                                  CY 2018 ASC        2019 ASC
           CY 2019 CPT code                     CY 2019 long descriptor             payment          payment
                                                                                   indicator       indicator *
----------------------------------------------------------------------------------------------------------------
31573.................................  Laryngoscopy, flexible; with                        G2               P3
                                         therapeutic injection(s) (e.g.,
                                         chemodenervation agent or
                                         corticosteroid, injected
                                         percutaneous, transoral, or via
                                         endoscope channel), unilateral.
36513.................................  Therapeutic apheresis; for platelets..              G2               R2
36902.................................  Introduction of needle(s) and/or                    G2               P3
                                         catheter(s), dialysis circuit, with
                                         diagnostic angiography of the
                                         dialysis circuit, including all
                                         direct puncture(s) and catheter
                                         placement(s), injection(s) of
                                         contrast, all necessary imaging from
                                         the arterial anastomosis and adjacent
                                         artery through entire venous outflow
                                         including the inferior or superior
                                         vena cava, fluoroscopic guidance,
                                         radiological supervision and
                                         interpretation and image
                                         documentation and report; with
                                         transluminal balloon angioplasty,
                                         peripheral dialysis segment,
                                         including all imaging and
                                         radiological supervision and
                                         interpretation necessary to perform
                                         the angioplasty.
36905.................................  Percutaneous transluminal mechanical                G2               P3
                                         thrombectomy and/or infusion for
                                         thrombolysis, dialysis circuit, any
                                         method, including all imaging and
                                         radiological supervision and
                                         interpretation, diagnostic
                                         angiography, fluoroscopic guidance,
                                         catheter placement(s), and
                                         intraprocedural pharmacological
                                         thrombolytic injection(s); with
                                         transluminal balloon angioplasty,
                                         peripheral dialysis segment,
                                         including all imaging and
                                         radiological supervision and
                                         interpretation necessary to perform
                                         the angioplasty.
----------------------------------------------------------------------------------------------------------------
* Payment indicators are based on a comparison of the proposed rates according to the ASC standard ratesetting
  methodology and the MPFS proposed rates. Current law specifies a 0.25 percent update to the MPFS payment rates
  for CY 2019. For a discussion of the MPFS rates, we refer readers to the CY 2019 MPFS proposed rule.

    We also reviewed CY 2017 volume and utilization data and other 
information for 10 procedures designated as temporary office-based in 
Tables 84 and 85 in the CY 2018 OPPS/ASC final rule with comment period 
(82 FR 59408). Of these 10 procedures, there were very few claims in 
our data and no claims data for 4 procedures described by CPT codes 
38222, 65785, 67229, and 0402T. Consequently, we are proposing to 
maintain the temporary office-based designations for these 4 codes for 
CY 2019. We list all of these codes for which we are proposing to 
maintain the temporary office-based designations for CY 2019 in Table 
38 below. The procedures for which the proposed office-based 
designations for CY 2019 are temporary also were indicated by asterisks 
in Addendum AA to this proposed rule (which is available via the 
internet on the CMS website).
    The volume and utilization data for the remaining six procedures 
that have a temporary office-based designation for CY 2018, described 
by CPT codes 10030, 36473, 36901, 64461, and 64463, and HCPCS code 
G0429, are sufficient to indicate that these procedures are performed 
predominantly in physicians' offices and, therefore, should be assigned 
an office-based payment indicator in CY 2018. Consequently, we are 
proposing to assign payment indicator ``P2'', ``P3'', or ``G2'' to 
these covered surgical procedure codes in CY 2019.

[[Page 37157]]



Table 38--Proposed CY 2019 Payment Indicators for ASC Covered Surgical Procedures Designated as Temporary Office-
                          Based in the CY 2018 OPPS/ASC Final Rule With Comment Period
----------------------------------------------------------------------------------------------------------------
                                                               CY 2018 ASC payment        CY 2019 ASC proposed
   CY 2019 CPT/HCPCS code        CY 2019 long descriptor           indicator *            payment indicator **
----------------------------------------------------------------------------------------------------------------
38222.......................  Diagnostic bone marrow;       P3 *                       P3 ***
                               biopsy(ies) and
                               aspiration(s).
65785.......................  Implantation of intrastromal  P2 *                       P2 ***
                               corneal ring segments.
67229.......................  Treatment of extensive or     R2 *                       R2 ***
                               progressive retinopathy, 1
                               or more sessions, preterm
                               infant (less than 37 weeks
                               gestation at birth),
                               performed from birth up to
                               1 year of age (e.g.,
                               retinopathy of
                               prematurity),
                               photocoagulation or
                               cryotherapy.
0402T.......................  Collagen cross-linking of     R2 *                       R2 ***
                               cornea (including removal
                               of the corneal epithelium
                               and intraoperative
                               pachymetry when performed).
10030.......................  Image-guided fluid            P2 *                       G2
                               collection drainage by
                               catheter (e.g., abscess,
                               hematoma, seroma,
                               lymphocele, cyst), soft
                               tissue (e.g., extremity,
                               abdominal wall, neck),
                               percutaneous.
36473.......................  Endovenous ablation therapy   P2 *                       P3 **
                               of incompetent vein,
                               extremity, inclusive of all
                               imaging guidance and
                               monitoring, percutaneous,
                               mechanochemical; first vein
                               treated.
36901.......................  Introduction of needle(s)     P2 *                       P3 **
                               and/or catheter(s),
                               dialysis circuit, with
                               diagnostic angiography of
                               the dialysis circuit,
                               including all direct
                               puncture(s) and catheter
                               placement(s), injection(s)
                               of contrast, all necessary
                               imaging from the arterial
                               anastomosis and adjacent
                               artery through entire
                               venous outflow including
                               the inferior or superior
                               vena cava, fluoroscopic
                               guidance, radiological
                               supervision and
                               interpretation and image
                               documentation and report.
64461.......................  Paravertebral block (pvb)     P3 *                       G2
                               (paraspinous block),
                               thoracic; single injection
                               site (includes imaging
                               guidance, when performed).
64463.......................  Paravertebral block (pvb)     P3 *                       G2
                               (paraspinous block),
                               thoracic; continuous
                               infusion by catheter
                               (includes imaging guidance,
                               when performed).
G0429.......................  Dermal filler injection(s)    P3 *                       P3 **
                               for the treatment of facial
                               lipodystrophy syndrome
                               (lds) (e.g., as a result of
                               highly active
                               antiretroviral therapy).
----------------------------------------------------------------------------------------------------------------
* If designation is temporary.
** Payment indicators are based on a comparison of the proposed rates according to the ASC standard ratesetting
  methodology and the MPFS proposed rates. Current law specifies a 0.25 percent update to the MPFS payment rates
  for CY 2019. For a discussion of the MPFS rates, we refer readers to the CY 2019 MPFS proposed rule.

    For CY 2019, we are proposing to designate 8 new CY 2019 CPT codes 
for ASC covered surgical procedures as temporary office-based, as 
displayed in Table 39 below. After reviewing the clinical 
characteristics, utilization, and volume of related procedure codes, we 
determined that the procedures described by the new CPT codes would be 
predominantly performed in physicians' offices. However, because we had 
no utilization data for the procedures specifically described by these 
new CPT codes, we are proposing to make the office-based designation 
temporary rather than permanent, and we will reevaluate the procedures 
when data become available. The procedures for which the proposed 
office-based designation for CY 2019 is temporary are indicated by 
asterisks in Addendum AA to this proposed rule (which is available via 
the internet on the CMS website).

 Table 39--Proposed CY 2019 Payment Indicators for New CY 2019 CPT Codes
for ASC Covered Surgical Procedures Designated as Temporary Office-Based
------------------------------------------------------------------------
    CY 2019 OPPS/ASC
  proposed rule 5-digit   CY 2019 long descriptor   Proposed CY 2019 ASC
  CMS placeholder code                              payment indicator **
------------------------------------------------------------------------
06X1T...................  Extracorporeal shock     R2 *
                           wave for integumentary
                           wound healing, high
                           energy, including
                           topical application
                           and dressing care;
                           initial wound.
10X12...................  Fine needle aspiration   P3 *
                           biopsy, including
                           ultrasound guidance;
                           first lesion.
10X14...................  Fine needle aspiration   P3 *
                           biopsy, including
                           fluoroscopic guidance;
                           first lesion.
10X16...................  Fine needle aspiration   P2 *
                           biopsy, including CT
                           guidance; first lesion.
10X18...................  Fine needle aspiration   R2 *
                           biopsy, including MR
                           guidance; first lesion.
11X02...................  Tangential biopsy of     P3 *
                           skin (e.g., shave,
                           scoop, saucerize,
                           curette); single
                           lesion.
11X04...................  Punch biopsy of skin     P3 *
                           (including simple
                           closure, when
                           performed); single
                           lesion.
11X06...................  Incisional biopsy of     P3 *
                           skin (e.g., wedge)
                           (including simple
                           closure, when
                           performed); single
                           lesion.
------------------------------------------------------------------------
* If designation is temporary.
** Payment indicators are based on a comparison of the proposed rates
  according to the ASC standard ratesetting methodology and the MPFS
  proposed rates. Current law specifies a 0.25 percent update to the
  MPFS payment rates for CY 2019. For a discussion of the MPFS rates, we
  refer readers to the CY 2019 MPFS proposed rule.


[[Page 37158]]

b. Proposed ASC Covered Surgical Procedures To Be Designated as Device-
Intensive
(1) Background
    As discussed in the CY 2017 OPPS/ASC final rule with comment period 
(81 FR 79739 through 79740), we implemented a payment methodology for 
calculating the ASC payment rates for covered surgical procedures that 
are designated as device-intensive.
    According to this ASC payment methodology, we apply the device 
offset percentage based on the standard OPPS APC ratesetting 
methodology to the OPPS national unadjusted payment to determine the 
device cost included in the OPPS payment rate for a device-intensive 
ASC covered surgical procedure, which we then set as equal to the 
device portion of the national unadjusted ASC payment rate for the 
procedure. We calculate the service portion of the ASC payment for 
device-intensive procedures by applying the uniform ASC conversion 
factor to the service (non-device) portion of the OPPS relative payment 
weight for the device-intensive procedure. Finally, we sum the ASC 
device portion and ASC service portion to establish the full payment 
for the device-intensive procedure under the revised ASC payment 
system.
    We also finalized in the CY 2017 OPPS/ASC final rule that device-
intensive procedures will be subject to all of the payment policies 
applicable to procedures designated as an ASC device-intensive 
procedure under our established methodology, including our policies on 
no cost/full credit and partial credit devices and discontinued 
procedures. In addition, in the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79739 through 79740), we adopted a policy for new 
HCPCS codes describing procedures involving the implantation of medical 
devices that do not yet have associated claims data, to designate these 
procedures as device-intensive with a default device offset set at 41 
percent until claims data are available to establish the HCPCS code-
level device offset for the procedures. This default device offset 
amount of 41 percent is not calculated from claims data; instead, it is 
applied as a default until claims data are available upon which to 
calculate an actual device offset for the new code. The purpose of 
applying the 41-percent default device offset to new codes that 
describe procedures that involve the implantation of medical devices 
would be to ensure ASC access for new procedures until claims data 
become available. However, in certain rare instances, for example, in 
the case of a very expensive implantable device, we indicated we might 
temporarily assign a higher offset percentage if warranted by 
additional information, such as pricing data from a device 
manufacturer. Once claims data are available for a new procedure 
involving the implantation of a medical device, the device-intensive 
designation is applied to the code if the HCPCS code device offset is 
greater than 40 percent, according to our policy of determining device-
intensive status, by calculating the HCPCS code-level device offset.
(2) Proposed Changes to List of ASC Covered Surgical Procedures 
Designated as Device-Intensive for CY 2019
    As discussed in section IV.B.2. of this proposed rule, for CY 2019 
we are proposing to modify our criteria for device-intensive procedures 
to better capture costs for procedures with significant device costs. 
We are proposing to allow procedures that involve surgically inserted 
or implanted, high-cost, single-use devices to qualify as device-
intensive procedures. In addition, we are proposing to modify our 
criteria to lower the device offset percentage threshold from 40 
percent to 30 percent. Specifically, for CY 2019 and subsequent years, 
we are proposing that device-intensive procedures would be subject to 
the following criteria:
    <bullet> All procedures must involve implantable devices assigned a 
CPT or HCPCS code;
    <bullet> The required devices (including single-use devices) must 
be surgically inserted or implanted; and
    <bullet> The device offset amount must be significant, which is 
defined as exceeding 30 percent of the procedure's mean cost. 
Corresponding to this change in the cost criterion we are proposing 
that the default device offset for new codes that describe procedures 
that involve the implantation of medical devices would be 31 percent 
beginning in CY 2019. For new codes describing procedures that are 
payable when furnished in an ASC involving the implantation of a 
medical device, we are proposing that the default device offset would 
be applied in the same manner as proposed in section IV.B.2 of this 
proposed rule.
    In addition, as also proposed in section IV.B.2 of this proposed 
rule, to further align the device-intensive policy with the criteria 
used for device pass-through status, we are proposing to specify, for 
CY 2019 and subsequent years, that for purposes of satisfying the 
device-intensive criteria, a device-intensive procedure must involve a 
device that:
    <bullet> Has received FDA marketing authorization, has received an 
FDA investigational device exemption (IDE) and has been classified as a 
Category B device by the FDA in accordance with 42 CFR 405.203 through 
405.207 and 405.211 through 405.215, or meets another appropriate FDA 
exemption from premarket review;
    <bullet> Is an integral part of the service furnished;
    <bullet> Is used for one patient only;
    <bullet> Comes in contact with human tissue;
    <bullet> Is surgically implanted or inserted (either permanently or 
temporarily); and
    <bullet> Is not any of the following:
    (a) Equipment, an instrument, apparatus, implement, or item of this 
type for which depreciation and financing expenses are recovered as 
depreciable assets as defined in Chapter 1 of the Medicare Provider 
Reimbursement Manual (CMS Pub. 15-1); or
    (b) A material or supply furnished incident to a service (for 
example, a suture, customized surgical kit, scalpel, or clip, other 
than a radiological site marker).
    In conjunction with our proposed modifications to the device-
intensive criteria, we are proposing to amend Sec.  416.171(b)(2) of 
the regulations to reflect the proposed new device criteria.
    Based on our proposed modifications to our device-intensive 
criteria, for CY 2019, we are proposing to update the ASC list of 
covered surgical procedures that are eligible for payment according to 
our proposed device-intensive procedure payment methodology, reflecting 
the proposed individual HCPCS code device-offset percentages based on 
CY 2017 OPPS claims and cost report data available for this proposed 
rule.
    The ASC covered surgical procedures that we are proposing to 
designate as device-intensive, and therefore subject to the device-
intensive procedure payment methodology for CY 2019, are assigned 
payment indicator ``J8'' and are included in Addendum AA to this 
proposed rule (which is available on the CMS website). The CPT code, 
the CPT code short descriptor, and the proposed CY 2019 ASC payment 
indicator, and an indication of whether the full credit/partial credit 
(FB/FC) device adjustment policy would apply because the procedure is 
designated as device intensive also are included in Addendum AA to this 
proposed rule. In addition, for CY 2019, we are proposing to only apply 
our proposed device-intensive procedure payment

[[Page 37159]]

methodology to device-intensive procedures under the ASC payment system 
when the device-intensive procedure is furnished with a surgically 
inserted or implanted device (including single use medical devices). 
Under this proposal, the payment rate under the ASC payment system for 
device-intensive procedures furnished without an implantable or 
inserted medical device would be calculated by applying the uniform ASC 
conversion factor to both the device portion and service (non-device) 
portion of the OPPS relative payment weight for the device-intensive 
procedure and summing both portions (device and service) to establish 
the ASC payment rate.
c. Proposed Adjustment to ASC Payments for No Cost/Full Credit and 
Partial Credit Devices
    Our ASC payment policy for costly devices implanted in ASCs at no 
cost/full credit or partial credit, as set forth in Sec.  416.179 of 
our regulations, is consistent with the OPPS policy that was in effect 
until CY 2014. Specifically, the OPPS policy that was in effect through 
CY 2013 provided a reduction in 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 (77 FR 68356 
through 68358). 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 (73 FR 68742 through 68744) for a full 
discussion of the ASC payment adjustment policy for no cost/full credit 
and partial credit devices.
    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 when a hospital furnished a specified device without cost or 
with a full credit and by 50 percent of the device offset amount when 
the hospital received partial credit in the amount of 50 percent or 
more (but less than 100 percent) of the cost for the specified device. 
For CY 2014, we finalized our proposal to reduce OPPS payment for 
applicable APCs by the full or partial credit a provider receives for a 
replaced device, capped at the device offset amount.
    Although we finalized our proposal to modify the policy of reducing 
payments when a hospital furnishes a specified device without cost or 
with full or partial credit under the OPPS, in that final rule with 
comment period (78 FR 75076 through 75080), we finalized our proposal 
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 credit received when furnishing a specified 
device at full or partial credit. Therefore, under the ASC payment 
system, we finalized our proposal for CY 2014 to continue to reduce ASC 
payments by 100 percent or 50 percent of the device offset amount when 
an ASC furnishes a device without cost or with full or partial credit, 
respectively.
    All ASC covered device-intensive procedures are subject to the no 
cost/full credit and partial credit device adjustment policy. 
Specifically, when a device-intensive procedure 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 in the claim 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 or with full credit to the ASC. We 
continue to believe that the reduction of ASC payment in these 
circumstances is necessary to pay appropriately for the covered 
surgical procedure furnished by the ASC.
    For partial credit, we are proposing to reduce the payment for a 
device-intensive procedure for which the ASC receives partial credit by 
one-half of the device offset amount that would be applied if a device 
was provided at no cost or with full credit, if the credit to the ASC 
is 50 percent or more (but less than 100 percent) of the cost of the 
new device. The ASC would append the HCPCS ``FC'' modifier to the HCPCS 
code for the device-intensive surgical procedure when the facility 
receives a partial credit of 50 percent or more (but less than 100 
percent) of the cost of a device. To report that the ASC received a 
partial credit of 50 percent or more (but less than 100 percent) of the 
cost of a new device, ASCs would have the option of either: (1) 
Submitting the claim for the device replacement procedure to their 
Medicare contractor after the procedure's performance, but prior to 
manufacturer acknowledgment of credit for the device, and subsequently 
contacting the contractor regarding a claim adjustment, once the credit 
determination is made; or (2) holding the claim for the device 
implantation procedure until a determination is made by the 
manufacturer on the partial credit and submitting the claim with the 
``FC'' modifier appended to the implantation procedure HCPCS code if 
the partial credit is 50 percent or more (but less than 100 percent) of 
the cost of the replacement device. Beneficiary coinsurance would be 
based on the reduced payment amount. As finalized in the CY 2015 OPPS/
ASC final rule with comment period (79 FR 66926), to ensure our policy 
covers any situation involving a device-intensive procedure where an 
ASC may receive a device at no cost or receive full credit or partial 
credit for the device, we apply our FB/FC policy to all device-
intensive procedures.
d. Proposed Additions to the List of ASC Covered Surgical Procedures
    As discussed in section XII.A.3. of this proposed rule, we are 
proposing to revise our definition of surgery for CY 2019 to include 
certain ``surgery-like'' procedures that are assigned codes outside the 
CPT surgical range. For CY 2019, we are proposing to include procedures 
that are described by Category I CPT codes that are not in the surgical 
range but directly crosswalk or are clinically similar to procedures in 
the Category I CPT code surgical range that we have determined do not 
pose a significant safety risk, would not be expected to require an 
overnight stay when performed in an ASC, and are separately paid under 
the OPPS. We also are continuing to include in our definition of 
surgical procedures 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 procedures in the CPT surgical range that we have 
determined do not pose a significant safety risk, that we would not 
expect to require an overnight stay when performed in ASCs, and that 
are separately paid under the OPPS.

[[Page 37160]]

    We conducted a review of HCPCS codes that currently are paid under 
the OPPS, but not included on the ASC list of covered surgical 
procedures, and that meet our proposed definition of surgery to 
determine if changes in technology and/or medical practice affected the 
clinical appropriateness of these procedures for the ASC setting. Based 
on this review, we are proposing to update the list of ASC covered 
surgical procedures by adding 12 cardiac catheterization procedures to 
the list for CY 2019, as shown in Table 40 below. After reviewing the 
clinical characteristics of these procedures and consulting with 
stakeholders and our clinical advisors, we determined that these 12 
procedures are separately paid under the OPPS, would not be expected to 
pose a significant risk to beneficiary safety when performed in an ASC, 
and would not be expected to require active medical monitoring and care 
of the beneficiary at midnight following the procedure. Our regulation 
at 42 CFR 416.166(c) lists general exclusions from the list of ASC 
covered surgical procedures based on factors relating to safety, 
including procedures that generally result in extensive blood loss, 
require major or prolonged invasion of body cavities, or directly 
involve major blood vessels. We have assessed each of the proposed 
added procedures against the regulatory safety criteria and believe 
that these procedures meet each of the criteria. Although the proposed 
cardiac catheterization procedures may involve blood vessels that could 
be considered major, based on our review of the clinical 
characteristics of the procedures and their similarity to other 
procedures that are currently included on the ASC list of covered 
surgical procedures, we believe these procedures may be appropriately 
performed in an ASC. Therefore, we are proposing to include these 12 
procedures on the list of ASC covered surgical procedures for CY 2019.
    As stated in the August 2, 2007 ASC final rule (72 FR 42481), we 
believe the involvement of major blood vessels is best considered in 
the context of the clinical characteristics of individual procedures, 
and we do not believe that it is logically or clinically consistent to 
exclude certain cardiac procedures from the list of ASC covered 
surgical procedures on the basis of the involvement of major blood 
vessels, yet continue to provide ASC payment for similar procedures 
involving major blood vessels that have a history of safe performance 
in ASCs, such as CPT code 36473 (Mechanicochemical destruction of 
insufficient vein of arm or leg, accessed through the skin using 
imaging guidance) and CPT code 37223 (Insertion of stents into groin 
artery, endovascular, accessed through the skin or open procedure). 
However, we are interested in hearing any specific safety concerns from 
stakeholders regarding these 12 cardiac catheterization procedures and 
are requesting comments on whether these procedures may be safely 
performed in an ASC in light of the regulatory criteria governing which 
procedures may be added to the ASC covered procedures list.
    The procedures that we are proposing to add to the ASC list of 
covered surgical procedures, including the HCPCS code long descriptors 
and the proposed CY 2019 payment indicators, are displayed in Table 40 
below.

    Table 40--Proposed Additions to the List of ASC Covered Surgical
                         Procedures for CY 2019
------------------------------------------------------------------------
                                                    Proposed CY 2019 ASC
    CY 2019 CPT code      CY 2019 long descriptor    payment indicator
------------------------------------------------------------------------
93451...................  Right heart              G2
                           catheterization
                           including
                           measurement(s) of
                           oxygen saturation and
                           cardiac output, when
                           performed.
93452...................  Left heart               G2
                           catheterization
                           including
                           intraprocedural
                           injection(s) for left
                           ventriculography,
                           imaging supervision
                           and interpretation,
                           when performed.
93453...................  Combined right and left  G2
                           heart catheterization
                           including
                           intraprocedural
                           injection(s) for left
                           ventriculography,
                           imaging supervision
                           and interpretation,
                           when performed.
93454...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation.
93455...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with catheter
                           placement(s) in bypass
                           graft(s) (internal
                           mammary, free
                           arterial, venous
                           grafts) including
                           intraprocedural
                           injection(s) for
                           bypass graft
                           angiography.
93456...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with right heart
                           catheterization.
93457...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with catheter
                           placement(s) in bypass
                           graft(s) (internal
                           mammary, free
                           arterial, venous
                           grafts) including
                           intraprocedural
                           injection(s) for
                           bypass graft
                           angiography and right
                           heart catheterization.
93458...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with left heart
                           catheterization
                           including
                           intraprocedural
                           injection(s) for left
                           ventriculography, when
                           performed.
93459...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with left heart
                           catheterization
                           including
                           intraprocedural
                           injection(s) for left
                           ventriculography, when
                           performed, catheter
                           placement(s) in bypass
                           graft(s) (internal
                           mammary, free
                           arterial, venous
                           grafts) with bypass
                           graft angiography.
93460...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with right and left
                           heart catheterization
                           including
                           intraprocedural
                           injection(s) for left
                           ventriculography, when
                           performed.
93461...................  Catheter placement in    G2
                           coronary artery(s) for
                           coronary angiography,
                           including
                           intraprocedural
                           injection(s) for
                           coronary angiography,
                           imaging supervision
                           and interpretation;
                           with right and left
                           heart catheterization
                           including
                           intraprocedural
                           injection(s) for left
                           ventriculography, when
                           performed, catheter
                           placement(s) in bypass
                           graft(s) (internal
                           mammary, free
                           arterial, venous
                           grafts) with bypass
                           graft angiography.
93462...................  Left heart               N1
                           catheterization by
                           transseptal puncture
                           through intact septum
                           or by transapical
                           puncture (list
                           separately in addition
                           to code for primary
                           procedure).
------------------------------------------------------------------------


[[Page 37161]]

e. Proposal To Review Recently-Added Procedures to the ASC Covered 
Procedures List
    Section 1833(i)(1) of the Act requires us to specify, in 
consultation with appropriate medical organizations, surgical 
procedures that are appropriately performed on an inpatient basis in a 
hospital but that can be safely performed in an ASC, a CAH, or an HOPD 
and to review and update the list of ASC procedures at least every 2 
years. As noted in section XII.C.1. of this proposed rule, we evaluate 
the ASC covered procedures list (ASC CPL) each year to determine 
whether procedures should be added or removed from the list, and 
changes to the list are often made in response to specific concerns 
raised by stakeholders. Often, when a procedure is added to the ASC 
CPL, the provider community has limited experience in performing the 
procedure on the Medicare population, even if providers have greater 
experience with other patient populations. Because ASCs generally 
provide a subset of items and services that are offered by hospitals 
and because Medicare beneficiaries tend to be frailer and exhibit a 
higher number of comorbidities than other populations, we believe it 
may be appropriate to reevaluate recently-added procedures.
    Specifically, we are proposing to review all procedures that were 
added to the ASC CPL within the 3 calendar years prior to the year in 
which we are engaging in rulemaking to assess the safety, 
effectiveness, and beneficiary experience of these newly-added 
procedures when performed in the ASC setting. Our review will begin 
with procedures added to the ASC CPL in CYs 2015, 2016, and 2017, and 
assess whether newly-added procedures continue to meet our criteria, 
including whether they continue not to be expected to pose a 
significant safety risk to a Medicare beneficiary when performed in an 
ASC and continue not to be expected to require active medical 
monitoring and care of the beneficiary at midnight following the 
procedure. This review would include taking into account recent 
clinical developments and available safety findings related to the 
recently-added procedures.
    We are proposing to review all 38 procedures that were added to the 
ASC CPL for CYs 2015, 2016, and 2017. The 38 procedures that were added 
to the ASC CPL during this time are displayed in Table 41 below, along 
with their HCPCS code long descriptors, the CY 2018 payment indicators, 
and the calendar year that each procedure was added to the ASC CPL. We 
also are seeking comment about these recently-added procedures from 
members of the public, including Medicare beneficiaries, ASC 
facilities, and physicians performing these procedures in the ASC 
setting. In addition, we are seeking comment from the public on whether 
these procedures continue to meet the criteria to remain on the ASC 
CPL. We intend to evaluate each of these 38 procedures using all 
available data, including clinical characteristics, utilization 
reflected in ASC claims and pricing data, prevailing medical practice, 
and any public comments we receive to determine whether they continue 
to meet the criteria to be a covered surgical procedure.
    In addition, we are soliciting comment regarding how our systematic 
review should be structured in the future, including the length of time 
procedures should be considered recently-added, how frequently reviews 
should be performed in light of the time required to accumulate 
meaningful data and whether any future reviews should examine 
procedures added during a period of time greater or less than the 
previous 3 completed calendar years.

         Table 41--Additions to the List of ASC Covered Surgical Procedures for Cy 2015, 2016, and 2017
----------------------------------------------------------------------------------------------------------------
                                                                                                   Calendar year
        CY 2019 CPT code              CY 2019 long descriptor      CY 2018 ASC payment indicator   added to ASC
                                                                                                        CPL
----------------------------------------------------------------------------------------------------------------
0171T...........................  Insertion of posterior spinous   J8                                       2016
                                   process distraction device
                                   (including necessary removal
                                   of bone or ligament for
                                   insertion and imaging
                                   guidance), lumbar; single
                                   level.
0172T...........................  Insertion of posterior spinous   N1                                       2016
                                   process distraction device
                                   (including necessary removal
                                   of bone or ligament for
                                   insertion and imaging
                                   guidance), lumbar; each
                                   additional level.
20936...........................  Autograft for spine surgery      N1                                       2017
                                   only (includes harvesting the
                                   graft); local (e.g., ribs,
                                   spinous process, or laminar
                                   fragments) obtained from same
                                   incision (list separately in
                                   addition to code for primary
                                   procedure).
20937...........................  Autograft for spine surgery      N1                                       2017
                                   only (includes harvesting the
                                   graft); morselized (through
                                   separate skin or fascial
                                   incision) (list separately in
                                   addition to code for primary
                                   procedure).
20938...........................  Autograft for spine surgery      N1                                       2017
                                   only (includes harvesting the
                                   graft); structural, bicortical
                                   or tricortical (through
                                   separate skin or fascial
                                   incision) (list separately in
                                   addition to code for primary
                                   procedure).
22551...........................  Arthrodesis, anterior            J8                                       2015
                                   interbody, including disc
                                   space preparation, discectomy,
                                   osteophytectomy and
                                   decompression of spinal cord
                                   and/or nerve roots; cervical
                                   below c2.
22552...........................  Arthrodesis, anterior            N1                                       2017
                                   interbody, including disc
                                   space preparation, discectomy,
                                   osteophytectomy and
                                   decompression of spinal cord
                                   and/or nerve roots; cervical
                                   below c2, each additional
                                   interspace (list separately in
                                   addition to code for separate
                                   procedure).
22554...........................  Arthrodesis, anterior interbody  J8                                       2015
                                   technique, including minimal
                                   discectomy to prepare
                                   interspace (other than for
                                   decompression); cervical below
                                   c2.
22612...........................  Arthrodesis, posterior or        J8                                       2015
                                   posterolateral technique,
                                   single level; lumbar (with
                                   lateral transverse technique,
                                   when performed).
22614...........................  Arthrodesis, posterior or        N1                                       2015
                                   posterolateral technique,
                                   single level; each additional
                                   vertebral segment (list
                                   separately in addition to code
                                   for primary procedure).
22840...........................  Posterior non-segmental          N1                                       2017
                                   instrumentation (e.g.,
                                   harrington rod technique,
                                   pedicle fixation across 1
                                   interspace, atlantoaxial
                                   transarticular screw fixation,
                                   sublaminar wiring at c1, facet
                                   screw fixation) (list
                                   separately in addition to code
                                   for primary procedure).
22842...........................  Posterior segmental              N1                                       2017
                                   instrumentation (e.g., pedicle
                                   fixation, dual rods with
                                   multiple hooks and sublaminar
                                   wires); 3 to 6 vertebral
                                   segments (list separately in
                                   addition to code for primary
                                   procedure).
22845...........................  Anterior instrumentation; 2 to   N1                                       2017
                                   3 vertebral segments (list
                                   separately in addition to code
                                   for primary procedure).

[[Page 37162]]

 
22853...........................  Insertion of interbody           N1                                       2017
                                   biomechanical device(s) (e.g.,
                                   synthetic cage, mesh) with
                                   integral anterior
                                   instrumentation for device
                                   anchoring (e.g., screws,
                                   flanges), when performed, to
                                   intervertebral disc space in
                                   conjunction with interbody
                                   arthrodesis, each interspace
                                   (list separately in addition
                                   to code for primary procedure).
22854...........................  Insertion of intervertebral      N1                                       2017
                                   biomechanical device(s) (e.g.,
                                   synthetic cage, mesh) with
                                   integral anterior
                                   instrumentation for device
                                   anchoring (e.g., screws,
                                   flanges), when performed, to
                                   vertebral corpectomy(ies)
                                   (vertebral body resection,
                                   partial or complete) defect,
                                   in conjunction with interbody
                                   arthrodesis, each contiguous
                                   defect (list separately in
                                   addition to code for primary
                                   procedure).
22859...........................  Insertion of intervertebral      N1                                       2017
                                   biomechanical device(s) (e.g.,
                                   synthetic cage, mesh,
                                   methylmethacrylate) to
                                   intervertebral disc space or
                                   vertebral body defect without
                                   interbody arthrodesis, each
                                   contiguous defect (list
                                   separately in addition to code
                                   for primary procedure).
37241...........................  Vascular embolization or         J8                                       2016
                                   occlusion, inclusive of all
                                   radiological supervision and
                                   interpretation,
                                   intraprocedural roadmapping,
                                   and imaging guidance necessary
                                   to complete the intervention;
                                   venous, other than hemorrhage
                                   (e.g., congenital or acquired
                                   venous malformations, venous
                                   and capillary hemangiomas,
                                   varices, varicoceles).
37242...........................  Vascular embolization or         J8                                       2016
                                   occlusion, inclusive of all
                                   radiological supervision and
                                   interpretation,
                                   intraprocedural roadmapping,
                                   and imaging guidance necessary
                                   to complete the intervention;
                                   arterial, other than
                                   hemorrhage or tumor (e.g.,
                                   congenital or acquired
                                   arterial malformations,
                                   arteriovenous malformations,
                                   arteriovenous fistulas,
                                   aneurysms, pseudoaneurysms).
37243...........................  Vascular embolization or         J8                                       2016
                                   occlusion, inclusive of all
                                   radiological supervision and
                                   interpretation,
                                   intraprocedural roadmapping,
                                   and imaging guidance necessary
                                   to complete the intervention;
                                   for tumors, organ ischemia, or
                                   infarction.
49406...........................  Image-guided fluid collection    G2                                       2016
                                   drainage by catheter (e.g.,
                                   abscess, hematoma, seroma,
                                   lymphocele, cyst); peritoneal
                                   or retroperitoneal,
                                   percutaneous.
57120...........................  Colpocleisis (le fort type)....  G2                                       2016
57310...........................  Closure of urethrovaginal        G2                                       2016
                                   fistula;.
58260...........................  Vaginal hysterectomy, for        G2                                       2016
                                   uterus 250 g or less.
58262...........................  Vaginal hysterectomy, for        G2                                       2016
                                   uterus 250 g or less; with
                                   removal of tube(s), and/or
                                   ovary(s).
58543...........................  Laparoscopy, surgical,           G2                                       2016
                                   supracervical hysterectomy,
                                   for uterus greater than 250 g.
58544...........................  Laparoscopy, surgical,           G2                                       2016
                                   supracervical hysterectomy,
                                   for uterus greater than 250 g;
                                   with removal of tube(s) and/or
                                   ovary(s).
58553...........................  Laparoscopy, surgical, with      G2                                       2016
                                   vaginal hysterectomy, for
                                   uterus greater than 250 g;.
58554...........................  Laparoscopy, surgical, with      G2                                       2016
                                   vaginal hysterectomy, for
                                   uterus greater than 250 g;
                                   with removal of tube(s) and/or
                                   ovary(s).
58573...........................  Laparoscopy, surgical, with      G2                                       2016
                                   total hysterectomy, for uterus
                                   greater than 250 g; with
                                   removal of tube(s) and/or
                                   ovary(s).
63020...........................  Laminotomy (hemilaminectomy),    G2                                       2015
                                   with decompression of nerve
                                   root(s), including partial
                                   facetectomy, foraminotomy and/
                                   or excision of herniated
                                   intervertebral disc; 1
                                   interspace, cervical.
63030...........................  Laminotomy (hemilaminectomy),    G2                                       2015
                                   with decompression of nerve
                                   root(s), including partial
                                   facetectomy, foraminotomy and/
                                   or excision of herniated
                                   intervertebral disc; 1
                                   interspace, lumbar.
63042...........................  Laminotomy (hemilaminectomy),    G2                                       2015
                                   with decompression of nerve
                                   root(s), including partial
                                   facetectomy, foraminotomy and/
                                   or excision of herniated
                                   intervertebral disc,
                                   reexploration, single
                                   interspace; lumbar.
63044...........................  Laminotomy (hemilaminectomy),    N1                                       2015
                                   with decompression of nerve
                                   root(s), including partial
                                   facetectomy, foraminotomy and/
                                   or excision of herniated
                                   intervertebral disc,
                                   reexploration, single
                                   interspace; each additional
                                   lumbar interspace (list
                                   separately in addition to code
                                   for primary procedure).
63045...........................  Laminectomy, facetectomy and     G2                                       2015
                                   foraminotomy (unilateral or
                                   bilateral with decompression
                                   of spinal cord, cauda equina
                                   and/or nerve root[s], [e.g.,
                                   spinal or lateral recess
                                   stenosis]), single vertebral
                                   segment; cervical.
63046...........................  Laminectomy, facetectomy and     G2                                       2016
                                   foraminotomy (unilateral or
                                   bilateral with decompression
                                   of spinal cord, cauda equina
                                   and/or nerve root[s], [e.g.,
                                   spinal or lateral recess
                                   stenosis]), single vertebral
                                   segment; thoracic.
63047...........................  Laminectomy, facetectomy and     G2                                       2015
                                   foraminotomy (unilateral or
                                   bilateral with decompression
                                   of spinal cord, cauda equina
                                   and/or nerve root[s], [e.g.,
                                   spinal or lateral recess
                                   stenosis]), single vertebral
                                   segment; lumbar.
63055...........................  Transpedicular approach with     G2                                       2016
                                   decompression of spinal cord,
                                   equina and/or nerve root(s)
                                   (e.g., herniated
                                   intervertebral disc), single
                                   segment; thoracic.
63056...........................  Transpedicular approach with     G2                                       2015
                                   decompression of spinal cord,
                                   equina and/or nerve root(s)
                                   (e.g., herniated
                                   intervertebral disc), single
                                   segment; lumbar (including
                                   transfacet, or lateral
                                   extraforaminal approach)
                                   (e.g., far lateral herniated
                                   intervertebral disc).
----------------------------------------------------------------------------------------------------------------


[[Page 37163]]

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 payment status for the services under the CY 2019 OPPS (72 
FR 42497). 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 2019. 
For example, if a covered ancillary service was separately paid under 
the ASC payment system in CY 2018, but is proposed for packaged status 
under the CY 2019 OPPS, to maintain consistency with the OPPS, we would 
also propose to package the ancillary service under the ASC payment 
system for CY 2019. We are proposing to continue this reconciliation of 
packaged status for subsequent calendar years. Comment indicator 
``CH'', which is 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 website) 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 2019.
    All ASC covered ancillary services and their proposed payment 
indicators for CY 2019 are included in Addendum BB to this proposed 
rule (which is available via the internet on the CMS website).

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, we use the ASC standard ratesetting methodology of 
multiplying the ASC relative payment weight for the procedure by the 
ASC conversion factor for that same year to calculate the national 
unadjusted payment rates for procedures with payment indicators ``G2'' 
and ``A2''. Payment indicator ``A2'' was developed to identify 
procedures that were included on the list of ASC covered surgical 
procedures in CY 2007 and, therefore, were subject to transitional 
payment prior to CY 2011. Although the 4-year transitional period has 
ended and payment indicator ``A2'' is no longer required to identify 
surgical procedures subject to transitional payment, we retained 
payment indicator ``A2'' because it is used to identify procedures that 
are exempted from the application of the office-based designation. The 
rate calculation established for device-intensive procedures (payment 
indicator ``J8'') is structured so that the packaged device payment 
amount is the same as under the OPPS, and only the service portion of 
the rate is subject to the ASC standard ratesetting methodology. In the 
CY 2017 OPPS/ASC final rule with comment period (81 FR 79732 through 
79753), we updated the CY 2016 ASC payment rates for ASC covered 
surgical procedures with payment indicators of ``A2'', ``G2'', and 
``J8'' using CY 2015 data, consistent with the CY 2017 OPPS update. We 
also updated payment rates for device-intensive procedures to 
incorporate the CY 2017 OPPS device offset percentages calculated under 
the standard APC ratesetting methodology, as discussed earlier in this 
section.
    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 2018 MPFS proposed and 
final rules) or the amount calculated using the ASC standard rate 
setting methodology for the procedure. In the CY 2017 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 2017 rate for each of the office-based procedures, calculated 
according to the ASC standard rate setting methodology, to the MPFS 
nonfacility PE RVU-based amount to determine which was lower and, 
therefore, would be the CY 2017 payment rate for the procedure under 
our final policy for the revised ASC payment system (Sec.  416.171(d)).
    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 payment for 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. Under the OPPS, device removal procedures are 
conditionally packaged and, therefore, would be packaged under the ASC 
payment system. There would be no Medicare payment made when a device 
removal procedure is performed in an ASC without another surgical 
procedure included on the claim; therefore, no Medicare payment would 
be made if a device was removed but not replaced. To address this 
concern, for the device removal procedures that are conditionally 
packaged in the OPPS (status indicator ``Q2''), we assigned the current 
ASC payment indicators associated with these procedures and continued 
to provide separate payment since CY 2014.
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for 
CY 2019
    We are proposing to update ASC payment rates for CY 2019 and 
subsequent years using the established rate calculation methodologies 
under Sec.  416.171 and using our definition of device-intensive 
procedures, as discussed in section XII.C.1.b. of this proposed rule. 
Because the proposed OPPS relative payment weights are based on 
geometric mean costs, the ASC system would 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 to calculate payment rates for office-based 
procedures (payment indicators ``P2'', ``P3'', and ``R2'') and device-
intensive procedures (payment indicator ``J8'') according to our 
established policies and, for device-intensive procedures, using our 
modified definition of device-intensive procedures, as discussed in 
section XII.C.1.b. of this proposed rule. Therefore, we are proposing 
to update the payment amount for the service portion of the device-
intensive procedures using the ASC standard rate setting methodology 
and the payment amount for the device portion based on the proposed CY 
2019 OPPS device offset percentages that have been calculated using the 
standard OPPS APC ratesetting methodology. Payment for office-based 
procedures would be at the lesser of the proposed CY 2019

[[Page 37164]]

MPFS nonfacility PE RVU-based amount or the proposed CY 2018 ASC 
payment amount calculated according to the ASC standard ratesetting 
methodology.
    As we did for CYs 2014 through 2018, for CY 2019, we are proposing 
to continue our policy for device removal procedures, such that device 
removal procedures that are conditionally packaged in the OPPS (status 
indicators ``Q1'' and ``Q2'') would be assigned the current ASC payment 
indicators associated with these procedures and would continue to be 
paid separately under the ASC payment system.
2. Proposed Payment for Covered Ancillary Services
a. Background
    Our payment policies under the 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 and 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 (except for device 
removal codes, as discussed in section IV. of this proposed rule). 
Thus, our 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 generally 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 (``Z3''), regardless of which is lower.
    Similarly, we also finalized our policy 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 using the ASC standard ratesetting methodology and, 
therefore, will include the cost for the contrast agent (42 CFR 
416.171(d)(2)). ASC payment policy for brachytherapy sources mirrors 
the payment policy under the OPPS. ASCs are paid for brachytherapy 
sources provided integral to ASC covered surgical procedures at 
prospective rates adopted under the OPPS or, if OPPS rates are 
unavailable, at contractor-priced rates (72 FR 42499). Since December 
31, 2009, ASCs have been paid for brachytherapy sources provided 
integral to ASC covered surgical procedures at prospective rates 
adopted under the OPPS.
    Our ASC policies also provide separate payment for: (1) Certain 
items and services that CMS designates as contractor-priced, including, 
but not limited to, the procurement of corneal tissue; and (2) certain 
implantable items that have pass-through payment status under the OPPS. 
These categories do not have prospectively established ASC payment 
rates according to ASC payment system policies (72 FR 42502 and 42508 
through 42509; 42 CFR 416.164(b)). Under the ASC payment system, we 
have designated corneal tissue acquisition and hepatitis B vaccines as 
contractor-priced. Corneal tissue acquisition is contractor-priced 
based on the invoiced costs for acquiring the corneal tissue for 
transplantation. Hepatitis B vaccines are contractor-priced based on 
invoiced costs for the vaccine.
    Devices that are eligible for pass-through payment under the OPPS 
are separately paid under the ASC payment system and are contractor-
priced. 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 also refer to this methodology as 
applying a ``device offset'' to the ASC payment for the associated 
surgical procedure. This ensures that duplicate payment is not provided 
for any portion of an implanted device with OPPS pass-through payment 
status. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66933 through 66934), we finalized that, beginning in CY 2015, certain 
diagnostic tests within the medicine range of CPT codes for which 
separate payment is allowed under the OPPS are covered ancillary 
services when they are integral to an ASC covered surgical procedure. 
We finalized 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. In the CY 2015 OPPS/ASC final rule with comment period, we also 
finalized our policy 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 (79 FR 
66933 through 66934). We finalized that the diagnostic tests for which 
the payment is based on the ASC standard ratesetting methodology be 
assigned to payment indicator ``Z2'' and revised the definition of 
payment indicator ``Z2'' to include a reference to diagnostic services 
and those for which the payment is based on the MPFS nonfacility PE 
RVU-based amount be assigned payment indicator ``Z3,'' and revised the 
definition of payment indicator ``Z3'' to include a reference to 
diagnostic services.
b. Proposed Payment for Covered Ancillary Services for CY 2019
    For CY 2019 and subsequent years, 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 2019 OPPS and ASC

[[Page 37165]]

payment rates and subsequent year payment rates. We also are proposing 
to continue to set the CY 2019 ASC payment rates and subsequent year 
payment rates for brachytherapy sources and separately payable drugs 
and biologicals equal to the OPPS payment rates for CY 2019 and 
subsequent year payment rates.
    Covered ancillary services and their proposed payment indicators 
for CY 2019 are listed in Addendum BB to this proposed rule (which is 
available via the internet on the CMS website). For those covered 
ancillary services where the payment rate is the lower of the proposed 
rates under the ASC standard rate setting methodology and the MPFS 
proposed rates, the proposed payment indicators and rates set forth in 
this proposed rule are based on a comparison using the proposed MPFS 
rates effective January 1, 2019. For a discussion of the MPFS rates, we 
refer readers to the CY 2019 MPFS proposed rule that is available on 
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
3. Proposed CY 2019 ASC Packaging Policy for Non-Opioid Pain Management 
Treatments
    In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the 
framework of existing packaging categories, such as drugs that function 
as supplies in a surgical procedure or diagnostic test or procedure, we 
requested stakeholder feedback on common clinical scenarios involving 
currently packaged items and services described by HCPCS codes that 
stakeholders believe should not be packaged under the OPPS. We also 
expressed interest in stakeholder feedback on common clinical scenarios 
involving separately payable HCPCS codes for which payment would be 
most appropriately packaged under the OPPS. Commenters expressed a 
variety of views on packaging under the OPPS. In the CY 2018 OPPS/ASC 
final rule with comment period, we summarized the comments received in 
response to our request (82 FR 59255). The comments ranged from 
requests to unpackage most items and services that are either 
conditionally or unconditionally packaged under the OPPS, including 
drugs and devices, to specific requests for separate payment for a 
specific drug or device. We stated in the CY 2018 OPPS/ASC final rule 
with comment period that CMS would continue to explore and evaluate 
packaging policies under the OPPS and consider these policies in future 
rulemaking.
    In addition to stakeholder feedback regarding OPPS packaging 
policies, the President's Commission on Combating Drug Addiction and 
the Opioid Crisis (the Commission) recently recommended that CMS 
examine payment policies for certain drugs that function as a supply, 
specifically non-opioid pain management treatments. The Commission was 
established in 2017 to study ways to combat and treat drug abuse, 
addiction, and the opioid crisis. The Commission's report \47\ included 
a recommendation for CMS to ``. . . review and modify ratesetting 
policies that discourage the use of non-opioid treatments for pain, 
such as certain bundled payments that make alternative treatment 
options cost prohibitive for hospitals and doctors, particularly those 
options for treating immediate post-surgical pain. . . .'' \48\ With 
respect to the packaging policy, the Commission's report states that 
``. . . the current CMS payment policy for `supplies' related to 
surgical procedures creates unintended incentives to prescribe opioid 
medications to patients for postsurgical pain instead of administering 
non-opioid pain medications. Under current policies, CMS provides one 
all-inclusive bundled payment to hospitals for all `surgical supplies,' 
which includes hospital-administered drug products intended to manage 
patients' postsurgical pain. This policy results in the hospitals 
receiving the same fixed fee from Medicare whether the surgeon 
administers a non-opioid medication or not.'' \49\ HHS also presented 
an Opioid Strategy in April 2017 \50\ that aims, in part, to support 
cutting-edge research and advance the practice of pain management. On 
October 26, 2017, the opioid crisis was first declared a national 
public health emergency under Federal law \51\ and this determination 
was renewed on April 20, 2018.\52\
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    \47\ President's Commission on Combating Drug Addiction and the 
Opioid Crisis, Report (2017). Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-1-2017.pdf.
    \48\ Ibid, at page 57, Recommendation 19.
    \49\ Ibid.
    \50\ Available at: https://www.hhs.gov/about/leadership/secretary/speeches/2017-speeches/secretary-price-announces-hhs-strategy-for-fighting-opioid-crisis/index.html.
    \51\ Available at: https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
    \52\ Available at: https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx.
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    In response to stakeholder comments on the CY 2018 OPPS/ASC 
proposed rule and in light of the recommendations regarding payment 
policies for certain drugs, we recently evaluated the impact of our 
packaging policy for drugs that function as a supply when used in a 
surgical procedure on the utilization of these drugs in both the HOPD 
and the ASC setting. Currently, as noted above, drugs that function as 
a supply are packaged under the OPPS and the ASC payment system, 
regardless of the costs of the drugs. The costs associated with 
packaged drugs that function as a supply are included in the 
ratesetting methodology for the surgical procedures with which they are 
billed and the payment rate for the associated procedure reflects the 
costs of the packaged drugs and other packaged items and services to 
the extent they are billed with the procedure. In our evaluation, we 
used currently available data to analyze the utilization patterns 
associated with specific drugs that function as a supply over a 5-year 
time period (2013 through 2017) to determine whether this packaging 
policy has reduced the use of these drugs. If the packaging policy 
discouraged the use of drugs that function as a supply or impeded 
access to these products, we would expect to see a significant decline 
in utilization of these drugs over time, although we note that a 
decline in utilization could also reflect other factors, such as the 
availability of alternative products. We did not observe significant 
declines in the total number of units used in the hospital outpatient 
department for a majority of the drugs included in our analysis.
    In fact, under the OPPS, we observed the opposite effect for 
several drugs that function as a supply, including Exparel (HCPCS code 
C9290). Exparel is a liposome injection of bupivacaine, an amide local 
anesthetic, indicated for single-dose infiltration into the surgical 
site to produce postsurgical analgesia. In 2011, Exparel was approved 
by the FDA for administration into the postsurgical site to provide 
postsurgical analgesia.\53\ Exparel had pass-through payment status 
from 2012 through 2014 and was separately paid under both the OPPS and 
the ASC payment system during this 3-year period. Beginning in CY 2015, 
Exparel was packaged as a surgical supply under both the OPPS and the 
ASC payment system. Exparel is currently the only non-opioid pain 
management drug that is packaged as a drug that functions as a supply 
when used in a surgical procedure under the OPPS and the ASC payment 
system.
---------------------------------------------------------------------------

    \53\ Available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2011/022496s000lbl.pdf.
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    From 2013 through 2017, there was an overall increase in the OPPS 
Medicare

[[Page 37166]]

utilization of Exparel of approximately 229 percent (from 2.3 million 
units to 7.7 million units) during this 5-year time period. The total 
number of claims reporting Exparel increased by 222 percent (from 
10,609 claims to 34,183 claims) over this time period. This increase in 
utilization continued, even after the 3-year drug pass-through payment 
period ended for this product in 2014, with 18 percent overall growth 
in the total number of units used from 2015 through 2017 (from 6.5 
million units to 7.7 million units). The number of claims reporting 
Exparel increased by 21 percent during this time period (from 28,166 
claims to 34,183 claims).
    Thus, we have not found evidence to support the notion that the 
OPPS packaging policy has had an unintended consequence of discouraging 
the use of non-opioid treatment for postsurgical pain management in the 
hospital outpatient department. Therefore, based on this data analysis, 
we do not believe that changes are necessary under the OPPS for the 
packaged drug policy for drugs that function as a surgical supply when 
used in a surgical procedure in this setting at this time.
    In terms of Exparel in particular, we have received several 
requests to pay separately for the drug rather than packaging payment 
for it as a surgical supply. In the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66874 and 66875), in response to comments from 
stakeholders requesting separate payment for Exparel, we stated that we 
considered Exparel to be a drug that functions as a surgical supply 
because it is indicated for the alleviation of postoperative pain. We 
also stated that we consider all items related to the surgical outcome 
and provided during the hospital stay in which the surgery is 
performed, including postsurgical pain management drugs, to be part of 
the surgery for purposes of our drug and biological surgical supply 
packaging policy. In the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59345), we reiterated our position with regard to payment 
for Exparel, stating that we believed that payment for this drug is 
appropriately packaged with the primary surgical procedure. In 
addition, we have reviewed recently available literature with respect 
to Exparel, including a briefing document \54\ submitted for the FDA 
Advisory Committee Meeting held February 14-15, 2018, by the 
manufacturer of Exparel that notes that ``. . . Bupivacaine, the active 
pharmaceutical ingredient in Exparel, is a local anesthetic that has 
been used for infiltration/field block and peripheral nerve block for 
decades'' and that ``since its approval, Exparel has been used 
extensively, with an estimated 3.5 million patient exposures in the 
US.'' \55\ On April 6, 2018, the FDA approved Exparel's new indication 
for use as an interscalene brachial plexus nerve block to produce 
postsurgical regional analgesia.\56\ Based on our review of currently 
available OPPS Medicare claims data and public information from the 
manufacturer of the drug, we do not believe that the OPPS packaging 
policy has discouraged the use of Exparel for either of the drug's 
indications. Accordingly, we continue to believe it is appropriate to 
package payment for Exparel as we do with other postsurgical pain 
management drugs when it is furnished in a hospital outpatient 
department. However, as noted in section II.A.3.b. of this proposed 
rule, we are seeking comments on whether separate payment would 
nonetheless further incentivize appropriate use of Exparel in the 
hospital outpatient setting and peer-reviewed evidence that such 
increased utilization would lead to a decrease in opioid use and 
addiction among Medicare beneficiaries.
---------------------------------------------------------------------------

    \54\ Food and Drug Administration, Meeting of the Anesthetic and 
Analgesic Drug Products Advisory Committee Briefing Document (2018). 
Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/AnestheticAndAnalgesicDrugProductsAdvisoryCommittee/UCM596314.pdf.
    \55\ Ibid, page 9.
    \56\ https://www.accessdata.fda.gov/drugsatfda_docs/label/2018/022496s009lbledt.pdf.
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    Although we found increases in utilization for Exparel when it is 
paid under the OPPS, we did notice different effects on Exparel 
utilization when examining the effects of our packaging policy under 
the ASC payment system. In particular, during the same 5-year period of 
2013 through 2017, the total number of units of Exparel used in the ASC 
setting decreased by 25 percent (from 98,160 total units to 73,595 
total units) and the total number of claims reporting Exparel decreased 
by 16 percent (from 527 claims to 441 claims). In the ASC setting, 
after the pass-through payment status ended for Exparel at the end of 
2014, the total number of units of Exparel used decreased by 70 percent 
(from 244,757 units to 73,595 units) between 2015 and 2017. The total 
number of claims reporting Exparel also decreased during this time 
period by 62 percent (from 1,190 claims to 441 claims). However, there 
was an increase of 238 percent (from 98,160 total units to 331,348 
total units) in the total number of units of Exparel used in the ASC 
setting during the time period of 2013-2014 when the drug received 
pass-through payments, which indicates that the payment rate of ASP+6 
percent for Exparel may have impact on its usage in the ASC setting. 
The total number of claims reporting Exparel also increased during this 
time period from 527 total claims to 1,540 total claims, an increase of 
192 percent.
    While several variables may contribute to this difference between 
utilization and claims reporting in the hospital outpatient department 
and the ASC setting, one potential explanation is that, in comparison 
to hospital outpatient departments, ASCs tend to provide specialized 
care and a more limited range of services. Also, ASCs are paid, in 
aggregate, approximately 55 percent of the OPPS rate. Therefore, 
fluctuations in payment rates for specific services may impact these 
providers more acutely than hospital outpatient departments, and, 
therefore, ASCs may be less likely to choose to furnish non-opioid 
postsurgical pain management treatments, which are typically more 
expensive than opioids, as a result. Another possible contributing 
factor is that ASCs do not typically report packaged items and services 
and, accordingly, our analysis may be undercounting the number of 
Exparel units utilized in the ASC setting.
    In light of the results of our evaluation of packaging policies 
under the OPPS and the ASC payment system, which showed decreased 
utilization for certain drugs that function as a supply in the ASC 
setting in comparison to the hospital outpatient department setting, as 
well as the Commission's recommendation to examine payment policies for 
non-opioid pain management drugs that function as a supply, we believe 
a change in how we pay for non-opioid pain management drugs that 
function as surgical supplies may be warranted. In particular, we 
believe it may be appropriate to pay separately for evidence-based non-
opioid pain management drugs that function as a supply in a surgical 
procedure in the ASC setting to address the decreased utilization of 
these drugs and to encourage use of these types of drugs rather than 
prescription opioids. Therefore, we are proposing to unpackage and pay 
separately for the cost of non-opioid pain management drugs that 
function as surgical supplies when they are furnished in the ASC 
setting for CY 2019.
    We have stated previously (82 FR 59250) that our packaging policies 
are designed to support our strategic goal of using larger payment 
bundles in the OPPS to maximize hospitals' incentives to provide care 
in the most efficient

[[Page 37167]]

manner. The packaging policies established under the OPPS also 
typically apply when services are provided in the ASC setting, and the 
policies have the same strategic goals in both settings. While this 
proposal is a departure from our current ASC packaging policy for drugs 
(specifically, non-opioid pain management drugs) that function as a 
supply when used in a surgical procedure, we believe that this proposed 
change would incentivize the use of non-opioid postsurgical pain 
management drugs and is an appropriate response to the Commission's 
recommendation to examine payment policies for non-opioid pain 
management drugs that function as a supply with the overall goal of 
combating the current opioid addiction crisis. However, we are also 
interested in peer-reviewed evidence that demonstrates that use of non-
opioid alternatives, such as Exparel, in the outpatient setting 
actually do lead to a decrease in prescription opioid use and addiction 
and are seeking comments containing the types of evidence that 
demonstrate whether and how such non-opioid alternatives affect 
prescription opioid use during or after an outpatient visit or 
procedure.
    As noted, for CY 2019, we are proposing to pay separately at 
average sales price (ASP) plus 6 percent for non-opioid pain management 
drugs that function as a supply when used in a surgical procedure when 
the procedure is performed in the ASC setting. As described in section 
V.A.1. of this proposed rule, section 1847A of the Act establishes the 
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) 
(82 FR 59337). As noted in section V.B.2.b. of this proposed rule, 
since CY 2013, our policy has been to pay for separately payable drugs 
and biologicals at ASP+6 percent in accordance with section 
1833(t)(14)(A)(iii)(II) of the Act (the statutory default) (82 FR 
59350).
    We are not proposing a change to the packaging policy under the 
OPPS for CY 2019. However, we are proposing to pay separately at ASP+6 
percent for non-opioid pain management drugs that function as a supply 
when used in a surgical procedure when the procedure is performed in 
the ASC setting for CY 2019. Because the ASC payment rate also includes 
packaged payment for non-opioid pain management drugs, we intend to 
remove the packaged costs attributable to non-opioid pain management 
drugs--at this time, only Exparel qualifies--from the applicable OPPS 
rates prior to establishing the ASC rates in order to prevent potential 
overpayment of these procedures when separate payment is provided in 
the ASC setting.
    Of the drugs that are currently packaged in the ASC setting, this 
policy would apply to Exparel. Exparel is the only non-opioid pain 
management drug that functions as a supply when used in a surgical 
procedure that is covered under Medicare Part B. While there are other 
non-opioid pain management drugs available that are also administered 
post-surgically, such as non-steroidal anti-inflammatory drugs 
(``NSAIDs''), Exparel is the currently the only drug used in the ASC 
setting that is both covered under Medicare Part B and policy packaged 
as a drug that functions as a supply in a surgical procedure. To the 
extent that other non-opioid drugs that function as surgical supplies 
come onto the U.S. market, we are proposing that this policy would 
apply to them as well in CY 2019. This proposal is also presented in 
section II.A.3.b. of this proposed rule for the OPPS. We are proposing 
a conforming change to the ASC regulation at 42 CFR 416.164(a)(4) to 
exclude non-opioid pain management drugs that function as a supply when 
used in a surgical procedure as an ASC service for which payment is 
packaged into the payment for a covered surgical procedure. We also are 
proposing a conforming change to 42 CFR 416.164 (b)(6) to include non-
opioid pain management drugs that function as a supply when used in a 
surgical procedure as a covered ancillary service that is integral to a 
covered surgical procedure.
    In addition, as noted in section II.A.3.b. of this proposed rule, 
we are seeking comment on whether the proposed policy would decrease 
the dose, duration and/or number of opioid prescriptions beneficiaries 
receive during and following an outpatient visit or procedure 
(especially for beneficiaries at high-risk for opioid addiction) as 
well as whether there are other non-opioid pain management alternatives 
that would have similar effects and may, therefore, warrant separate 
payment. For example, we are interested in identifying whether single 
post-surgical analgesic injections, such as Exparel, or other non-
opioid drugs or devices that are used during an outpatient visit or 
procedure are associated with decreased opioid prescriptions and 
reduced cases of associated opioid addiction following such an 
outpatient visit or procedure. We are also requesting comments that 
provide evidence (such as published peer-reviewed literature), we could 
use to determine whether these products help to deter or avoid 
prescription opioid use and addiction as well as evidence that the 
current packaged payment for such non-opioid alternatives presents a 
barrier to access to care and therefore warrants separate payment under 
either or both the OPPS and the ASC payment system. The reduction or 
avoidance of prescription opioids would be the criteria we would seek 
to determine whether separate payment was warranted for CY 2019. Should 
evidence change over time, we would consider whether a reexamination of 
any policy adopted in the final rule would be necessary.
    In addition, we also are inviting the public to submit ideas on 
regulatory, subregulatory, policy, practice, and procedural changes to 
help prevent opioid use disorder and improve access to treatment under 
the Medicare program. We are interested in identifying barriers that 
may inhibit access to non-opioid alternatives for pain treatment and 
management or access to opioid use disorder treatment, including those 
barriers related to payment methodologies or coverage. In addition, 
consistent with our ``Patients Over Paperwork'' Initiative, we also are 
interested in suggestions to improve existing requirements in order to 
more effectively address the opioid epidemic.
    As noted above, and discussed in section II.A.3.b.of this proposed 
rule we are interested in comments regarding other non-opioid 
treatments for acute or chronic pain besides Exparel that might be 
affected by OPPS and ASC packaging policies including alternative, non-
opioid pain treatments, such as devices or therapy services that are 
not currently separable payable. We are specifically interested in 
comments regarding whether CMS should consider separate payment for 
such items and services for which payment is currently packaged under 
the OPPS and ASC payment systems that are effective non-opioid 
alternatives as well as evidence that demonstrates such items and 
services lead to a decrease in prescription opioid use during or after 
an outpatient visit or procedure in order to determine whether separate 
payment may be warranted. We intend to examine the evidence submitted 
to determine whether to adopt a final policy that incentivizes use of 
non-opioid alternative items and services that have evidence to 
demonstrate an associated decrease in prescription opioid use and 
addiction following an outpatient visit

[[Page 37168]]

or procedure. Some examples of evidence that may be relevant could 
include an indication on the product's FDA label or studies published 
in peer-reviewed literature that such product aids in the management of 
acute or chronic pain and is an evidence-based non-opioid alternative 
for acute and/or chronic pain management. We would also be interested 
in evidence relating to products that have shown clinical improvement 
over other alternatives, such as a device that has been shown to 
provide a substantial clinical benefit over the standard of care for 
pain management. This could include, for example, spinal cord 
stimulators used to treat chronic pain such as the devices described by 
HCPCS codes C1822 (Generator, neurostimulator (implantable), high 
frequency, with rechargeable battery and charging system), C1820 
(Generator, neurostimulator (implantable), with rechargeable battery 
and charging system), and C1767 (Generator, neurostimulator 
(implantable), nonrechargeable) which are primarily assigned to APCs 
5463-5464 (Levels 3 and 4 Neurostimulator and Related Procedures) with 
proposed CY 2019 payment rates of $18,718 and $27,662, respectively, 
that have received pass-through payment status as well as other similar 
devices.
    Currently, all devices are packaged under the OPPS and ASC payment 
systems unless they have pass-through status, however, in light of the 
Commission's recommendation to review and modify ratesetting policies 
that discourage the use of non-opioid treatments for pain, we are 
interested in comments from stakeholders regarding whether, similar to 
the goals of the proposed payment policy for non-opioid pain management 
drugs that function as a supply when used in a surgical procedure, a 
policy of providing separate payment (rather than packaged payment) for 
these products, indefinitely or for a specified period of time would 
also incentivize the use of alternative non-opioid pain management 
treatments and improve access to care for non-opioid alternatives, 
particularly for innovative and low-volume items and services.
    We are also interested in comments regarding whether we should 
provide separate payment for non-opioid pain management treatments or 
products using a mechanism such as an equitable payment adjustment 
under our authority at section 1833(t)(2)(E) of the Act, which states 
that the Secretary shall establish, in a budget neutral manner, other 
adjustments as determined to be necessary to ensure equitable payments. 
For example, we are considering whether an equitable payment adjustment 
in the form of an add-on payment for APCs that use a non-opioid pain 
management drug, device or service would be appropriate. To the extent 
that commenters provide evidence to support this approach being 
adopted, we would consider adopting a final policy, which could include 
regulatory changes that would allow for an exception to the packaging 
of certain non-passthrough devices which represent non-opioid 
alternatives for acute or chronic pain that have evidence to 
demonstrate that their use leads to a decrease in opioid prescriptions 
or addictions, in the final rule to effectuate such change.
    Alternatively, we are interested in comments on whether a 
reorganization of the APC structure for procedures involving these 
products or establishing more granular APC groupings for specific 
procedure and device combinations to ensure that the payment rate for 
such services is aligned with the resources associated with procedures 
involving specific devices would better achieve our goal of 
incentivizing increased use of non-opioid alternatives, with the aim of 
reducing opioid use and subsequent addiction. For example, we would 
consider finalizing a policy to establish new APCs for procedures 
involving non-opioid pain management packaged items or services if such 
APC would better recognize the resources involved in furnishing such 
items and services and decrease or eliminate the need for prescription 
opioids. In addition, given the general desire to encourage provider 
efficiency through creating larger bundles of care and packaging items 
and services that are integral, ancillary, supportive, dependent, or 
adjunctive to a primary service, we are also seeking comment on how 
such alternative payment structures would continue to balance the goals 
of incentivizing provider efficiencies with encouraging the use of non-
opioid alternatives to pain management.
    Furthermore, since patients may receive opioid prescriptions 
following receipt of a non-opioid drug or implantation of a device, we 
are interested in identifying any cost implications for the patient and 
Medicare program caused by this potential change in policy. The 
implications of incentivizing non-opioid pain management drugs 
available for postsurgical acute pain relief during or after an 
outpatient visit or procedure are also of interest, including for non-
opioid drugs. The goal is to encourage appropriate use of such non-
opioid alternatives. This comment solicitation is also discussed in 
section II.A.3.b. of this proposed rule.

E. New Technology Intraocular Lenses (NTIOLs)

    New Technology Intraocular Lenses (NTIOLs) are intraocular lenses 
that replace a patient's natural lens that has been removed in cataract 
surgery and that also meet the requirements listed in 42 CFR 416.195.
1. NTIOL Application Cycle
    Our process for reviewing applications to establish new classes of 
NTIOLs is as follows:
    <bullet> 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 website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/NTIOLs.html.
    <bullet> 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 Public Law 103-432 and our regulations at 42 
CFR 416.185(b), the deadline for receipt of public comments is 30 days 
following publication of the list of requests in the proposed rule.
    <bullet> In the final rule updating the ASC and OPPS payment rates 
for the following calendar year, we--
    ++ Provide a list of determinations made as a result of our review 
of all new NTIOL class requests and public comments;
    ++ When a new NTIOL class is created, 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.
    ++ Set the date of implementation of a payment adjustment in the 
case of approval of an IOL as a member of a new NTIOL class 
prospectively as of 30 days after publication of the ASC payment update 
final rule, consistent with the statutory requirement.
    ++ Announce the deadline for submitting requests for review of an

[[Page 37169]]

application for a new NTIOL class for the following calendar year.
2. Requests to Establish New NTIOL Classes for CY 2019
    We did not receive any requests for review to establish a new NTIOL 
class for CY 2019 by March 1, 2018, the due date published in the CY 
2018 OPPS/ASC final rule with comment period (82 FR 59416).
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 
2019.

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 created final comment indicators for the 
ASC payment system in the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66855). We created Addendum DD1 to define ASC payment 
indicators that we use in Addenda AA and BB to provide payment 
information regarding covered surgical procedures and covered ancillary 
services, respectively, under the revised ASC payment system. The ASC 
payment indicators in Addendum DD1 are intended to capture policy-
relevant characteristics of HCPCS codes that may receive packaged or 
separate payment in ASCs, such as whether they were on the ASC list of 
covered services prior to CY 2008; payment designation, such as device-
intensive or office-based, and the corresponding ASC payment 
methodology; and their classification as separately payable ancillary 
services, including radiology services, brachytherapy sources, OPPS 
pass-through devices, corneal tissue acquisition services, drugs or 
biologicals, or NTIOLs.
    We also created Addendum DD2 that lists the ASC comment indicators. 
The ASC comment indicators used in Addenda AA and BB to the proposed 
rules and final rules with comment period serve to identify, for the 
revised ASC payment system, the status of a specific HCPCS code and its 
payment indicator with respect to the timeframe when comments will be 
accepted. The comment indicator ``NP'' is used in the OPPS/ASC proposed 
rule to indicate new codes for the next calendar year for which the 
interim payment indicator assigned is subject to comment. The comment 
indicator ``NP'' also is assigned to existing codes with substantial 
revisions to their descriptors, such that we consider them to be 
describing new services, as discussed in the CY 2010 OPPS/ASC final 
rule with comment period (74 FR 60622). In the CY 2017 OPPS/ASC final 
rule with comment period, we responded to public comments and finalized 
the ASC treatment of all codes that were labeled with comment indicator 
``NP'' in Addenda AA and BB to the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70497).
    The ``CH'' comment indicator is used in Addenda AA and BB to the 
proposed rule (which are available via the internet on the CMS website) 
to indicate that the payment indicator assignment has changed for an 
active HCPCS code in the current year and the next calendar year, for 
example if 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.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79748 
through 79749), for CY 2017 and subsequent years, we finalized our 
policy to continue using the current comment indicators of ``NP'' and 
``CH''.
2. Proposed ASC Payment and Comment Indicators
    For CY 2019, there are proposed new and revised Category I and III 
CPT codes as well as new and revised Level II HCPCS codes. Therefore, 
proposed Category I and III CPT codes that are new and revised for CY 
2018 and any new and existing Level II HCPCS codes with substantial 
revisions to the code descriptors for CY 2019 compared to the CY 2018 
descriptors that are included in ASC Addenda AA and BB to this proposed 
rule are labeled with proposed comment indicator ``NP'' to indicate 
that these CPT and Level II HCPCS codes are open for comment as part of 
this proposed rule. Proposed comment indicator ``NP'' means a new code 
for the next calendar year or an existing code with substantial 
revision to its code descriptor in the next calendar year, as compared 
to current calendar year; and denotes that comments will be accepted on 
the proposed ASC payment indicator for the new code.
    We will respond to public comments on ASC payment and comment 
indicators and finalize their ASC assignment in the CY 2019 OPPS/ASC 
final rule with comment period. We refer readers to Addenda DD1 and DD2 
to this proposed rule (which are available via the internet on the CMS 
website) for the complete list of ASC payment and comment indicators 
proposed for the CY 2019 update.

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

1. Background
    In the August 2, 2007 final rule (72 FR 42493), we established our 
policy to base ASC relative payment weights and payment rates under the 
revised ASC payment system on APC groups and the OPPS relative payment 
weights. Consistent with that policy and the requirement at section 
1833(i)(2)(D)(ii) of the Act that the revised payment system be 
implemented so that it would be budget neutral, the initial ASC 
conversion factor (CY 2008) was calculated so that estimated total 
Medicare payments under the revised ASC payment system in the first 
year would be budget neutral to estimated total Medicare payments under 
the prior (CY 2007) ASC payment system (the ASC conversion factor is 
multiplied by the relative payment weights calculated for many ASC 
services in order to establish payment rates). That is, application of 
the ASC conversion factor was designed to result in aggregate Medicare 
expenditures under the revised ASC payment system in CY 2008 being 
equal to aggregate Medicare expenditures that would have occurred in CY 
2008 in the absence of the revised system, taking into consideration 
the cap on ASC payments in CY 2007, as required under section 
1833(i)(2)(E) of the Act (72 FR 42522). We adopted a policy to make the 
system budget neutral in subsequent calendar years (72 FR 42532 through 
42533; 42 CFR 416.171(e)).
    We note that we consider the term ``expenditures'' in the context 
of the budget neutrality requirement under section 1833(i)(2)(D)(ii) of 
the Act to mean expenditures 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

[[Page 37170]]

always 20 percent for ASC services, this interpretation of expenditures 
has minimal impact for subsequent budget neutrality adjustments 
calculated within the revised ASC payment system.
    In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 
through 66858), we set out a step-by-step illustration of the final 
budget neutrality adjustment calculation based on the methodology 
finalized in the August 2, 2007 final rule (72 FR 42521 through 42531) 
and as applied to updated data available for the CY 2008 OPPS/ASC final 
rule with comment period. The application of that methodology to the 
data available for the CY 2008 OPPS/ASC final rule with comment period 
resulted in a budget neutrality adjustment of 0.65.
    For CY 2008, we adopted the OPPS relative payment weights as the 
ASC relative payment weights for most services and, consistent with the 
final policy, we calculated the CY 2008 ASC payment rates by 
multiplying the ASC relative payment weights by the final CY 2008 ASC 
conversion factor of $41.401. For covered office-based surgical 
procedures, 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. of this proposed rule), and certain diagnostic tests 
within the medicine range that are covered ancillary services, the 
established policy is to set the payment rate at the lower of the MPFS 
unadjusted nonfacility PE RVU-based amount or the amount calculated 
using the ASC standard ratesetting methodology.
    Further, as discussed in the CY 2008 OPPS/ASC final rule with 
comment period (72 FR 66841 through 66843), we also adopted alternative 
ratesetting methodologies for specific types of services (for example, 
device-intensive procedures).
    As discussed in the August 2, 2007 final rule (72 FR 42517 through 
42518) and as codified at Sec.  416.172(c) of the regulations, the 
revised ASC payment system accounts for geographic wage variation when 
calculating individual ASC payments by applying the pre-floor and pre-
reclassified IPPS hospital wage indexes to the labor-related share, 
which is 50 percent of the ASC payment amount based on a GAO report of 
ASC costs using 2004 survey data. Beginning in CY 2008, CMS accounted 
for geographic wage variation in labor costs 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.
    The reclassification provision in section 1886(d)(10) of the Act is 
specific to hospitals. We believe that using the most recently 
available pre-floor and pre-reclassified IPPS hospital wage indexes 
results in the most appropriate adjustment to the labor portion of ASC 
costs. We continue to believe that the unadjusted hospital wage 
indexes, which are updated yearly and are used by many other Medicare 
payment systems, appropriately account for geographic variation in 
labor costs for ASCs. Therefore, the wage index for an ASC is the pre-
floor and pre-reclassified hospital wage index under the IPPS of the 
CBSA that maps to the CBSA where the ASC is located.
    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: 
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2013/b13-01.pdf.)
    In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 
49963), we implemented the use of the CBSA delineations issued by OMB 
in OMB Bulletin 13-01 for the IPPS hospital wage index beginning in FY 
2015. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66937), we finalized a 1-year transition policy that we applied in CY 
2015 for all ASCs that experienced any decrease in their actual wage 
index exclusively due to the implementation of the new OMB 
delineations. This transition does not apply in CY 2019.
    Generally, OMB issues major revisions to statistical areas every 10 
years, based on the results of the decennial census. However, OMB 
occasionally issues minor updates and revisions to statistical areas in 
the years between the decennial censuses. On July 15, 2015, OMB issued 
OMB Bulletin No. 15-01, which provides updates to and supersedes OMB 
Bulletin No. 13-01 that was issued on February 28, 2013. The attachment 
to OMB Bulletin No. 15-01 provides detailed information on the update 
to statistical areas since February 28, 2013. The updates provided in 
OMB Bulletin No. 15-01 are based on the application of the 2010 
Standards for Delineating Metropolitan and Micropolitan Statistical 
Areas to Census Bureau population estimates for July 1, 2012 and July 
1, 2013. The complete list of statistical areas incorporating these 
changes is provided in the attachment to OMB Bulletin No. 15-01. 
According to OMB, ``[t]his bulletin establishes revised delineations 
for the Nation's Metropolitan Statistical Areas, Micropolitan 
Statistical Areas, and Combined Statistical Areas. The bulletin also 
provides delineations of Metropolitan Divisions as well as delineations 
of New England City and Town Areas.'' (A copy of this bulletin may be 
obtained at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2015/15-01.pdf.)
    OMB Bulletin No. 15-01 made changes that are relevant to the IPPS 
and ASC wage index. We refer readers to the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79750) for a discussion of these changes and 
our implementation of these revisions.
    In OMB Bulletin No. 17-01, OMB announced that one Micropolitan 
Statistical Area now qualifies as a Metropolitan Statistical Area. The 
new urban CBSA is as follows:
    <bullet> Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of 
the principal city of Twin Falls, Idaho in Jerome County, Idaho and 
Twin Falls County, Idaho.
    The OMB bulletin is available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/bulletins/2017/b-17-01.pdf. We note that we 
did not have sufficient time to include this change in the computation 
of the proposed FY 2019 IPPS wage index. This new CBSA may affect the 
budget neutrality factors and wage indexes, depending on the impact of 
the overall payments of ASCs located in this new CBSA. We are providing 
below an estimate of this new area's wage index based on the average 
hourly wages for new CBSA 46300 and the national average hourly wages 
from the wage data for the proposed FY 2019 wage index (described in 
section III.B. of the preamble of the FY 2019 IPPS/LTCH PPS proposed 
rule). Currently, provider 130002 is the only hospital located in Twin 
Falls County, Idaho, and there are no hospitals located in Jerome 
County, Idaho. Thus, the proposed wage index for CBSA 46300 is 
calculated using the average hourly wage data for one provider 
(provider 130002).

[[Page 37171]]



------------------------------------------------------------------------
                                                            Estimated
                                           Estimated       occupational
                                        unadjusted wage    mix adjusted
                                         index for new    wage index for
                                           CBSA 46300     new CBSA 46300
------------------------------------------------------------------------
Proposed National Average Hourly Wage.     42.990625267     42.948428861
Estimated CBSA Average Hourly Wage....     35.833564813     38.127590025
Estimated Wage Index..................           0.8335           0.8878
------------------------------------------------------------------------

    Other than the previously described wage index, for CY 2019, the 
proposed CY 2019 ASC wage indexes fully reflect the OMB labor market 
area delineations (including the revisions to the OMB labor market 
delineations discussed above, as set forth in OMB Bulletin No. 15-01).
    We note that, in certain instances, there might be urban or rural 
areas for which there is no IPPS hospital that has wage index data that 
could 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 
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 2019 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 2019 relative payment weights 
for ASCs according to the following method. Holding ASC utilization, 
the ASC conversion factor, and the mix of services constant from CY 
2017, we are proposing to compare the total payment using the CY 2018 
ASC relative payment weights with the total payment using the CY 2019 
ASC relative payment weights to take into account the changes in the 
OPPS relative payment weights between CY 2018 and CY 2019. We are 
proposing to use the ratio of CY 2018 to CY 2019 total payments (the 
weight scalar) to scale the ASC relative payment weights for CY 2019. 
The proposed CY 2019 ASC weight scalar is 0.8854 and scaling would 
apply to the ASC relative payment weights of the covered surgical 
procedures, covered ancillary radiology services, and certain 
diagnostic tests within the medicine range of CPT codes, which are 
covered ancillary 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 had available 98 
percent of CY 2017 ASC claims data.
    To create an analytic file to support calculation of the weight 
scalar and budget neutrality adjustment for the wage index (discussed 
below), we summarized available CY 2017 ASC claims by ASC and by HCPCS 
code. We used the National Provider Identifier for the purpose of 
identifying unique ASCs within the CY 2017 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 website at: 
http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html.
b. 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 2017 ASC payment system and 
subsequent years, in the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79751 through 79753), we finalized our policy 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 2019, we calculated the proposed adjustment for the ASC payment 
system by using the most recent CY 2017 claims data available and 
estimating the difference in total payment that would be created by 
introducing the proposed CY 2019 ASC wage indexes. Specifically, 
holding CY 2017 ASC utilization, service-mix, and the proposed CY 2019 
national payment rates after application of the weight scalar constant, 
we calculated the total adjusted payment using the CY 2018 ASC wage 
indexes (which would fully reflect the new OMB delineations) and the 
total adjusted payment using the

[[Page 37172]]

proposed CY 2019 ASC wage indexes. We used the 50-percent labor-related 
share for both total adjusted payment calculations. We then compared 
the total adjusted payment calculated with the CY 2018 ASC wage indexes 
to the total adjusted payment calculated with the proposed CY 2019 ASC 
wage indexes and applied the resulting ratio of 1.0003 (the proposed CY 
2019 ASC wage index budget neutrality adjustment) to the CY 2018 ASC 
conversion factor to calculate the proposed CY 2019 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 (CPI-U), U.S. city average, as estimated by the Secretary for 
the 12-month period ending with the midpoint of the year involved. The 
statute 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.
    In the CY 2018 OPPS/ASC rulemaking (82 FR 33668 through 33670; 
59422 through 59424), we solicited and discussed comments regarding our 
current policy, 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. In the CY 2018 OPPS/ASC final rule with comment period, we noted 
that in 2008 facilities paid under the ASC payment system received 
approximately 65 percent of the payment that hospitals paid under the 
OPPS received for an average service. The differential between ASC 
facility payment and OPPS provider payment has continued to increase 
since 2008, and by 2017, facilities paid under the ASC payment system 
received approximately 56 percent of the payment that hospitals paid 
under the OPPS received for an average service. At the same time, 
indicators of ASC payment adequacy, such as capacity and supply of 
providers and providers' access to capital, suggest that Medicare 
beneficiaries have adequate access to ASC services.\57\
---------------------------------------------------------------------------

    \57\ MedPAC. Report to the Congress: March 2018.
---------------------------------------------------------------------------

    The Administration recognizes the value that ASCs may bring to the 
Medicare Program that results in the delivery of efficient, high-
quality care to beneficiaries at a lower cost. The Administration is 
promoting greater price transparency across all of Medicare's payment 
systems. Both beneficiaries and the Medicare Program benefit from 
reduced expenditures when a beneficiary's clinical needs allow for a 
procedure to be performed in lower cost settings, such as ASCs relative 
to hospital outpatient departments.\58\
---------------------------------------------------------------------------

    \58\ Medicare Beneficiaries Could Save Billions if CMS Reduces 
Hospital Outpatient Department Payment Rates for Ambulatory Surgical 
Center-Approved Procedures to Ambulatory Surgical Center Payment 
Rates, Department of Health and Human Services, Office of Inspector 
General, April 2014.
---------------------------------------------------------------------------

    As articulated in the FY 2019 President's Budget, the 
Administration supports payment reforms that base payment on patient 
characteristics rather than the site of care. To that end, we are 
exploring ways to align payments with the costs of care and to 
incentivize use of the most efficient and clinically appropriate sites 
of care including hospital outpatient departments, ASCs, and physician 
offices, to the extent feasible, in future rulemaking. In the near 
term, however, there is concern by some stakeholders that the 
differential between payment updates for HOPDs and ASCs is resulting in 
inefficient and unnecessary shifts of care to the hospital outpatient 
setting and away from ASCs. We are concerned about the potential 
unintended consequences of using the CPI-U to update payments for ASCs, 
such as consolidation of ASCs or fewer physician-owned ASCs, which may 
contribute to higher prices; stagnation in number of ASC facilities and 
number of multispecialty ASC facilities; and payments being misaligned 
with the cost of treatment for complex patients.
    We recognize commenters' belief that ASCs may incur some of the 
same costs that hospitals incur, which may be better reflected in the 
hospital market basket update than the CPI-U. Nevertheless, we 
recognize also that ASCs are among the only health care facilities in 
Medicare that do not submit cost information and therefore their rates 
are not updated based on a related market basket. We do not believe 
that the ASC cost structure is identical to the hospital cost structure 
for a few reasons (these differences are illustrative and not 
exhaustive). First, the majority of ASCs are single specialty (61 
percent based on 2016 data), whereas hospitals provide a wider variety 
of services, and also provide inpatient care and room and board. 
Second, the vast majority of ASCs are for-profit and located in urban 
areas, whereas hospital ownership is varied and hospitals are located 
in more geographically diverse locations. Third, compliance with 
certain laws, such as the Emergency Medical Treatment and Labor Act 
(EMTALA), apply to hospitals and do not apply to ASCs. These 
differences illustrate why there is reason to believe there is a 
measure of misalignment between the HOPD and ASC cost structure, and 
should be considered when assessing the suitability of using the 
hospital market basket as a better proxy for ASC costs than the CPI-U.
    According to commenters on last year's proposed rule, only 8.5 
percent of the CPI-U inputs are related to health care, and even those 
inputs are based on a consumer's experience purchasing health care 
items, rather than a provider's experience purchasing the items 
necessary to furnish a health care service, and do not measure whether 
a facility's costs increase, such as the cost of purchasing supplies 
and equipment or personnel labor costs.
    We also acknowledge commenters' concern that the disparity in 
payments between the OPPS and the ASC payment system may reduce the 
migration of services from the HOPD setting to the less costly ASC 
setting. For example, one study looked at the impact of the difference 
in facility fees paid to ASCs versus hospital outpatient departments on 
ASC growth using a fixed effects model.\59\ The study found results 
indicating that, as ASC payments increase, patients are more likely to 
undergo outpatient procedures in an ASC than they are in a hospital. 
Another study found that the opening of an ASC in a hospital service 
area resulted in a decline in hospital-based outpatient surgery without 
increasing mortality or admission.\60\ In markets where facilities 
opened, procedure growth at ASCs was greater than the decline in 
outpatient surgery use at their respective hospitals.
---------------------------------------------------------------------------

    \59\ Munnich EL, Parente ST. Returns to Specialization: Evidence 
from the Outpatient Surgery Market. Journal of Health Economics. 
Volume 57. January 2018.
    \60\ Hollenbeck BK, Dunn RL, et. al. Ambulatory Surgery Centers 
and Their Intended Effects on Outpatient Surgery. HSR: Health 
Services Research. 50:5. October 2015.
---------------------------------------------------------------------------

    If a migration of services from the hospital setting to ASCs 
occurred, it may potentially yield savings to the Medicare program and 
beneficiaries if the savings from the migration of services net of any 
increases in total volume of services does not exceed the cost of a 
higher rate update factor. ASC

[[Page 37173]]

payment rates would still generally be significantly less than under 
the OPPS.
    To the extent that it is clinically appropriate for a beneficiary 
to receive services in a lower cost setting, we believe it would be 
appropriate to continue to develop payment incentives and remove 
payment disincentives to facilitate this choice. While there are 
several factors that contribute to the divergence in payment between 
the two systems (which were identified in the comment solicitation on 
ASC payment reform in the CY 2018 OPPS/ASC rulemaking), such as 
different distribution of costs between hospitals and ASCs and 
different ratesetting methodologies between the OPPS and the ASC 
payment system, we believe that an alternative update factor could 
stabilize the differential between the OPPS payment and the ASC 
payment, to the extent that the CPI-U has been lower than the hospital 
market basket, and encourage the migration of services to lower cost 
settings as clinically appropriate (82 FR 59422 through 59424). In 
addition, we note that there are many services that can safely be 
performed in either the hospital setting or the ASC setting and a 
common rate update factor recognizes that the two provider types often 
compete for the same patients though patient acuity is likely higher in 
hospitals.
    Therefore, we believe providing ASCs with the same rate update 
mechanism as hospitals could encourage the migration of services from 
the hospital setting to the ASC setting and increase the presence of 
ASCs in health care markets or geographic areas where previously there 
were none or few, thus promoting better beneficiary access to care. 
However, because physicians have a financial interest in ASCs, higher 
payments could also lead to greater utilization of services.\61\ At the 
same time, we are cognizant of concerns that Medicare does not 
currently collect cost data from ASCs, which makes it difficult to 
assess payment adequacy in the same way that it is assessed for 
hospitals, to validate alignment between ASC and hospital cost 
structure, or to establish an ASC-specific market basket. Accordingly, 
until we have information on the ASC cost structure, we would like to 
balance our desire to promote migration of services away from the HOPD 
to ASCs where clinically appropriate with our desire to minimize 
increases in beneficiary out-of-pocket costs. Therefore, as described 
in more specific detail below, we are proposing to apply a hospital 
market basket update to ASCs for an interim period of 5 years but are 
seeking comments on ASC costs to assess whether the hospital market 
basket is an appropriate proxy for ASC costs. We note that the hospital 
market basket is collected under OMB Control No. 0938-0050 and the 
information collected through hospital cost reports is used, in part, 
to inform the calculation of the hospital market basket.
---------------------------------------------------------------------------

    \61\ Munnich EL, Parente ST. Returns to Specialization: Evidence 
from the Outpatient Surgery Market. Journal of Health Economics. 
Volume 57. January 2018.
---------------------------------------------------------------------------

    The hospital market basket update would be derived using the same 
hospital inpatient market basket percentage increase that we are 
proposing to use to derive the OPD fee increase factor as described in 
section II.B. of this proposed rule and is adjusted for multifactor 
productivity. We are proposing this payment update methodology for a 5-
year period, during which we would assess whether there is a migration 
of procedures from the hospital setting to the ASC setting as a result 
of the use of a hospital market basket update, as well as whether there 
are any unintended consequences (for example, an unnecessary increase 
in the overall volume of services or beneficiaries' out-of-pocket 
costs). We believe that 5 years would be an appropriate number of years 
to assess changes in the migration of services, as it should provide us 
enough time to confirm that trends in the data are consistent over 
time. We welcome comment on whether implementing the hospital market 
basket update for a different number of years might be more 
appropriate.
    We are interested in commenter feedback on additional ways we can 
evaluate the impacts of this payment change over the 5-year period. For 
example, we welcome input on how we should delineate between changes in 
the volume of a particular service due to the higher update, versus 
changes in the volume of a service due to changes in enrollment, 
patient acuity, or utilization, and what would be an appropriate 
interval to measure such migration of services. During this 5-year 
period, we intend to assess the feasibility of collaborating with 
stakeholders to collect ASC cost data in a minimally burdensome manner 
and could propose a plan to collect such information. As previously 
mentioned, in response to the comment solicitation in the CY 2018 OPPS/
ASC proposed rule, stakeholders indicated a willingness to work with 
CMS to collect cost information in the least burdensome manner (82 FR 
59422 through 59424).
    Therefore, for CY 2019 through 2023, in response to stakeholder 
concerns described in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59420 through 59421) that ASCs may incur some of the same 
costs that hospitals incur and that are better reflected in the 
hospital market basket update than the CPI-U, and including the concern 
that the payment differentials between the different settings of care 
due to the use of the CPI-U may stagnate the migration of services from 
hospitals to the ASC setting, even though those services can be safely 
performed in ASCs, we are proposing to update ASC payment rates using 
the hospital market basket and to revise our regulations under 42 CFR 
416.171(a)(2), which address the annual update to the ASC conversion 
factor, to reflect this proposal. In addition, we are requesting 
comments and evidence to assess whether the hospital market basket is 
an appropriate proxy for ASC costs. Under this proposal, for CY 2019, 
we would use the proposed FY 2019 hospital market basket update as 
published in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20381). 
This proposed update to ASC payment rates would be derived using the 
same hospital inpatient market basket percentage increase that we are 
proposing to use to derive the OPD fee increase factor as described in 
section II.B. of this proposed rule. We also are seeking comments on an 
alternative proposal to maintain CPI-U while collecting evidence to 
justify a different payent pdate, or adopting the new proposed payhment 
update based on the hospital market basket permanently. We are 
requesting comments on what type of evidence should be used to justify 
a different payment update and how CMS should go about collecting that 
information in the least burdensome way possible.
    Section 1833(t)(3)(G)(v) of the Act applies an additional 
adjustment of 0.75 for CY 2019 to hospitals. We note that such 
adjustment was authorized by the Affordable Care Act and that, while 
the Affordable Care Act authorized a productivity adjustment for ASCs 
(as it did for hospitals), it expressly did not authorize the 
``additional adjustment'' that was mandated for hospitals. The 
additional adjustment is separate and distinct from the productivity 
adjustment that already applies to both hospitals and ASCs and there 
does not appear to be a correlation between the productivity adjustment 
and the additional adjustment. Further, application of the additional 
adjustment may be contrary to the goals we have

[[Page 37174]]

articulated that led us to propose to apply the hospital market basket 
to the ASC payment system in the first place; that is, we believe that 
proposing to apply the hospital market basket to ASC rates may 
encourage the migration of services from the hospital setting to the 
ASC setting. However, if we were to propose to apply the additional 
adjustment, the ASC rate update would be 1.25 percent, instead of the 
proposed 2.0 percent. The 1.25 percent is lower than applying the CPI-U 
rate update factor, which would have been 1.3 percent for CY 2019. This 
lower update would appear contrary to the goals set forth earlier in 
this section. However, we are seeking comment on whether applying this 
additional adjustment may nonetheless be appropriate.
    While we expect this proposal would increase spending, by both the 
government and beneficiaries, relative to the current update factor 
over the 5-year period, as previously stated, we believe that the 
proposal could encourage the migration of services that are currently 
performed in the hospital outpatient setting to the ASC setting, which 
could result in savings to beneficiaries and the Medicare program. We 
believe that it is important to maximize patient choice to obtain 
services at a lower cost to the extent feasible. We believe also that 
without cost data from ASCs to examine their cost structure and 
adequacy of payment, we lack key data that may help inform the 
development of payment policies that are based on patients' clinical 
needs rather than the site of care.
    If, after review of all comments and all available evidence, we 
choose to finalize this proposal, we will continue to monitor site-of-
service shifts for the duration of this policy to determine if services 
move safely to lower cost settings and to explore collecting additional 
data that may help inform further development of the ASC payment 
system. We are proposing to continue to use the adjusted hospital 
market basket update through CY 2023 (for 5 years total). We intend to 
reassess whether application of the hospital market basket update to 
ASC rates has provided more patient choice to obtain services at a 
lower cost beginning with the CY 2024 rulemaking period, or sooner if 
appropriate. Section 3401(k) of the Affordable Care Act amended section 
1833(i)(2)(D) of the Act by adding a new clause (v), which requires 
that any annual update under the ASC payment system for the year, after 
application of clause (iv), shall be reduced by the productivity 
adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act, 
effective with the calendar year beginning January 1, 2011. The statute 
defines the productivity adjustment to be equal to the 10-year moving 
average of changes in annual economy-wide private nonfarm business 
multifactor productivity (MFP) (as projected by the Secretary for the 
10-year period ending with the applicable fiscal year, year, cost 
reporting period, or other annual period) (the ``MFP adjustment''). 
Clause (iv) of section 1833(i)(2)(D) of the Act authorizes the 
Secretary to provide for a reduction in any annual update for failure 
to report on quality measures. Clause (v) of section 1833(i)(2)(D) of 
the Act states that application of the MFP adjustment to the ASC 
payment system may result in the update to the ASC payment system being 
less than zero for a year and may result in payment rates under the ASC 
payment system for a year being less than such payment rates for the 
preceding year.
    In the CY 2012 OPPS/ASC final rule with comment period (76 FR 
74516), we finalized a policy that ASCs begin submitting data on 
quality measures for services beginning on October 1, 2012 for the CY 
2014 payment determination under the ASC Quality Reporting (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 we are 
proposing to be the hospital market basket update, may result in the 
update to the ASC payment system being less than zero for a year for 
ASCs that fail to meet the ASCQR Program requirements. We amended 
Sec. Sec.  416.160(a)(1) and 416.171 to reflect these policies.
    In prior years, in accordance with section 1833(i)(2)(C)(i) of the 
Act, before applying the MFP adjustment, the Secretary first determined 
the ``percentage increase'' in the CPI-U, which we interpreted cannot 
be a negative percentage. Thus, in the instance where the percentage 
change in the CPI-U for a year was negative, we would hold the CPI-U 
update factor for the ASC payment system to zero (75 FR 72062). 
Consistent with past practice, in the instance where the percentage 
change in the hospital market basket for a year is negative, we are 
proposing to hold the hospital market basket 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 policies established by the 
Secretary in accordance with section 1833(i)(7) of the Act.
    Section 1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of 
the Affordable Care Act, requires that the Secretary reduce the annual 
update factor, after application of any quality reporting reduction, by 
the MFP adjustment, and states that application of the MFP adjustment 
to the annual update factor after application of any quality reporting 
reduction may result in the update being less than zero for a year. If 
the application of the MFP adjustment to the annual update factor after 
application of any quality reporting reduction would result in an MFP-
adjusted update factor that is less than zero, the resulting update to 
the ASC payment rates would be negative and payments would decrease 
relative to the prior year. We refer readers to the CY 2011 OPPS/ASC 
final rule with comment period (75 FR 72062 through 72064) for examples 
of how the MFP adjustment is applied to the ASC payment system.
    For this proposed rule, as published in the FY 2019 IPPS/LTCH PPS 
proposed rule (83 FR 20381), based on IHS Global Inc.'s (IGI's) 2017 
fourth quarter forecast with historical data through the third quarter 
of 2017, the hospital market basket update for CY 2019 is projected to 
be 2.8 percent.
    We finalized the methodology for calculating the MFP adjustment in 
the CY 2011 MPFS final rule with comment period (75 FR 73394 through 
73396) and revised it in the CY 2012 MPFS final rule with comment 
period (76 FR 73300 through 73301) and the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70500 through 70501). For this proposed 
rule, as published in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 
20382) based on IGI's 2017 fourth quarter forecast, the proposed MFP 
adjustment for CY 2019 is projected to be 0.8 percent.
    We note that the update factor for CY 2019 under the current 
policy, which is to increase the payment amounts by the percentage 
increase in the CPI-U, U.S. city average, as estimated by the Secretary 
for the 12-month period ending with the midpoint of the year involved, 
is currently projected to be 2.1 percent (based on IGI's first quarter 
2018 forecast). If we were to derive the MFP adjustment that aligns 
with this

[[Page 37175]]

payment update under current policy (ending with the midpoint of the 
year involved), the MFP adjustment is projected to be 0.8 percent, 
which would lead to a proposed update amount of 1.3 percent.
    For CY 2019, we are proposing to utilize the hospital market basket 
update of 2.8 percent minus the MFP adjustment of 0.8 percentage point, 
resulting in an MFP-adjusted hospital market basket update factor of 
2.0 percent for ASCs meeting the quality reporting requirements. 
Therefore, we are proposing to apply a 2.0 percent MFP-adjusted 
hospital market basket update factor to the CY 2018 ASC conversion 
factor for ASCs meeting the quality reporting requirements to determine 
the CY 2019 ASC payment amounts. The ASCQR Program affected payment 
rates beginning in CY 2014 and, under this program, there is a 2.0 
percentage point reduction to the update factor for ASCs that fail to 
meet the ASCQR Program requirements. We are proposing to utilize the 
hospital market basket update of 2.8 percent by 2.0 percentage points 
for ASCs that do not meet the quality reporting requirements and then 
subtract the 0.8 percentage point MFP adjustment. Therefore, we are 
proposing to apply a 0.0 percent MFP-adjusted hospital market basket 
update factor to the CY 2018 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 hospital market basket update and MFP), we would use 
such data, if appropriate, to determine the CY 2019 ASC update for the 
final rule with comment period.
    For CY 2019, we are proposing to adjust the CY 2018 ASC conversion 
factor ($45.575) by the proposed wage index budget neutrality factor of 
1.0003 in addition to the MFP-adjusted hospital market basket update 
factor of 2.0 percent discussed above, which results in a proposed CY 
2019 ASC conversion factor of $46.500 for ASCs meeting the quality 
reporting requirements. For ASCs not meeting the quality reporting 
requirements, we proposed to adjust the CY 2018 ASC conversion factor 
($45.575) by the proposed wage index budget neutrality factor of 1.0003 
in addition to the quality reporting/MFP-adjusted hospital market 
basket update factor of 0.0 percent discussed above, which results in a 
proposed CY 2019 ASC conversion factor of $45.589.
3. Display of Proposed CY 2019 ASC Payment Rates
    Addenda AA and BB to this proposed rule (which are available on the 
CMS website) display the proposed updated ASC payment rates for CY 2019 
for covered surgical procedures and covered ancillary services, 
respectively. For those covered surgical procedures and covered 
ancillary services where the payment rate is the lower of the proposed 
rates under the ASC standard ratesetting methodology and the MPFS 
proposed rates, the proposed payment indicators and rates set forth in 
this proposed rule are based on a comparison using the proposed MPFS 
rates that would be effective January 1, 2019. For a discussion of the 
MPFS rates, we refer readers to the CY 2019 MPFS proposed rule.
    The proposed 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 2019 payment rates. 
Specifically, in Addendum AA, a ``Y'' in the column titled ``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 
for CY 2018. Display of the comment indicator ``NI'' in the column 
titled ``Comment Indicator'' indicates that the code is new (or 
substantially revised) and that comments will be accepted on the 
interim payment indicator for the new code. Display of the comment 
indicator ``NP'' in the column titled ``Comment Indicator'' indicates 
that the code is new (or substantially revised) and that comments will 
be accepted on the ASC payment indicator for the new code.
    The values displayed in the column titled ``Proposed CY 2019 
Payment Weight'' are the proposed relative payment weights for each of 
the listed services for CY 2019. The proposed relative payment weights 
for all covered surgical procedures and covered ancillary services 
where the 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 2019 payment rate displayed in the 
``Proposed CY 2019 Payment Rate'' column, each ASC payment weight in 
the ``Proposed CY 2019 Payment Weight'' column was multiplied by the 
proposed CY 2019 conversion factor of $46.500. The proposed 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.G.2.b. of this 
proposed rule). In Addendum BB, there are no relative payment weights 
displayed in the ``Proposed CY 2019 Payment Weight'' column for items 
and services with predetermined national payment amounts, such as 
separately payable drugs and biologicals. The ``Proposed CY 2019 
Payment'' column displays the proposed CY 2019 national unadjusted ASC 
payment rates for all items and services. The proposed CY 2019 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 2018.
    Addendum EE provides the HCPCS codes and short descriptors for 
surgical procedures that are proposed to be excluded from payment in 
ASCs for CY 2019.

XIII. Requirements for the Hospital Outpatient Quality Reporting (OQR) 
Program

A. Background

1. Overview
    CMS seeks to promote higher quality and more efficient healthcare 
for Medicare beneficiaries. Consistent with these goals, CMS has 
implemented

[[Page 37176]]

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 is generally aligned with 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 as well as value-based 
purchasing programs for other care settings.
    We refer readers to section I.A.2. of this proposed rule where we 
discuss our new Meaningful Measures Initiative and our approach in 
evaluating quality program measures.
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. Regulatory History of the Hospital OQR Program
    We refer readers to the CY 2008 through 2018 OPPS/ASC final rules 
with comment period (72 FR 66860 through 66875; 73 FR 68758 through 
68779; 74 FR 60629 through 60656; 75 FR 72064 through 72110; 76 FR 
74451 through 74492; 77 FR 68467 through 68492; 78 FR 75090 through 
75120; 79 FR 66940 through 66966; 80 FR 70502 through 70526; and 81 FR 
79753 through 79797; 82 FR 59424 through 59445). We have also codified 
certain requirements under the Hospital OQR Program at 42 CFR 419.46.
4. Meaningful Measures Initiative
    In this proposed rule, we are proposing a number of new policies 
for the Hospital OQR Program. We developed these proposals after 
conducting an overall review of the program under our new Meaningful 
Measures Initiative, which is discussed in more detail in section 
I.A.2. of this proposed rule. The proposals reflect our efforts to 
ensure that the Hospital OQR Program measure set continues to promote 
improved health outcomes for our beneficiaries while minimizing costs, 
which can consist of several different types of costs including, but 
not limited to: (1) Facility information collection burden and related 
cost and burden associated with the submitting/reporting of quality 
measures to CMS; (2) the facility cost associated with complying with 
other quality programmatic requirements; (3) the facility cost 
associated with participating in multiple quality programs, and 
tracking multiple similar or duplicative measures within or across 
those programs; (4) the CMS cost associated with the program oversight 
of the measure, including measure maintenance and public display; and 
(5) the facility cost associated with compliance with other federal 
and/or State regulations (if applicable). They also reflect our efforts 
to improve the usefulness of the data that we publicly report in the 
Hospital OQR Program. Our goal is to improve the usefulness and 
usability of CMS quality program data by streamlining how facilities 
are reporting and accessing data, while maintaining or improving 
consumer understanding of the data publicly reported on a Compare 
website. We believe this framework will allow hospitals and patients to 
continue to obtain meaningful information about HOPD performance and 
incentivize quality improvement while also streamlining the measure 
sets to reduce duplicative measures and program complexity so that the 
costs to hospitals associated with participating in this program do not 
outweigh the benefits of improving beneficiary care.

B. Hospital OQR Program Quality Measures

1. Considerations in the Selection of Hospital OQR Program Quality 
Measures
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74458 through 74460) for a detailed discussion of the 
priorities we consider for the Hospital OQR Program quality measure 
selection. We are not proposing any changes to these policies.
2. Accounting for Social Risk Factors in the Hospital OQR Program
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59425 
through 59427), we discussed the importance of improving beneficiary 
outcomes including reducing health disparities. We also discussed our 
commitment to ensuring that medically complex patients, as well as 
those with social risk factors, receive excellent care. We discussed 
how studies show that social risk factors, such as being near or below 
the poverty level as determined by HHS, belonging to a racial or ethnic 
minority group, or living with a disability, can be associated with 
poor health outcomes and how some of this disparity is related to the 
quality of health care.\62\ Among our core objectives, we aim to 
improve health outcomes, attain health equity for all beneficiaries, 
and ensure that complex patients as well as those with social risk 
factors receive excellent care. Within this context, reports by the 
Office of the Assistant Secretary for Planning and Evaluation (ASPE) 
and the National Academy of Medicine have examined the influence of 
social risk factors in CMS value-based purchasing programs.\63\ As we 
noted in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59425), ASPE's report to Congress found that, in the context of value-
based purchasing programs, dual eligibility was the most powerful 
predictor of poor health care outcomes among those social risk factors 
that they examined and tested. In addition, as we noted in the CY 2018 
OPPS/ASC final rule with comment period (82 FR 59425), the National 
Quality Forum (NQF) undertook a 2-year trial period in which certain 
new measures and measures undergoing maintenance review have been 
assessed to determine if risk adjustment for social risk factors is 
appropriate for these measures.\64\ The trial period ended in April 
2017 and a final report is available at: http://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a 
conceptual basis for adjustment generally did not demonstrate an 
empirical relationship'' between social risk factors and the outcomes 
measured. This discrepancy may be explained in part by the methods used 
for adjustment and the limited availability of robust data on social 
risk factors. NQF has extended the socioeconomic status (SES) 
trial,\65\

[[Page 37177]]

allowing further examination of social risk factors in outcome 
measures.
---------------------------------------------------------------------------

    \62\ See, for example United States Department of Health and 
Human Services. ``Healthy People 2020: Disparities. 2014.'' 
Available at: http://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences, 
Engineering, and Medicine. Accounting for Social Risk Factors in 
Medicare Payment: Identifying Social Risk Factors. Washington, DC: 
National Academies of Sciences, Engineering, and Medicine 2016.
    \63\ Department of Health and Human Services Office of the 
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to 
Congress: Social Risk Factors and Performance Under Medicare's 
Value-Based Purchasing Programs.'' December 2016. Available at: 
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \64\ National Quality Forum. Final Report-Disparities Project. 
September 2017. Available at: http://www.qualityforum.org/SES_Trial_Period.aspx.
    \65\ National Quality Forum. Health Equity Program: Social Risk 
Initiative 2.0. 2017. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
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    In the FY 2018 and CY 2018 proposed rules for our quality reporting 
and value-based purchasing programs, we solicited feedback on which 
social risk factors provide the most valuable information to 
stakeholders and the methodology for illuminating differences in 
outcomes rates among patient groups within a hospital or facility that 
would also allow for a comparison of those differences, or disparities, 
across facilities. Feedback we received through our quality reporting 
programs included encouraging CMS to explore whether factors that could 
be used to stratify or risk adjust the measures (beyond dual 
eligibility); considering the full range of differences in patients' 
backgrounds that might affect outcomes; exploring risk adjustment 
approaches; and offering careful consideration of what type of 
information display would be most useful to the public. We also sought 
public comment on confidential reporting and future public reporting of 
some of our measures stratified by patient dual eligibility. In 
general, commenters noted that stratified measures could serve as tools 
for hospitals to identify gaps in outcomes for different groups of 
patients, improve the quality of health care for all patients, and 
empower beneficiaries and other consumers to make informed decisions 
about health care. Commenters encouraged us to stratify measures by 
other social risk factors such as age, income, and educational 
attainment. With regard to value-based purchasing programs, commenters 
also cautioned to balance fair and equitable payment while avoiding 
payment penalties that mask health disparities or discourage the 
provision of care to more medically complex patients. Commenters also 
noted that value-based purchasing program measure selection, domain 
weighting, performance scoring, and payment methodology must account 
for social risk.
    As a next step, CMS is considering options to reduce health 
disparities among patient groups within and across health care settings 
by increasing the transparency of disparities as shown by quality 
measures. We also are considering how this work applies to other CMS 
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where 
we discuss the potential stratification of certain Hospital IQR Program 
outcome measures. Furthermore, we continue to consider options to 
address equity and disparities in our value-based purchasing programs.
    We plan to continue working with ASPE, the public, and other key 
stakeholders on this important issue to identify policy solutions that 
achieve the goals of attaining health equity for all beneficiaries and 
minimizing unintended consequences.
3. Retention of Hospital OQR Program Measures Adopted in Previous 
Payment Determinations
    We previously adopted a policy to retain measures from a previous 
year's Hospital OQR Program measure set for subsequent years' measure 
sets in the CY 2013 OPPS/ASC final rule with comment period (77 FR 
68471). Thus, quality measures adopted in a previous year's rulemaking 
are retained in the Hospital OQR Program for use in subsequent years 
unless otherwise specified. We refer readers to that final rule with 
comment period for more information. We are not proposing any changes 
to our retention policy; however, we are proposing to codify this 
policy at proposed 42 CFR 419.46(h)(1).
4. Removal of Quality Measures From the Hospital OQR Program Measure 
Set
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 
60315), we finalized a process to use the regular rulemaking process to 
remove a measure for circumstances for which we do not believe that 
continued use of a measure raises specific patient safety concerns.\66\ 
We are not proposing any changes to this policy; however, we are 
proposing to codify this policy at 42 CFR 419.46(h)(3). We refer 
readers to section XIII.B.4.a. of this proposed rule for more details.
---------------------------------------------------------------------------

    \66\ We initially referred to this process as ``retirement'' of 
a measure in the 2010 OPPS/ASC proposed rule, but later changed it 
to ``removal'' during final rulemaking.
---------------------------------------------------------------------------

a. Considerations in Removing Quality Measures from the Hospital OQR 
Program
(1) Immediate Removal
    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60634 
through 60635), we finalized a process for immediate retirement, which 
we later termed ``removal,'' of Hospital OQR Program measures, based on 
evidence that the continued use of the measure as specified raise 
patient safety concerns.\67\ We are not proposing any changes to our 
policy to immediately remove measures as a result of patient safety 
concerns; however, we are proposing to codify that policy at 42 CFR 
419.46(h)(2).
---------------------------------------------------------------------------

    \67\ 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.
---------------------------------------------------------------------------

(2) Consideration Factors for Removing Measures
    In the CY 2013 OPPS/ASC final rule with comment period, we 
finalized a set of factors \68\ for determining whether to remove 
measures from the Hospital OQR Program (77 FR 68472 through 68473). 
These factors are:
---------------------------------------------------------------------------

    \68\ We note that we previously referred to these factors as 
``criteria'' (for example, 77 FR 68472 through 68473); we now use 
the term ``factors'' in order to align the Hospital OQR Program 
terminology with the terminology we use in other CMS quality 
reporting and pay-for-performance (value-based purchasing) programs.
---------------------------------------------------------------------------

    <bullet> Factor 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).
    <bullet> Factor 2. Performance or improvement on a measure does not 
result in better patient outcomes.
    <bullet> Factor 3. A measure does not align with current clinical 
guidelines or practice.
    <bullet> Factor 4. The availability of a more broadly applicable 
(across settings, populations, or conditions) measure for the topic.
    <bullet> Factor 5. The availability of a measure that is more 
proximal in time to desired patient outcomes for the particular topic.
    <bullet> Factor 6. The availability of a measure that is more 
strongly associated with desired patient outcomes for the particular 
topic.
    <bullet> Factor 7. Collection or public reporting of a measure 
leads to negative unintended consequences such as patient harm.
    In addition, we refer readers to the CY 2015 OPPS/ASC final rule 
with comment period where we finalized the criteria for determining 
when a measure is ``topped-out'' (79 FR 66769). In that final rule with 
comment period, we finalized two criteria for determining when a 
measure is ``topped out'' under the Hospital OQR Program: (1) When 
there is statistically indistinguishable performance at the 75th and 
90th percentiles of national facility performance; and (2) when the 
measure's truncated coefficient of variation (TCOV) is less than or 
equal to 0.10 (79 FR 66942).
    The benefits of removing a measure from the Hospital OQR Program 
are

[[Page 37178]]

assessed on a case-by-case basis (79 FR 66941 through 66942). We note 
that, under this case-by-case approach, a measure will not be removed 
solely on the basis of meeting any specific factor. We note that in the 
CY 2015 OPPS/ASC final rule with comment period (79 FR 66967), a 
similar measure removal policy was finalized for the ASCQR Program. In 
this proposed rule, we are proposing to: (1) Update measure removal 
Factor 7; (2) add a new removal Factor 8; and (3) codify our measure 
removal policies and factors at 42 CFR 419.46(h) effective upon 
finalization of the CY 2019 OPPS/ASC final rule and for subsequent 
years. We also are providing clarification of our ``topped-out'' 
criteria.
(3) Proposed Update to Measure Removal Factor 7
    As shown above, Factor 7 under the Hospital OQR Program states, 
``collection or public reporting of a measure leads to negative 
unintended consequences such as patient harm.'' In contrast, under the 
ASCQR Program, Factor 7 reads as follows, ``collection or public 
reporting of a measure leads to negative unintended consequences other 
than patient harm'' (79 FR 66967). We believe the wording in the ASCQR 
Program is more appropriate because measures causing patient harm would 
be removed from the program immediately, outside of rulemaking, in 
accordance with our previously finalized policy to immediately remove 
measures as a result of patient safety concerns (74 FR 60634 and 
discussed above). Therefore, in this proposed rule, we are proposing to 
change measure removal Factor 7 in the Hospital OQR Program to 
``collection or public reporting of a measure leads to negative 
unintended consequences other than patient harm'' such that it aligns 
with measure removal Factor 7 in the ASCQR Program.
(4) Proposed New Measure Removal Factor 8
    We are proposing to adopt an additional factor to consider when 
evaluating measures for removal from the Hospital OQR Program measure 
set:
    <bullet> Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    As we discuss in section I.A.2. of this proposed rule with respect 
to our new Meaningful Measures Initiative, we are engaging in efforts 
to ensure that the Hospital OQR Program measure set continues to 
promote improved health outcomes for beneficiaries while minimizing the 
overall costs associated with the program. We believe these costs are 
multifaceted and include not only the burden associated with reporting, 
but also the costs associated with implementing and maintaining the 
program. We have identified several different types of costs, 
including, but not limited to: (1) Facility information collection 
burden and related costs and burden associated with the submission/
reporting of quality measures to CMS; (2) the facility cost associated 
with complying with other programmatic requirements; (3) the facility 
cost associated with participating in multiple quality programs and 
tracking multiple similar or duplicative measures within or across 
those programs; (4) the CMS cost associated with the program oversight 
of the measure including measure maintenance and public display; and 
(5) the facility cost associated with compliance with other Federal and 
State regulations (if applicable). For example, it may be needlessly 
costly and/or of limited benefit to retain or maintain a measure which 
our analyses show no longer meaningfully supports program objectives 
(for example, informing beneficiary choice or payment scoring). It may 
also be costly for health care providers to track confidential 
feedback, preview reports, and publicly reported information on a 
measure where we use the measure in more than one program. CMS may also 
have to expend unnecessary resources to maintain the specifications for 
the measure, as well as the tools needed to collect, validate, analyze, 
and publicly report the measure data. Furthermore, beneficiaries may 
find it confusing to see public reporting on the same measure in 
different programs.
    In weighing the costs against the benefits, we evaluate the 
benefits of the measure, but, we assess the benefits through the 
framework of our Meaningful Measures Initiative, as we discussed in 
section I.A.2. of this proposed rule. One key aspect of patient 
benefits is assessing the improved beneficiary health outcomes if a 
measure is retained in our measure set. We believe that these benefits 
are multifaceted, and are illustrated through the Meaningful Measures 
framework's 6 domains and 19 areas. For example, we assessed the 
Healthcare Worker Influenza Vaccination and patient Influenza 
Vaccination measures categorized in the Quality Priority ``Promote 
Effective Prevention and Treatment of Chronic Disease'' in the 
meaningful measure area of ``Preventive Care'' across multiple CMS 
programs, and considered: patient outcomes, such as mortality and 
hospitalizations associated with influenza; CMS measure performance in 
a program; and other available and reported influenza process measures, 
such as population influenza vaccination coverage.
    When these costs outweigh the evidence supporting the benefits to 
patients with the continued use of a measure in the Hospital OQR 
Program, we believe it may be appropriate to remove the measure from 
the program. Although we recognize that one of the main goals of the 
Hospital OQR Program is to improve beneficiary outcomes by 
incentivizing health care facilities to focus on specific care issues 
and making public data related to those issues, we also recognize that 
those goals can have limited utility where, for example, the publicly 
reported data (including percentage payment adjustment data) is of 
limited use because it cannot be easily interpreted by beneficiaries, 
and used to inform their choice of facility. In these cases, removing 
the measure from the Hospital OQR Program may better accommodate the 
costs of program administration and compliance without sacrificing 
improved health outcomes and beneficiary choice.
    We are proposing that we would remove measures based on this factor 
on a case-by-case basis. We might, for example, decide to retain a 
measure that is burdensome for health care facilities to report if we 
conclude that the benefit to beneficiaries justifies the reporting 
burden. Our goal is to move the program forward in the least burdensome 
manner possible, while maintaining a parsimonious set of meaningful 
quality measures and continuing to incentivize improvement in the 
quality of care provided to patients. We are inviting public comment on 
our proposal to adopt an additional measure removal Factor 8, the costs 
associated with a measure outweigh the benefit of its continued use in 
the program, beginning with the effective date of the CY 2019 OPPS/ASC 
final rule with comment period and for subsequent years.
    We refer readers to section XIII.B.4.b. of this proposed rule, 
where we are proposing to remove two measures based on this proposed 
measure removal factor. We note that we have also proposed this same 
removal factor for the ASCQR Program in section XIV.B.3.b. of this 
proposed rule, as well as for other quality reporting and value-based 
purchasing programs for FY 2019 including: the Hospital Value-Based 
Purchasing (VBP) Program (83 FR 20409), the Hospital IQR Program (83 FR 
20472); the PPS-exempt Cancer Hospital Quality Reporting (PCHQR) 
Program (83 FR 20501 through 20502); the Long-Term Care Hospital 
Quality

[[Page 37179]]

Reporting Program (LTCH QRP) (83 FR 20512); the Hospice Quality 
Reporting Program (HQRP) (83 FR 20956); the Inpatient Rehabilitation 
Facility Quality Reporting Program (IRF QRP) (83 FR 21000); the Skilled 
Nursing Facility Quality Reporting Program (SNF QRP) (83 FR 21082); and 
the Inpatient Psychiatric Facilities Quality Reporting (IPFQR) Program 
(83 FR 21118).
    If our proposals to update one and add one new removal factor are 
finalized as proposed, the new removal factors list would be:
    <bullet> Factor 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).
    <bullet> Factor 2. Performance or improvement on a measure does not 
result in better patient outcomes.
    <bullet> Factor 3. A measure does not align with current clinical 
guidelines or practice.
    <bullet> Factor 4. The availability of a more broadly applicable 
(across settings, populations, or conditions) measure for the topic.
    <bullet> Factor 5. The availability of a measure that is more 
proximal in time to desired patient outcomes for the particular topic.
    <bullet> Factor 6. The availability of a measure that is more 
strongly associated with desired patient outcomes for the particular 
topic.
    <bullet> Factor 7. Collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm.
    <bullet> Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
(5) Proposed Codification at 42 CFR 419.46(h)(2) and (3)
    We are proposing to codify our measure removal policies, including 
proposals made in this rule, in proposed 42 CFR 419.46(h)(2) and (3).
(6) Clarification of Removal Factor 1: ``Topped-Out'' Measures
    As noted above, we refer readers to the CY 2015 OPPS/ASC final rule 
with comment period where we finalized the criteria for determining 
when a measure is ``topped-out'' (79 FR 66769). In that final rule with 
comment period, we finalized two criteria for determining when a 
measure is ``topped out'' under the Hospital OQR Program: (1) When 
there is statistically indistinguishable performance at the 75th and 
90th percentiles of national facility performance; and (2) when the 
measure's truncated coefficient of variation (TCOV) is less than or 
equal to 0.10 (79 FR 66942).
    In this proposed rule, we are clarifying our process for 
calculating the truncated coefficient of variation (TCOV), particularly 
for two of the measures (OP-11 and OP-14) proposed for removal from the 
Hospital OQR Program. In accordance with our finalized methodology (79 
FR 66942), we determine the truncated coefficient of variation (TCOV) 
by calculating the truncated standard deviation (SD) divided by the 
truncated mean. As discussed above, our finalized removal criteria 
state that to be considered ``topped-out,'' a measure must have a 
truncated TCOV of less than 0.10. We utilize the TCOV because it is 
generally a good measure of variability and provides a relative 
methodology for comparing different types of measures.
    Unlike the majority of the measures, for which a higher rate 
(indicating a higher proportion of a desired event) is the preferred 
outcome, some measures--in particular, OP-11 and OP-14--assess the rate 
of rare, undesired events for which a lower rate is preferred. For 
example, OP-11 assesses the use of both a contrast and non-contrast CT 
Thorax study at the same time, which is not recommended, as no clinical 
guidelines or peer-reviewed literature supports such CT Thorax 
``combined studies.'' However, when determining the TCOV for a measure 
assessing rare, undesired events, the mean-or average rate of event 
occurrence-is very low, and the result is a TCOV that increases rapidly 
and approaches infinity as the proportion of rare events declines.\69\ 
We note that the SD, the variability statistic, is the same in 
magnitude for measures assessing rare and nonrare events.
---------------------------------------------------------------------------

    \69\ Rose-Hulman Institute of Technology. Denominator 
approaching zero. Available at: https://www.rose-hulman.edu/media/89584/lclimitsguide.pdf.
---------------------------------------------------------------------------

    In this proposed rule, we are proposing to remove two measures that 
assess the rate of rare, undesired events for which a lower rate is 
preferred--OP-11 and OP-14--and refer readers to section XIII.B.4.b. of 
this proposed rule, where these proposals are discussed in detail. 
Because by design these measures have maintained very low rates of 
rare, undesired events (indicating the preferred outcomes), we utilized 
the mean of non-adverse events in our calculation of the TCOV. For 
example, for OP-11, to calculate the TCOV, we divide the SD by the 
average rate of patients not receiving both contrast and non-contrast 
abdominal CT (1.0 minus the rate of patients receiving both), rather 
than the rate of those receiving both types of CT. Utilizing this 
methodology results in a TCOV that is comparable to that calculated for 
other measures and allows us to assess rare-event measures by still 
generally using our previously finalized topped-out criteria.
b. Proposed Removal of Quality Measures from the Hospital OQR Program 
Measure Set
    In this proposed rule, we are proposing to remove a total of 10 
measures from the Hospital OQR Program measure set across the CY 2020 
and CY 2021 payment determinations. Specifically, beginning with the CY 
2020 payment determination, we are proposing to remove (1) OP-27: 
Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431); 
and beginning with the CY 2021 payment determination, we are proposing 
to remove--(2) OP-5: Median Time to ECG (NQF #0289); (3) OP 31: 
Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery (NQF #1536); (4) OP-29: Endoscopy/Polyp 
Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy in 
Average Risk Patients (NQF #0658); (5) OP-30: Endoscopy/Polyp 
Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use (NQF #0659); (6) OP-
9: Mammography Follow-up Rates (no NQF number); (7) OP-11: Thorax 
Computed Tomography (CT)--Use of Contrast Material (NQF #0513); (8) OP-
12: The Ability for Providers with HIT (Health Information Technology) 
to Receive Laboratory Data Electronically Directly into Their 
Qualified/Certified EHR System as Discrete Searchable Data (NQF 
endorsement removed); (9) OP-14: Simultaneous Use of Brain Computed 
Tomography (CT) and Sinus CT (no NQF number); and (10) OP-17: Tracking 
Clinical Results between Visits (NQF endorsement removed). We are 
proposing to remove these measures under the following removal factors: 
proposed measure removal Factor 8--the costs associated with a measure 
outweigh the benefit of its continued use in the program; measure 
removal Factor 3--a measure does not align with current clinical 
guidelines or practice; measure removal Factor 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); and measure removal Factor 2--performance or improvement on 
a measure does not result in better patient outcomes. These

[[Page 37180]]

proposed measure removals are discussed in detail below.
(1) Proposed Measure Removal for the CY 2020 Payment Determination and 
Subsequent Years--Proposed Removal of OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF #0431)
    For the CY 2020 payment determination and subsequent years, we are 
proposing to remove one NHSN measure under proposed measure removal 
Factor 8, the costs associated with this measure outweigh the benefit 
of its continued use in the program.
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75099), where we adopted OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF #0431), beginning with the CY 
2016 payment determination and for subsequent years. This process-of-
care measure, also a National Healthcare Safety Network (NHSN) measure, 
assesses the percentage of healthcare personnel who have been immunized 
for influenza during the flu season. We initially adopted this measure 
based on our recognition that influenza immunization is an important 
public health issue and vital component to preventing healthcare 
associated infections. We believe that the measure addresses this 
public health concern by assessing influenza vaccination in the HOPD 
among health care personnel (HCP), who can serve as vectors for 
influenza transmission.
    In this proposed rule, we are proposing to remove OP-27, beginning 
with the CY 2020 payment determination under our proposed measure 
removal Factor 8 because we have concluded that the costs associated 
with this measure outweigh the benefit of its continued use in the 
program.
    The information collection burden for the Influenza Vaccination 
Coverage Among Healthcare Personnel measure is less than for measures 
that require chart-abstraction of patient data because influenza 
vaccination among healthcare personnel can be calculated through review 
of records maintained in administrative systems and because facilities 
have fewer healthcare personnel than patients. As such, OP-27 does not 
require review of as many records. However, this measure does still 
pose information collection burden on facilities due to the requirement 
to identify personnel who have been vaccinated against influenza and 
for those not vaccinated, the reason why.
    Furthermore, as we stated in section XIII.B.4.a. of this proposed 
rule, costs are multi-faceted and include not only the burden 
associated with reporting, but also the costs associated with 
implementing and maintaining the program. For example, it may be costly 
for health care providers to maintain general administrative knowledge 
to report these measures. In addition, CMS must expend resources in 
maintaining information collection systems, analyzing reported data, 
and providing public reporting of the collected information.
    In our analysis of the Hospital OQR Program measure set, we 
recognized that some facilities face challenges with respect to the 
administrative requirements of the NHSN in their reporting of the 
Influenza Vaccination Coverage Among Healthcare Personnel measure. 
These administrative requirements (which are unique to NHSN) include 
annually completing NHSN system user authentication. Enrolling in NHSN 
is a five-step process that the Centers for Disease Control and 
Prevention (CDC) estimates takes an average of 263 minutes per 
facility.\70\
---------------------------------------------------------------------------

    \70\ CDC, National Healthcare Safety Network (NHSN). Five-Step 
Enrollment for Acute Care Hospitals/Facilities. Available at: 
https://www.cdc.gov/nhsn/acute-care-hospital/enroll.html (the 
estimates for time to complete are 2 hours 45 minutes for step 1, 10 
minutes for step 2, 16 minutes for step 3a, 35 minutes for step 3b, 
32 minutes for step 4, and 5 minutes for step 5; totaling 263 
minutes).
---------------------------------------------------------------------------

    Furthermore, submission via NHSN requires the system security 
administrator of participating facilities to re-consent electronically, 
ensure that contact information is kept current, ensure that the 
hospital has an active facility administrator account, keep Secure 
Access Management Service (SAMS) credentials active by logging in 
approximately every 2 months and changing their password, create a 
monthly reporting plan, and ensure the facility's CCN information is 
up-to-date. Unlike acute care hospital which participate in other 
quality programs, such as the Hospital IQR and HAC Reduction Programs, 
HOPDs are only required to participate in NHSN to submit data for this 
one measure. In our assessment, we also considered that the vast 
majority (99.7 percent) of Hospital OQR Program eligible hospitals 
already report this measure in the Hospital IQR Program for workers 
providing any services to inpatient care. The Hospital IQR Program 
measure includes the vast majority of all hospital personnel, since 
many workers in outpatient departments provide services to both 
inpatient and outpatient departments (adopted at 76 FR 51631 through 
51633). These workers include most emergency department clinicians, 
specialists such as pharmacists and imaging professionals, and 
custodians and other support staff working across the hospital.
    We continue to believe that the OP-27: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF #0431) measure provides the 
benefit of protecting patients against influenza. However, we believe 
that these benefits are offset by other efforts to reduce influenza 
infection among patients, such as numerous healthcare employer 
requirements for health care personnel to be vaccinated against 
influenza.\71\ We also expect that a portion of MIPS-eligible 
clinicians nationwide will report on the Preventive Care and Screening: 
Influenza Immunization measure through the Quality Payment Program 
(QPP).\72\ Although MIPS-eligible clinicians may voluntarily select 
measures from a list of options, HOPD providers that are MIPS-eligible 
will have the opportunity to continue collecting information for the 
measure. We remain responsive to the public health concern of influenza 
infection within the Medicare FFS population by collecting data on 
rates of influenza immunization among patients.\73\ Thus, the public 
health concern of influenza immunization is addressed via these other 
efforts to track influenza vaccination. The availability of this 
measure in another CMS program demonstrates CMS' continued commitment 
to this measure area. In addition, as we discuss in section XIII.B.4.a 
of this proposed rule, where we are proposing to adopt measure removal 
Factor 8, beneficiaries may find it confusing to see public reporting 
on the same measure in different programs.
---------------------------------------------------------------------------

    \71\ CDC, Influenza Vaccination Information for Health Care 
Workers. Available at: https://www.cdc.gov/flu/healthcareworkers.htm.
    \72\ QPP 2017 Measures Selection: Influenza. Retrieved from: 
https://qpp.cms.gov/mips/quality-measures.
    \73\ Ibid.
---------------------------------------------------------------------------

    We wish to minimize the level of cost of our programs for 
participating facilities, as discussed under the Meaningful Measures 
Initiative, described in section I.A.2. of this proposed rule. In our 
assessment of the Hospital OQR Program measure set, we prioritized 
measures that align with this Initiative's framework as the most 
important to the Hospital OQR Program's population. Our assessment 
concluded that while the OP-27 measure continues to provide benefits, 
these benefits are diminished by other factors and are outweighed by 
the costs and burdens of reporting this chart-abstracted measure.

[[Page 37181]]

    For these reasons, we are proposing to remove OP-27: NHSN Influenza 
Vaccination Coverage among Healthcare Personnel (NQF #0431) from the 
Hospital OQR Program beginning with the CY 2020 payment determination 
and for subsequent years. We note that if proposed measure removal 
Factor 8 is not finalized, removal of this measure would also not be 
finalized. We note that this measure is also proposed for removal from 
the ASCQR Program in section XIV.B.3.c. of this proposed rule and the 
IPFQR Program in the FY 2019 IPF PPS proposed rule (83 FR 21104).
(2) Proposed Measure Removals for the CY 2021 Payment Determination and 
Subsequent Years
    For the CY 2021 payment determination and subsequent years, we are 
proposing to remove: Four measures under proposed measure removal 
Factor 8; one measure under measure removal Factor 3; two measures 
under removal Factor 1; and two measures under measure removal Factor 
2.
(a) Proposed Measure Removals Under Proposed Removal Factor 8: OP-5, 
OP-29, OP-30, and OP-31
    In this proposed rule, we are proposing to remove four measures 
under our proposed measure removal Factor 8 for the CY 2021 payment 
determination and subsequent years: OP-5, OP-29, OP-30, and OP-31. We 
note that if proposed measure removal Factor 8 is not finalized, 
removal of these measures would also not be finalized. The proposals 
are discussed in more detail below. We note that in crafting our 
proposals, we considered removing these measures beginning with the CY 
2020 payment determination, but we decided on proposing to delay 
removal until the CY 2021 payment determination to be sensitive to 
facilities' planning and operational procedures given that data 
collection for this measure begins during CY 2018 for the CY 2020 
payment determination.
    <bullet> Proposed Removal of OP-5: Median Time to ECG (NQF #0289)
    We refer readers to the CY 2008 OPPS/ASC final rule with comment 
period (72 FR 66865) where we adopted OP-5: Median Time to ECG (NQF 
#0289) beginning with the CY 2009 payment determination.\74\ This 
chart-abstracted measure assesses the median number of minutes before 
outpatients with heart attack (or chest pain that suggests a possible 
heart attack) received an electrocardiograph (ECG) test to help 
diagnose heart attack.
---------------------------------------------------------------------------

    \74\ This measure was formerly called ``ED-AMI-4--Median Time to 
Electrocardiogram (ECG)'' in the cited Federal Register.
---------------------------------------------------------------------------

    We are proposing to remove the OP-5 measure beginning with the CY 
2021 payment determination under our proposed measure removal Factor 8, 
the costs associated with the measure outweigh the benefit of its 
continued use in the program. As noted above, OP-5 is a chart-
abstracted measure, which can be potentially more challenging for 
facilities to report than claims-based or structural measures. Chart-
abstraction requires facilities to select a sample population, access 
historical records from several clinical data quarters past, and 
interpret that patient data. This process is typically more time and 
resource-consuming than for other measure types. As described in 
section I.A.2. of this proposed rule, our Meaningful Measures 
Initiative is intended to reduce costs and minimize burden, and we 
believe that removing this chart-abstracted measure from the Hospital 
OQR Program would reduce program complexity.
    However, we do not believe the use of chart-abstracted measure data 
alone is sufficient justification for removal of a measure under 
proposed measure removal Factor 8. The costs of collection and 
submission of chart-abstracted measure data is burdensome for 
facilities, especially when taking into consideration that, although 
this measure is not topped-out, we have come to the conclusion that the 
benefit of this measure is limited. Based on our analysis of data 
submitted by 1,995 hospitals from Quarter 3 in 2016 through Quarter 2 
in 2017 the variation in average measure performance between hospitals 
is minimal, with a difference in median time to ECG of less than 2 
minutes between the 75th and 90th percentile hospitals. Furthermore, 
the difference between the 25th and 75th percentile, distinguishing 
between high and low performers, is only 5.5 minutes, further 
indicating that variations are not sufficiently large to inform 
beneficiary decision-making to justify the costs of collecting the 
data. These data are demonstrated in the table below.

                          Differences in Performance for OP-5: Median Wait Time to ECG
----------------------------------------------------------------------------------------------------------------
                                                     Number of         25th            75th            90th
                     Period                          hospitals      Percentile      Percentile      Percentile
----------------------------------------------------------------------------------------------------------------
2016 Q3--2017 Q2................................           1,995    11.0 minutes     5.5 minutes    3.8 minutes.
----------------------------------------------------------------------------------------------------------------

    We believe that the minimal variation in hospital performance does 
not help beneficiaries to make informed care decisions, since 
distinguishing meaningful differences in hospital performance on this 
measure is difficult. As such, the measure benefit is limited, and no 
longer meaningfully supports program objectives of informing 
beneficiary choice.
    Thus, we believe that costs and burdens to both facilities and CMS 
such as program oversight, measure maintenance, and public display, 
associated with keeping this measure in the program outweigh the 
limited benefit associated with the measure's continued use. Therefore, 
we are proposing to remove OP-5: Median Time to ECG from the Hospital 
OQR Program beginning with the CY 2021 payment determination and for 
subsequent years.
    <bullet> Proposed Removal of OP-29: Endoscopy/Polyp Surveillance: 
Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk 
Patients
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75099 through 75100) where we adopted OP-29: Endoscopy/
Polyp Surveillance: Appropriate Follow-up Interval for Normal 
Colonoscopy in Average Risk Patients (NQF #0659) beginning with the CY 
2016 payment determination. This chart-abstracted process measure 
assesses the ``[p]ercentage of patients aged 18 years and older 
receiving a surveillance colonoscopy, with a history of a prior colonic 
polyp in previous colonoscopy findings, who had a follow-up interval of 
3 or more years since their last colonoscopy documented in the 
colonoscopy report'' (78 FR 75099). This measure aims to assess whether 
average risk patients

[[Page 37182]]

with normal colonoscopies receive a recommendation to receive a repeat 
colonoscopy in an interval that is less than the recommended amount of 
10 years.
    In this proposed rule, we are proposing to remove OP-29: Endoscopy/
Polyp Surveillance Follow-up Interval for Normal Colonoscopy in Average 
Risk Patients beginning with the CY 2021 payment determination and for 
subsequent years under our proposed measure removal Factor 8, the costs 
associated with a measure outweigh the benefit of its continued use in 
the program. We adopted OP-29: Endoscopy/Polyp Surveillance Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75099 through 75100) 
noting that performing colonoscopy too frequently increases patients' 
exposure to procedural harm. However, we now believe that the costs of 
this measure outweigh the benefit of its continued use in the program.
    Chart-abstraction requires facilities to select a sample 
population, access historical records from several current and historic 
clinical data quarters, and interpret that patient data. This process 
is typically more time and resource-consuming than for other measure 
types. In addition to submission of manually chart-abstracted data, we 
take all burden and costs into account when evaluating a measure. 
Removing OP-29 would reduce the burden and cost to facilities 
associated with collection of information and reporting on their 
performance associated with the measure.
    However, we do not believe the use of chart-abstracted measure data 
alone is sufficient justification for removal of a measure under 
proposed measure removal Factor 8. The costs of collection and 
submission of chart-abstracted measure data is burdensome for 
facilities especially when taking into consideration the availability 
of other CMS quality measures that are relevant in the clinical 
condition and highly correlated in performance across measures. Another 
colonoscopy-related measure required in the Hospital OQR Program, OP-
32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy (NQF# 2539), measures all-cause, unplanned 
hospital visits (admissions, observation stays, and emergency 
department visits) within 7 days of an outpatient colonoscopy procedure 
(79 FR 66949). This claims-based outcomes measure does not require 
chart-abstraction, and similarly contributes data on quality of care 
related to colonoscopy procedures, although the measure does not 
specifically track processes such as follow-up intervals. When we 
adopted OP-32, we believed 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 
facilities and patients all unplanned hospital visits following the 
procedure (79 FR 66949). Furthermore, the potential benefits of keeping 
OP-29 in the program are mitigated by the existence of the same measure 
(Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk 
Patients) \75\ for gastroenterologists in the Merit-Based Incentive 
Payment System (MIPS) for the 2019 performance period in the QPP (82 FR 
30292). Thus, we believe the issue of preventing harm to patients from 
colonoscopy procedures that are performed too frequently is adequately 
addressed through MIPS in the QPP, because we expect a portion of MIPS-
eligible clinicians reporting on the measure nationwide to provide 
meaningful data to CMS. We note that although MIPS-eligible clinicians 
may voluntarily select measures from a list of options, HOPD providers 
that are MIPS-eligible will have the opportunity to continue collecting 
information for the measure without being penalized if they determine 
there is value for various quality improvement efforts.\76\ The 
availability of this measure in another CMS program demonstrates CMS' 
continued commitment to this measure area.
---------------------------------------------------------------------------

    \75\ QPP Measure Selection: Appropriate Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients. Available at: https://qpp.cms.gov/mips/quality-measures.
    \76\ CMS finalized that services furnished by an eligible 
clinician that are payable under the ASC, HHA, Hospice, or HOPD 
methodology will not be subject to the MIPS payments adjustments, 
but eligible clinicians payable under those methodologies may have 
the option to still voluntarily report on applicable measures and 
the data reported will not be used to determine future eligibility 
(82 FR 53586).
---------------------------------------------------------------------------

    Furthermore, we seek to align our quality reporting work with the 
Patients Over Paperwork and the Meaningful Measures Initiatives 
described in section I.A.2. of this proposed rule. The purpose of this 
effort is to hold providers accountable for only the measures that are 
most important to patients and clinicians and those that are focused on 
patient outcomes in particular, because outcome measures evaluate the 
actual results of care. As described in section I.A.2. of this proposed 
rule, our Meaningful Measures Initiative is intended to reduce costs 
and minimize burden, and we believe that removing this chart-abstracted 
measure from the Hospital OQR Program would reduce program complexity. 
In addition, as we discuss in section XIV.B.3.b. of this proposed rule, 
where we are proposing to adopt measure removal Factor 8, beneficiaries 
may find it confusing to see public reporting on the same measure in 
different programs.
    Therefore, due to the combination of factors of the costs of 
collecting data for this chart-abstracted measure, the preference for 
an outcomes measure in the Hospital OQR Program that provides valuable 
data for the same procedure, and the existence of the same measure in 
another CMS program, we believe that the burdens and costs associated 
with this measure outweigh the limited benefit to beneficiaries. As a 
result, we are proposing to remove OP-29: Endoscopy/Polyp Surveillance 
Follow-up Interval for Normal Colonoscopy in Average Risk Patients 
beginning with the CY 2021 payment determination and for subsequent 
years. We note that we are also proposing to remove a similar measure 
in the ASCQR Program in section XIV.B.3.c. of this proposed rule.
    <bullet> Proposed Removal of OP-30: Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous 
Polyps--Avoidance of Inappropriate Use
    We refer readers to CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75102) where we adopted OP-30: Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous 
Polyps--Avoidance of Inappropriate Use (NQF #0659) beginning with the 
CY 2016 payment determination. This chart-abstracted process measure 
assesses the percentage of patients aged 18 years and older receiving a 
surveillance colonoscopy, with a history of a prior colonic polyp in 
previous colonoscopy findings, who had a follow-up interval of 3 or 
more years since their last colonoscopy documented in the colonoscopy 
report.
    In this proposed rule, we are proposing to remove OP-30: Endoscopy/
Polyp Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use beginning with the 
CY 2021 payment determination and for subsequent years under our 
proposed measure removal Factor 8, the costs associated with a measure 
outweigh the benefit of its continued use in the program.
    We adopted OP-30: Endoscopy/Polyp Surveillance: Colonoscopy 
Interval for Patients with a History of Adenomatous Polyps--Avoidance 
of Inappropriate Use in the CY 2014 OPPS/ASC final rule

[[Page 37183]]

with comment period (78 FR 75102) noting that colonoscopy screening for 
high risk patients is recommended based on risk factors and one such 
factor is a history of adenomatous polyps. The frequency of colonoscopy 
screening varies depending on the size and amount of polyps found, with 
the general recommendation of a 3-year follow-up. We stated that this 
measure is appropriate for the measurement of quality of care furnished 
by hospital outpatient departments because colonoscopy screening is 
commonly performed in these settings (78 FR 75102). However, we now 
believe that the costs of this measure outweigh the benefit of its 
continued use in the program.
    Chart-abstraction requires facilities to select a sample 
population, access historical records from several clinical data 
quarters past, and interpret that patient data. This process is 
typically more time and resource-consuming than for other measure 
types. In addition to submission of manually chart-abstracted data, we 
take all burden and costs into account when evaluating a measure. 
Removing OP-30 would reduce the burden and cost to facilities 
associated with collection of information and reviewing their data and 
performance associated with the measure.
    However, we do not believe the use of chart-abstracted measure data 
alone is sufficient justification for removal of a measure under 
proposed measure removal Factor 8. The costs of collection and 
submission of chart-abstracted measure data is burdensome for 
facilities especially when taking into consideration the availability 
of other CMS quality measures. Another colonoscopy-related measure 
required in the Hospital OQR Program, OP-32: Facility 7-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy (NQF# 
2539) measures all-cause, unplanned hospital visits (admissions, 
observation stays, and emergency department visits) within 7 days of an 
outpatient colonoscopy procedure (79 FR 66949). This claims-based 
outcome measure does not require chart-abstraction, and similarly 
contributes data on quality of care related to colonoscopy procedures, 
although the measure does not specifically track processes such as 
follow-up intervals. When we adopted OP-32, we believed 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 facilities and patients all unplanned hospital 
visits following the procedure (79 FR 66949). Furthermore, the 
potential benefits of keeping OP-30 in the program are mitigated by the 
existence of the same measure for gastroenterologists in the Merit-
Based Incentive Payment System (MIPS) for the 2019 performance period 
in the QPP (82 FR 30292). Thus, we believe the issue of preventing harm 
to patients from colonoscopy procedures that are performed too 
frequently is adequately addressed through MIPS in the QPP because we 
expect a portion of MIPS-eligible clinicians reporting on the measure 
nationwide to provide meaningful data to CMS. Although MIPS-eligible 
clinicians may voluntarily select measures from a list of options, HOPD 
providers that are MIPS-eligible will have the opportunity to continue 
collecting information for the measure without being penalized if they 
determine there is value for various quality improvement efforts.\77\ 
The availability of this measure in another CMS program demonstrates 
CMS' continued commitment to this measure area.
---------------------------------------------------------------------------

    \77\ CMS finalized that services furnished by an eligible 
clinician that are payable under the ASC, HHA, Hospice, or HOPD 
methodology will not be subject to the MIPS payments adjustments, 
but eligible clinicians payable under those methodologies may have 
the option to still voluntarily report on applicable measures and 
the data reported will not be used to determine future eligibility 
(82 FR 53586).
---------------------------------------------------------------------------

    Furthermore, we seek to align our quality reporting work with the 
Patients Over Paperwork and the Meaningful Measures Initiatives 
described in section I.A.2. of this proposed rule. The purpose of this 
effort is to hold providers accountable for only the measures that are 
most important to patients and clinicians and those that are focused on 
patient outcomes in particular, because outcome measures evaluate the 
actual results of care. As described in section I.A.2. of this proposed 
rule, our Meaningful Measures Initiative is intended to reduce costs 
and minimize burden, and we believe that removing this chart-abstracted 
measure from the Hospital OQR Program would reduce program complexity. 
In addition, as we discuss in section XIII.B.4.a. of this proposed 
rule, where we are proposing to adopt measure removal Factor 8, 
beneficiaries may find it confusing to see public reporting on the same 
measure in different programs.
    Therefore, due to the combination of factors of the costs of 
collecting data for this chart-abstracted measure, the preference for 
an outcomes measure in OQR that provides valuable data for the same 
procedure, and the existence of the same measure in the MIPS program, 
we believe that the burdens and costs associated with manual chart 
abstraction outweigh the limited benefit to beneficiaries of receiving 
this information. As a result, we are proposing to remove OP-30: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use beginning 
with the CY 2021 payment determination and for subsequent years. We 
note that we are also proposing to remove a similar measure in the 
ASCQR Program in section XIV.B.3.c. of this proposed rule.
    <bullet> Proposed Removal of OP-31: Cataracts--Improvement in 
Patient's Visual Function within 90 Days Following Cataract Surgery
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75103) where we adopted OP-31: Cataracts: Improvement in 
Patient's Visual Function within 90 Days Following Cataract Surgery 
(NQF #1536) beginning with the CY 2016 payment determination and 
subsequent years. 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 the adoption of this measure, we came to believe that it can 
be operationally difficult for facilities to collect and report the 
measure (79 FR 66947). Specifically, we were 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 facilities to have knowledge of the 
visual function of the patient before and after surgery (79 FR 66947). 
We were 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 (79 
FR 66947). Therefore, on December 31, 2013, we issued guidance stating 
that we would delay data collection for OP-31 for 3 months (data 
collection would commence with April 1, 2014 encounters) for the CY 
2016 payment determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772854917). We issued additional guidance on April 2, 2014, stating that we 
would further delay the implementation of OP-31 for an additional 9 
months, until January 1, 2015 for the CY 2016 payment

[[Page 37184]]

determination, due to continued concerns (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228773786593). As a result of these concerns, in the CY 2015 OPPS/ASC final 
rule with comment period (79 FR 66948), we finalized our proposal to 
allow voluntary data collection and reporting of this measure beginning 
with the CY 2017 payment determination and for subsequent years.
    In this proposed rule, we are proposing to remove OP-31: Cataracts: 
Improvement in Patient's Visual Function within 90 Days Following 
Cataract Surgery beginning with the CY 2021 and for subsequent years 
under our proposed measure removal Factor 8, the costs associated with 
the measure outweigh the benefit of its continued use in the program. 
We originally adopted OP-31 because we believe facilities should be a 
partner in care with physicians and other clinicians using their 
facility and that this measure would provide an opportunity to do so 
(79 FR 66947). However, in light of the history of complications and 
upon reviewing this measure within our Meaningful Measures framework, 
we have concluded that it is overly burdensome for facilities to report 
this measure due to the difficulty of tracking care that occurs outside 
of the HOPD setting. In order to report on this measure to CMS, a 
facility would need to obtain the visual function assessment results 
from the appropriate ophthalmologist and ensure that the assessment 
utilized is validated for the population for which it is being used. If 
the assessment is not able to be used or is not available, the facility 
would then need to administer the survey directly and ensure that the 
same visual function assessment tool is utilized preoperatively and 
postoperatively. There is no simple, preexisting means for information 
sharing between ophthalmologists and facilities, so a facility would 
need to obtain assessment results from each individual patient's 
ophthalmologist both preoperatively and postoperatively. The high 
administrative costs of the technical tracking of this information 
presents an undue cost, and also burden associated with submission and 
reporting of OP-31 to CMS, especially for small facilities with limited 
staffing capacity.
    Furthermore, this measure currently provides limited benefits. 
Since making the measure voluntary, only 59 \78\ facilities have 
reported this measure to CMS, compared to approximately 4,798 total 
facilities for all other measures, resulting in only 1.2 percent of 
facilities reporting. Consequently, we have been unable to uniformly 
offer pertinent information to beneficiaries on how the measure 
assesses facility performance. This reinforces comments made in the CY 
2015 OPPS/ASC final rule with comment period in which commenters 
expressed concern that the incomplete display of data associated with 
voluntary reporting is confusing and not meaningful to beneficiaries 
and other consumers (79 FR 66947). The data are also hard to validate. 
Furthermore, commenters feared that the display of data from some 
hospitals, but not others, would lead some patients to conclude that 
some hospitals are more committed to improving cataract surgery. As 
described in section I.A.2. of this proposed rule, we strive to ensure 
that beneficiaries are empowered to make decisions about their health 
care using information from data-driven insights. Because of the lack 
of sufficient data, this measure may be difficult for beneficiaries to 
interpret or use to aid in their choice of where to obtain care; thus, 
the benefits of this measure are limited.
---------------------------------------------------------------------------

    \78\ OQR Hospital Compare. Available at: https://data.medicare.gov/Hospital-Compare/Timely-and-Effective-Care-Hospital/yv7e-xc69.
---------------------------------------------------------------------------

    Thus, we believe the high technical and administrative costs of 
this measure, coupled with the high technical and administrative 
burden, outweigh the limited benefit associated with the measure's 
continued use in the Hospital OQR Program. As discussed in section 
I.A.2. of this proposed rule, above, our Meaningful Measures Initiative 
is intended to reduce costs and minimize burden. We believe that 
removing this measure from the Hospital OQR Program will reduce program 
burden, costs, and complexity. Therefore, we are proposing to remove 
OP-31: Cataracts: Improvement in Patient's Visual Function within 90 
Days Following Cataract Surgery beginning with the CY 2021 payment 
determination and for subsequent years. We note that we are also 
proposing to remove a similar measure under the ASCQR Program in 
section XIV.B.3.c. of this proposed rule.
(b) Proposed Measure Removal Under Removal Factor 3: OP-9: Mammography 
Follow-Up Rates
    We refer readers to the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68766) where we adopted OP-9: Mammography Follow-up Rates 
beginning with the CY 2010 payment determination. This claims-based 
measure assesses the percentage of patients with mammography screening 
studies that are followed by a diagnostic mammography, ultrasound, or 
MRI of the breast in an outpatient or office setting within 45 days. We 
are proposing to remove this measure under measure removal Factor 3, a 
measure does not align with current clinical guidelines or practice.
    An examination of the measure specifications \79\ shows that recent 
changes in clinical practice are not incorporated into the measure 
calculation. Since development of this measure in 2008, advancements in 
imaging technology and clinical practice for mammography warrant 
updating the measure's specifications to align with current clinical 
practice guidelines and peer-reviewed literature. Specifically, 
findings from the annual Literature Reviews and Environmental Scans 
conducted by the measure developer suggest that there is additional 
clinical benefit in performing adjuvant DBT concomitant with full-field 
digital mammography (FFDM) or conventional mammography (currently 
included in the measure denominator), especially in women with dense 
breast tissue.<SUP>80 81 82</SUP> In addition, in 2016, the American 
College of Radiology (ACR) updated its Breast Cancer Screening 
Appropriateness Criteria[supreg] to include DBT.\83\ The ACR notes that 
DBT can better detect potential false-positive findings without the 
need for recall. Furthermore, the cancer detection rate is increased 
with use of DBT compared with traditional mammography alone.\84\ A 2014 
study published in the Journal of the American College of Radiology 
assessed the utilization of DBT among physician members of the Society 
of

[[Page 37185]]

Breast Imaging and found that 30 percent of respondents reported using 
DBT concurrent with traditional mammography.\85\ With the update of the 
ACR clinical practice guidelines (that is, the Breast Cancer Screening 
Appropriateness Criteria[supreg]) to include DBT, use of this 
technology is expected to increase.
---------------------------------------------------------------------------

    \79\ Hospital Outpatient Quality Reporting Specifications 
Manual. Version 11.0a. Available at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FSpecsManualTemplate&cid=1228776146046.
    \80\ Bernardi, D., Macaskill, P., Pellegrini, M., Valentini, M., 
Fanto, C., Ostillio, L., Houssami, N. (2016). Breast cancer 
screening with tomosynthesis (3D mammography) with acquired or 
synthetic 2D mammography compared with 2D mammography alone (STORM-
2): A population-based prospective study. Lancet Oncol, 17(8), 1105-
1113. doi: 10.1016/s1470-2045(16)30101-2.
    \81\ Bian, T., Lin, Q., Cui, C., Li, L., Qi, C., Fei, J., & Su, 
X. (2016). Digital Breast Tomosynthesis: A New Diagnostic Method for 
Mass-Like Lesions in Dense Breasts. Breast J, 22(5), 535-540. doi: 
10.1111/tbj.12622.
    \82\ Pozz, A., Corte, A.D., Lakis, M. A., & Jeong, H. (2016). 
Digital Breast Tomosynthesis in Addition to Conventional 
2DMammography Reduces Recall Rates and is Cost Effective. Asian Pac 
J Cancer Prev, 17(7), 3521-3526.
    \83\ Mainiero MB, Bailey L, D'Orsi C, Green ED, Holbrook AI, Lee 
SJ, Lourenco AP, Moy L, Sepulveda KA, Slanetz PJ, Trikha S, Yepes 
MM, Newell MS, Expert Panel on Breast Imaging. ACR Appropriateness 
Criteria[supreg] breast cancer screening. Reston (VA): American 
College of Radiology (ACR); 2016. 7 p.
    \84\ Ibid.
    \85\ Hardesty LA, Kreidler SM, Glueck DH. Digital breast 
tomosynthesis utilization in the United States: A survey of 
physician members of the Society of Breast Imaging. Journal of the 
American College of Radiology. 2014. 11(6): 594-599.
---------------------------------------------------------------------------

    As currently specified, the measure does not adequately capture 
this shift in clinical practice. Thus, we believe this measure as 
specified does not align with current clinical guidelines or practice, 
and we are proposing to remove OP-9: Mammography Follow-up Rates from 
the program for the CY 2021 payment determination and subsequent years. 
We intend to investigate respecification of this measure and consider 
it for adoption to the program through future rulemaking. Specifically, 
we will consider ways to capture a broader, more comprehensive spectrum 
of mammography services including adding diagnostic digital breast 
tomosynthesis (DBT). We note that, in crafting our proposal, we 
considered removing this measure beginning with the CY 2020 payment 
determination, but decided on proposing to delay removal until the CY 
2021 payment determination and subsequent years to be sensitive to 
facilities' planning and operational procedures given that data 
collection for this measure begins during CY 2018 for the CY 2020 
payment determination.
(c) Proposed Measure Removals Under Removal Factor 1: OP-11 and OP-14
    In this proposed rule, for the CY 2021 payment determination and 
subsequent years, we are proposing to remove OP-11 and OP-14 under 
removal Factor 1, measure performance among providers is so high and 
unvarying that meaningful distinctions and improvements in performance 
can no longer be made. The Hospital OQR Program previously finalized 
two criteria for determining when a measure is ``topped-out'': (1) When 
there is statistically indistinguishable performance at the 75th and 
90th percentiles of national facility performance; and (2) when the 
measure's truncated coefficient of variation is less than or equal to 
0.10 (79 FR 66968 through 66969). We refer readers to section 
XIII.B.4.a.(6) of this proposed rule, above, where we clarify and 
discuss how we calculate the TCOV for measures that assess the rate of 
rare, undesired events for which a lower rate is preferred such as OP-
11 and OP-14.
    For each of these measures, we believe that removal from the 
Hospital OQR Program measure set is appropriate as there is little room 
for improvement. In addition, as discussed in section I.A.2. of this 
proposed rule above, our Meaningful Measures Initiative is intended to 
reduce costs and minimize burden. We believe that removing these 
measures from the Hospital OQR Program will reduce program burden, 
costs, and complexity. As such, we believe the burden associated with 
reporting these measures outweighs the benefits of keeping them in the 
Hospital OQR Program.
    Each measure is discussed in more detail below. We also note that 
in crafting our proposals, we considered removing these measures 
beginning with the CY 2020 payment determination, but decided on 
proposing to delay removal until the CY 2021 payment determination and 
subsequent years to be sensitive to providers' planning and operational 
procedures given that data collection for the measures begins during CY 
2018 for the CY 2020 payment determination.
    <bullet> Proposed Removal of OP-11: Thorax CT Use of Contrast 
Material
    We refer readers to the CY 2009 OPPS/ASC final rule with comment 
period (73 FR 68766) where we adopted OP-11: Thorax CT Use of Contrast 
Material (NQF #0513) beginning with the CY 2010 payment determination. 
This claims-based measure assesses the percentage of thorax studies 
that are performed with and without contrast out of all thorax studies 
performed.
    Based on our analysis of Hospital OQR Program measure data, we have 
determined that this measure meets our measure removal Factor 1. These 
analyses are captured in the table below.

                          OP-11--Thorax CT Use of Contrast Material Topped-Out Analysis
----------------------------------------------------------------------------------------------------------------
                                                     Number of         75th            90th
                   Encounters                        hospitals      Percentile      Percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
CY 2012.........................................             867            96.9            98.4           0.081
CY 2013.........................................             869            97.1            98.5           0.074
CY 2014.........................................             796            97.2            98.4           0.065
CY 2015.........................................             711            97.4            98.5           0.054
----------------------------------------------------------------------------------------------------------------

    As displayed in the table above, there is a statistically 
indistinguishable difference in hospital performance between the 75th 
and 90th percentiles, and the truncated coefficient of variation has 
been below 0.10 since 2012.
    <bullet> Proposed Removal of OP-14: Simultaneous Use of Brain 
Computed Tomography (CT) and Sinus CT
    We refer readers to the CY 2010 OPPS/ASC final rule with comment 
period (75 FR 72082) where we adopted OP-14: Simultaneous Use of Brain 
Computed Tomography (CT) and Sinus CT beginning with the CY 2012 
payment determination and for subsequent years. This claims-based 
measure assesses the extent to which patients with a headache who have 
a brain CT also have a sinus CT performed on the same date at the same 
facility.
    Based on our analysis of Hospital OQR Program measure data, we have 
determined that this measure meets our measure removal Factor 1. These 
analyses are captured in the table below.

           OP-14: Simultaneous Use of Brain Computed Tomography (CT) And Sinus CT Topped-Out Analysis
----------------------------------------------------------------------------------------------------------------
                                                     Number of         75th            90th
                   Encounters                        hospitals      percentile      percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
CY 2012.........................................           1,478            97.8            98.3           0.012

[[Page 37186]]

 
CY 2013.........................................           1,939            97.7            98.2           0.010
CY 2014.........................................           2,023            97.6            98.2           0.011
CY 2015.........................................           1,101            98.5            98.8           0.007
----------------------------------------------------------------------------------------------------------------

    As displayed in the table above, there is a statistically 
indistinguishable difference in hospital performance between the 75th 
and 90th percentiles, and the truncated coefficient of variation has 
been below 0.10 since 2012.
    Therefore, we are inviting public comment on our proposals to 
remove: (1) OP-11: Thorax CT Use of Contrast Material, and (2) OP-14: 
Simultaneous Use of Brain Computed Tomography (CT) and Sinus CT measure 
for the CY 2021 payment determination and subsequent years as discussed 
above.
(d) Proposed Removals Under Measure Removal Factor 2: OP-12 and OP-17
    In this proposed rule, for the CY 2021 payment determination and 
subsequent years, we are proposing to remove two measures under our 
measure removal Factor 2, performance or improvement on a measure does 
not result in better patient outcomes: OP-12 and OP-17. The proposals 
are discussed in more detail below. As discussed in section I.A.2. of 
this proposed rule above, our Meaningful Measures Initiative is 
intended to reduce costs and minimize burden. We believe that removing 
these measures from the Hospital OQR Program will reduce program 
burden, costs, and complexity. In addition, we note that in crafting 
our proposals, we considered removing these measures beginning with the 
CY 2020 payment determination, but decided on proposing to delay 
removal until the CY 2021 payment determination to be sensitive to 
facilities' planning and operational procedures given that data 
collection for this measure begins during CY 2018 for the CY 2020 
payment determination.
    <bullet> Proposed Removal of OP-12: The Ability for Providers with 
HIT to Receive Laboratory Data Electronically Directly into Their 
Qualified/Certified EHR System as Discrete Searchable Data
    We refer readers to CY 2011 OPPS/ASC final rule with comment period 
(75 FR 72076) where we adopted OP-12: The Ability for Providers with 
HIT to Receive Laboratory Data Electronically Directly into Their 
Qualified/Certified EHR System as Discrete Searchable Data beginning 
with the CY 2012 payment determination. This web-based measure assesses 
the extent to which a provider uses an Office of the National 
Coordinator for Health Information Technology (ONC) certified 
electronic health record (EHR) system that incorporates an electronic 
data interchange with one or more laboratories allowing for direct 
electronic transmission of laboratory data in the EHR as discrete 
searchable data elements. In this proposed rule, we are proposing to 
remove OP-12 beginning with the CY 2021 payment determination and for 
subsequent years under our measure removal Factor 2, performance or 
improvement on a measure does not result in better patient outcomes.
    OP-12 is a process measure that tracks the transmittal of data, but 
does not directly assess quality or patient outcomes. In the CY 2011 
OPPS/ASC final rule with comment period (75 FR 72075), commenters 
expressed concern that the measure only assesses HIT functionality and 
does not assess the quality of care provided. As discussed in section 
I.A.2. of this proposed rule, one of the goals of our Meaningful 
Measures Initiative is to reduce burden associated with payment policy, 
quality measures, documentation requirements, conditions of 
participation, and health information technology. As also discussed in 
section I.A.2. of this proposed rule, one of the goals of our 
Meaningful Measures Initiative is to utilize measures that are 
``outcome-based where possible.'' We do not believe OP-12 adds to these 
goals. In fact, we believe that provider performance in the measure is 
not an indicator for patient outcomes and continued collection provides 
little benefit.
    Therefore, we are proposing to remove OP-12 from the Hospital OQR 
Program beginning with the CY 2021 payment determination and for 
subsequent years.
    <bullet> Proposed Removal of OP-17: Tracking Clinical Results 
Between Visits
    We refer readers to CY 2011 OPPS/ASC final rule with comment period 
(75 FR 72085) where we adopted OP-17: Tracking Clinical Results between 
Visits beginning with the CY 2013 payment determination. This web-based 
measure assesses the extent to which a provider uses a certified/
qualified EHR system to track pending laboratory tests, diagnostic 
studies (including common preventive screenings), or patient referrals. 
In this proposed rule, we are proposing to remove OP-17 beginning with 
the CY 2021 payment determination and for subsequent years under our 
measure removal Factor 2, performance or improvement on a measure does 
not result in better patient outcomes.
    OP-17 is a process measure that tabulates only the ability for 
transmittal of data, but does not directly assess quality or patient 
outcomes. In the CY 2011 OPPS/ASC final rule with comment period (75 FR 
72075), commenters expressed concern that the measure only assesses HIT 
functionality and does not assess the quality of care provided. As 
discussed in section I.A.2. of this proposed rule, one of the goals of 
our Meaningful Measures Initiative is to reduce burden associated with 
payment policy, quality measures, documentation requirements, 
conditions of participation, and health information technology. As also 
discussed in section I.A.2. of this proposed rule, one of the goals of 
our Meaningful Measures Initiative is to utilize measures that 
``outcome-based where possible.'' We do not believe OP-17 supports this 
goal. In fact, we believe that provider performance in the measure does 
not improve patient outcomes and continued collection provides little 
benefit. Therefore, we are proposing to remove OP-17 from the Hospital 
OQR Program beginning with the CY 2021 payment determination and for 
subsequent years.
5. Summary of Proposed Hospital OQR Program Measure Sets for the CY 
2020 and CY 2021 Payment Determinations
    In this proposed rule, we are not proposing any new measures for 
the Hospital OQR Program. We refer readers to the CY 2018 OPPS/ASC 
final rule with comment period (82 FR 59434 through 59435) for the 
previously finalized measure set for the CY 2020 payment determination 
and subsequent years. The tables below summarize the

[[Page 37187]]

proposed Hospital OQR Program measure sets for the CY 2020 and 2021 
payment determinations and subsequent years (including previously 
adopted measures and excluding measures proposed for removal in this 
proposed rule).

    Proposed Hospital OQR Program Measure Set for the CY 2020 Payment
                              Determination
------------------------------------------------------------------------
           NQF No.                            Measure name
------------------------------------------------------------------------
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 [dagger]
0514.........................  OP-8: MRI Lumbar Spine for Low Back Pain
None.........................  OP-9: Mammography Follow-up Rates
None.........................  OP-10: Abdomen CT--Use of Contrast
                                Material
0513.........................  OP-11: Thorax CT--Use of Contrast
                                Material
None.........................  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
None.........................  OP-14: Simultaneous Use of Brain Computed
                                Tomography (CT) and Sinus Computed
                                Tomography (CT)
0491.........................  OP-17: Tracking Clinical Results between
                                Visits [dagger]
0496.........................  OP-18: Median Time from ED Arrival to ED
                                Departure for Discharged ED Patients
0499.........................  OP-22: Left Without Being Seen [dagger]
0661.........................  OP-23: 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 ED
                                Arrival
0658.........................  OP-29: Appropriate Follow-Up Interval for
                                Normal Colonoscopy in Average Risk
                                Patients *
0659.........................  OP-30: 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 **
2539.........................  OP-32: Facility 7-Day Risk-Standardized
                                Hospital Visit Rate after Outpatient
                                Colonoscopy
1822.........................  OP-33: External Beam Radiotherapy for
                                Bone Metastases
None.........................  OP-35: Admissions and Emergency
                                Department (ED) Visits for Patients
                                Receiving Outpatient Chemotherapy
2687.........................  OP-36: Hospital Visits after Hospital
                                Outpatient Surgery
None.........................  OP-37a: OAS CAHPS--About Facilities and
                                Staff ***
None.........................  OP-37b: OAS CAHPS--Communication About
                                Procedure ***
None.........................  OP-37c: OAS CAHPS--Preparation for
                                Discharge and Recovery ***
None.........................  OP-37d: OAS CAHPS--Overall Rating of
                                Facility ***
None.........................  OP-37e: OAS CAHPS--Recommendation of
                                Facility ***
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
* OP-26: Procedure categories and corresponding HCPCS codes are located
  at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
** We note that measure name was revised to reflect NQF title.
*** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
  through 66947).
**** Measure reporting delayed beginning with CY 2018 reporting and for
  subsequent years as discussed in section XIII.B.5. of the CY 2018 OPPS/
  ASC final rule with comment period (82 FR 59432 through 59433).


    Proposed Hospital OQR Program Measure Set for the CY 2021 Payment
                   Determination and Subsequent Years
------------------------------------------------------------------------
           NQF No.                            Measure name
------------------------------------------------------------------------
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.
0514.........................  OP-8: MRI Lumbar Spine for Low Back Pain.
None.........................  OP-10: Abdomen CT--Use of Contrast
                                Material.
0669.........................  OP-13: Cardiac Imaging for Preoperative
                                Risk Assessment for Non-Cardiac, Low-
                                Risk Surgery.
0496.........................  OP-18: Median Time from ED Arrival to ED
                                Departure for Discharged ED Patients.
0499.........................  OP-22: Left Without Being Seen. [dagger]
0661.........................  OP-23: 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 ED
                                Arrival.
2539.........................  OP-32: Facility 7-Day Risk-Standardized
                                Hospital Visit Rate after Outpatient
                                Colonoscopy.
1822.........................  OP-33: External Beam Radiotherapy for
                                Bone Metastases.
None.........................  OP-35: Admissions and Emergency
                                Department (ED) Visits for Patients
                                Receiving Outpatient Chemotherapy.
2687.........................  OP-36: Hospital Visits after Hospital
                                Outpatient Surgery.
None.........................  OP-37a: OAS CAHPS--About Facilities and
                                Staff.***
None.........................  OP-37b: OAS CAHPS--Communication About
                                Procedure.***
None.........................  OP-37c: OAS CAHPS--Preparation for
                                Discharge and Recovery.***
None.........................  OP-37d: OAS CAHPS--Overall Rating of
                                Facility.***
None.........................  OP-37e: OAS CAHPS--Recommendation of
                                Facility.***
------------------------------------------------------------------------
[dagger] We note that NQF endorsement for this measure was removed.
[ordm] OP-26: Procedure categories and corresponding HCPCS codes are
  located at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1196289981244 9981244.
* We note that measure name was revised to reflect NQF title.
** Measure voluntarily collected as set forth in section XIII.D.3.b. of
  the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946
  through 66947).
*** Measure reporting delayed beginning with CY 2018 reporting and for
  subsequent years as discussed in section XIII.B.5. of the CY 2018 OPPS/
  ASC final rule with comment period (82 FR 59432 through 59433).


[[Page 37188]]

6. Hospital OQR Program Measures and Topics for Future Consideration
    In this proposed rule, we are requesting public comment on future 
measure topics for the Hospital OQR Program. 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. The current measure set for the Hospital 
OQR Program includes measures that assess process of care, imaging 
efficiency patterns, care transitions, ED throughput efficiency, Health 
Information Technology (health IT) use, care coordination, and patient 
safety. Measures are of various types, including those of process, 
structure, outcome, and efficiency. 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, 
while aligning quality measures across the Medicare program to the 
extent possible.
    We are moving towards greater use of outcome measures and away from 
use of clinical process measures across our Medicare quality reporting 
and value-based purchasing programs. We are inviting public comments on 
possible measure topics for future consideration in the Hospital OQR 
Program. We are specifically requesting comment on any outcome measures 
that would be useful to add to as well as any process measures that 
should be eliminated from the Hospital OQR Program.
7. Maintenance of Technical Specifications for Quality Measures
    CMS maintains technical specifications for previously adopted 
Hospital OQR Program measures. These specifications are updated as we 
modify the Hospital OQR Program measure set. The manuals that contain 
specifications for the previously adopted measures can be found on the 
QualityNet website at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244. In this proposed rule, we are proposing to change the frequency 
of the Hospital OQR Program Specifications Manual release beginning 
with CY 2019 and for subsequent years and we refer readers to section 
XIII.D.2. of this proposed rule for more details.
8. Public Display of Quality Measures
    We refer readers to the CY 2014 and CY 2017 OPPS/ASC final rules 
with comment period (78 FR 75092 and 81 FR 79791 respectively) for our 
previously finalized policies regarding public display of quality 
measures. In this proposed rule, we are not proposing any changes to 
our previously finalized public display policies.

C. Administrative Requirements

1. QualityNet Account and Security Administrator
    The previously finalized QualityNet security administrator 
requirements, including setting up a QualityNet account and the 
associated timelines, are described in the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75108 through 75109). In that final rule 
with comment period, we codified these procedural requirements at 42 
CFR 419.46(a). In this proposed rule, we are not proposing any changes 
to our requirements for the QualityNet account and security 
administrator.
2. Requirements Regarding Participation Status
    In this proposed rule, we are proposing to update our requirements 
related to the Notice of Participation (NOP) form.
a. Background
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75108 through 75109) and the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70519) for requirements for participation 
and withdrawal from the Hospital OQR Program. We also codified these 
procedural requirements at 42 CFR 419.46(a) and 42 CFR 419.46(b).
b. Proposal to Remove the Notice of Participation (NOP) Form 
Requirement
    We finalized in the CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75108 through 75109) that participation in the Hospital OQR 
Program requires that hospitals must: (1) Register on the QualityNet 
website before beginning to report data; (2) identify and register a 
QualityNet security administrator; and (3) complete and submit an 
online participation form, the Notice of Participation (NOP) form, 
available at the QualityNet website if this form has not been 
previously completed, if a hospital has previously withdrawn, or if the 
hospital acquires a new CMS Certification Number (CCN). In addition, in 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75108 
through 75109), we finalized the requirement that that hospitals must 
submit the NOP according to the below deadlines. These requirements are 
also codified at 42 CFR 419.46(a).
    <bullet> If a hospital has a Medicare acceptance date before 
January 1 of the year prior to the affected annual payment update, the 
hospital must complete and submit to CMS a completed Hospital OQR 
Notice of Participation Form by July 31 of the calendar year prior to 
the affected annual payment update.
    <bullet> If a hospital has a Medicare acceptance date on or after 
January 1 of the year prior to the affected annual payment update, the 
hospital must submit a completed participation form no later than 180 
days from the date identified as its Medicare acceptance date. In this 
proposed rule, beginning with the CY 2018 reporting period/CY 2020 
payment determination, we are proposing to remove submission of the NOP 
form as a requirement for the Hospital OQR Program. After reevaluating 
program requirements, we have concluded that this form does not provide 
CMS with any unique information, and as such, we believe it is 
unnecessarily burdensome for hospitals to complete and submit. In place 
of the NOP form, we are proposing that submission of any Hospital OQR 
Program data would indicate a hospital's status as a participant in the 
program. This includes submitting just one data element. That is, 
hospitals would no longer be required to submit the NOP form as was 
previously required. Instead, hospitals would need to do the following 
to be a participant in the Hospital OQR Program: (1) Register on the 
QualityNet website before beginning to report data; (2) identify and 
register a QualityNet security administrator; and (3) submit data. We 
are also proposing to update 42 CFR 419.46(a) to reflect these changes.

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

1. Hospital OQR Program Annual Payment Determinations
    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75110 
through 75111) and the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70519 through 70520), we specified our data submission 
deadlines. We also codified our submission requirements at 42 CFR 
419.46(c).
    We refer readers to the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70519 through 70520), where we finalized our proposal to 
shift the quarters upon which the Hospital OQR Program payment 
determinations are based, beginning with the CY 2018 payment 
determination. The finalized deadlines for the CY 2020 payment

[[Page 37189]]

determination and subsequent years are illustrated in the table below.

           CY 2020 Payment Determination and Subsequent Years
------------------------------------------------------------------------
                                                               Clinical
                                                                 data
                 Patient encounter quarter                    submission
                                                               deadline
------------------------------------------------------------------------
Q2 2018 (April 1-June 30)..................................    11/1/2018
Q3 2018 (July 1-September 30)..............................     2/1/2019
Q4 2018 (October 1-December 31)............................     5/1/2019
Q1 2019 (January 1-March 31)...............................     8/1/2019
------------------------------------------------------------------------

    In the CY 2018 OPPS/ASC final rule with comment period, we 
finalized a policy to align the initial data submission timeline for 
all hospitals that did not participate in the previous year's Hospital 
OQR Program and made conforming revisions at 42 CFR 419.46(c)(3). In 
this proposed rule, we are not proposing any changes to these policies.
2. Proposal To Change Frequency of Hospital Outpatient Quality 
Reporting Specifications Manual Release Beginning With CY 2019 and for 
Subsequent Years
    In this proposed rule, we are proposing to change the frequency of 
the Hospital Outpatient Quality Reporting Specifications Manual release 
beginning with CY 2019 and for subsequent years. In the CY 2009 OPPS/
ASC final rule with comment period (73 FR 68766 through 68767), we 
established a subregulatory process for making updates to the measures 
we have adopted for the Hospital OQR Program. As stated in CY 2014 
OPPS/ASC final rule with comment period (78 FR 75091), we believe that 
a measure can be updated through this subregulatory process provided it 
is a nonsubstantive change. We expect to continue to make the 
determination of what constitutes a substantive versus a nonsubstantive 
change on a case-by-case basis. Examples of nonsubstantive changes to 
measures might include updated diagnosis or procedure codes, medication 
updates for categories of medications, broadening of age ranges, and 
exclusions for a measure (such as the addition of a hospice exclusion 
to the 30-day mortality measures). We believe that nonsubstantive 
changes may include updates to measures based upon changes to 
guidelines upon which the measures are based.
    For a history of our policies regarding maintenance of technical 
specifications for quality measures, we refer readers to the CY 2010 
OPPS/ASC final rule with comment period (74 FR 60631), the CY 2011 
OPPS/ASC final rule with comment period (75 FR 72069), and the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68469 through 68470). We 
note that we will continue to use rulemaking to adopt substantive 
updates to measures we have adopted for the Hospital OQR Program. We 
believe that this policy adequately balances our need to incorporate 
nonsubstantive updates to Hospital OQR Program measures in the most 
expeditious manner possible, while preserving the public's ability to 
comment on updates that so fundamentally change an endorsed measure 
that it is no longer the same measure that we originally adopted. We 
also note that the NQF process incorporates an opportunity for public 
comment and engagement in the measure maintenance process.
    As stated in CY 2014 OPPS/ASC final rule with comment period (78 FR 
75091), under current policy, technical specifications for the Hospital 
OQR Program measures are listed in the Hospital Outpatient Quality 
Reporting Specifications Manual, which is posted on the CMS QualityNet 
website at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FSpecsManualTemplate&cid=1228772438492. We maintain the technical specifications for the 
measures by updating this Hospital Outpatient Quality Reporting 
Specifications Manual and including detailed instructions and 
calculation algorithms. In some cases where the specifications are 
available elsewhere, we may include links to websites hosting technical 
specifications. These resources are for hospitals to use when 
collecting and submitting data on required measures. We revise the 
Hospital Outpatient Quality Reporting Specifications Manual so that it 
clearly identifies the updates and provide links to where additional 
information on the updates can be found. We provide sufficient lead 
time for facilities to implement the changes where changes to the data 
collection systems would be necessary. We generally release the 
Hospital Outpatient Quality Reporting Specifications Manual every 6 
months and release addenda as necessary. This release schedule provides 
at least 3 months of advance notice for nonsubstantive changes such as 
changes to ICD-10, CPT, NUBC, and HCPCS codes, and at least 6 months of 
advance notice for changes to data elements that would require 
significant systems changes (78 FR 75091).
    However, we believe that unnecessarily releasing two manuals a year 
has the potential to cause confusion for Hospital OQR Program 
participants. Therefore, in this proposed rule, we are proposing to 
update the frequency with which we release Hospital Outpatient Quality 
Reporting Specifications Manuals, such that instead of every 6 months, 
we would release Specifications Manuals every 6 to 12 months beginning 
with CY 2019 and for subsequent years. Under this proposal, we would 
release a Hospital Outpatient Quality Reporting Specifications Manual 
one to two times per calendar year, depending on the need for an 
updated release and consideration of our policy to provide at least 6 
months' notice for substantive changes.
3. Requirements for Chart-Abstracted Measures Where Patient-Level Data 
Are Submitted Directly to CMS for the CY 2020 Payment Determination and 
Subsequent Years
    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, 
manner, and timing for data submission requirements of chart-abstracted 
measures for the CY 2014 payment determination and subsequent years. We 
are not proposing any changes to our policies regarding the submission 
of chart-abstracted measure data where patient-level data are submitted 
directly to CMS.
    We note that, in section XIII.B.4.b. of this proposed rule, we are 
proposing to remove OP-5: Median Time to ECG for the CY 2021 payment 
determination and subsequent years. If that proposal is finalized as 
proposed, only the following previously finalized Hospital OQR Program 
chart-abstracted measures will require patient-level data to be 
submitted for the CY 2021 payment determination and subsequent years:
    <bullet> OP-2: Fibrinolytic Therapy Received Within 30 Minutes of 
ED Arrival (NQF #0288);
    <bullet> OP-3: Median Time to Transfer to Another Facility for 
Acute Coronary Intervention (NQF #0290);
    <bullet> OP-18: Median Time from ED Arrival to ED Departure for 
Discharged ED Patients (NQF #0496); and
    <bullet> OP-23: Head CT Scan Results for Acute Ischemic Stroke or 
Hemorrhagic Stroke Patients who Received Head CT Scan Interpretation 
Within 45 Minutes of ED Arrival (NQF #0661).
4. Claims-Based Measure Data Requirements for the CY 2020 Payment 
Determination and Subsequent Years
    In this proposed rule, we are proposing to extend the reporting

[[Page 37190]]

period \86\ for OP-32: Facility 7-Day Risk-Standardized Hospital Visit 
Rate after Outpatient Colonoscopy.
---------------------------------------------------------------------------

    \86\ We note that we previously referred to these reporting 
periods as ``collection periods'' (for example, 82 FR 59440); we now 
use the term ``reporting period'' in order to align the ASCQR 
Program terminology with the terminology we use in other CMS quality 
reporting and pay for performance (value-based purchasing) programs.
---------------------------------------------------------------------------

a. General
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75111 through 75112) for a discussion of the general 
claims-based measure data submission requirements for the CY 2015 
payment determination and subsequent years.
    We are not proposing changes to our general requirements for 
claims-based measure data, but refer readers to the section below for 
our proposal specific to OP-32.
    We note that, in section XIII.B.4.b. of this proposed rule, we are 
proposing to remove OP-9: Mammography Follow-up Rates, OP-11: Thorax CT 
Use of Contrast Material, and OP-14: Simultaneous Use of Brain Computed 
Tomography (CT) and Sinus CT for the CY 2021 payment determination and 
subsequent years. If these removals are finalized as proposed, only the 
following previously finalized Hospital OQR Program claims-based 
measures will be required for the CY 2021 payment determination and 
subsequent years:
    <bullet> OP-8: MRI Lumbar Spine for Low Back Pain (NQF #0514);
    <bullet> OP-10: Abdomen CT--Use of Contrast Material;
    <bullet> OP-13: Cardiac Imaging for Preoperative Risk Assessment 
for Non-Cardiac, Low Risk Surgery (NQF #0669);
    <bullet> OP-32: Facility 7-Day Risk-Standardized Hospital Visit 
Rate after Outpatient Colonoscopy (NQF #2539);
    <bullet> OP-35: Admissions and Emergency Department Visits for 
Patients Receiving Outpatient Chemotherapy; and
    <bullet> OP-36: Hospital Visits after Hospital Outpatient Surgery 
(NQF #2687).
b. Proposed Extension of the Reporting Period for OP-32: Facility 7-Day 
Risk-Standardized Hospital Visit Rate After Outpatient Colonoscopy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66949), we finalized the adoption of OP-32: Facility 7-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy into the 
Hospital OQR Program for the CY 2018 payment determination and 
subsequent years, with public display to begin on or after December 1, 
2017. This measure is calculated with data obtained from paid Medicare 
FFS claims (79 FR 66950). For this reason, facilities are not required 
to submit any additional information. In that final rule with comment 
period, we also finalized the reporting period for measure calculation 
as claims data from 2 calendar years prior to the payment determination 
year. Specifically, for the CY 2018 payment determination, we stated we 
would use paid Medicare FFS claims from January 1, 2016 to December 31, 
2016 to calculate measure results (79 FR 66955). We finalized a 1-year 
reporting period, as it adequately balanced competing interests of 
measure reliability and timeliness for payment determination purposes, 
and explained that we would continue to assess this during the dry run 
(79 FR 66955).
    We noted we would complete a dry run of the measure in 2015 using 3 
or 4 years of data, and, from the results of this dry run, we would 
review the appropriate volume cutoff for facilities to ensure 
statistical reliability in reporting the measure score (79 FR 66953). 
Our analyses of the 2015 dry run using data from July 2011 through June 
2014 showed that a reporting period of one year had moderate to high 
reliability for measure calculation. Specifically, using data from July 
2013 through June 2014, we calculated facility-level reliability 
estimates as the ratio of true variance to observed variance.\87\ 
Consistent with the original measure specifications as described in the 
2014 technical report,\88\ this calculation was performed combining the 
measure results for HOPDs and ASCs. We found that for a facility with 
median case size, the reliability estimate was high (over 0.90), but 
the minimum reliability estimate for facilities with 30 cases (the 
minimum case size chosen for public reporting) was only moderate (that 
is, between 0.40 and 0.60).\89\
---------------------------------------------------------------------------

    \87\ Snijders TA, Bosker RJ. Multilevel Analysis: An 
introduction to basic and advanced multilevel modeling. SAGE 
Publications. 2000. London.
    \88\ Additional methodology details and information obtained 
from public comments for measure development are available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html under 
``Hospital Outpatient Colonoscopy.''
    \89\ Landis JR, Koch GG. The Measurement of Observer Agreement 
for Categorical Data. Biometrics. 1977;33(1):159-174.
---------------------------------------------------------------------------

    However, after the 2015 dry run, CMS calculated the HOPD and ASC 
scores separately to compare similar types of providers to each other. 
During subsequent analysis of the 1-year period July 2013 through June 
2014, we confirmed that a 1-year reporting period with separate 
calculations for HOPDs and ASCs was sufficient, but did result in lower 
reliability and decreased precision compared to these measures 
calculated from longer reporting periods (2 or 3 years). Based on 
analyses conducted using data from July 2013 through June 2014 (1-year 
reporting period) and 2017 measure specifications,\90\ we found that 
the median facility-level reliability was 0.74 for ASCs and 0.51 for 
HOPDs. Using a 2-year reporting period (data from July 2012--June 
2014), we found that median facility-level reliability was 0.81 for 
ASCs and 0.67 for HOPDs. When the reporting period was extended to 3 
years (using data from July 2011 through June 2014), we found that 
median facility-level reliability was higher for both ASCs and HOPDs: 
0.87 for ASCs and 0.75 for HOPDs. These results indicate that a larger 
portion of the included facilities have scores measured with higher 
reliability when 3 years of data are used rather than 1 year of data.
---------------------------------------------------------------------------

    \90\ Current and past measure specifications are available at: 
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228775214597.
---------------------------------------------------------------------------

    Using 3 years of data, compared to just 1 year, is estimated to 
increase the number of HOPDs with eligible cases for OP-32 by 5 
percent, adding approximately 235 additional facilities to the measure 
calculation. Facilities reporting the measure would increase their 
sample sizes and, in turn, increase the precision and reliability of 
their measure scores. Thus, we believe extending the reporting period 
to 3 years from 1 year for purposes of increasing reliability would be 
beneficial for providing better information to beneficiaries regarding 
the quality of care associated with low-risk outpatient colonoscopy 
procedures. In crafting our proposal, we considered extending the 
reporting period to 2 years beginning with the CY 2020 payment 
determinations and subsequent years, but decided on proposing 3 years 
instead, because a higher level of reliability is achieved with a 3-
year reporting period compared to 2 years.
    Therefore, we are proposing to change the reporting period for OP-
32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy from 1 year to 3 years beginning with the CY 
2020 payment determination (which would use claims data from January 1, 
2016 through December 31, 2018) and for subsequent years. Under this 
proposal, the annual reporting requirements for facilities would not 
change, because this is a claims-based measure. However, with a 3-year 
reporting period, the most current year

[[Page 37191]]

of data would be supplemented by the addition of 2 prior years. For 
example, for the CY 2020 payment determination, we would use a 
reporting period of CY 2018 data plus 2 prior years of data (CYs 2016 
and 2017). We note that since implementation of this measure began with 
the CY 2018 payment determination, we have already used paid Medicare 
fee-for-service claims from January 1, 2016 to December 31, 2016 to 
calculate measure scores, which have been previously previewed by 
facilities and publicly displayed. In crafting our proposal, we also 
considered timeliness related to payment determinations and public 
display. Because we would utilize data already collected to supplement 
current data, our proposal to use 3 years of data would not disrupt 
payment determinations or public display. We refer readers to the table 
below for example reporting periods and public display dates 
corresponding to the CY 2020, CY 2021, and CY 2022 payment 
determinations:

----------------------------------------------------------------------------------------------------------------
                                           CY 2020 payment          CY 2021 payment          CY 2022 payment
                                            determination            determination            determination
----------------------------------------------------------------------------------------------------------------
Public display.......................  January 2020...........  January 2021...........  January 2022.
Reporting period.....................  January 1, 2016-         January 1, 2017-         January 1, 2018-
                                        December 31, 2018.       December 31, 2019.       December 31, 2020.
----------------------------------------------------------------------------------------------------------------

5. Data Submission Requirements for the OP-37a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79792 through 79794) for a discussion of the previously 
finalized requirements related to survey administration and vendors for 
the OAS CAHPS Survey-based measures. In addition, we refer readers to 
the CY 2018 OPPS/ASC final rule with comment period (82 FR 59432 
through 59433), where we finalized a policy to delay implementation of 
the OP-37a-e OAS CAHPS Survey-based measures beginning with the CY 2020 
payment determination (2018 reporting period) until further action in 
future rulemaking. We are not proposing any changes to the previously 
finalized requirements related to survey administration and vendors for 
the OAS CAHPS Survey-based measures.
6. Data Submission Requirements for Previously Finalized Measures for 
Data Submitted via a Web-Based Tool for the CY 2020 Payment 
Determination and Subsequent Years
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75112 through 75115) and the CY 2016 OPPS/ASC final rule 
with comment period (80 FR 70521) and the CMS QualityNet website 
(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1205442125082) for a discussion of the requirements for measure data submitted 
via the CMS QualityNet website for the CY 2017 payment determination 
and subsequent years. In addition, we refer readers to the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75097 through 75100) for 
a discussion of the requirements for measure data submitted via the CDC 
NHSN website. We are not proposing any changes to our policies 
regarding the submission of measure data submitted via a web-based 
tool.
    We note that, in section XIII.B.4.b. of this proposed rule, we are 
proposing to remove of OP-27: Influenza Vaccination Coverage Among 
Healthcare Personnel beginning with the CY 2020 payment determination 
and for subsequent years. If this removal is finalized as proposed, for 
the CY 2020 payment determination, the following web-based quality 
measures would be required:
    <bullet> OP-12: The Ability for Providers with HIT to Receive 
Laboratory Data Electronically Directly into their ONC-Certified EHR 
System as Discrete Searchable Data (via CMS' QualityNet website);
    <bullet> OP-17: Tracking Clinical Results between Visits (NQF 
#0491) (via CMS' QualityNet website);
    <bullet> OP-22: Left Without Being Seen (NQF #0499) (via CMS' 
QualityNet website);
    <bullet> OP-29: Appropriate Follow-up Interval for Normal 
Colonoscopy in Average Risk Patients (NQF #0658) (via CMS' QualityNet 
website);
    <bullet> OP-30: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use (NQF #0659) (via 
CMS' QualityNet website);
    <bullet> OP-31: Cataracts: Improvement in Patient's Visual Function 
within 90 Days Following Cataract Surgery (NQF #1536) (via CMS' 
QualityNet website); and
    <bullet> OP-33: External Beam Radiotherapy (EBRT) for Bone 
Metastases (NQF #1822) (via CMS' QualityNet website).
    Furthermore, we note that in section XIII.B.4.b. of this proposed 
rule, for the CY 2021 payment determination and subsequent years, we 
are proposing to remove: OP-12: The Ability for Providers with HIT to 
Receive Laboratory Data Electronically Directly into Their Qualified/
Certified EHR System as Discrete Searchable Data; OP-17: Tracking 
Clinical Results between Visits; OP-29: Endoscopy/Polyp Surveillance: 
Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk 
Patients; OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for 
Patients with a History of Adenomatous Polyps-Avoidance of 
Inappropriate Use; and OP-31: Cataracts: Improvement in Patient's 
Visual Function within 90 Days Following Cataract Surgery beginning 
with the CY 2021 payment determination and for subsequent years. If 
these removals are finalized as proposed, only the following web-based 
quality measures would require data to be submitted via a web-based 
tool for the CY 2021 payment determination and subsequent years:
    <bullet> OP-22: Left Without Being Seen (NQF #0499) (via CMS' 
QualityNet website); and
    <bullet> OP-33: External Beam Radiotherapy (EBRT) for Bone 
Metastases (NQF #1822) (via CMS' QualityNet website).
7. Population and Sampling Data Requirements for the CY 2020 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 
population and sampling requirements. In this proposed rule, we are not 
proposing any changes to our population and sampling requirements for 
chart-abstracted measures.
8. Hospital OQR Program Validation Requirements
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68484 through 68487), the

[[Page 37192]]

CY 2015 OPPS/ASC final rule with comment period (79 FR 66964 through 
66965), the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70524), and the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59441 through 59443), and 42 CFR 419.46(e) for our policies regarding 
validation. We are not proposing any changes to these policies in this 
proposed rule.
9. Extraordinary Circumstances Exception (ECE) Process for the CY 2020 
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), the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66966), the CY 2016 OPPS/ASC final rule with 
comment period (80 FR 70524), the CY 2017 OPPS/ASC final rule with 
comment period (81 FR 79795), the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59444), and 42 CFR 419.46(d) for a complete 
discussion of our extraordinary circumstances exception (ECE) process 
under the Hospital OQR Program. We are not proposing any changes to our 
ECE policy in this proposed rule.
10. Hospital OQR Program Reconsideration and Appeals Procedures for the 
CY 2020 Payment Determination and Subsequent Years
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68487 through 68489), the CY 2014 OPPS/ASC final rule 
with comment period (78 FR 75118 through 75119), the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70524), the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79795), and 42 CFR 419.46(f) for 
our reconsideration and appeals procedures. We are not proposing any 
changes to our reconsideration and appeals procedures in this proposed 
rule.

E. Proposed Payment Reduction for Hospitals That Fail To Meet the 
Hospital OQR Program Requirements for the CY 2019 Payment Determination

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 
measures selected by the Secretary, in the form and manner, and at a 
time, specified 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 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 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 
website): ``J1'', ``J2'', ``P'', ``Q1'', ``Q2'',:Q3'', ``R'', ``S'', 
``T'', ``V'', or ``U''. In the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79796), we clarified that the reporting ratio does not 
apply to codes with status indicator ``Q4'' because services and 
procedures coded with status indicator ``Q4'' are either packaged or 
paid through the Clinical Laboratory Fee Schedule and are never paid 
separately through the OPPS. Payment for all services assigned to these 
status indicators will be subject to the reduction of the national 
unadjusted payment rates for hospitals that fail to meet Hospital OQR 
Program requirements, with the exception of services assigned to New 
Technology APCs with assigned status indicator ``S'' or ``T''. We refer 
readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68770 through 68771) for a discussion of this policy.
    The OPD fee schedule increase factor is an input into the OPPS 
conversion factor, which is used to calculate OPPS payment rates. To 
reduce the OPD fee schedule increase factor for hospitals that fail to 
meet reporting requirements, we calculate two conversion factors--a 
full market basket conversion factor (that is, the full conversion 
factor), and a reduced market basket conversion factor (that is, the 
reduced conversion factor). We then calculate a reduction ratio by 
dividing the reduced conversion factor by the full conversion factor. 
We refer to this reduction ratio as the ``reporting ratio'' to indicate 
that it applies to payment for hospitals that fail to meet their 
reporting requirements. Applying this reporting ratio to the OPPS 
payment amounts results in reduced national unadjusted payment rates 
that are mathematically equivalent to the reduced national unadjusted 
payment rates that would result if we multiplied the scaled OPPS 
relative payment weights by the reduced conversion factor. For example, 
to determine the reduced national unadjusted payment rates that applied 
to hospitals that failed to meet their quality reporting requirements 
for the CY 2010 OPPS, we multiplied the final full national unadjusted 
payment rate found in Addendum B of the CY 2010 OPPS/ASC final rule 
with comment period by the CY 2010 OPPS final reporting ratio of 0.980 
(74 FR 60642).
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 
through 68772), we established a policy that the Medicare beneficiary's 
minimum unadjusted copayment and national unadjusted copayment for a 
service to which a reduced national unadjusted payment rate applies 
would each equal the product of the reporting ratio and the national 
unadjusted copayment or the minimum unadjusted copayment, as 
applicable, for the service. Under this policy, we apply the reporting 
ratio to both the minimum unadjusted copayment and national unadjusted 
copayment for services provided by hospitals that receive the payment 
reduction for failure to meet the Hospital OQR Program reporting 
requirements. This application of the reporting ratio to the national 
unadjusted and minimum unadjusted copayments is calculated according to 
Sec.  419.41 of our regulations, prior to any adjustment for a 
hospital's failure to meet the quality reporting standards according to 
Sec.  419.43(h). Beneficiaries and secondary payers thereby share in 
the reduction of payments to these hospitals.
    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 
68772), we established the policy that all other applicable adjustments 
to the OPPS national unadjusted payment rates apply when the OPD fee 
schedule

[[Page 37193]]

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 2019
    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 2019 annual payment update factor. 
For the CY 2019 OPPS, the proposed reporting ratio is 0.980, calculated 
by dividing the proposed reduced conversion factor of 77.955 by the 
proposed full conversion factor of 79.546. We are proposing to continue 
to apply the reporting ratio to all services calculated using the OPPS 
conversion factor. For the CY 2019 OPPS, we are proposing to apply the 
reporting ratio, when applicable, to all HCPCS codes to which we have 
proposed status indicator assignments of ``J1'', ``J2'', ``P'', ``Q1'', 
``Q2'', ``Q3'', ``R'', ``S'', ``T'', ``V'', and ``U'' (other than new 
technology APCs to which we have proposed status indicator assignment 
of ``S'' and ``T''). 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 are also 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.

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 and to section 
I.A.2. of this proposed rule for a discussion of our new Meaningful 
Measures Initiative.
2. Statutory History of the 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 74494) for a detailed 
discussion of the statutory history of the ASCQR Program.
3. Regulatory History of the ASCQR Program
    We seek to promote higher quality and more efficient health care 
for beneficiaries. This effort is supported by the adoption of widely-
agreed-upon quality measures. We have worked with relevant stakeholders 
to define measures of quality in almost every healthcare setting and 
currently measure some aspect of care for almost all Medicare 
beneficiaries. These measures assess structural aspects of care, 
clinical processes, patient experiences with care, and outcomes. We 
have implemented quality measure reporting programs for multiple 
settings of care. To measure the quality of ASC services and to make 
such information publicly available, we implemented 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), section XIV. of the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66966 through 66987), section 
XIV. of the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70526 through 70538), section XIV. of the CY 2017 OPPS/ASC final rule 
with comment period (81 FR 79797 through 79826) and section XIV. of the 
CY 2018 OPPS/ASC final rule with comment period (82 FR 59445 through 
59476) for an overview of the regulatory history of the ASCQR Program.
4. Meaningful Measures Initiative
    In this proposed rule, we are proposing a number of new policies 
for the ASCQR Program. We developed these proposals after conducting an 
overall review of the Program under our new Meaningful Measures 
Initiative, which is discussed in more detail in section I.A.2. of this 
proposed rule. The proposals reflect our efforts to ensure that the 
ASCQR Program measure set continues to promote improved health outcomes 
for our beneficiaries while minimizing costs, which can consist of 
several different types of costs, including, but not limited to: (1) 
Facility information collection burden and related cost and burden 
associated with the submitting/reporting of quality measures to CMS; 
(2) the facility cost associated with complying with other quality 
programmatic requirements; (3) the facility cost associated with 
participating in multiple quality programs, and tracking multiple 
similar or duplicative measures within or across those programs; (4) 
the CMS cost associated with the program oversight of the measure, 
including measure maintenance and public display; and (5) the facility 
cost associated with compliance with other federal and/or State 
regulations (if applicable). They also reflect our efforts to improve 
the usefulness of the data that we publicly report in the ASCQR 
Program. Our goal is to improve the usefulness and usability of CMS 
quality program data by streamlining how facilities are reporting and 
accessing data, while maintaining or improving consumer understanding 
of the data publicly reported on a Compare website. We believe this 
framework will allow ASCs and patients to continue to obtain meaningful 
information about ASC performance and incentivize quality improvement 
while also streamlining the measure sets to reduce duplicative measures 
and program complexity so that the costs to ASCs associated with 
participating in this program do not outweigh the benefits of improving 
beneficiary care.

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures
    We refer readers to the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68493 through 68494) for a detailed discussion of the 
priorities we consider for ASCQR Program quality measure selection. We 
are not proposing any changes to these policies.

[[Page 37194]]

2. Accounting for Social Risk Factors in the ASCQR Program
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59445 
through 59447), we discussed the importance of improving beneficiary 
outcomes including reducing health disparities. We also discussed our 
commitment to ensuring that medically complex patients, as well as 
those with social risk factors, receive excellent care. We discussed 
how studies show that social risk factors, such as being near or below 
the poverty level as determined by HHS, belonging to a racial or ethnic 
minority group, or living with a disability, can be associated with 
poor health outcomes and how some of this disparity is related to the 
quality of health care.\91\ Among our core objectives, we aim to 
improve health outcomes, attain health equity for all beneficiaries, 
and ensure that complex patients as well as those with social risk 
factors receive excellent care. Within this context, reports by the 
Office of the Assistant Secretary for Planning and Evaluation (ASPE) 
and the National Academy of Medicine have examined the influence of 
social risk factors in CMS value-based purchasing programs.\92\ As we 
noted in the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59445 through 59447), ASPE's report to Congress found that, in the 
context of value-based purchasing programs, dual eligibility was the 
most powerful predictor of poor health care outcomes among those social 
risk factors that they examined and tested. In addition, as we noted in 
the CY 2018 OPPS/ASC final rule with comment period (82 FR 59446), the 
National Quality Forum (NQF) undertook a 2-year trial period in which 
certain new measures and measures undergoing maintenance review have 
been assessed to determine if risk adjustment for social risk factors 
is appropriate for these measures.\93\ The trial period ended in April 
2017 and a final report is available at: http://www.qualityforum.org/SES_Trial_Period.aspx. The trial concluded that ``measures with a 
conceptual basis for adjustment generally did not demonstrate an 
empirical relationship'' between social risk factors and the outcomes 
measured. This discrepancy may be explained in part by the methods used 
for adjustment and the limited availability of robust data on social 
risk factors. NQF is now undertaking an extension of the socioeconomic 
status (SES) trial,\94\ allowing further examination of social risk 
factors in outcome measures.
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    \91\ See, for example, United States Department of Health and 
Human Services. ``Healthy People 2020: Disparities. 2014.'' 
Available at: http://www.healthypeople.gov/2020/about/foundation-health-measures/Disparities; or National Academies of Sciences, 
Engineering, and Medicine. Accounting for Social Risk Factors in 
Medicare Payment: Identifying Social Risk Factors. Washington, DC: 
National Academies of Sciences, Engineering, and Medicine 2016.
    \92\ Department of Health and Human Services Office of the 
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to 
Congress: Social Risk Factors and Performance Under Medicare's 
Value-Based Purchasing Programs.'' December 2016. Available at: 
https://aspe.hhs.gov/pdf-report/report-congress-social-risk-factors-and-performance-under-medicares-value-based-purchasing-programs.
    \93\ National Quality Forum. Final Report-Disparities Project. 
September 2017. Available at: http://www.qualityforum.org/SES_Trial_Period.aspx.
    \94\ National Quality Forum. Health Equity Program: Social Risk 
Initiative 2.0. 2017. Available at: http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=86357.
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    In the FY 2018 and CY 2018 proposed rules for our quality reporting 
and value-based purchasing programs, we solicited feedback on which 
social risk factors provide the most valuable information to 
stakeholders and the methodology for illuminating differences in 
outcomes rates among patient groups within a hospital or facility that 
would also allow for a comparison of those differences, or disparities, 
across facilities. Feedback we received through our quality reporting 
programs included encouraging CMS to explore whether factors that could 
be used to stratify or risk adjust the measures (beyond dual 
eligibility); considering the full range of differences in patients' 
backgrounds that might affect outcomes; exploring risk adjustment 
approaches; and offering careful consideration of what type of 
information display would be most useful to the public. We also sought 
public comment on confidential reporting and future public reporting of 
some of our measures stratified by patient dual eligibility. In 
general, commenters noted that stratified measures could serve as tools 
for facilities to identify gaps in outcomes for different groups of 
patients, improve the quality of health care for all patients, and 
empower beneficiaries and other consumers to make informed decisions 
about health care. Commenters encouraged us to stratify measures by 
other social risk factors such as age, income, and educational 
attainment. With regard to value-based purchasing programs, commenters 
also cautioned to balance fair and equitable payment while avoiding 
payment penalties that mask health disparities or discourage the 
provision of care to more medically complex patients. Commenters also 
noted that value-based payment program measure selection, domain 
weighting, performance scoring, and payment methodology must account 
for social risk.
    As a next step, CMS is considering options to reduce health 
disparities among patient groups within and across healthcare settings 
by increasing the transparency of disparities as shown by quality 
measures. We also are considering how this work applies to other CMS 
quality programs in the future. We refer readers to the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38403 through 38409) for more details, where 
we discuss the potential stratification of certain Hospital Inpatient 
Quality Reporting Program outcome measures. Furthermore, we continue to 
consider options to address equity and disparities in our value-based 
purchasing programs.
    We plan to continue working with ASPE, the public, and other key 
stakeholders on this important issue to identify policy solutions that 
achieve the goals of attaining health equity for all beneficiaries and 
minimizing unintended consequences.
3. Policies for Retention and Removal of Quality Measures From the 
ASCQR Program
a. Retention of Previously Adopted ASCQR Program Measures
    We previously adopted a policy that quality measures adopted for an 
ASCQR Program measure set for a previous payment determination year be 
retained in the ASCQR Program for measure sets for subsequent payment 
determination years, except when they are removed, suspended, or 
replaced as indicated (76 FR 74494 and 74504; 77 FR 68494 through 
68495; 78 FR 75122; and 79 FR 66967 through 66969). In this proposed 
rule, we are not proposing any changes to this policy.
b. Removal Factors for ASCQR Program Measures
(1) Current Policy
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66967 through 66969) and 42 CFR 416.320 for a detailed 
discussion of the process for removing adopted measures from the ASCQR 
Program. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 
66967 through 66969), we finalized the ASCQR Program measure removal 
factors \95\ for determining whether to

[[Page 37195]]

remove ASCQR Program measures as follows:
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    \95\ We note that we previously referred to these factors as 
``criteria'' (for example, 82 FR 59474 through 59475); we now use 
the term ``factors'' in order to align the ASCQR Program terminology 
with the terminology we use in other CMS quality reporting and pay 
for performance (value-based purchasing) programs.
---------------------------------------------------------------------------

    <bullet> Factor 1. Measure performance among ASCs is so high and 
unvarying that meaningful distinctions and improvements in performance 
can no longer be made (``topped-out'' measures).
    <bullet> Factor 2. Availability of alternative measures with a 
stronger relationship to patient outcomes.
    <bullet> Factor 3. A measure does not align with current clinical 
guidelines or practice.
    <bullet> Factor 4. The availability of a more broadly applicable 
(across settings, populations, or conditions) measure for the topic.
    <bullet> Factor 5. The availability of a measure that is more 
proximal in time to desired patient outcomes for the particular topic.
    <bullet> Factor 6. The availability of a measure that is more 
strongly associated with desired patient outcomes for the particular 
topic.
    <bullet> Factor 7. Collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm.
    In that final rule with comment period, we stated that the benefits 
of removing a measure from the ASCQR Program will be assessed on a 
case-by-case basis (79 FR 66969). Under this case-by-case approach, a 
measure will not be removed solely on the basis of meeting any specific 
factor. We note that in the CY 2013 OPPS/ASC final rule with comment 
period (77 FR 68472 through 68473), similar measure removal factors 
were finalized for the Hospital OQR Program.
    In this proposed rule, we are proposing to: (1) Remove one factor; 
(2) add two new measure removal factors, and (3) update 42 CFR 
416.320(c) to better reflect our measure removal policies. We are also 
making one clarification to measure removal Factor 1. These items are 
discussed in detail below.
(2) Proposal To Remove Factor 2
    We received comments in the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66967) remarking the duplicative nature of the 
ASCQR Program's measure removal Factor 2, availability of alternative 
measures with a stronger relationship to patient outcomes, with measure 
removal Factor 6, the availability of a measure that is more strongly 
associated with desired patient outcomes for the particular topic. In 
that final rule with comment period, we stated that ``criterion (2) 
applies when there is more than one alternative measure with a stronger 
relationship to patient outcomes that is available, and criterion (6) 
applies where there is only one measure that is strongly and 
specifically associated with desired patient outcomes for the 
particular topic that is available'' (79 FR 66967). Since reevaluating 
those comments, we have now come to agree that ASCQR measure removal 
Factor 2 is repetitive with Factor 6. Therefore, we are proposing to 
remove Factor 2, ``availability of alternative measures with a stronger 
relationship to patient outcomes,'' beginning with the effective date 
of the CY 2019 OPPS/ASC final rule with comment period.
(3) Proposals To Add Two New Measure Removal Factors
(a) Proposed Measure Removal Factor 2: Performance or Improvement on a 
Measure Does Not Result in Better Patient Outcomes
    We would like the ASCQR Program measure removal factors to be fully 
aligned with the Hospital OQR Program to provide consistency across 
these two outpatient setting quality reporting programs. We believe it 
is important to evaluate the appropriateness of measures across 
programs using similar standards. In evaluating the two programs' 
removal factors, we became aware that the Hospital OQR Program includes 
one factor not currently in the ASCQR Program. The Hospital OQR 
Program's second measure removal factor specifies ``performance or 
improvement on a measure does not result in better patient outcomes'' 
(75 FR 50185).
    Therefore, in this proposed rule, we are proposing to add 
``performance or improvement on a measure does not result in better 
patient outcomes'' as the new removal Factor 2 for the ASCQR Program 
(replacing the previously adopted factor proposed for removal above). 
We believe that this factor is applicable in evaluating the ASCQR 
Program quality measures for removal because we have found it useful 
for evaluating measures in the Hospital OQR Program, which also 
evaluates the outpatient setting. We also note that this proposed 
factor is already included in the Hospital IQR (80 FR 49641 through 
49642), the PCHQR (82 FR 38411), the LTCH QRP (77 FR 53614 through 
53615), and the IPFQR (82 FR 38463) Programs. Therefore, we are 
proposing to add a new removal factor to the ASCQR Program: 
``performance or improvement on a measure does not result in better 
patient outcomes'' beginning with the effective date of the CY 2019 
OPPS/ASC final rule with comment period.
(b) Proposed New Measure Removal Factor 8
    We are proposing to adopt an additional factor to consider when 
evaluating measures for removal from the ASCQR Program measure set:
    <bullet> Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    As we discuss in section I.A.2. of this proposed rule with respect 
to our new Meaningful Measures Initiative, we are engaging in efforts 
to ensure that the ASCQR Program measure set continues to promote 
improved health outcomes for beneficiaries while minimizing the overall 
costs associated with the program. We believe these costs are 
multifaceted and include not only the burden associated with reporting, 
but also the costs associated with implementing and maintaining the 
program. We have identified several different types of costs, 
including, but not limited to: (1) Facility information collection 
burden and related costs and burden associated with the submission/
reporting of quality measures to CMS; (2) the facility cost associated 
with complying with other programmatic requirements; (3) the facility 
cost associated with participating in multiple quality programs, and 
tracking multiple similar or duplicative measures within or across 
those programs; (4) the CMS cost associated with the program oversight 
of the measure including measure maintenance and public display; and 
(5) the facility cost associated with compliance with other federal 
and/or State regulations (if applicable). For example, it may be 
needlessly costly and/or of limited benefit to retain or maintain a 
measure which our analyses show no longer meaningfully supports program 
objectives (for example, informing beneficiary choice or payment 
scoring). It may also be costly for ASCs to track confidential 
feedback, preview reports, and publicly reported information on a 
measure where we use the measure in more than one program. CMS may also 
have to expend unnecessary resources to maintain the specifications for 
the measure, as well as the tools needed to collect, validate, analyze, 
and publicly report the measure data. Furthermore, beneficiaries may 
find it confusing to see public reporting on the same measure in 
different programs.
    In weighing the costs against the benefits, we evaluate the 
benefits of the

[[Page 37196]]

measure as a whole, but in particular, we assess the benefits through 
the framework of our Meaningful Measures Initiative, as we discussed in 
section I.A.2. of this proposed rule. One key aspect of patient 
benefits is assessing the improved beneficiary health outcomes if a 
measure is retained in our measure set. We believe that these benefits 
are multifaceted, and are illustrated through the Meaningful Measures 
framework's 6 domains and 19 areas. For example, we assessed the 
Healthcare Worker Influenza Vaccination and patient Influenza 
Vaccination measures categorized in the Quality Priority ``Promote 
Effective Prevention and Treatment of Chronic Disease'' in the 
meaningful measure area of ``Preventive Care'' across multiple CMS 
programs, and considered: Patient outcomes, such as mortality and 
hospitalizations associated with influenza; CMS measure performance in 
a program; and other available and reported influenza process measures, 
such as population influenza vaccination coverage.
    When these costs outweigh the evidence supporting the benefits to 
patients with the continued use of a measure in the ASCQR Program, we 
believe it may be appropriate to remove the measure from the Program. 
Although we recognize that one of the main goals of the ASCQR Program 
is to improve beneficiary outcomes by incentivizing health care 
facilities to focus on specific care issues and making public data 
related to those issues, we also recognize that those goals can have 
limited utility where, for example, the publicly reported data 
(including percentage payment adjustment data) is of limited use 
because it cannot be easily interpreted by beneficiaries and used to 
inform their choice of facility. In these cases, removing the measure 
from the ASCQR Program may better accommodate the costs of program 
administration and compliance without sacrificing improved health 
outcomes and beneficiary choice.
    We are proposing that we would remove measures based on this factor 
on a case-by-case basis. We might, for example, decide to retain a 
measure that is burdensome for ASCs to report if we conclude that the 
benefit to beneficiaries justifies the reporting burden. Our goal is to 
move the program forward in the least burdensome manner possible, while 
maintaining a parsimonious set of meaningful quality measures and 
continuing to incentivize improvement in the quality of care provided 
to patients.
    We are inviting public comment on our proposal to adopt an 
additional measure removal Factor 8, the costs associated with a 
measure outweigh the benefit of its continued use in the program, 
beginning with the effective date of the CY 2019 OPPS/ASC final rule 
with comment period and for subsequent years.
    We refer readers to section XIV.B.3.c. of this proposed rule, where 
we are proposing to remove four measures based on this proposed measure 
removal factor. We note that we have also proposed this same removal 
factor for the Hospital OQR Program in section XIII.B.4.a.(4) of this 
proposed rule, as well as for other quality reporting and value-based 
purchasing programs for FY 2019 including: the Hospital VBP Program (83 
FR 20409), the Hospital IQR Program (83 FR 20472); the PCHQR Program 
(83 FR 20501 through 20502); the LTCH QRP (83 FR 20512); the HQRP (83 
FR 20956); the IRF QRP (83 FR 21000); the SNF QRP (83 FR 21082); and 
the IPFQR Program (83 FR 21118).
    If our proposals to remove one and add two new removal factors are 
finalized as proposed, the new removal factors list would be:
    <bullet> Factor 1. Measure performance among ASCs is so high and 
unvarying that meaningful distinctions and improvements in performance 
can no longer be made (``topped-out'' measures).
    <bullet> Factor 2. Performance or improvement on a measure does not 
result in better patient outcomes.
    <bullet> Factor 3. A measure does not align with current clinical 
guidelines or practice.
    <bullet> Factor 4. The availability of a more broadly applicable 
(across settings, populations, or conditions) measure for the topic.
    <bullet> Factor 5. The availability of a measure that is more 
proximal in time to desired patient outcomes for the particular topic.
    <bullet> Factor 6. The availability of a measure that is more 
strongly associated with desired patient outcomes for the particular 
topic.
    <bullet> Factor 7. Collection or public reporting of a measure 
leads to negative unintended consequences other than patient harm.
    <bullet> Factor 8. The costs associated with a measure outweigh the 
benefit of its continued use in the program.
(4) Proposed Revisions to 42 CFR 416.320(c)
    We are proposing to revise 42 CFR 416.320(c) to better reflect our 
considerations for removing measures policy in light of the above 
proposals.
(5) Clarification for Removal Factor 1: ``Topped-Out'' Measures
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period where we finalized the criteria for determining when a measure 
is ``topped-out'' (79 FR 66968). In that final rule with comment 
period, we finalized two criteria for determining when a measure is 
``topped-out'' under the ASCQR Program: (1) When there is statistically 
indistinguishable performance at the 75th and 90th percentiles of 
national facility performance; and (2) when the measure's truncated 
coefficient of variation (TCOV) is less than or equal to 0.10 (79 FR 
66968 through 66969).
    We are not proposing any changes to this policy; however, we are 
clarifying our process for calculating the truncated coefficient of 
variation (TCOV) for four of the measures (ASC-1, ASC-2, ASC-3, and 
ASC-4) proposed for removal from the ASCQR Program. Utilizing our 
finalized methodology (79 FR 66968), we determine the truncated 
coefficient of variation (TCOV) by calculating the truncated standard 
deviation (SD) divided by the truncated mean. As discussed above, our 
finalized removal criteria state that to be considered ``topped-out'', 
a measure must have a TCOV of less than 0.10. We utilize the TCOV 
because it is generally a good measure of variability and provides a 
relative methodology for comparing different types of measures.
    Unlike the majority of our measures, for which a higher rate 
(indicating a higher proportion of a desired event) is the preferred 
outcome, some measures--in particular, ASC-1, ASC-2, ASC-3, and ASC-4--
assess the rate of rare, undesired events for which a lower rate is 
preferred. For example, ASC-1 assesses the occurrence of patient burns, 
a patient safety issue. However, when determining the TCOV for a 
measure assessing rare, undesired events, the mean, or average rate of 
event occurrence, is very low and the result is a TCOV that increases 
rapidly and approaches infinity as the proportion of rare events 
declines.\96\ We note that the SD, the variability statistic, is the 
same in magnitude for measures assessing rare and non-rare events.
---------------------------------------------------------------------------

    \96\ Rose-Hulman Institute of Technology. Denominator 
approaching zero. Retrieved from: https://www.rose-hulman.edu/media/89584/lclimitsguide.pdf.
---------------------------------------------------------------------------

    In this proposed rule, we are proposing to remove a number of 
measures that assess the rate of rare, undesired events for which a 
lower rate is preferred--ASC-1, ASC-2, ASC-3, and ASC-4--and refer 
readers to section

[[Page 37197]]

XIV.B.3.c. of this proposed rule where these proposed measure removals 
are discussed in detail. Because by design these measures have 
maintained very low rates (indicating the preferred outcome), we 
utilized the mean of non-adverse events in our calculation of the TCOV. 
For example, for ASC-1, to calculate the TCOV we divide the SD by the 
average rate of patients not receiving burns (1 minus the rate of 
patients receiving burns) rather than the rate of patients receiving 
burns. Utilizing this methodology results in a TCOV that is comparable 
to that calculated for other measures and allows us to assess rare-
event measures by still generally using our previously finalized 
topped-out criteria.
c. Proposed Removal of Quality Measures From the ASCQR Program Measure 
Set
    In this proposed rule, we are proposing to remove a total of 8 
measures from the ASCQR Program measure set across the CY 2020 and CY 
2021 payment determinations. Specifically, beginning with the CY 2020 
payment determination, we are proposing to remove: (1) ASC-8: Influenza 
Vaccination Coverage Among Healthcare Personnel (NQF #0431); and 
beginning with the CY 2021 payment determination, we are proposing to 
remove: (2) ASC-1: Patient Burn (NQF #0263); (3) ASC-2: Patient Fall 
(NQF #0266); (4) ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong 
Procedure, Wrong Implant (NQF #0267); (5) ASC-4: All-Cause Hospital 
Transfer/Admission (NQF #0265); (6) ASC-9: Endoscopy/Polyp Surveillance 
Follow-up Interval for Normal Colonoscopy in Average Risk Patients (NQF 
#0658); (7) ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use (NQF #0659); and (8) ASC-11: Cataracts--Improvement 
in Patient's Visual Function within 90 Days Following Cataract Surgery 
(NQF #1536). We are proposing to remove these measures under the 
following measure removal factors: Factor 1--measure performance among 
ASCs is so high and unvarying that meaningful distinctions and 
improvements in performance can no longer be made (``topped-out'' 
measures); and proposed Factor 8--the costs associated with a measure 
outweigh the benefit of its continued use in the program.
    These proposed measure removals are discussed in detail below.
(1) Proposed Measure Removal for the CY 2020 Payment Determination and 
Subsequent Years--Proposed Removal of ASC-8: Influenza Vaccination 
Coverage Among Healthcare Personnel
    For the CY 2020 payment determination and subsequent years, we are 
proposing to remove one NHSN measure under proposed measure removal 
Factor 8, the costs associated with this measure outweigh the benefit 
of its continued use in the program.
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74510), where we adopted ASC-8: Influenza Vaccination 
Coverage Among Healthcare Personnel (NQF #0431), beginning with the CY 
2016 payment determination and for subsequent years. This process of 
care measure, also a National Healthcare Safety Network (NHSN) measure, 
assesses the percentage of healthcare personnel who have been immunized 
for influenza during the flu season. We initially adopted this measure 
based on our recognition that influenza immunization is an important 
public health issue and vital component to preventing healthcare 
associated infections. We believe that the measure addresses this 
public health concern by assessing influenza vaccination in the ASC 
among healthcare personnel (HCP), who can serve as vectors for 
influenza transmission.
    In this proposed rule, we are proposing to remove ASC-8: Influenza 
Vaccination Coverage Among Healthcare Personnel beginning with the CY 
2020 payment determination under proposed measure removal Factor 8, 
because we have concluded that the costs associated with this measure 
outweigh the benefit of its continued use in the program.
    The information collection burden for the Influenza Vaccination 
Coverage Among Healthcare Personnel measure is less than for measures 
that require chart abstraction of patient data because influenza 
vaccination among health care personnel can be calculated through 
review of records maintained in administrative systems and because 
facilities have fewer health care personnel than patients. As such, 
ASC-8 does not require review of as many records. However, this measure 
does still pose information collection burden on facilities due to the 
requirement to identify personnel who have been vaccinated against 
influenza and for those not vaccinated, the reason why.
    Furthermore, as we stated in section XIV.B.3.b. of this proposed 
rule, costs are multifaceted and include not only the burden associated 
with reporting, but also the costs associated with implementing and 
maintaining the program. For example, it may be costly for health care 
providers to maintain general administrative knowledge to report these 
measures. In addition, CMS must expend resources in maintaining 
information collection systems, analyzing reported data, and providing 
public reporting of the collected information.
    In our analysis of the ASCQR Program measure set, we recognized 
that some ASCs face challenges with respect to the administrative 
requirements of the NHSN in their reporting of the Influenza 
Vaccination Coverage Among Healthcare Personnel measure. These 
administrative requirements (which are unique to NHSN) include annually 
completing NHSN system user authentication. Enrolling in NHSN is a 
five-step process that the CDC estimates takes an average of 263 
minutes per ASC.\97\ Furthermore, submission via NHSN requires the 
system security administrator of participating facilities to reconsent 
electronically, ensure that contact information is kept current, ensure 
that the ASC has an active facility administrator account, keep Secure 
Access Management Service (SAMS) credentials active by logging in 
approximately every 2 months and changing their password, create a 
monthly reporting plan, and ensure the ASC's CCN information is up-to-
date.
---------------------------------------------------------------------------

    \97\ Available at: https://www.cdc.gov/nhsn/ambulatory-surgery/enroll.html (the estimates for time to complete are 2 hours 45 
minutes for step 1, 10 minutes for step 2, 16 minutes for step 3a, 
35 minutes for step 3b, 32 minutes for step 4, and 5 minutes for 
step 5; totaling 263 minutes).
---------------------------------------------------------------------------

    Unlike acute care hospitals which participate in other quality 
programs, such as the Hospital IQR and HAC Reduction Programs, ASCs are 
only required to participate in NHSN to submit data for this one 
measure. This may unduly disadvantage smaller ASCs, specifically those 
that are not part of larger hospital systems, because these ASCs do not 
have NHSN access for other quality reporting or value-based payment 
programs. It is our goal to ensure that the ASCQR Program is equitable 
to all ASCs and this measure may disproportionately affect small, 
independent ASCs. Especially for these small, independent ASCs, the 
incremental costs of this measure, as compared to other measures in the 
ASCQR Program measure set, are significant because of the requirements 
imposed by NHSN participation.
    We continue to believe that the Influenza Vaccination Coverage 
Among Healthcare Personnel measure provides the benefit of protecting 
ASC patients

[[Page 37198]]

against influenza. However, we believe that these benefits are offset 
by other efforts to reduce influenza infection among ASC patients, such 
as numerous healthcare employer requirements for healthcare personnel 
to be vaccinated against influenza.\98\ We also expect that a portion 
of MIPS-eligible clinicians nationwide will report on the Preventive 
Care and Screening: Influenza Immunization measure (NQF #0041) through 
the Quality Payment Program (QPP).\99\ Although MIPS-eligible 
clinicians may voluntarily select measures from a list of options, ASC 
providers that are MIPS-eligible will have the opportunity to continue 
collecting information for the measure. CMS remains responsive to the 
public health concern of influenza infection within the Medicare FFS 
population by collecting data on rates of influenza immunization among 
patients.\100\ Thus, the public health concern is addressed via these 
other efforts to track influenza vaccination. The availability of this 
measure in another CMS program demonstrates CMS' continued commitment 
to this measure area. In addition, as we discuss in section XIV.B.3.b. 
of this proposed rule, where we are proposing to adopt measure removal 
Factor 8, beneficiaries may find it confusing to see public reporting 
on the same measure in different programs.
---------------------------------------------------------------------------

    \98\ CDC, Influenza Vaccination Information for Health Care 
Workers. Available at: https://www.cdc.gov/flu/healthcareworkers.htm.
    \99\ QPP 2017 Measures Selection: Influenza. Retrieved from: 
https://qpp.cms.gov/mips/quality-measures.
    \100\ Ibid.
---------------------------------------------------------------------------

    We wish to minimize the level of cost of our programs for 
participating facilities, as discussed under the Meaningful Measures 
Initiative described in section I.A.2. of this proposed rule. In our 
assessment of the ASCQR Program measure set, we prioritized measures 
that align with this Framework as the most important to the ASC 
population. Our assessment concluded that while the Influenza 
Vaccination Coverage Among Healthcare Personnel measure continues to 
provide benefits, these benefits are diminished by other factors and 
are outweighed by the costs and burdens of reporting this measure.
    For these reasons, we are proposing to remove ASC-8: Influenza 
Vaccination Coverage among Healthcare Personnel (NQF #0431) from the 
ASCQR Program beginning with the CY 2020 payment determination and for 
subsequent years because the costs associated with the measure outweigh 
the benefit of its continued use in the program. We note that if 
proposed measure removal Factor 8 is not finalized, removal of this 
measure would also not be finalized. We note that this measure is also 
being proposed for removal from the Hospital OQR Program in section 
XIII.B.4.b. of this proposed rule and the IPFQR Program in the FY 2019 
IPF PPS proposed rule (83 FR 21119 through 21120).
(2) Proposed Measure Removals for the CY 2021 Payment Determination and 
Subsequent Years
    For the CY 2021 payment determination and subsequent years, we are 
proposing to remove: (1) Four claims-based measures under measure 
removal Factor 1, ``topped-out'' status; (2) two chart-abstracted 
measures and one web-based tool measure under proposed measure removal 
Factor 8.
(a) Proposed Measure Removals Under Removal Factor 1: ASC-1, ASC-2, 
ASC-3, and ASC-4
    In this proposed rule, beginning with the CY 2021 payment 
determination and subsequent years, we are proposing to remove ASC-1, 
ASC-2, ASC-3, and ASC-4 under measure removal Factor 1, measure 
performance among ASCs is so high and unvarying that meaningful 
distinctions and improvements in performance can no longer be made. The 
ASCQR Program previously finalized two criteria for determining when a 
measure is ``topped-out'': (1) When there is statistically 
indistinguishable performance at the 75th and 90th percentiles of 
national facility performance; and (2) when the measure's truncated 
coefficient of variation is less than or equal to 0.10 (79 FR 66968 
through 66969). We refer readers to section XIV.B.3.b. of this proposed 
rule, above, where we clarify and discuss how we calculate the TCOV for 
measures that assess the rate of rare, undesired events for which a 
lower rate is preferred, such as ASC-1, ASC-2, ASC-3, and ASC-4.
    For each of these measures, we believe that removal from the ASCQR 
Program measure set is appropriate as there is little room for 
improvement. In addition, removal would alleviate the maintenance costs 
and administrative burden to ASCs associated with retaining the 
measures. As such, we believe the burden associated with reporting 
these measures outweighs the benefits of keeping them in the program.
    Each measure is discussed in more detail below. We also note that 
in crafting our proposals, we considered removing these measures 
beginning with the CY 2020 payment determination, but opted to delay 
removal until the CY 2021 payment determination to be sensitive to 
facilities' planning and operational procedures given that data 
collection for the measures begins during CY 2018 for the CY 2020 
payment determination.
    <bullet> Proposed Removal of ASC-1: Patient Burn
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74497 through 74498) where we adopted ASC-1: Patient Burn 
beginning with the CY 2014 payment determination (NQF #0263). This 
claims-based outcome measure assesses the percentage of ASC admissions 
experiencing a burn prior to discharge.
    Based on our analysis of ASCQR Program measure data for CYs 2013 to 
2017 encounters, the ASC-1 measure meets our measure removal Factor 1. 
These analyses are captured in the table below.

                                     ASC-1--Patient Burn Topped-Out Analysis
----------------------------------------------------------------------------------------------------------------
             Encounters                 Number of ASCs    75th percentile    90th percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
Q1-Q4 2013..........................              4,768             100.00             100.00              0.023
Q1-Q4 2014..........................              4,794             100.00             100.00              0.015
Q1-Q4 2015..........................              4,783             100.00             100.00              0.011
Q1-Q4 2016..........................              4,788             100.00             100.00              0.010
Q1-Q4 2017..........................              4,814             100.00             100.00              0.008
----------------------------------------------------------------------------------------------------------------


[[Page 37199]]

    As displayed in the analysis above, there is no distinguishable 
difference in ASC performance between the 75th and 90th percentiles, 
and the truncated coefficient of variation has been below 0.10 since 
2013. We also note that NQF endorsement of this measure (NQF #0263) was 
removed on May 24, 2016.\101\
---------------------------------------------------------------------------

    \101\ National Quality Forum. Available at: http://www.qualityforum.org/QPS/0263.
---------------------------------------------------------------------------

    <bullet> Proposed Removal of ASC-2: Patient Fall
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74498) where we adopted ASC-2: Patient Fall beginning 
with the CY 2014 payment determination. This NQF-endorsed (NQF #0266), 
claims-based measure assesses the percentage of ASC admissions 
experiencing a fall in the ASC.
    Based on our analysis of ASCQR Program measure data for CYs 2013 to 
2017 encounters, the ASC-2 measure meets our measure removal Factor 1. 
These analyses are captured in the table below.

                                     ASC-2--Patient Fall Topped-Out Analysis
----------------------------------------------------------------------------------------------------------------
             Encounters                 Number of ASCs    75th percentile    90th percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
Q1-Q4 2013..........................              4,769             100.00             100.00              0.011
Q1-Q4 2014..........................              4,793             100.00             100.00              0.007
Q1-Q4 2015..........................              4,783             100.00             100.00              0.006
Q1-Q4 2016..........................              4,787             100.00             100.00              0.003
Q1-Q4 2017..........................              4,815             100.00             100.00              0.001
----------------------------------------------------------------------------------------------------------------

    As displayed in the analysis above, there is no distinguishable 
difference in ASC performance between the 75th and 90th percentiles and 
the truncated coefficient of variation has been below 0.10 since 2013.
    <bullet> Proposed Removal of ASC-3: Wrong Site, Wrong Side, Wrong 
Patient, Wrong Procedure, Wrong Implant
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74498 through 74499) where we adopted ASC-3: Wrong Site, 
Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant beginning 
with the CY 2014 payment determination (NQF #0267). This claims-based 
outcome measure assesses the percentage of ASC admissions experiencing 
a wrong site, wrong side, wrong patient, wrong procedure, or wrong 
implant.
    Based on our analysis of ASCQR Program measure data for CYs 2013 to 
2017 encounters, the ASC-3 measure meets our measure removal Factor 1. 
These analyses are captured in the table below.

        ASC-3--Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant Topped-Out Analysis
----------------------------------------------------------------------------------------------------------------
             Encounters                 Number of ASCs    75th percentile    90th percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
Q1-Q4 2013..........................              4,769             100.00             100.00              0.000
Q1-Q4 2014..........................              4,793             100.00             100.00              0.000
Q1-Q4 2015..........................              4,781             100.00             100.00              0.000
Q1-Q4 2016..........................              4,787             100.00             100.00              0.000
Q1-Q4 2017..........................              4,815             100.00             100.00              0.000
----------------------------------------------------------------------------------------------------------------

    As displayed in the analysis above, there is no distinguishable 
difference in ASC performance between the 75th and 90th percentiles and 
the truncated coefficient of variation has been below 0.10 since 2013. 
We also note that NQF endorsement of this measure (NQF #0267) was 
removed on May 24, 2016.\102\
---------------------------------------------------------------------------

    \102\ National Quality Forum. Available at: http://www.qualityforum.org/QPS/0267.
---------------------------------------------------------------------------

    <bullet> Proposed Removal of ASC-4: All-Cause Hospital Transfer/
Admission
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74499) where we adopted ASC-4: All-Cause Hospital 
Transfer/Admission beginning with the CY 2014 payment determination 
(NQF #0265). This claims-based outcome measure assesses the rate of ASC 
admissions requiring a hospital transfer or hospital admission upon 
discharge from the ASC.
    Based on our analysis of ASCQR Program measure data for CYs 2013 to 
2017 encounters, the ASC-4 measure meets our measure removal Factor 1. 
These analyses are captured in the table below.

                        ASC-4--All Cause Hospital Transfer/Admission Topped-Out Analysis
----------------------------------------------------------------------------------------------------------------
             Encounters                 Number of ASCs    75th percentile    90th percentile     Truncated COV
----------------------------------------------------------------------------------------------------------------
Q1-Q4 2013..........................              4,768             100.00             100.00              0.059
Q1-Q4 2014..........................              4,793             100.00             100.00              0.050
Q1-Q4 2015..........................              4,781             100.00             100.00              0.041
Q1-Q4 2016..........................              4,787             100.00             100.00              0.040
Q1-Q4 2017..........................              4,814             100.00             100.00              0.037
----------------------------------------------------------------------------------------------------------------


[[Page 37200]]

    As displayed in the analysis above, there is no distinguishable 
difference in ASC performance between the 75th and 90th percentiles and 
the truncated coefficient of variation has been below 0.10 since 2013. 
We also note that NQF endorsement of this measure (NQF #0265) was 
removed on February 4, 2016.\103\
---------------------------------------------------------------------------

    \103\ National Quality Forum. Available at: http://www.qualityforum.org/QPS/0265.
---------------------------------------------------------------------------

    Therefore, we are inviting public comment on our proposals to 
remove: (1) ASC-1: Patient Burn; (2) ASC-2: Patient Fall; (3) ASC-3: 
Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant; 
and (4) ASC-4: All-Cause Hospital Transfer/Admission beginning with the 
CY 2021 payment determination and for subsequent years as discussed 
above.
(b) Proposed Measure Removals Under Removal Factor 8: ASC-9, ASC-10, 
and ASC-11
    In this proposed rule, we are proposing to remove three measures 
(ASC-9, ASC-10, and ASC-11) under proposed measure removal Factor 8, 
the costs associated with a measure outweigh the benefit of its 
continued use in the program, for the CY 2021 payment determination and 
subsequent years. We note that if proposed measure removal Factor 8 is 
not finalized, removal of these measures would also not be finalized.
    The proposals are discussed in more detail below. We note that in 
crafting our proposals, we considered removing these measures beginning 
with the CY 2020 payment determination, but opted to delay removal 
until the CY 2021 payment determination to be sensitive to facilities' 
planning and operational procedures given that data collection for 
these measures begins during CY 2018 for the CY 2020 payment 
determination.
    <bullet> Proposed Removal of ASC-9: Endoscopy/Polyp Surveillance: 
Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk 
Patients
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75127 through 75128) where we adopted ASC-9: Endoscopy/
Polyp Surveillance: Appropriate Follow-up Interval for Normal 
Colonoscopy in Average Risk Patients (NQF #0659) beginning with the CY 
2016 payment determination. This chart-abstracted process measure 
assesses the ``[p]ercentage of patients aged 18 years and older 
receiving a surveillance colonoscopy, with a history of a prior colonic 
polyp in previous colonoscopy findings, who had a follow-up interval of 
3 or more years since their last colonoscopy documented in the 
colonoscopy report'' (78 FR 75128). This measure aims to assess whether 
average risk patients with normal colonoscopies receive a 
recommendation to receive a repeat colonoscopy in an interval that is 
less than the recommended amount of 10 years.
    In this proposed rule, we are proposing to remove ASC-9: Endoscopy/
Polyp Surveillance Follow-up Interval for Normal Colonoscopy in Average 
Risk Patients beginning with the CY 2021 payment determination and for 
subsequent years under our proposed measure removal Factor 8, the costs 
associated with a measure outweigh the benefit of its continued use in 
the program. We adopted ASC-9: Endoscopy/Polyp Surveillance Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients in the CY 2014 
OPPS/ASC final rule with comment period (78 FR 75127 through 75128) 
noting that performing colonoscopy too frequently increases patients' 
exposure to procedural harm. However, we now believe that the costs of 
this measure outweigh the benefit of its continued use in the program.
    Chart-abstraction requires facilities to select a sample 
population, access historical records from several current and historic 
clinical data quarters, and interpret that patient data. This process 
is typically more time and resource-consuming than for other measure 
types. In addition to submission of manually chart-abstracted data, we 
take all burden and costs into account when evaluating a measure. 
Removing ASC-9 would reduce the burden and cost to facilities 
associated with collection of information and reviewing their data and 
performance associated with the measure.
    However, we do not believe the use of chart-abstracted measure data 
alone is sufficient justification for removal of a measure under 
proposed measure removal Factor 8. The costs of collection and 
submission of chart-abstracted measure data is burdensome for 
facilities, especially when taking into consideration the availability 
of other CMS quality measures that are relevant in the clinical 
condition and highly correlated in performance across measures. Another 
colonoscopy-related measure required in the ASCQR Program, ASC-12: 
Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient 
Colonoscopy (NQF #2539) measures all-cause, unplanned hospital visits 
(admissions, observation stays, and emergency department visits) within 
7 days of an outpatient colonoscopy procedure (79 FR 66970). This 
claims-based outcome measure does not require chart-abstraction, and 
similarly contributes data on quality of care related to colonoscopy 
procedures, although the measure does not specifically track processes 
such as follow-up intervals. When we adopted ASC-12, we believed 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 facilities and patients all 
unplanned hospital visits following the procedure (79 FR 66970).
    Furthermore, the potential benefits of keeping ASC-9 in the program 
are mitigated by the existence of the same measure (Appropriate Follow-
up Interval for Normal Colonoscopy in Average Risk Patients) \104\ for 
gastroenterologists in the Merit-Based Incentive Payment System (MIPS) 
for the 2019 performance period in the QPP (82 FR 30292). Thus, we 
believe the issue of preventing harm to patients from colonoscopy 
procedures that are performed too frequently is adequately addressed 
through MIPS in the QPP, because we expect a portion of MIPS-eligible 
clinicians reporting on the measure nationwide to provide meaningful 
data to CMS. Although MIPS-eligible clinicians may voluntarily select 
measures from a list of options, ASC providers that are MIPS-eligible 
will have the opportunity to continue collecting information for the 
measure without being penalized if they determine there is value for 
various quality improvement efforts.\105\ The availability of this 
measure in another CMS program demonstrates CMS' continued commitment 
to this measure area.
---------------------------------------------------------------------------

    \104\ QPP Measure Selection: Appropriate Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients. Retrieved from: https://qpp.cms.gov/mips/quality-measures.
    \105\ CMS finalized that services furnished by an eligible 
clinician that are payable under the ASC, HHA, Hospice, or HOPD 
methodology will not be subject to the MIPS payments adjustments, 
but eligible clinicians payable under those methodologies may have 
the option to still voluntarily report on applicable measures and 
the data reported will not be used to determine future eligibility 
(82 FR 53586).
---------------------------------------------------------------------------

    Furthermore, we seek to align our quality reporting work with the 
Patients Over Paperwork and the Meaningful Measures Initiatives 
described in section I.A.2. of this proposed rule. The purpose of this 
effort is to hold providers accountable for only the measures that are 
most important to patients and clinicians and those that are focused on 
patient outcomes in particular, because outcome measures

[[Page 37201]]

evaluate the actual results of care. As described in section I.A.2. of 
this proposed rule, our Meaningful Measures Initiative is intended to 
reduce costs and minimize burden, and we believe that removing this 
chart-abstracted measure from the ASCQR Program would reduce program 
complexity. In addition, as we discuss in section XIV.B.3.b. of this 
proposed rule, where we are proposing to adopt measure removal Factor 
8, beneficiaries may find it confusing to see public reporting on the 
same measure in different programs.
    Therefore, due to the combination of factors of the costs of 
collecting data for this chart-abstracted measure, the preference for 
an outcomes measure in the ASCQR Program that provides valuable data 
for the same procedure, and the existence of the same measure in 
another CMS program, we believe that the burdens and costs associated 
with this measure outweigh the limited benefit to beneficiaries. As a 
result, we are proposing to remove ASC-9: Endoscopy/Polyp Surveillance: 
Appropriate Follow-up Interval for Normal Colonoscopy in Average Risk 
Patients beginning with the CY 2021 payment determination and for 
subsequent years. We note that we are also proposing to remove a 
similar measure in the Hospital OQR Program in section XIII.B.4.b. of 
this proposed rule.
    <bullet> Proposed Removal of ASC-10: Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous 
Polyps--Avoidance of Inappropriate Use
    We refer readers to CY 2014 OPPS/ASC final rule with comment period 
(78 FR 75128) where we adopted ASC-10: Endoscopy/Polyp Surveillance: 
Colonoscopy Interval for Patients with a History of Adenomatous 
Polyps--Avoidance of Inappropriate Use (NQF #0659) beginning with the 
CY 2016 payment determination. This chart-abstracted process measure 
assesses the percentage of patients aged 18 years and older receiving a 
surveillance colonoscopy, with a history of a prior colonic polyp in 
previous colonoscopy findings, who had a follow-up interval of 3 or 
more years since their last colonoscopy documented in the colonoscopy 
report.
    In this proposed rule, we are proposing to remove ASC-10: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use beginning 
with the CY 2021 payment determination and for subsequent years under 
our proposed measure removal Factor 8, the costs associated with a 
measure outweigh the benefit of its continued use in the program.
    We adopted ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy 
Interval for Patients with a History of Adenomatous Polyps--Avoidance 
of Inappropriate Use in the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75128) noting that colonoscopy screening for high risk 
patients is recommended based on risk factors, and one such factor is a 
history of adenomatous polyps. The frequency of colonoscopy screening 
varies depending on the size and amount of polyps found, with the 
general recommendation of a 3-year follow-up. We stated that this 
measure is appropriate for the measurement of quality of care furnished 
by ASCs, because colonoscopy screening is commonly performed in these 
settings (78 FR 75128). However, we now believe that the costs of this 
measure outweigh the benefit of its continued use in the program.
    Chart-abstraction requires facilities to select a sample 
population, access historical records from several clinical data 
quarters past, and interpret that patient data. This process is 
typically more time and resource-consuming than for other measure 
types. In addition to submission of manually chart-abstracted data, we 
take all burden and costs into account when evaluating a measure. 
Removing ASC-10 would reduce the burden and cost to facilities 
associated with collection of information and reporting on their 
performance associated with the measure.
    However, we do not believe the use of chart-abstracted measure data 
alone is sufficient justification for removal of a measure under 
proposed measure removal Factor 8. The costs of collection and 
submission of chart-abstracted measure data is burdensome for 
facilities especially when taking into consideration the availability 
of other CMS quality measures. Another colonoscopy-related measure 
required in the ASCQR Program, ASC-12: Facility 7-Day Risk-Standardized 
Hospital Visit Rate after Outpatient Colonoscopy (NQF #2539) measures 
all-cause, unplanned hospital visits (admissions, observation stays, 
and emergency department visits) within 7 days of an outpatient 
colonoscopy procedure (79 FR 66970). This claims-based outcome measure 
does not require chart-abstraction, and similarly contributes data on 
quality of care related to colonoscopy procedures, although the measure 
does not specifically track processes such as follow-up intervals. When 
we adopted ASC-12, we believed 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 facilities and patients all unplanned hospital visits 
following the procedure (79 FR 66970). Furthermore, the potential 
benefits of keeping ASC-10 in the ASCQR Program are mitigated by the 
existence of the same measure (Appropriate Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients) \106\ for 
gastroenterologists in the Merit-Based Incentive Payment System (MIPS) 
for the 2019 performance period in the QPP (82 FR 30292). Thus, we 
believe the issue of preventing harm to patients from colonoscopy 
procedures that are performed too frequently is adequately addressed 
through MIPS in the QPP, because we expect a portion of MIPS-eligible 
clinicians reporting on the measure nationwide to provide meaningful 
data to CMS. Although MIPS-eligible clinicians may voluntarily select 
measures from a list of options, ASC providers that are MIPS-eligible 
will have the opportunity to continue collecting information for the 
measure without being penalized if they determine there is value for 
various quality improvement efforts.\107\ The availability of this 
measure in another CMS program demonstrates CMS' continued commitment 
to this measure area.
---------------------------------------------------------------------------

    \106\ QPP Measure Selection: Appropriate Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients. Retrieved from: https://qpp.cms.gov/mips/quality-measures.
    \107\ CMS finalized that services furnished by an eligible 
clinician that are payable under the ASC, HHA, Hospice, or HOPD 
methodology will not be subject to the MIPS payments adjustments, 
but eligible clinicians payable under those methodologies may have 
the option to still voluntarily report on applicable measures and 
the data reported will not be used to determine future eligibility 
(82 FR 53586).
---------------------------------------------------------------------------

    Furthermore, we seek to align our quality reporting work with the 
Patients Over Paperwork and the Meaningful Measures Initiatives 
described in section I.A.2. of this proposed rule. The purpose of this 
effort is to hold providers accountable for only the measures that are 
most important to patients and clinicians and that are focused on 
patient outcomes in particular, because outcome measures evaluate the 
actual results of care. As described in section I.A.2. of this proposed 
rule, our Meaningful Measures Initiative is intended to reduce costs 
and minimize burden, and we believe that removing this chart-abstracted 
measure from the ASCQR Program would reduce program complexity. In 
addition, as we discuss in section

[[Page 37202]]

XIV.B.3.b. of this proposed rule, where we are proposing to adopt 
measure removal Factor 8, beneficiaries may find it confusing to see 
public reporting on the same measure in different programs.
    Therefore, due to the combination of factors of the costs of 
collecting data for this chart-abstracted measure, the preference for 
an outcomes measure in the ASCQR Program that provides valuable data 
for the same procedure, and the existence of the same measure in the 
MIPS program, we believe that the burdens and costs associated with 
manual chart abstraction outweigh the limited benefit to beneficiaries 
of receiving this information. As a result, we are proposing to remove 
ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients 
with a History of Adenomatous Polyps--Avoidance of Inappropriate Use 
beginning with the CY 2021 payment determination and for subsequent 
years. We note that we are also proposing to remove a similar measure 
in the Hospital OQR Program in section XIII.B.4.b. of this proposed 
rule.
    <bullet> Proposed Removal of ASC-11: Cataracts: Improvement in 
Patient's Visual Function within 90 Days Following Cataract Surgery
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75129) 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. 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 preoperative and postoperative visual 
function survey.
    Since the adoption of this measure, we came to believe that it can 
be operationally difficult for ASCs to collect and report the measure 
(79 FR 66984). Specifically, we were concerned that the results of the 
survey used to assess the preoperative 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 (79 FR 66984). 
We were 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 (79 
FR 66984). Therefore, on December 31, 2013, we issued guidance stating 
that we would delay data collection for ASC-11 for 3 months (data 
collection would commence with April 1, 2014 encounters) for the CY 
2016 payment determination (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772879036). We issued additional guidance on April 2, 2014, stating that we 
would further delay the implementation of ASC-11 for an additional 9 
months, until January 1, 2015 for the CY 2016 payment determination, 
due to continued concerns (https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228773811586). As a result of these concerns, in the CY 2015 OPPS/ASC final 
rule with comment period (79 FR 66984 through 66985), we finalized our 
proposal to allow voluntary data collection and reporting of this 
measure beginning with the CY 2017 payment determination and for 
subsequent years.
    In this proposed rule, we are proposing to remove ASC-11: 
Cataracts: Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery from the ASCQR Program beginning with the CY 
2021 payment determination under proposed measure removal Factor 8, the 
costs associated with the measure outweigh the benefit of its continued 
use in the program. We originally adopted ASC-11 because we believe 
ASCs should be a partner in care with physicians and other clinicians 
using their facility and that this measure would provide an opportunity 
to do so (79 FR 66984). However, in light of the history of 
complications and upon reviewing this measure within our Meaningful 
Measures framework, we have concluded that it is overly burdensome for 
facilities to report this measure due to the difficulty of tracking 
care that occurs outside of the ASC setting.
    In order to report on this measure to CMS, a facility would need to 
obtain the visual function assessment results from the appropriate 
ophthalmologist and ensure that the assessment utilized is validated 
for the population for which it is being used. If the assessment is not 
able to be used or is not available, the ASC facility would then need 
to administer the survey directly and ensure that the same visual 
function assessment tool is utilized preoperatively and 
postoperatively. There is no simple, preexisting means for information 
sharing between ophthalmologists and ASCs, so an ASC would need to 
obtain assessment results from each individual patient's 
ophthalmologist both preoperatively and postoperatively. The high 
administrative costs of the technical tracking of this information 
presents an undue cost, and also burden associated with submission and 
reporting of ASC-11 to CMS, especially for small ASCs with limited 
staffing capacity.
    Furthermore, this measure currently provides limited benefits. 
Since making the measure voluntary, only 118 facilities have reported 
this measure to CMS, compared to approximately 5,121 total facilities 
for all other measures, resulting in only 2.3 percent of facilities 
reporting.\108\ Consequently, we have been unable to uniformly offer 
pertinent information to beneficiaries on how the measure assesses ASC 
performance. This reinforces comments made in the CY 2015 OPPS/ASC 
final rule with comment period, in which commenters expressed concern 
that the voluntary reporting of this measure would result in incomplete 
data that may be confusing to beneficiaries and other consumers (79 FR 
66984). As we state in section I.A.2. of this proposed rule, we strive 
to ensure that beneficiaries are empowered to make decisions about 
their healthcare using information from data-driven insights. Because 
of the lack of sufficient data, this measure may be difficult for 
beneficiaries to interpret or use to aid in their choice of where to 
obtain care; thus, the benefits of this measure are limited.
---------------------------------------------------------------------------

    \108\ ASCQR Compare Data. Available at: https://data.medicare.gov/Hospital-Compare/Ambulatory-Surgical-Quality-Measures-Facility/4jcv-atw7/data.
---------------------------------------------------------------------------

    Therefore, we believe the high technical and administrative costs 
of this measure outweigh the limited benefit associated with its 
continued use in the ASCQR Program. As discussed in section I.A.2. of 
this proposed rule, above, our Meaningful Measures Initiative is 
intended to reduce costs and minimize burden. We believe that removing 
this measure from the ASCQR Program will reduce program burden, costs, 
and complexity. As a result, we are proposing to remove ASC-11 
beginning with the CY 2021 payment determination and for subsequent 
years. We are also proposing to remove a similar measure under the 
Hospital OQR Program in section XIII.B.4.b. of this proposed rule.
4. Summary of ASCQR Program Quality Measure Sets Proposed for the CY 
2020, CY 2021, and CY 2022 Payment Determinations
    In this CY 2019 OPPS/ASC proposed rule, we are not proposing any 
new measures for the ASCQR Program. We refer readers to the CY 2018 
OPPS/ASC final rule with comment period (82 FR

[[Page 37203]]

59470) for the previously finalized ASCQR Program measure set for the 
CY 2020 payment determination and subsequent years. We note that we are 
proposing to change the reporting period for one previously adopted 
measure, ASC-12, and refer readers to section XIV.D.4.b. of this 
proposed rule for details.
    The tables below summarize the proposed ASCQR Program measure sets 
for the CY 2020, 2021, and 2022 payment determinations (including 
previously adopted measures and measures proposed for removal in this 
proposed rule).

          Proposed ASCQR Program Measure Set for the CY 2020 Payment Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------
           ASC No.                        NQF No.                                Measure name
----------------------------------------------------------------------------------------------------------------
ASC-1........................  0263[dagger].................  Patient Burn.
ASC-2........................  0266.........................  Patient Fall.
ASC-3........................  0267[dagger].................  Wrong Site, Wrong Side, Wrong Patient, Wrong
                                                               Procedure, Wrong Implant.
ASC-4........................  0265[dagger].................  All-Cause Hospital Transfer/Admission.
ASC-9........................  0658.........................  Endoscopy/Polyp Surveillance: Appropriate Follow-
                                                               Up Interval for Normal Colonoscopy in Average
                                                               Risk Patients.
ASC-10.......................  0659.........................  Endoscopy/Polyp Surveillance: Colonoscopy Interval
                                                               for Patients with a History of Adenomatous Polyps-
                                                               Avoidance of Inappropriate Use.
ASC-11.......................  1536.........................  Cataracts: Improvement in Patient's Visual
                                                               Function within 90 Days Following Cataract
                                                               Surgery.*
ASC-12.......................  2539.........................  Facility 7-Day Risk-Standardized Hospital Visit
                                                               Rate after Outpatient Colonoscopy.
ASC-13.......................  None.........................  Normothermia Outcome.
ASC-14.......................  None.........................  Unplanned Anterior Vitrectomy.
ASC-15a......................  None.........................  OAS CAHPS--About Facilities and Staff.**
ASC-15b......................  None.........................  OAS CAHPS--Communication About Procedure.**
ASC-15c......................  None.........................  OAS CAHPS--Preparation for Discharge and
                                                               Recovery.**
ASC-15d......................  None.........................  OAS CAHPS--Overall Rating of Facility.**
ASC-15e......................  None.........................  OAS CAHPS--Recommendation of Facility.**
----------------------------------------------------------------------------------------------------------------
[dagger] NQF endorsement was removed.
* Measure voluntarily collected effective beginning with the CY 2017 payment determination as set forth in
  section XIV.E.3.c. of the CY 2015 OPPS/ASC final rule with comment period (79 FR 66984 through 66985).
** Measure finalized for delay in reporting beginning with the CY 2020 payment determination (CY 2018 data
  collection) until further action in future rulemaking as discussed in section XIV.B.4. of the CY 2018 OPPS/ASC
  final rule with comment period (82 FR 59450 through 59451).


          Proposed ASCQR Program Measure Set for the CY 2021 Payment Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------
           ASC No.                        NQF No.                                Measure name
----------------------------------------------------------------------------------------------------------------
ASC-12.......................  2539.........................  Facility 7-Day Risk-Standardized Hospital Visit
                                                               Rate after Outpatient Colonoscopy.
ASC-13.......................  None.........................  Normothermia Outcome.
ASC-14.......................  None.........................  Unplanned Anterior Vitrectomy.
ASC-15a......................  None.........................  OAS CAHPS--About Facilities and Staff.*
ASC-15b......................  None.........................  OAS CAHPS--Communication About Procedure.*
ASC-15c......................  None.........................  OAS CAHPS--Preparation for Discharge and
                                                               Recovery.*
ASC-15d......................  None.........................  OAS CAHPS--Overall Rating of Facility.*
ASC-15e......................  None.........................  OAS CAHPS--Recommendation of Facility.*
----------------------------------------------------------------------------------------------------------------
* Measure finalized for delay in reporting beginning with the CY 2020 payment determination (CY 2018 data
  collection) until further action in future rulemaking as discussed in section XIV.B.4. of the CY 2018 OPPS/ASC
  final rule with comment period (82 FR 59450 through 59451).


          Proposed ASCQR Program Measure Set for the CY 2022 Payment Determination and Subsequent Years
----------------------------------------------------------------------------------------------------------------
           ASC No.                        NQF No.                                Measure name
----------------------------------------------------------------------------------------------------------------
ASC-12.......................  2539.........................  Facility 7-Day Risk-Standardized Hospital Visit
                                                               Rate after Outpatient Colonoscopy.
ASC-13.......................  None.........................  Normothermia Outcome.
ASC-14.......................  None.........................  Unplanned Anterior Vitrectomy.
ASC-15a......................  None.........................  OAS CAHPS--About Facilities and Staff.**
ASC-15b......................  None.........................  OAS CAHPS--Communication About Procedure.*
ASC-15c......................  None.........................  OAS CAHPS--Preparation for Discharge and
                                                               Recovery.*
ASC-15d......................  None.........................  OAS CAHPS--Overall Rating of Facility.*
ASC-15e......................  None.........................  OAS CAHPS--Recommendation of Facility.*
ASC-17.......................  None.........................  Hospital Visits after Orthopedic Ambulatory
                                                               Surgical Center Procedures.
ASC-18.......................  None.........................  Hospital Visits after Urology Ambulatory Surgical
                                                               Center Procedures.
----------------------------------------------------------------------------------------------------------------
* Measure finalized for delay in reporting beginning with the CY 2020 payment determination (CY 2018 data
  collection) until further action in future rulemaking as discussed in section XIV.B.4. of the CY 2018 OPPS/ASC
  final rule with comment period (82 FR 59450 through 59451).


[[Page 37204]]

5. ASCQR Program Measures and Topics for Future Consideration: Possible 
Future Validation of ASCQR Program Measures
    We are requesting public comment on the possible future validation 
of ASCQR Program measures. There is currently no validation of ASCQR 
measure data, and we believe ASCs may benefit from the opportunity to 
better understand their data and examine potential discrepancies. We 
believe the ASCQR Program may similarly benefit from the opportunity to 
produce a more reliable estimate of whether an ASC's submitted data 
have been abstracted correctly and provide more statistically reliable 
estimates of the quality of care delivered in each selected ASC as well 
as at the national level. We believe the Hospital OQR Program 
validation policy could be a good model for the ASCQR Program and are 
requesting comment on the validation methodology and identifying one 
measure with which to start.
    The Hospital OQR Program requires validation of its chart-
abstracted measures. We refer readers to the CY 2013 OPPS/ASC final 
rule with comment period (77 FR 68484 through 68487) and the CY 2015 
OPPS/ASC final rule with comment period (79 FR 66964 through 66965) for 
a discussion of finalized policies regarding Hospital OQR Program 
validation requirements, which are also codified at 42 CFR 419.46(e). 
Under the Hospital OQR Program, CMS selects a random sample of 450 
hospitals and an additional 50 hospitals based on the following 
criteria: (1) The hospital failing of the validation requirement that 
applies to the previous year's payment determination; or (2) the 
hospital having an outlier value for a measure based on data that it 
submits. An ``outlier value'' is defined as a measure value that is 
greater than 5 standard deviations from the mean of the measure values 
for other hospitals, and indicates a poor score. Then, CMS or its 
contractor provides written requests to the randomly selected hospitals 
by requesting supporting medical record documentation used for purposes 
of data submission under the program. The hospital must submit the 
supporting medical record documentation within 45 days of the date 
written in the request. A hospital meets the validation requirement 
with respect to a calendar year if it achieves at least a 75 percent 
reliability score, as determined by CMS.
    Specifically for the ASCQR Program, we are interested in the 
validation of chart-abstracted measures. We believe it would be 
beneficial to start with validation of just one measure, such as ASC-
13: Normothermia Outcome, prior to expanding to more measures. ASC-13: 
Normothermia Outcome was finalized in the 2017 OPPS/ASC final rule with 
comment period (81 FR 79798 through 79801) and assesses the percentage 
of patients having surgical procedures under general or neuraxial 
anesthesia of 60 minutes or more in duration who are normothermic 
within 15 minutes of arrival in the post-anesthesia care unit. We also 
considered starting with ASC-14: Unplanned Anterior Vitrectomy instead, 
which was finalized in the 2017 OPPS/ASC final rule with comment period 
(81 FR 79801 through 79803) and assesses the percentage of cataract 
surgery patients who have an unplanned anterior vitrectomy. However, we 
believe ASC-13 would be the most feasible measure for validation 
because it assesses surgical cases and would have a larger population 
of cases from which to sample. ASC-14, which assesses rare, unplanned 
events that are less common, would have a smaller population of cases 
from which to sample.
    Therefore, we are inviting public comment on the possible future 
validation of ASCQR Program measures. We specifically request comment 
on whether Hospital OQR Program's validation policies could be an 
appropriate model for the ASCQR Program, the possible ASC sample size, 
sampling methodology, number of cases to sample, validation score 
methodology, and reduced annual payment updates for facilities that do 
not pass validation requirements. We also are requesting comment on 
possibly starting with only one measure, specifically ASC-13, before 
expanding to more measures.
6. 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 updating adopted measures. In the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68496 through 68497), 
the CY 2014 OPPS/ASC final rule (78 FR 75131), and the CY 2015 OPPS/ASC 
final rule with comment period (79 FR 66981), 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. In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70531), we provided clarification regarding our decision 
to not display the technical specifications for the ASCQR Program on 
the CMS website, but stated that we will continue to display the 
technical specifications for the ASCQR Program on the QualityNet 
website. In addition, our policies regarding the maintenance of 
technical specifications for the ASCQR Program are codified at 42 CFR 
416.325. In this proposed rule, we are not proposing any changes to our 
policies regarding the maintenance of technical specifications for the 
ASCQR Program.
7. 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 website 
after providing an ASC an opportunity to review the data to be made 
public. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 
70531 through 70533), we finalized our policy to publicly display data 
by the National Provider Identifier (NPI) when the data are submitted 
by the NPI and to publicly display data by the CCN when the data are 
submitted by the CCN. In addition, we codified our policies regarding 
the public reporting of ASCQR Program data at 42 CFR 416.315 (80 FR 
70533). In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79819 through 79820), we formalized our current public display 
practices regarding timing of public display and the preview period by 
finalizing our proposals to: Publicly display data on the Hospital 
Compare website, or other CMS website as soon as practicable after 
measure data have been submitted to CMS; to generally provide ASCs with 
approximately 30 days to review their data before publicly reporting 
the data; and to announce the timeframes for each preview period 
starting with the CY 2018 payment determination on a CMS website and/or 
on our applicable listservs. In the CY 2018 OPPS/ASC final rule with 
comment period (82 FR 59455 through 59470), we discussed specific 
public reporting policies associated with two measures beginning with 
the CY 2022 payment determination: ASC-17: Hospital Visits after 
Orthopedic Ambulatory Surgical Center Procedures, and ASC-18: Hospital 
Visits after Urology Ambulatory Surgical Center Procedures.

[[Page 37205]]

    In this proposed rule, we are not proposing any changes to our 
public reporting policies.

C. 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. In the CY 2016 OPPS/ASC 
final rule with comment period (80 FR 70533), we codified the 
administrative requirements regarding maintenance of a QualityNet 
account and security administrator for the ASCQR Program at 42 CFR 
416.310(c)(1)(i). In the CY 2018 OPPS/ASC final rule (82 FR 59473), we 
finalized expanded submission via the CMS online tool to also allow for 
batch data submission and made corresponding changes to the 42 CFR 
416.310(c)(1)(i). In this proposed rule, 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 75135) for a complete discussion of the 
participation status requirements for the CY 2014 payment determination 
and subsequent years. In the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70533 and 70534), we codified these requirements 
regarding participation status for the ASCQR Program at 42 CFR 416.305. 
In this proposed rule, we are not proposing any changes to these 
policies.

D. 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. In the CY 2016 OPPS/
ASC final rule with comment period (80 FR 70534), we codified the 
requirements regarding data processing and collection periods for 
claims-based measures using QDCs for the ASCQR Program at 42 CFR 
416.310(a)(1) and (2).
    In this proposed rule, we are not proposing any changes to these 
requirements. However, we note that in section XIV.B.3.c. of this 
proposed rule, beginning with the CY 2021 payment determination and for 
subsequent years, we are proposing to remove all four claims-based 
measures currently using QDCs:
    <bullet> ASC-1: Patient Burn;
    <bullet> ASC-2: Patient Fall;
    <bullet> ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong 
Procedure, Wrong Implant; and
    <bullet> ASC-4: Hospital Transfer/Admission.
    If the removal of these measures is finalized as proposed, no 
claims-based measures using QDCs would remain in the ASCQR Program. 
However, we are not proposing any changes to our requirements regarding 
data processing and collection periods for these types of measures. 
These requirements would apply to any future claims-based measures 
using QDCs adopted in the program.
2. Minimum Threshold, Minimum Case Volume, and Data Completeness for 
Claims-Based Measures Using QDCs
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59472) (and the previous rulemakings cited therein), as 
well as 42 CFR 416.310(a)(3) and 42 CFR 416.305(c) for our policies 
about minimum threshold, minimum case volume, and data completeness for 
claims-based measures using QDCs. In this proposed rule, we are not 
proposing any changes to these policies.
3. Requirements for Data Submitted via an Online Data Submission Tool
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59472) (and the previous rulemakings cited therein) and 
42 CFR 416.310(c) for our previously finalized policies for data 
submitted via an online data submission tool. For more information on 
data submission using QualityNet, we refer readers to: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228773314768.
a. Requirements for Data Submitted via a Non-CMS Online Data Submission 
Tool
    We refer readers to the CY 2014 OPPS/ASC final rule with comment 
period (78 FR 75139 through 75140) and the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66985 through 66986) for our requirements 
regarding data submitted via a non-CMS online data submission tool 
(that is, the CDC NHSN website). We codified our existing policies 
regarding the data collection time periods for measures involving 
online data submission and the deadline for data submission via a non-
CMS online data submission tool at 42 CFR 416.310(c)(2).
    Currently, we only have one measure (ASC-8: Influenza Vaccination 
Coverage among Healthcare Personnel) that is submitted via a non-CMS 
online data submission tool. We note that we are proposing this measure 
for removal for the CY 2020 payment determination and subsequent years 
in section XIV.B.3.c. of this proposed rule. If the removal of ASC-8 is 
finalized as proposed, no measures submitted via a non-CMS online data 
submission tool would remain in the ASCQR Program. However, we are not 
proposing any changes to our non-CMS online data submission tool 
reporting requirements; these requirements would apply to any future 
non-CMS online data submission tool measures adopted in the program.
b. Requirements for Data Submitted via a CMS Online Data Submission 
Tool
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59473) (and the previous rulemakings cited therein) and 
42 CFR 416.310(c)(1) for our requirements regarding data submitted via 
a CMS online data submission tool. We are currently using the 
QualityNet website as our CMS online data submission tool: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetHomepage&cid=1120143435383. We note that in the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59473), we finalized expanded submission via the CMS 
online tool to also allow for batch data submission and made 
corresponding changes to the 42 CFR 416.310(c)(1)(i).
    In this proposed rule, we are not proposing any changes to this 
policy. However, we note that in sections XIV.B.3.c. of this proposed 
rule, we are proposing to remove three measures collected via a CMS 
online data submission tool-ASC-9: Endoscopy/Polyp Surveillance: 
Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk 
Patients, ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use, and ASC-11: Cataracts: Improvement in Patients' 
Visual Function within 90 Days Following

[[Page 37206]]

Cataract Surgery \109\ beginning with the CY 2021 payment 
determination. If those measures are finalized for removal as proposed, 
only the following previously finalized measures will require data to 
be submitted via a CMS online data submission tool for the CY 2021 
payment determination and subsequent years:

    \109\ We note that the ASC-11 measure is voluntarily collected 
effective beginning with the CY 2017 payment determination, as set 
forth in section XIV.E.3.c. of the CY 2015 OPPS/ASC final rule with 
comment period (79 FR 66984 through 66985).
---------------------------------------------------------------------------

<bullet> ASC-13: Normothermia Outcome
<bullet> ASC-14: Unplanned Anterior Vitrectomy
4. Requirements for Non-QDC Based, Claims-Based Measure Data
    In this proposed rule, we are not proposing any changes to our 
requirements for non-QDC based, claims-based measures. However, we are 
proposing to change the reporting period for the previously adopted 
measure, ASC-12: Facility 7-Day Risk-Standardized Hospital Visit Rate 
after Outpatient Colonoscopy. This proposal is discussed in more detail 
further below.
a. General
    We refer readers to the CY 2015 OPPS/ASC final rule with comment 
period (79 FR 66985) and the CY 2016 OPPS/ASC final rule with comment 
period (80 FR 70536) for our previously adopted policies regarding data 
processing and reporting periods for claims-based measures for the CY 
2018 payment determination and subsequent years. In addition, in the CY 
2016 OPPS/ASC final rule with comment period (80 FR 70536), we codified 
these policies at 42 CFR 416.310(b). We are not proposing any changes 
to these policies. We note that the non-QDC, claims-based measures in 
the program are as follows:

<bullet> CY 2020 payment determination and subsequent years: ASC 12: 
Facility 7-Day Risk Standardized Hospital Visit Rate after Outpatient 
Colonoscopy (79 FR 66970 through 66978)
<bullet> CY 2022 payment determination and subsequent years:
    <bullet><bullet> ASC-17: Hospital Visits after Orthopedic 
Ambulatory Surgical Center Procedures (82 FR 59455 through 59470)
    <bullet><bullet> ASC-18: Hospital Visits after Urology Ambulatory 
Surgical Center Procedures (82 FR 59455 through 59470)
b. Proposed Extension of the Reporting Period for ASC-12: Facility 
Seven-Day Risk-Standardized Hospital Visit Rate After Outpatient 
Colonoscopy
    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66970 
through 66978), we finalized the adoption of ASC-12: Facility 7-Day 
Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy into 
the ASCQR Program for the CY 2018 payment determination and subsequent 
years, with public display to begin on or after December 1, 2017. This 
measure is calculated with data obtained from paid Medicare FFS claims 
(79 FR 66978). For this reason, facilities are not required to submit 
any additional information. In that final rule with comment period, we 
also finalized the reporting period for measure calculation as claims 
data from two calendar years prior to the payment determination year. 
Specifically, for the CY 2018 payment determination, we stated we would 
use paid Medicare FFS claims from January 1, 2016 to December 31, 2016 
to calculate measure results (79 FR 66985). We finalized a 1-year 
reporting period as it adequately balanced competing interests of 
measure reliability and timeliness for payment determination purposes, 
and explained that we would continue to assess this during the dry run 
(79 FR 66973).
    We noted we would complete a dry run of the measure in 2015 using 3 
or 4 years of data, and, from the results of this dry run, we would 
review the appropriate volume cutoff for facilities to ensure 
statistical reliability in reporting the measure score (79 FR 66974). 
Our analyses of the 2015 dry run using data from July 2011 through June 
2014 showed that a reporting period of 1 year had moderate to high 
reliability for measure calculation. Specifically, using data from July 
2013 through June 2014, we calculated facility-level reliability 
estimates as the ratio of true variance to observed variance.\110\ 
Consistent with the original measure specifications as described in the 
2014 technical report,\111\ this calculation was performed combining 
the measure results for HOPDs and ASCs. We found that for a facility 
with median case size, the reliability estimate was high (over 0.90), 
but the minimum reliability estimate for facilities with 30 cases (the 
minimum case size chosen for public reporting) was only moderate (that 
is, between 0.40 and 0.60).\112\
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    \110\ Snijders TA, Bosker RJ. Multilevel Analysis: An 
introduction to basic and advanced multilevel modeling. SAGE 
Publications. 2000. London.
    \111\ Additional methodology details and information obtained 
from public comments for measure development are available at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html under 
``Hospital Outpatient Colonoscopy.''
    \112\ Landis JR, Koch GG. The Measurement of Observer Agreement 
for Categorical Data. Biometrics. 1977;33(1):159-174.
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    However, after the 2015 dry run, CMS calculated the HOPD and ASC 
scores separately to compare similar types of facilities to each other. 
During subsequent analysis of the 1-year period of July 2013 through 
June 2014, we confirmed that a 1-year reporting period with separate 
calculations for HOPDs and ASCs was sufficient, but did result in lower 
reliability and decreased precision, compared to results calculated 
with longer reporting periods (2 or 3 years). Based on analyses 
conducted using data from July 2013 through June 2014 (1-year reporting 
period) and 2017 measure specifications,\113\ we found that the median 
facility-level reliability was 0.74 for ASCs and 0.51 for HOPDs. Using 
a 2-year reporting period (data from July 2012--June 2014), we found 
that median facility-level reliability was 0.81 for ASCs and 0.67 for 
HOPDs. When the reporting period was extended to 3 years (using data 
from July 2011 through June 2014), we found that median facility-level 
reliability was higher for both ASCs and HOPDs: 0.87 for ASCs and 0.75 
for HOPDs. These results indicate that a larger portion of the included 
facilities have scores measured with higher reliability when 3 years of 
data are used rather than 1 year of data.
---------------------------------------------------------------------------

    \113\ Current and past measure specifications are available at: 
https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228775214597.
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    Using 3 years of data, compared to just 1 year, is estimated to 
increase the number of ASCs with eligible cases for ASC-12 by 10 
percent, adding approximately 235 additional ASCs to the measure 
calculation. ASCs reporting the measure would increase their sample 
sizes and, in turn, increase the precision and reliability of their 
measure scores. Thus, we believe extending the reporting period to 3 
years from 1 year for purposes of increasing reliability would be 
beneficial for providing better information to beneficiaries regarding 
the quality of care associated with low-risk outpatient colonoscopy 
procedures. In crafting our proposal, we considered extending the 
reporting period to 2 years beginning with the CY 2020 payment 
determinations and subsequent years, but decided on proposing 3 years 
instead, because a higher level of reliability is achieved with a 3-
year reporting period compared to 2 years.

[[Page 37207]]

    Therefore, we are proposing to change the reporting period for ASC-
12: Facility 7-Day Risk-Standardized Hospital Visit Rate after 
Outpatient Colonoscopy from 1 year to 3 years beginning with the CY 
2020 payment determination (which would use claims data from January 1, 
2016 through December 31, 2018) and for subsequent years. Under this 
proposal, the annual reporting requirements for ASCs would not change 
because this is a claims-based measure. However, with a 3-year 
reporting period, the most current year of data would be supplemented 
by the addition of 2 prior years. For example, for the CY 2020 payment 
determination, we would use a reporting period of CY 2018 data plus 2 
prior years of data (CYs 2016 and 2017). We note that since 
implementation of this measure began with the CY 2018 payment 
determination, we have already used paid Medicare FFS claims from 
January 1, 2016 to December 31, 2016 to calculate the measure scores, 
which have been previously previewed by ASCs and publicly displayed. In 
crafting our proposal, we also considered timeliness related to payment 
determinations and public display. Because we would utilize data 
already collected to supplement current data, our proposal to use 3 
years of data would not disrupt payment determinations or public 
display. We refer readers to the table below for example reporting 
periods and public display dates corresponding to the CY 2020, CY 2021, 
and CY 2022 payment determinations:

----------------------------------------------------------------------------------------------------------------
                                           CY 2020 Payment          CY 2021 Payment          CY 2022 Payment
                                            determination            determination            determination
----------------------------------------------------------------------------------------------------------------
Public display.......................  January 2020...........  January 2021...........  January 2022.
Reporting period.....................  January 1, 2016-         January 1, 2017-         January 1, 2018-
                                        December 31, 2018.       December 31, 2019.       December 31, 2020.
----------------------------------------------------------------------------------------------------------------

5. Requirements for Data Submission for ASC-15a-e: Outpatient and 
Ambulatory Surgery Consumer Assessment of Healthcare Providers and 
Systems (OAS CAHPS) Survey-Based Measures
    We refer readers to the CY 2017 OPPS/ASC final rule with comment 
period (81 FR 79822 through 79824) for our previously finalized 
policies regarding survey administration and vendor requirements for 
the CY 2020 payment determination and subsequent years. In addition, we 
codified these policies at 42 CFR 416.310(e). However, in the CY 2018 
OPPS/ASC final rule with comment period (82 FR 59450 through 59451), we 
delayed implementation of the ASC-15a-e: OAS CAHPS Survey-based 
measures beginning with the CY 2020 payment determination (CY 2018 data 
submission) until further action in future rulemaking, and we refer 
readers to that discussion for more details. In this proposed rule, we 
are not proposing any changes to this policy.
6. Extraordinary Circumstances Exception (ECE) Process for the CY 2020 
Payment Determination and Subsequent Years
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59474 through 59475) (and the previous rulemakings cited 
therein) and 42 CFR 416.310(d) for the ASCQR Program's policies for 
extraordinary circumstance exceptions (ECE) requests.
    In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59474 
through 59475), we: (1) Changed the name of this policy from 
``extraordinary circumstances extensions or exemption'' to 
``extraordinary circumstances exceptions'' for the ASCQR Program, 
beginning January 1, 2018; and (2) revised 42 CFR 416.310(d) of our 
regulations to reflect this change. We also clarified that we will 
strive to complete our review of each request within 90 days of 
receipt. In this proposed rule, we are not proposing any changes to 
these policies.
7. ASCQR Program Reconsideration Procedures
    We refer readers to the CY 2016 OPPS/ASC final rule with comment 
period (82 FR 59475) (and the previous rulemakings cited therein) and 
42 CFR 416.330 for the ASCQR Program's reconsideration policy. In this 
proposed rule, we are not proposing any changes to this policy.

E. Payment Reduction for ASCs That Fail To Meet the ASCQR Program 
Requirements

1. Statutory Background
    We refer readers to section XVI.D.1. of the CY 2013 OPPS/ASC final 
rule with comment period (77 FR 68499) for a detailed discussion of the 
statutory background regarding payment reductions for ASCs that fail to 
meet the ASCQR Program requirements.
2. Proposed Policy Regarding 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. For CY 2019, the proposed ASC conversion factor is equal 
to the conversion factor calculated for the previous year updated by 
the multifactor productivity (MFP)-adjusted hospital market basket 
update factor. The MFP adjustment is set forth in section 
1833(i)(2)(D)(v) of the Act. The MFP-adjusted hospital market basket 
update is the proposed annual update for the ASC payment system for an 
interim 5-year period (CY 2019 through CY 2023). As discussed in the CY 
2011 OPPS/ASC final rule with comment period (75 FR 72062), if the CPI-
U update factor is a negative number, the CPI-U update factor would be 
held to zero. Consistent with past practice, in the event the 
percentage change in the hospital market basket for a year is negative, 
we are proposing to hold the hospital market basket update factor for 
the ASC payment system to zero. Under the ASCQR Program in accordance 
with section 1833(i)(7)(A) of the Act and as discussed in the CY 2013 
OPPS/ASC final rule with comment period (77 FR 68499), any annual 
increase shall be reduced by 2.0 percentage points for ASCs that fail 
to meet the reporting requirements of the ASCQR Program. This reduction 
applied beginning with the CY 2014 payment rates (77 FR 68500). For a 
complete discussion of the calculation of the ASC conversion factor and 
our proposal to update the ASC payment rates using the inpatient 
hospital market basket update for CYs 2019 through 2023, 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

[[Page 37208]]

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 the proposed rule, which are available via the internet on 
the CMS website): ``A2'', ``G2'', ``P2'', ``R2'' and ``Z2'', as well as 
the service portion of device-intensive procedures identified by ``J8'' 
(77 FR 68500). 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 (77 FR 68500).
    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 payment rates, 
and certain office-based procedures, certain radiology services and 
diagnostic tests where payment is based on the PFS nonfacility PE RVU-
based amount, and a few other specific services that receive cost-based 
payment (77 FR 68500). 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 
(77 FR 68500).
    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) 
are paid at the lesser of the PFS nonfacility PE RVU-based amounts or 
the amount calculated under the standard ASC ratesetting methodology. 
Similarly, in section XII.D.2.b. of the CY 2015 OPPS/ASC final rule 
with comment period (79 FR 66933 through 66934), we finalized our 
proposal that payment for the new category of covered ancillary 
services (that is, certain diagnostic test codes within the medical 
range of CPT codes for which separate payment is allowed under the OPPS 
and when they are integral to covered ASC surgical procedures) will be 
at the lower of the PFS nonfacility PE RVU-based (or technical 
component) amount or the rate calculated according to the standard ASC 
ratesetting methodology. In the CY 2013 OPPS/ASC final rule with 
comment period (77 FR 68500), we finalized our proposal that the 
standard ASC ratesetting methodology for this type of comparison would 
use the ASC conversion factor that has been calculated using the full 
ASC update adjusted for productivity. This is necessary so that the 
resulting ASC payment indicator, based on the comparison, assigned to 
these procedures or services is consistent for each HCPCS code, 
regardless of whether payment is based on the full update conversion 
factor or the reduced update conversion factor.
    For ASCs that receive the reduced ASC payment for failure to meet 
the ASCQR Program requirements, we believe that it is both equitable 
and appropriate that a reduction in the payment for a service should 
result in proportionately reduced coinsurance liability for 
beneficiaries (77 FR 68500). 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 coinsurance for a 
service to which a reduced national unadjusted payment rate applies 
will 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 (77 FR 68500). We believe that 
these adjustments continue to be equally applicable to payment for ASCs 
that do not meet the ASCQR Program requirements (77 FR 68500).
    In the CY 2015, CY 2016, CY 2017, and CY 2018 OPPS/ASC final rules 
with comment period (79 FR 66981 through 66982; 80 FR 70537 through 
70538; 81 FR 79825 through 79826; and 82 FR 59475 through 59476, 
respectively), we did not make any other changes to these policies.

XV. Requests for Information (RFIs)

    This section addresses three requests for information (RFIs). Upon 
reviewing the RFIs, respondents are encouraged to provide complete but 
concise responses. These RFIs are issued solely for information and 
planning purposes; neither RFI constitutes a Request for Proposal 
(RFP), application, proposal abstract, or quotation. The RFIs do not 
commit the U.S. Government to contract for any supplies or services or 
make a grant award. Further, CMS is not seeking proposals through these 
RFIs and will not accept unsolicited proposals. Responders are advised 
that the U.S. Government will not pay for any information or 
administrative costs incurred in response to these RFIs; all costs 
associated with responding to these RFIs will be solely at the 
interested party's expense.
    Failing to respond to either RFI will not preclude participation in 
any future procurement, if conducted. It is the responsibility of the 
potential responders to monitor each RFI announcement for additional 
information pertaining to the request. Please note that CMS will not 
respond to questions about the policy issues raised in these RFIs. CMS 
may or may not choose to contact individual responders. Such 
communications would only serve to further clarify written responses. 
Contractor support personnel may be used to review RFI responses. 
Responses to these RFIs are not offers and cannot be accepted by the 
U.S. Government to form a binding contract or issue a grant. 
Information obtained as a result of these RFIs may be used by the U.S. 
Government for program planning on a non-attribution basis. Respondents 
should not include any information that might be considered proprietary 
or confidential. These RFIs should not be construed as a commitment or 
authorization to incur cost for which reimbursement would be required 
or sought. All submissions become U.S. Government property and will not 
be returned. CMS may publically post the comments received, or a 
summary thereof.

[[Page 37209]]

A. Request for Information on Promoting Interoperability and Electronic 
Healthcare Information Exchange Through Possible Revisions to the CMS 
Patient Health and Safety Requirements for Hospitals and Other 
Medicare- and Medicaid-Participating Providers and Suppliers

    Currently, Medicare- and Medicaid-participating providers and 
suppliers are at varying stages of adoption of health information 
technology (health IT). Many hospitals have adopted electronic health 
records (EHRs), and CMS has provided incentive payments to eligible 
hospitals, critical access hospitals (CAHs), and eligible professionals 
who have demonstrated meaningful use of certified EHR technology 
(CEHRT) under the Medicare EHR Incentive Program. As of 2015, 96 
percent of Medicare- and Medicaid-participating non-Federal acute care 
hospitals had adopted certified EHRs with the capability to 
electronically export a summary of clinical care.\114\ While both 
adoption of EHRs and electronic exchange of information have grown 
substantially among hospitals, significant obstacles to exchanging 
electronic health information across the continuum of care persist. 
Routine electronic transfer of information post-discharge has not been 
achieved by providers and suppliers in many localities and regions 
throughout the Nation.
---------------------------------------------------------------------------

    \114\ These statistics can be accessed at: https://dashboard.healthit.gov/quickstats/pages/FIG-Hospital-EHR-Adoption.php.
---------------------------------------------------------------------------

    CMS is firmly committed to the use of certified health IT and 
interoperable EHR systems for electronic healthcare information 
exchange to effectively help hospitals and other Medicare- and 
Medicaid-participating providers and suppliers improve internal care 
delivery practices, support the exchange of important information 
across care team members during transitions of care, and enable 
reporting of electronically specified clinical quality measures 
(eCQMs). The Office of the National Coordinator for Health Information 
Technology (ONC) acts as the principal Federal entity charged with 
coordination of nationwide efforts to implement and use health 
information technology and the electronic exchange of health 
information on behalf of the Department of Health and Human Services.
    In 2015, ONC finalized the 2015 Edition health IT certification 
criteria (2015 Edition), the most recent criteria for health IT to be 
certified to under the ONC Health IT Certification Program. The 2015 
Edition facilitates greater interoperability for several clinical 
health information purposes and enables health information exchange 
through new and enhanced certification criteria, standards, and 
implementation specifications. CMS requires eligible hospitals and CAHs 
in the Medicare and Medicaid EHR Incentive Programs and eligible 
clinicians in the Quality Payment Program (QPP) to use EHR technology 
certified to the 2015 Edition beginning in CY 2019.
    In addition, several important initiatives will be implemented over 
the next several years to provide hospitals and other participating 
providers and suppliers with access to robust infrastructure that will 
enable routine electronic exchange of health information. Section 4003 
of the 21st Century Cures Act (Pub. L. 114-255), enacted in 2016, and 
amending section 3000 of the Public Health Service Act (42 U.S.C. 
300jj), requires HHS to take steps to advance the electronic exchange 
of health information and interoperability for participating providers 
and suppliers in various settings across the care continuum. 
Specifically, Congress directed that ONC ``. . . for the purpose of 
ensuring full network-to-network exchange of health information, 
convene public-private and public-public partnerships to build 
consensus and develop or support a trusted exchange framework, 
including a common agreement among health information networks 
nationally.'' In January 2018, ONC released a draft version of its 
proposal for the Trusted Exchange Framework and Common Agreement,\115\ 
which outlines principles and minimum terms and conditions for trusted 
exchange to enable interoperability across disparate health information 
networks (HINs). The Trusted Exchange Framework (TEF) is focused on 
achieving the following four important outcomes in the long-term:
---------------------------------------------------------------------------

    \115\ The draft version of the trusted Exchange Framework may be 
accessed at: https://beta.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement.
---------------------------------------------------------------------------

    <bullet> Professional care providers, who deliver care across the 
continuum, can access health information about their patients, 
regardless of where the patient received care.
    <bullet> Patients can find all of their health information from 
across the care continuum, even if they do not remember the name of the 
professional care provider they saw.
    <bullet> Professional care providers and health systems, as well as 
public and private health care organizations and public and private 
payer organizations accountable for managing benefits and the health of 
populations, can receive necessary and appropriate information on 
groups of individuals without having to access one record at a time, 
allowing them to analyze population health trends, outcomes, and costs; 
identify at-risk populations; and track progress on quality improvement 
initiatives.
    <bullet> The health IT community has open and accessible 
application programming interfaces (APIs) to encourage entrepreneurial, 
user-focused innovation that will make health information more 
accessible and improve EHR usability.
    ONC will revise the draft TEF based on public comment and 
ultimately release a final version of the TEF that will subsequently be 
available for adoption by HINs and their participants seeking to 
participate in nationwide health information exchange. The goal for 
stakeholders that participate in, or serve as, a HIN is to ensure that 
participants will have the ability to seamlessly share and receive a 
core set of data from other network participants in accordance with a 
set of permitted purposes and applicable privacy and security 
requirements. Broad adoption of this framework and its associated 
exchange standards is intended to both achieve the outcomes described 
above while creating an environment more conducive to innovation.
    In light of the widespread adoption of EHRs along with the 
increasing availability of health information exchange infrastructure 
predominantly among hospitals, we are interested in hearing from 
stakeholders on how we could use the CMS health and safety standards 
that are required for providers and suppliers participating in the 
Medicare and Medicaid programs (that is, the Conditions of 
Participation (CoPs), Conditions for Coverage (CfCs), and Requirements 
for Participation (RfPs) for Long-Term Care (LTC) Facilities) to 
further advance electronic exchange of information that supports safe, 
effective transitions of care between hospitals and community 
providers. Specifically, CMS might consider revisions to the current 
CMS CoPs for hospitals, such as: Requiring that hospitals transferring 
medically necessary information to another facility upon a patient 
transfer or discharge do so electronically; requiring that hospitals 
electronically send required discharge information to a community 
provider via electronic means if possible and if a community provider 
can be identified; and requiring that hospitals make certain 
information available to patients or a specified third-party 
application (for example, required

[[Page 37210]]

discharge instructions) via electronic means if requested.
    On November 3, 2015, we published a proposed rule (80 FR 68126) to 
implement the provisions of the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (the IMPACT Act) (Pub. L. 113-185) and to 
revise the discharge planning CoP requirements that hospitals 
(including short-term acute care hospitals, long-term care hospitals 
(LTCHs), rehabilitation hospitals, psychiatric hospitals, children's 
hospitals, and cancer hospitals), critical access hospitals (CAHs), and 
home health agencies (HHAs) would need to meet in order to participate 
in the Medicare and Medicaid programs. This proposed rule has not been 
finalized yet. However, several of the proposed requirements directly 
address the issue of communication between providers and between 
providers and patients, as well as the issue of interoperability:
    <bullet> Hospitals and CAHs would be required to transfer certain 
necessary medical information and a copy of the discharge instructions 
and discharge summary to the patient's practitioner, if the 
practitioner is known and has been clearly identified;
    <bullet> Hospitals and CAHs would be required to send certain 
necessary medical information to the receiving facility/post-acute care 
providers, at the time of discharge; and
    <bullet> Hospitals, CAHs, and HHAs would need to comply with the 
IMPACT Act requirements that would require hospitals, CAHs, and certain 
post-acute care providers to use data on quality measures and data on 
resource use measures to assist patients during the discharge planning 
process, while taking into account the patient's goals of care and 
treatment preferences.
    We published another proposed rule (81 FR 39448) on June 16, 2016, 
that updated a number of CoP requirements that hospitals and CAHs would 
need to meet in order to participate in the Medicare and Medicaid 
programs. This proposed rule has not been finalized yet. One of the 
proposed hospital CoP revisions in that rule directly addresses the 
issues of communication between providers and patients, patient access 
to their medical records, and interoperability. We proposed that 
patients have the right to access their medical records, upon an oral 
or written request, in the form and format requested by such patients, 
if it is readily producible in such form and format (including in an 
electronic form or format when such medical records are maintained 
electronically); or, if not, in a readable hard copy form or such other 
form and format as agreed to by the facility and the individual, 
including current medical records, within a reasonable timeframe. The 
hospital must not frustrate the legitimate efforts of individuals to 
gain access to their own medical records and must actively seek to meet 
these requests as quickly as its recordkeeping system permits.
    We also published a final rule (81 FR 68688) on October 4, 2016, 
that revised the requirements that LTC facilities must meet to 
participate in the Medicare and Medicaid programs. In this rule, we 
made a number of revisions based on the importance of effective 
communication between providers during transitions of care, such as 
transfers and discharges of residents to other facilities or providers, 
or to home. Among these revisions was a requirement that the 
transferring LTC facility must provide all necessary information to the 
resident's receiving provider, whether it is an acute care hospital, an 
LTCH, a psychiatric facility, another LTC facility, a hospice, a home 
health agency, or another community-based provider or practitioner (42 
CFR 483.15(c)(2)(iii)). We specified that necessary information must 
include the following:
    <bullet> Contact information of the practitioner responsible for 
the care of the resident;
    <bullet> Resident representative information including contact 
information;
    <bullet> Advance directive information;
    <bullet> Special instructions or precautions for ongoing care;
    <bullet> The resident's comprehensive care plan goals; and
    <bullet> All other necessary information, including a copy of the 
resident's discharge or transfer summary and any other documentation to 
ensure a safe and effective transition of care.
    We note that the discharge summary mentioned above must include 
reconciliation of the resident's medications, as well as a 
recapitulation of the resident's stay, a final summary of the 
resident's status, and the post-discharge plan of care. In addition, in 
the preamble to the rule, we encouraged LTC facilities to 
electronically exchange this information if possible and to identify 
opportunities to streamline the collection and exchange of resident 
information by using information that the facility is already capturing 
electronically.
    Additionally, we specifically invite stakeholder feedback on the 
following questions regarding possible new or revised CoPs/CfCs/RfPs 
for interoperability and electronic exchange of health information:
    <bullet> If CMS were to propose a new CoP/CfC/RfP standard to 
require electronic exchange of medically necessary information, would 
this help to reduce information blocking as defined in section 4004 of 
the 21st Century Cures Act?
    <bullet> Should CMS propose new CoPs/CfCs/RfPs for hospitals and 
other participating providers and suppliers to ensure a patient's or 
resident's (or his or her caregiver's or representative's) right and 
ability to electronically access his or her health information without 
undue burden? Would existing portals or other electronic means 
currently in use by many hospitals satisfy such a requirement regarding 
patient/resident access as well as interoperability?
    <bullet> Are new or revised CMS CoPs/CfCs/RfPs for interoperability 
and electronic exchange of health information necessary to ensure 
patients/residents and their treating providers routinely receive 
relevant electronic health information from hospitals on a timely basis 
or will this be achieved in the next few years through existing 
Medicare and Medicaid policies, the implementing regulations related to 
the privacy and security standards of the Health Insurance Portability 
and Accountability Act of 1996 (HIPAA) (Pub. L. 104-91), and 
implementation of relevant policies in the 21st Century Cures Act?
    <bullet> What would be a reasonable implementation timeframe for 
compliance with new or revised CMS CoPs/CfCs/RfPs for interoperability 
and electronic exchange of health information if CMS were to propose 
and finalize such requirements? Should these requirements have delayed 
implementation dates for specific participating providers and 
suppliers, or types of participating providers and suppliers (for 
example, participating providers and suppliers that are not eligible 
for the Medicare and Medicaid EHR Incentive Programs)?
    <bullet> Do stakeholders believe that new or revised CMS CoPs/CfCs/
RfPs for interoperability and electronic exchange of health information 
would help improve routine electronic transfer of health information as 
well as overall patient/resident care and safety?
    <bullet> Under new or revised CoPs/CfCs/RfPs, should non-electronic 
forms of sharing medically necessary information (for example, printed 
copies of patient/resident discharge/transfer summaries shared directly 
with the patient/resident or with the receiving provider or supplier, 
either directly transferred with the patient/resident or by mail or fax 
to the receiving provider or supplier) be permitted to continue if the 
receiving

[[Page 37211]]

provider, supplier, or patient/resident cannot receive the information 
electronically?
    <bullet> Are there any other operational or legal considerations 
(for example, implementing regulations related to the HIPAA privacy and 
security standards), obstacles, or barriers that hospitals and other 
providers and suppliers would face in implementing changes to meet new 
or revised interoperability and health information exchange 
requirements under new or revised CMS CoPs/CfCs/RfPs if they are 
proposed and finalized in the future?
    <bullet> What types of exceptions, if any, to meeting new or 
revised interoperability and health information exchange requirements 
should be allowed under new or revised CMS CoPs/CfCs/RfPs if they are 
proposed and finalized in the future? Should exceptions under the QPP, 
including CEHRT hardship or small practices, be extended to new 
requirements? Would extending such exceptions impact the effectiveness 
of these requirements?
    We would also like to directly address the issue of communication 
between hospitals (as well as the other providers and suppliers across 
the continuum of patient care) and their patients and caregivers. 
MyHealthEData is a government-wide initiative aimed at breaking down 
barriers that contribute to preventing patients from being able to 
access and control their medical records. Privacy and security of 
patient data will be at the center of all CMS efforts in this area. CMS 
must protect the confidentiality of patient data, and CMS is completely 
aligned with the Department of Veterans Affairs (VA), the National 
Institutes of Health (NIH), ONC, and the rest of the Federal 
Government, on this objective.
    While some Medicare beneficiaries have had, for quite some time, 
the ability to download their Medicare claims information, in pdf or 
Excel formats, through the CMS Blue Button platform, the information 
was provided without any context or other information that would help 
beneficiaries understand what the data were really telling them. For 
beneficiaries, their claims information is useless if it is either too 
hard to obtain or, as was the case with the information provided 
through previous versions of Blue Button, hard to understand. In an 
effort to fully contribute to the Federal Government's MyHealthEData 
initiative, CMS developed and launched the new Blue Button 2.0, which 
represents a major step toward giving patients meaningful control of 
their health information in an easy-to-access and understandable way. 
Blue Button 2.0 is a developer-friendly, standards-based application 
programming interface (API) that enables Medicare beneficiaries to 
connect their claims data to secure applications, services, and 
research programs they trust. The possibilities for better care through 
Blue Button 2.0 data are exciting, and might include enabling the 
creation of health dashboards for Medicare beneficiaries to view their 
health information in a single portal, or allowing beneficiaries to 
share complete medication lists with their doctors to prevent dangerous 
drug interactions.
    To fully understand all of these health IT interoperability issues, 
initiatives, and innovations through the lens of its regulatory 
authority, CMS invites members of the public to submit their ideas on 
how best to accomplish the goal of fully interoperable health IT and 
EHR systems for Medicare- and Medicaid-participating providers and 
suppliers, as well as how best to further contribute to and advance the 
MyHealthEData initiative for patients. We are particularly interested 
in identifying fundamental barriers to interoperability and health 
information exchange, including those specific barriers that prevent 
patients from being able to access and control their medical records. 
We also welcome the public's ideas and innovative thoughts on 
addressing these barriers and ultimately removing or reducing them in 
an effective way, specifically through revisions to the current CMS 
CoPs, CfCs, and RfPs for hospitals and other participating providers 
and suppliers. We have received stakeholder input through recent CMS 
Listening Sessions on the need to address health IT adoption and 
interoperability among providers that were not eligible for the 
Medicare and Medicaid EHR Incentives program, including long-term and 
post-acute care providers, behavioral health providers, clinical 
laboratories and social service providers, and we would also welcome 
specific input on how to encourage adoption of certified health IT and 
interoperability among these types of providers and suppliers as well.

B. Request for Information on Price Transparency: Improving Beneficiary 
Access to Provider and Supplier Charge Information

    In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20548 and 20549) 
and the FY 2015 IPPS/LTCH PPS proposed and final rules (79 FR 28169 and 
79 FR 50146, respectively), we stated that we intend to continue to 
review and post relevant charge data in a consumer-friendly way, as we 
previously have done by posting hospital and physician charge 
information on the CMS website.\116\ In the FY 2019 IPPS/LTCH PPS 
proposed rule, we also continued our discussion of the implementation 
of section 2718(e) of the Public Health Service Act, which aims to 
improve the transparency of hospital charges. This discussion in the FY 
2019 IPPS/LTCH PPS proposed rule continued a discussion we began in the 
FY 2015 IPPS/LTCH PPS proposed rule and final rule (79 FR 28169 and 79 
FR 50146, respectively). In all of these rules, we noted that section 
2718(e) of the Public Health Service Act requires that each hospital 
operating within the United States, for each year, establish (and 
update) and make public (in accordance with guidelines developed by the 
Secretary) a list of the hospital's standard charges for items and 
services provided by the hospital, including for diagnosis-related 
groups (DRGs) established under section 1886(d)(4) of the Social 
Security Act. In the FY 2015 IPPS/LTCH PPS proposed and final rules, we 
reminded hospitals of their obligation to comply with the provisions of 
section 2718(e) of the Public Health Service Act and provided 
guidelines for its implementation. We stated that hospitals are 
required to either make public a list of their standard charges 
(whether that be the chargemaster itself or in another form of their 
choice) or their policies for allowing the public to view a list of 
those charges in response to an inquiry. In the FY 2019 IPPS/LTCH PPS 
proposed rule, we took one step to further improve the public 
accessibility of charge information. Specifically, effective January 1, 
2019, we are updating our guidelines to require hospitals to make 
available a list of their current standard charges via the internet in 
a machine readable format and to update this information at least 
annually, or more often as appropriate.
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    \116\ For example, Medicare Provider Utilization and Payment 
Data, available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/index.html.
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    In general, we encourage all providers and suppliers of health care 
services to undertake efforts to engage in consumer-friendly 
communication of their charges to help patients understand what their 
potential financial liability might be for services they obtain, and to 
enable patients to compare charges for similar services. We encourage 
providers and suppliers to update this information at least annually, 
or more often as appropriate, to reflect current charges.
    We are concerned that challenges continue to exist for patients due 
to insufficient price transparency. Such challenges include patients 
being

[[Page 37212]]

surprised by out-of-network bills for physicians, such as 
anesthesiologists and radiologists, who provide services at in-network 
hospitals and other settings, and patients being surprised by facility 
fees, physician fees for emergency department visits, or by fees for 
provider and supplier services that the beneficiary might consider to 
be a part of an episode of care involving a hospitalization but that 
are not services furnished by the hospital. We also are concerned that, 
for providers and suppliers that maintain a list of standard charges, 
the charge data are not helpful to patients for determining what they 
are likely to pay for a particular service or facility encounter. In 
order to promote greater price transparency for patients, we are 
considering ways to improve the accessibility and usability of current 
charge information.
    We also are considering potential actions that would be appropriate 
to further our objective of having providers and suppliers undertake 
efforts to engage in consumer-friendly communication of their charges 
to help patients understand what their potential financial liability 
might be for services they obtain from the provider or supplier, and to 
enable patients to compare charges for similar services across 
providers and suppliers, including when services could be offered in 
more than one setting, such as a freestanding physician office or a 
hospital outpatient department or an ambulatory surgical center. 
Therefore, we are seeking public comment from all providers and 
suppliers, including providers receiving payment under the OPPS, on the 
following:
    <bullet> How should we define ``standard charges'' in provider and 
supplier settings? Is there one definition for those settings that 
maintain chargemasters, and potentially a different definition for 
those settings that do not maintain chargemasters? Should ``standard 
charges'' be defined to mean: Average or median rates for the items on 
a chargemaster or other price list or charge list; average or median 
rates for groups of items and/or services commonly billed together, as 
determined by the provider or supplier based on its billing patterns; 
or the average discount off the chargemaster, price list, or charge 
list amount across all payers, either for each separately enumerated 
item or for groups of services commonly billed together? Should 
``standard charges'' be defined and reported for both some measure of 
the average contracted rate and the chargemaster, price list, or charge 
list? Or is the best measure of a provider's or supplier's standard 
charges its chargemaster, price list, or charge list?
    <bullet> What types of information would be most beneficial to 
patients, how can health care providers and suppliers best enable 
patients to use charge and cost information in their decision-making, 
and how can CMS and providers and suppliers help third parties create 
patient-friendly interfaces with these data?
    <bullet> Should providers and suppliers be required to inform 
patients how much their out-of- pocket costs for a service will be 
before those patients are furnished that service? How can information 
on out-of-pocket costs be provided to better support patient choice and 
decision-making? What changes would be needed to support greater 
transparency around patient obligations for their out-of-pocket costs? 
How can CMS help beneficiaries to better understand how copayment and 
coinsurance are applied to each service covered by Medicare? What can 
be done to better inform patients of their financial obligations? 
Should providers and suppliers play any role in helping to inform 
patients of what their out-of-pocket obligations will be?
    <bullet> Can we require providers and suppliers to provide patients 
with information on what Medicare pays for a particular services 
performed by that provider or supplier. If so, what changes would need 
to be made by providers and suppliers. What burden would be added as a 
result of such a requirement?
    In addition, we are seeking public comment on improving a Medigap 
patient's understanding of his or her out-of-pocket costs prior to 
receiving services, especially with respect to the following particular 
questions:
    <bullet> How does Medigap coverage affect patients' understanding 
of their out-of-pocket costs before they receive care? What challenges 
do providers and suppliers face in providing information about out-of-
pocket costs to patients with Medigap? What changes can Medicare make 
to support providers and suppliers that share out-of-pocket cost 
information with patients that reflects the patient's Medigap coverage? 
Who is best situated to provide patients with clear Medigap coverage 
information on their out-of-pocket costs prior to receipt of care? What 
role can Medigap plans play in providing information to patients on 
their expected out-of-pocket costs for a service? What State-specific 
requirements or programs help educate Medigap patients about their out-
of-pocket costs prior to receipt of care?

C. Request for Information on Leveraging the Authority for the 
Competitive Acquisition Program (CAP) for Part B Drugs and Biologicals 
for a Potential CMS Innovation Center Model

    Building on President Trump's Blueprint to Lower Drug Prices and 
Reduce Out-of-Pocket Costs, the CMS Center for Medicare and Medicaid 
Innovation (Innovation Center) is soliciting public comment on key 
design considerations for developing a potential model that would test 
private market strategies and introduce competition to improve quality 
of care for beneficiaries, while reducing both Medicare expenditures 
and beneficiaries' out of pocket spending. CMS has sought similar 
feedback in a previous solicitation of comments \117\ and, most 
recently, in the President's Blueprint to Lower Drug Prices and Reduce 
Out-of-Pocket Costs.\118\ Comments provided in response to these 
previous solicitations have been extremely helpful to CMS. In this 
request for information (RFI), we are seeking additional and more 
specific public feedback on a potential model design that would 
accelerate the move to a value-based health care system building upon 
the Competitive Acquisition Program (CAP) established under section 
1847B of the Act, including but not limited to design features such as 
the potential model's scope, which providers and suppliers should be 
included or excluded from the model, the types of Medicare Part B drugs 
and biologicals that should be included or excluded from the potential 
model, the role of private-sector vendors in the model (``model 
vendors''), a defined population of beneficiaries to be addressed by 
the potential model,

[[Page 37213]]

appropriate beneficiary protections, possible inclusion of other 
payers, and options for model payments. We also are interested in how 
best to handle Medicare payment for the new high-cost therapies, and 
whether a potential CAP-like model could be an appropriate payment and 
delivery structure for these drugs and biologicals. We are soliciting 
comments on how a model could be structured to advance the goals of the 
President's blueprint, namely to increase competition, strengthen 
negotiation, create incentives for lower list prices, and lower out-of-
pocket costs. Feedback on these questions will be important for shaping 
the potential model's design and operations. CMS appreciates the 
public's input on these important issues.
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    \117\ CMS included a solicitation of comments on the Competitive 
Acquisition Program (CAP) for Part B Drugs and Biologicals (81 FR 
13247) in a proposed rule, on March 11, 2016, entitled ``Medicare 
Program; Part B Drug Payment Model'' (81 FR 13230). The solicitation 
of comments sought to help CMS determine if there was sufficient 
interest in the CAP program, and to gather public input if we were 
to consider developing and testing a future model that would be at 
least partly based on the authority for the CAP under section 1847B 
of the Act. The March 11, 2016 proposed rule was withdrawn on 
October 4, 2017 (82 FR 46182) to ensure agency flexibility in 
reexamining important issues related to the proposed payment model 
and exploring new options and alternatives with stakeholders as CMS 
develops potential payment models that support innovative approaches 
to improve quality, accessibility, and affordability, reduce 
Medicare program expenditures, and empower patients and doctors to 
make decisions about their health care.
    \118\ President Donald J. Trump's Blueprint to Lower Drug 
Prices, May 11, 2018. Available at: https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-blueprint-lower-drug-prices/.
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1. Current Medicare Payments for Part B Drugs
    Medicare Part B covers and pays separately for a limited number of 
drugs. Drugs paid separately under Medicare Part B generally fall into 
three categories: Drugs, typically injectable, furnished incident to a 
physician's service in the physician office or other nonfacility 
setting (covered under sections 1832(a)(1) and 1861(s)(2)(A) of the 
Act), hospital outpatient settings (covered under sections 
1832(a)(2)(B) and 1861(s)(2)(B) of the Act), or ambulatory surgical 
center (covered under sections 1832(a)(2)(F) and 1833(i)(1)(A) of the 
Act); drugs administered via a covered item of durable medical 
equipment (DME) (covered under section 1861(n) of the Act); and other 
categories of drugs specified by statute (generally in section 
1861(s)(2) of the Act).
    Many Medicare Part B drug expenditures are for drugs furnished 
``incident to'' a physician's service. Sections 1861(s)(2)(A) and 
1861(s)(2)(B) of the Act provide that ``incident to'' drugs are not 
usually self-administered; self-administered drugs, such as orally 
administered tablets and capsules, are not included in the ``incident 
to'' provisions. Payment for drugs furnished ``incident to'' a 
physician's service is specified at section 1842(o) of the Act. Drugs 
that are covered ``incident to'' a physician's service must represent a 
real cost to the physician (that is, the physician must incur a cost to 
obtain the drug); hence, the physician obtains these drugs using the 
``buy and bill'' methodology.
    In accordance with section 1842(o)(1)(C) of the Act, most 
``incident to'' drugs are paid under the methodology in section 1847A 
of the Act. This means the Medicare payment is generally based on the 
average sales price (ASP) methodology, which includes a statutorily 
mandated 6-percent add-on. Under this methodology, expensive drugs 
receive higher add-on payment amounts than inexpensive drugs, 
potentially creating a financial incentive for providers and suppliers 
to furnish higher cost drugs. Specifically, because the 6-percent add-
on results in increased Medicare payment for a higher-cost drug 
relative to a lower-cost drug, the use of more expensive drugs may 
generate more revenue for a health care provider, depending on the 
health care provider's acquisition costs for the drugs.\119\ However, 
more expensive drugs generally result in greater cost-sharing for 
beneficiaries because patient cost-sharing is set at a percentage of 
the total Medicare payment amount. Meanwhile, the ASP-based methodology 
creates no direct incentives for furnishing high-value drug therapies.
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    \119\ MedPAC Report to the Congress Medicare and the Health Care 
Delivery System, June 2015, pp. 65-72. Available at: http://medpac.gov/docs/default-source/reports/june-2015-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf?sfvrsn=0.
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    The ASP payment amount determined under section 1847A of the Act 
reflects a weighted ASP for all National Drug Codes (NDCs) that are 
assigned to a Healthcare Common Procedure Coding System (HCPCS) code. 
The ASP payment amount does not vary based on the price an individual 
provider or supplier pays to acquire the drug, but reflects the price 
of all nonexcluded sales from all purchasers in the U.S. market. 
Payment determinations under the methodology in section 1847A of the 
Act also do not directly take into account the effectiveness of a 
particular drug. The payment determinations do not consider the cost of 
clinically comparable drugs that are billed for and paid under other 
HCPCS codes. The ASP is calculated quarterly using manufacturer-
submitted data\120\ on sales to all purchasers (with limited exceptions 
as articulated in section 1847A(c)(2) of the Act, such as sales to an 
entity that are merely nominal in amount and sales exempt from 
inclusion in the determination of Medicaid best price) with 
manufacturers' rebates, discounts, and price concessions included in 
the ASP calculation.
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    \120\ OMB Control Number 0938-0921.
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    Medicare Part B also pays for drugs that are infused through a 
covered item of durable medical equipment (DME), such as drugs 
administered with an infusion pump and inhalation drugs administered 
through a nebulizer. Medicare payments for these drugs are described in 
section 1842(o)(1)(D) of the Act for DME infusion drugs and section 
1842(o)(1)(G) of the Act for inhalation drugs.
    Finally, Medicare Part B covers and pays for a number of drugs with 
specific benefit categories defined under section 1861(s) of the Act 
including: Immunosuppressive drugs; hemophilia blood clotting factors; 
certain oral anticancer drugs; certain oral anti-emetic drugs; 
pneumococcal pneumonia, influenza and hepatitis B vaccines; 
erythropoietin for trained home dialysis patients; and certain 
osteoporosis drugs. Payment for many of these drugs falls under section 
1842(o) of the Act, and in accordance with section 1842(o)(1)(C) of the 
Act, most, but not all, drugs with specific benefit categories are paid 
under the methodology in section 1847A of the Act. A notable exception 
is that payment for pneumococcal pneumonia, influenza and hepatitis B 
vaccines is based on published AWP, specifically 95 percent AWP, if 
furnished in the physician office setting, payment is based on 
reasonable cost in the hospital outpatient setting.
    Under Medicare Part B, drug payment depends on the site of care, 
the drug, and the statutory requirements. Beneficiaries' cost-sharing 
is generally 20 percent of the Medicare allowed amount. However, for a 
hospital outpatient service, beneficiaries are financially responsible 
for a copayment amount for a procedure up to the amount of the 
inpatient deductible for the year, which means that beneficiary cost-
sharing for a separately payable drug or biological is limited to 
$1,340 in 2018 when the drug or biological is part of a covered 
outpatient hospital service, while the remaining portion of the 
Medicare allowed amount would be paid by the Medicare program.
    From 2011 to 2016, Medicare drug spending increased from $17.6 
billion to $28 billion under Medicare Part B, representing a compound 
annual growth rate (CAGR) of 9.8 percent, with per capita spending 
increasing 54 percent, from $532 to $818.\121\ The number of Medicare 
Part B FFS beneficiaries and the number of these beneficiaries who 
received a Part B drug increased over the 5-year period (2011 through 
2016). However, the increase in total Medicare drug spending during 
this period is more fully explained by increases in the prices of drugs 
for those beneficiaries

[[Page 37214]]

who received them than by increases in enrollment and utilization.
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    \121\ Spending and Enrollment Data from Centers for Medicare and 
Medicaid Services Office of Enterprise Data and Analytics.
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    Furthermore, the most recent National Health Expenditure 
Projections (2017-2026) noted ``among the largest health care goods and 
services, prescription drugs are projected to experience the fastest 
average annual spending growth in 2017-26 (6.3 percent per year).'' 
\122\ This trend primarily reflects faster anticipated growth in drug 
prices, which is attributable to a larger share of drug spending being 
accounted for by specialty drugs over the coming decade.
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    \122\ National Health Expenditure Projections, 2017-26: Despite 
Uncertainty, Fundamentals Primarily Drive Spending Growth, available 
at: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2017.1655.
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2. Competitive Acquisition Program (CAP) for Part B Drugs
    Section 1847B of the Act authorizes the CAP for Medicare Part B 
drugs and biologicals that are not paid on a cost or prospective 
payment basis. The CAP was established as an alternative to the average 
sales price (ASP) methodology that is specified in section 1847A of the 
Act described above. Instead of buying drugs for their offices, the CAP 
would allow physicians to voluntarily choose to participate in the CAP 
and place patient specific drug orders with an approved CAP vendor; the 
CAP vendor would acquire and distribute (or supply) the drugs to the 
physician's office and then bill Medicare and collect cost-sharing 
amounts from the beneficiary.
    The CAP program was operational for a limited time. CMS conducted 
the initial bidding for CAP vendors in 2005. The first CAP contract 
period ran from July 1, 2006 until December 31, 2008. One entity 
participated in the program, as the CAP vendor, providing drugs 
assigned to approximately 180 HCPCS billing codes (including heavily 
utilized drugs in Medicare Part B) to physicians across the United 
States and certain Territories. Unlike the ``buy and bill'' process 
that is still used to obtain many Medicare Part B drugs, physicians who 
chose to participate in the CAP did not buy or take title to the drug. 
The CAP vendor supplied drugs in unopened containers (not pharmacy-
prepared individualized doses like syringes containing a patient's 
prescribed dose). The CAP vendor's drug claims were processed by a 
designated Medicare claims processing contractor selected by CMS.
    The parameters for the second round of the CAP vendor selection 
were essentially the same as those for the first round. While CMS 
received several qualified bids for the second contract period, 
contractual issues with the successful bidders led to the postponement 
of the program. The CAP has been suspended since January 1, 2009. After 
the CAP was suspended, we sought additional input from physicians and 
other interested parties about further improvements to the program. For 
example, we held Open Door Forums, met with stakeholders, and 
encouraged correspondence from stakeholders and physicians who 
participated in the CAP. Although we received some useful suggestions, 
several significant concerns could not be addressed under the existing 
statutory requirements. These concerns included uncertainty about the 
participation of non-pharmacy entities like wholesalers as approved CAP 
vendors under the statutory requirements, and the requirement for a 
beneficiary-specific drug order, which impacts use of a consignment 
approach to facilitate emergency/urgent access to drugs, and to manage 
inventory through automated dispensing systems in the office. Many 
stakeholders were also concerned about the complexity of the program 
and the level of financial risk, particularly for the entities selected 
as CAP vendors. Financial risks for vendors included unpaid beneficiary 
cost sharing, lost or damaged drugs, and unverified drug 
administrations (which prevented payment). The CAP also was hindered by 
low physician enrollment and that some physicians perceived physician 
election, drug ordering and billing processes, and post pay 
documentation as burdensome. Also, an evaluation of the CAP found that 
it was not associated with savings (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Research-Reports-Items/CMS1234237.html).
    More detailed information about the CAP is available on the 
following CMS web page and links within the web page: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/CompetitiveAcquisforBios/index.html. The ``Downloads'' section of the 
following CMS web page includes a section with information about CAP 
vendor bidding, physician participation, and drugs provided under the 
CAP: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/CompetitiveAcquisforBios/vendorbackground.html.
3. MedPAC Part B Drug Value Program (DVP) Proposal
    In June 2017, the Medicare Payment Advisory Commission (MedPAC) 
recommended the development of a voluntary alternative to the ASP 
payment system, calling it the Part B Drug Value Program (DVP), along 
with changes to the existing Medicare payment policy for separately 
payable Part B drugs and biologicals. MedPAC stated in its June 2017 
Report to Congress that the purpose of such a program would be to 
obtain lower prices for Medicare Part B drugs by using private vendors 
to negotiate with manufacturers and improve incentives for health care 
providers furnishing Medicare Part B drugs by making health care 
providers accountable for cost and quality through shared savings 
opportunities.\123\ MedPAC noted that, although the CAP program faced 
challenges, the concept underlying the CAP--to create a voluntary 
alternative to the ASP system using private vendors to negotiate 
favorable prices and eliminate financial incentives for physicians to 
prescribe Medicare Part B drugs--still has appeal. The DVP would be 
designed differently from the CAP to address several issues encountered 
with the CAP program and to allow hospitals to obtain drugs through the 
DVP. MedPAC noted that CAP vendors had little leverage to negotiate 
discounts with manufacturers because they were required to offer a 
group of about 180 HCPCS codes, including many single-source drugs and 
biologicals used in Medicare Part B. By contrast, DVP vendors would be 
permitted to use tools (such as a formulary, step therapy, prior 
authorization, indication-based pricing, risk based contracting with 
savings passed back to the Medicare program, and, in certain 
circumstances, binding arbitration) to give the DVP vendors greater 
negotiating leverage with manufacturers.
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    \123\ The MedPAC June 2017 Report to the Congress: Medicare and 
the Health Care Delivery System. http://medpac.gov/docs/default-source/reports/jun17_reporttocongress_sec.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    MedPAC envisioned that the DVP would begin with a subset of drug 
classes. In addition, under the DVP, private vendors would negotiate 
prices for Medicare Part B drugs, but, unlike the CAP, DVP vendors 
would not purchase (take title of) or ship drugs to the voluntarily 
participating health care providers. Rather, participating health care 
providers would continue to buy drugs from established distribution 
channels, but at the DVP-negotiated prices, and the Medicare payment to 
participating health care providers would be at the same negotiated 
price. To encourage voluntary enrollment in the DVP, in addition to 
lowered financial risk associated with buying and billing for drugs at 
the set amounts established by a DVP vendor, participating health care 
providers

[[Page 37215]]

would have shared savings opportunities through the DVP. According to 
MedPAC June 2017 report, the proposed shared savings opportunities for 
providers would not include providers taking on risk. Specifically, the 
shared savings with providers would occur ``if the DVP led to lower 
aggregate costs of Part B drugs, the savings would be shared with 
providers.'' Savings achieved through the DVP would also be shared with 
beneficiaries (through lower cost sharing), the DVP vendors, and the 
Medicare program. Nonparticipating health care providers would continue 
to buy drugs from traditional distribution channels and Medicare would 
pay based on the ASP system, although the ASP add-on would be reduced 
gradually. Other key elements of the DVP include its vendor structure, 
a shared savings component, tools to increase vendors' negotiating 
leverage, a reduction of the add-on in the ASP system, and exclusion of 
DVP prices from the ASP calculations.
    In response to the Innovation Center New Direction RFI,\124\ issued 
in September 2017, MedPAC encouraged the Innovation Center to consider 
its DVP proposal, suggesting that the Innovation Center could test use 
of private vendors to negotiate drug prices with manufacturers on a 
smaller scale in specific markets, and allow for voluntary provider 
participation, as a way to obtain lower prices for Medicare Part B 
drugs. The public comments that were received by the CMS Innovation 
Center in response to the New Direction RFI are available at: https://innovation.cms.gov/initiatives/direction. Numerous other stakeholders, 
such as the Coalition of State Rheumatology Organizations, CVS Health, 
and The Pew Charitable Trusts, also referenced or recommended similar 
approaches to MedPAC's DVP proposal in response to the New Direction 
RFI, involving the use of a private vendor to structure alternative 
payment arrangements for a small subset of therapies.\125\
---------------------------------------------------------------------------

    \124\ New Direction RFI and public comments are available at 
https://innovation.cms.gov/initiatives/direction.
---------------------------------------------------------------------------

4. Potential Model Goals and Considerations
    Section 1115A of the Act authorizes the Innovation Center to test 
innovative payment and service delivery models expected to reduce 
program expenditures, while preserving or enhancing the quality of care 
furnished to Medicare, Medicaid, and Children's Health Insurance 
Program beneficiaries. The CMS Innovation Center is exploring 
leveraging the authority for the CAP under section 1847B of the Act to 
test improvements to the CAP and to test whether allowing private-
sector model vendors to enter into and administer value-based 
arrangements with manufacturers of separately payable Medicare Part B 
drugs and biologicals improves beneficiary access and quality of care 
while reducing Medicare expenditures. Such a CAP-like model would test 
an alternative to the current system, under which health care providers 
(physicians, hospital outpatient departments, and potentially other 
providers and suppliers) would acquire drugs through value-based 
agreements with manufacturers administered by CAP-like model vendors 
(``vendor-administered payment arrangements''), building on lessons 
learned from CMS' experience with the CAP. A potential benefit of a 
CAP-like model of this nature would be eliminating the financial risk 
to providers and suppliers of taking title to very high-cost drugs and 
biologicals.
    Such a potential model would include competitively selected 
private-sector vendors that would establish vendor-administered payment 
arrangements with the manufacturers of separately payable Part B drugs 
and biologicals included in the model (``included drugs and 
biologicals''). CMS has considered that model vendors' vendor-
administered payment arrangements under a potential model could be 
required to include value-based pricing strategies, such as outcomes-
based agreements, indication-based pricing, payment over time, shared 
savings or performance-based payments based on the impact on total cost 
of care, and reduced beneficiary cost-sharing. This could more closely 
tie the Medicare payment and beneficiary cost-sharing for an included 
drug or biological to the value of such therapy, which we believe has 
the potential to reduce Medicare expenditures while preserving or 
enhancing the quality of care for beneficiaries. Such a model could 
start with a subset of therapies, with an increasing number of included 
drugs and biologicals over time. By introducing a competitive dynamic 
in Part B between manufacturers and model vendors and potentially among 
model vendors, such a model would aim to get lower drug prices for 
Medicare and for beneficiaries.
    We are considering how to structure a model vendor role, and 
whether a CAP-like model test should include an approach similar to the 
CAP (where model vendors would purchase and take title to the included 
drugs and biologicals) or an approach similar to MedPAC's envisioned 
DVP (where providers and suppliers purchase and receive included drugs 
and biologicals through pricing arrangements and model vendors would 
not take title to the included drugs and biologicals). We also are 
considering, for example, whether testing either or both of these 
approaches may be appropriate for certain drugs and biologicals, such 
as testing one approach for high-cost drugs and biologicals, single 
source drugs and biologicals, or certain drug classes, and testing 
another approach for other types of drugs and biologicals.
    We also are considering whether model vendors, if they did take 
title to included drugs and biologicals, would take possession of the 
included drugs and biologicals, or if existing distribution channels 
could be leveraged such that model vendors would take title to, but not 
possession of, the included drugs and biologicals and the included 
drugs and biologicals would be distributed directly to the providers 
and suppliers. In addition, we are considering whether, under a 
potential CAP-like model, providers and suppliers could have a formal 
custodial agreement with one or more model vendors, under which the 
model vendor would agree to ensure onsite availability of an included 
therapy without the provider or supplier taking ownership of the 
product, making payment, or otherwise being financially at risk for 
obtaining the product, subject to the provider's or supplier's 
obligation to ensure the physical safety and integrity of the included 
drug and biological until the included therapy is administered to an 
included beneficiary. In addition, we are considering how custodial 
agreements of this nature could address concerns with existing CAP 
requirements that CAP drugs could only be delivered upon receipt of a 
prescription, with limited exceptions. We are also considering whether 
providers and suppliers under such a custodial agreement with a model 
vendor could continue to collect beneficiary cost-sharing to address 
issues encountered under the CAP, such as eliminating the need for the 
provider or supplier to share beneficiary billing information with 
model vendors, reducing model vendors' financial risk for uncollected 
beneficiary cost-sharing, and lessening beneficiaries' burden 
associated with model vendors' billing for cost-sharing. However, 
potential financial relationships between providers and suppliers and 
model vendors could increase program risks, and we seek information on 
how CMS

[[Page 37216]]

might structure a potential model to avoid these risks while testing 
improvements to the CAP.
    CMS is also considering how a potential CAP-like model could 
include other payers including Medicare Advantage organizations, State 
Medicaid agencies, as well as Medicaid Managed Care Organizations 
(MCOs). Specifically, we are considering ways to allow Medicare 
Advantage, State Medicaid agencies, and Medicaid MCOs to have access to 
the same or similar value-based vendor-administered payment 
arrangements available under a potential CAP-like model, such as by 
paying for included drugs and biologicals for their enrollees through 
model vendors.
    We are soliciting public comments on these design considerations, 
on how to best initially test and then broaden the scope of a potential 
CAP-like model, and on the questions about a potential model identified 
below. These questions have been categorized into the following key 
areas: Included providers and suppliers; included drugs and 
biologicals; beneficiary cost-sharing, protections and fiscal 
considerations; model vendors; regulatory barriers and transparency 
issues; manufacturer participation; and model scope.
a. Included Providers and Suppliers
    <bullet> Are there types of Part B providers and suppliers that 
should be included or excluded from a potential CAP-like model, and if 
so why?
    <bullet> Certain physician specialties currently receive 
substantial revenue from Medicare payments for Part B drugs. For 
certain specialties (for example, rheumatology, ophthalmology and 
oncology) a significant portion of their overall Medicare payments are 
related to Part B drugs. Should a potential CAP-like model address 
concerns about a potential reduction in overall payments for physicians 
that currently rely on this revenue and, if so, how?
    <bullet> What protections or incentives would be necessary for 
providers and suppliers to participate in a potential model that would 
require that included drugs and biologicals be acquired under a vendor-
administered payment arrangement?
b. Included Drugs and Biologicals
    <bullet> Which separately payable Part B drugs and biologicals or 
drug classes, would be appropriate to include in a potential CAP-like 
model in order to bring the greatest value to the Medicare program and 
to beneficiaries, and among these drugs and biologicals or classes 
thereof, which ones would be appropriate to include initially? Should 
separately payable Part B drugs and biologicals that are used in the 
treatment of substance use disorders and mental health disorders be 
included? Are there certain separately payable Part B drugs and 
biologicals or drug classes that should be excluded, and if so, why?
    <bullet> Which specific drugs, drug classes, groups of drugs, or 
indications would be appropriate candidates for inclusion in a 
potential CAP-like model or in specific types of value-based pricing 
strategies? What rationale and supporting data are available to support 
adopting value-based payment for these candidates? For which of these 
candidates would claims data be an adequate information source for 
determining whether outcomes under a value-based agreement were met? 
Which drugs and biologicals or drug classes would be appropriate 
candidates for reducing or eliminating beneficiary coinsurance? How 
should modifications to beneficiary cost-sharing amounts be structured 
so that any reduced cost sharing does not lead to unintended 
competitive advantages?
    <bullet> In addition to outcomes-based agreements, indication-based 
pricing arrangements, payment over time, shared savings or performance-
based payment based on the impact on the total cost of care, what other 
potential value-based pricing strategies can CMS test that utilize 
market-based strategies in paying for Part B drugs? How could CMS 
ensure that payment arrangements are site neutral, where applicable? 
What current experience in the commercial or other markets should CMS 
consider?
    <bullet> For outcomes-based agreements, what elements (e.g., 
clinical measures, cost measures, quality measures, and other targets) 
should these agreements include? How would the outcomes of interest be 
measured? What information systems and infrastructure would be 
necessary for collection of outcomes data? Are there existing systems 
or data (such as claims data or quality measures) that could be 
leveraged to measure outcomes? What role could registries have in 
supporting outcomes-based agreements?
c. Beneficiary Cost Sharing, Protections and Fiscal Considerations
    <bullet> How could a potential CAP-like model be structured to 
improve beneficiaries' access to Part B drugs and biologicals?
    <bullet> How can access to and quality of care for beneficiaries be 
improved or maintained under a potential vendor-administered payment 
arrangement? Should these arrangements be constructed so beneficiaries 
share in the value created? How could the sharing of value with 
beneficiaries be structured?
    <bullet> How can CMS ensure a potential CAP-like model includes 
beneficiary protections, including ensuring the quality of and access 
to care?
    <bullet> What key considerations should CMS assess related to 
beneficiary cost-sharing, experience of care, choice of health care 
provider and drug or biological, and access to care in potentially 
designing such a model test?
    <bullet> What challenges would need to be addressed to allow for 
collection of beneficiary outcomes data by model vendors or other CMS 
contractors?
    <bullet> What tools and strategies should a potential model include 
to ensure program integrity and to minimize the potential for fraud, 
waste and abuse?
d. Model Vendors
    <bullet> How could the role of the CAP vendor be improved such that 
model vendors, and included providers and suppliers, would not face 
unsurmountable challenges to model participation? What types of 
organizations should CMS consider as candidates to serve as the model 
vendors?
    <bullet> As described above, CMS used a competitive process to 
select vendors for the CAP under section 1847B of the Act. What factors 
and selection criteria should CMS consider as part of a competitive 
selection process under a potential CAP-like model to identify those 
entities most likely to perform the responsibilities of a model vendor 
efficiently and effectively with minimal start up time? What methods 
should CMS consider for evaluation of submitted bids to obtain the best 
value for the Medicare program?
    <bullet> What factors should CMS consider in setting the geographic 
areas that model vendors would serve? What are the benefits and 
challenges of setting larger geographic areas, or even a single 
nationwide geographic area, verses smaller geographic areas? If CMS 
establishes multiple geographic areas to be served by model vendors, 
should CMS allow entities that bid to perform model vendor 
responsibilities to submit a bid for one or more geographic areas or 
require entities that bid to perform model vendor responsibilities to 
do so for all areas included in a model? If bidders are allowed to 
choose to apply only for certain geographic areas, what strategies 
should CMS consider to ensure that qualified model vendors could be 
selected for each geographic area?
    <bullet> How should CMS balance the need for potential model 
vendors to have

[[Page 37217]]

negotiating power (for example, sufficient volume) with the need to 
create competition across model vendors for developing vendor-based 
payment arrangements using innovative value-based pricing strategies? 
Should there be more than one model vendor that covers a specific 
geographic area? Should the number of model vendors in a specific 
geographic area be limited? Are there unique challenges that should be 
addressed for certain geographic areas, such as rural areas or the 
Territories, or for providers and suppliers in those areas?
    <bullet> One suggested improvement to the CAP is to use a 
consignment approach. How could existing purchasing and distribution 
processes for included drugs and biologicals be leveraged to facilitate 
model vendor ownership prior to administration without a model vendor 
taking physical possession of the included drugs and biologicals, while 
ensuring timely onsite availability of included drugs and biologicals 
and flexibility for dosage changes?
    <bullet> What are the potential risks with testing a consignment 
approach for model vendor-owned included drugs and biologicals, 
including high-cost therapies? What would be possible approaches for 
mitigating these risks?
    <bullet> What terms and responsibilities should be included in 
formal custodial agreements between model vendors and included 
providers and suppliers to provide protections to model vendors, 
included providers and suppliers, and the Medicare program?
    <bullet> What potential conflicts of interest might limit the 
success of a potential CAP-like model and what steps should CMS 
consider to mitigate this risk?
    <bullet> What types of structures (such as group purchasing 
organizations, single or affiliated entities) could support a model 
vendor role for a potential CAP-like model for included drugs and 
biologicals?
    <bullet> What financial protection(s) may be necessary to encourage 
private-sector vendor participation in a potential CAP-like model?
    <bullet> How should CMS structure the payment arrangement between 
CMS and selected model vendors? Should CMS pay model vendors a fee that 
is not tied to the value of the included drugs and biologicals, 
discounts or rebates and, if so, how? Should the payment be tied to 
model vendor performance and, if so, how? How can CMS ensure that the 
payment arrangements with model vendors do not introduce perverse 
incentives?
    <bullet> What, if any, formulary and/or utilization management 
strategies, such as step therapy, should model vendors be allowed to 
include in their value-based payment arrangements with manufacturers?
e. Regulatory Barriers and Transparency Issues
    <bullet> What specific regulatory barriers currently exist under 
either the Medicare or Medicaid programs to value-based pricing 
strategies as part of a potential Medicare payment model that would 
test vendor-administered payment arrangements? How could CMS best 
address these barriers?
    <bullet> What waivers of statutory and other requirements would 
need to be considered for purposes of testing a potential CAP-like 
model that would make included drugs and biologicals available to 
included providers and suppliers through vendor-administered payment 
arrangements?
    <bullet> What specific engagement strategies, information sharing, 
and transparency would be necessary as part of a test of value-based 
vendor-administered payment arrangements with manufacturers in order to 
encourage participation and to provide beneficiaries, providers, and 
suppliers with important information in order for beneficiaries, 
providers, and suppliers to make person-centered health care decisions?
    <bullet> What types of data would need to be shared with model 
vendors, manufacturers or other stakeholders to support model vendors' 
value-based payment arrangements with manufacturers?
    <bullet> What are specific barriers that limit sharing data with 
model vendors or manufacturers? What safeguards should be in place 
regarding sharing data with potential model participants?
    <bullet> How should the potential model be evaluated? What metrics 
should be reviewed or collected? What benchmarks should be used for 
purposes of the model for evaluation?
f. Manufacturer Participation
    <bullet> What features should CMS consider that would incentivize 
manufacturers to participate in vendor-administered payment 
arrangements? Should participation by manufacturers be mandatory?
    <bullet> How would drug prices and manufacturer price reporting for 
included drugs and biologicals be impacted by the potential CAP-like 
model test?
g. Model Scope
    In designing models, CMS must consider the size and scope of the 
potential model, which impacts how many participants may be eligible 
for a model, to ensure an effective and valid model test and 
evaluation.
    <bullet> What features should CMS consider to ensure a potential 
CAP-like model addresses a defined population for which there are 
deficits in care leading to poor clinical outcomes or potentially 
avoidable expenditures?
    <bullet> Under a potential CAP-like model, how geographically broad 
should a model be in order to allow for a robust model test and 
evaluation?
    <bullet> Are there certain states, localities, geographies, or 
other areas that should be excluded from the model? If so, what 
compelling reason exists for such exclusion?
    <bullet> How could a CAP-like model be structured to allow for 
Medicare Advantage organizations, State Medicaid agencies, and Medicaid 
MCOs to have access to model vendor pricing under the model?
    <bullet> Under what circumstances would allowing Medicare Advantage 
organizations, State Medicaid agencies, and Medicaid MCOs to pay for 
included drugs and biologicals for their enrollees through a model 
vendor's vendor-administered arrangement with a manufacturer not be 
appropriate?
    <bullet> What are the potential interactions of a potential CAP-
like model with existing CMS Innovation Center models? What steps 
should CMS consider to minimize potential overlap or impacts on 
existing models?

XVI. Proposed Additional Hospital Inpatient Quality Reporting (IQR) 
Program Policies

A. Background

    We refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR 
43860 through 43861) and the FY 2011 IPPS/LTCH PPS final rule (75 FR 
50180 through 50181) for detailed discussions of the history of the 
Hospital IQR Program, including the statutory history, and to the FY 
2015 IPPS/LTCH PPS final rule (79 FR 50217 through 50249), the FY 2016 
IPPS/LTCH PPS final rule (80 FR 49660 through 49692), the FY 2017 IPPS/
LTCH PPS final rule (81 FR 57148 through 57150), and the FY 2018 IPPS/
LTCH PPS final rule (82 FR 38323 through 38411) for the measures and 
program policies we have adopted for the Hospital IQR Program through 
the FY 2020 payment determination and subsequent years. In addition to 
the proposal discussed in this section, we also refer readers to the FY 
2019 IPPS/LTCH PPS proposed rule (83 FR 20470 through 20500) for a full 
discussion of the Hospital IQR Program and its proposed policies.

[[Page 37218]]

B. Proposed Updates to the HCAHPS Survey Measure (NQF #0166) for the FY 
2024 Payment Determination and Subsequent Years

1. Background of the HCAHPS Survey in the Hospital IQR Program
    CMS partnered with the Agency for Healthcare Research and Quality 
(AHRQ) to develop the Hospital Consumer Assessment of Healthcare 
Providers and Systems (HCAHPS) patient experience of care survey (NQF 
#0166) \126\ (hereinafter referred to as the HCAHPS Survey). We adopted 
the HCAHPS Survey in the Hospital IQR Program (at the time called the 
Reporting Hospital Quality Data Annual Payment Update Program) in the 
CY 2007 OPPS final rule with comment period (71 FR 68202 through 68204) 
beginning with the FY 2008 payment determination and for subsequent 
years. We refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FY 
43882), the FY 2011 IPPS/LTCH PPS final rule (75 FR 50220 through 
50222), the FY 2012 IPPS/LTCH PPS final rule (76 FR 51641 through 
51643), the FY 2013 IPPS/LTCH PPS final rule (77 FR 53537 through 
53538), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50819 through 
50820), and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38328 to 38342) 
for details on previously-adopted HCAHPS Survey requirements.
---------------------------------------------------------------------------

    \126\ The HCAHPS measure also includes the NQF-endorsed Care 
Transition Measure (CTM-3) (NQF #0228), which we added in the FY 
2013 IPPS/LTCH PPS final rule (77 FR 53513 through 53516). We added 
the Communication About Pain composite measure in the FY 2018 IPPS/
LTCH PPS final rule (38328 through 38342), and stated that we would 
seek NQF endorsement for this measure.
---------------------------------------------------------------------------

    The HCAHPS Survey (OMB Control Number 0938-0981) is the first 
national, standardized, publicly reported survey of patients' 
experience of hospital care and asks discharged patients 32 questions 
about their recent hospital stay. The HCAHPS Survey is administered to 
a random sample of adult patients who receive medical, surgical, or 
maternity care between 48 hours and 6 weeks (42 calendar days) after 
discharge and is not restricted to Medicare beneficiaries.\127\ 
Hospitals must survey patients throughout each month of the year.\128\ 
The HCAHPS Survey is available in official English, Spanish, Chinese, 
Russian, Vietnamese, and Portuguese versions. The HCAHPS Survey and its 
protocols for sampling, data collection and coding, and file submission 
can be found in the current HCAHPS Quality Assurance Guidelines, which 
is available on the official HCAHPS website at: http://www.hcahpsonline.org/en/quality-assurance/. AHRQ carried out a rigorous 
scientific process to develop and test the HCAHPS Survey instrument. 
This process entailed multiple steps, including: A public call for 
measures; literature reviews; cognitive interviews; consumer focus 
groups; multiple opportunities for additional stakeholder input; a 3-
State pilot test; small-scale field tests; and notice-and-comment 
rulemaking. In May 2005, the HCAHPS Survey was first endorsed by the 
NQF.\129\
---------------------------------------------------------------------------

    \127\ We refer readers to the FY 2018 IPPS/LTCH PPS final rule 
(82 FR 38328 to 38342, 38398) and to the official HCAHPS website at: 
http://www.hcahpsonline.org for details on HCAHPS requirements.
    \128\ Ibid.
    \129\ Available at: http://www.qualityforum.org/Publications/2008/08/National_Voluntary_Consensus_Standards_for_Hospital_Care_2007__Performance_Measures.aspx.
---------------------------------------------------------------------------

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38328 through 
38342), out of an abundance of caution, in the face of a nationwide 
epidemic of opioid overprescription, we finalized a refinement to the 
HCAHPS Survey measure as used in the Hospital IQR Program by removing 
the previously adopted pain management questions and incorporating new 
Communication About Pain questions beginning with patients discharged 
in January 2018, for the FY 2020 payment determination and subsequent 
years.\130\ These three survey questions within the HCAHPS Survey, 
collectively known as the Communication About Pain questions,\131\ 
address how providers communicate with patients about pain. These 
questions are as follows:
---------------------------------------------------------------------------

    \130\ In the CY 2017 OPPS/ASC final rule with comment period (81 
FR 79855 through 79862), the Hospital VBP Program removed the Pain 
Management dimension of the HCAHPS Survey in the Patient and 
Caregiver-Centered Experience of Care/Care Coordination domain of 
the Hospital VBP Program beginning with the FY 2018 program year. 
Under the Hospital VBP Program, payment adjustments are tied to 
hospitals' performance on the measures that are used to calculate 
each hospital's Total Performance Score.
    \131\ Available at: http://hcahpsonline.org/en/survey-instruments/.
---------------------------------------------------------------------------

    <bullet> HP1: ``During this hospital stay, did you have any pain?''

[ballot] Yes
[ballot] No
    <bullet> HP2: ``During this hospital stay, how often did hospital 
staff talk with you about how much pain you had?''

[ballot] Never
[ballot] Sometimes
[ballot] Usually
[ballot] Always
    <bullet> HP3: ``During this hospital stay, how often did hospital 
staff talk with you about how to treat your pain?''

[ballot] Never
[ballot] Sometimes
[ballot] Usually
[ballot] Always

    In addition, we finalized public reporting on the Communication 
About Pain questions, such that hospital performance data on those 
questions would be publicly reported on the Hospital Compare website 
beginning October 2020, using CY 2019 data. We also stated that we 
would provide performance results based on CY 2018 data on the 
Communication About Pain questions to hospitals in confidential preview 
reports, upon the availability of four quarters of data, as early as 
July 2019. We believed implementing the Communication About Pain 
questions as soon as feasible was necessary to address any perceived 
conflict between appropriate management of opioid use and patient 
satisfaction by relieving any potential pressure physicians may feel to 
overprescribe opioids (82 FR 38333).
2. Proposed Updates to the HCAHPS Survey: Removal of Communication 
About Pain Questions
    Since finalization of the Communication About Pain questions, we 
have received feedback that some stakeholders are concerned that, 
although the revised questions focus on communications with patients 
about their pain and treatment of that pain, rather than how well their 
pain was controlled, the questions still could potentially impose 
pressure on hospital staff to prescribe more opioids in order to 
achieve higher scores on the HCAHPS Survey. In addition, in its final 
report, the President's Commission on Combating Drug Addiction and the 
Opioid Crisis recommended removal of the HCAHPS Pain Management 
questions in order to ensure providers are not incentivized to offer 
opioids to raise their HCAHPS Survey score.\132\
---------------------------------------------------------------------------

    \132\ Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-15-2017.pdf.
---------------------------------------------------------------------------

    Other potential factors outside the control of CMS quality program 
requirements may contribute to the perception of a link between the 
Communication About Pain questions and opioid prescribing practices, 
including: misuse of the HCAHPS Survey (such as using it for outpatient 
emergency room care instead of inpatient care, or using it for 
determining individual physician performance); failure to recognize 
that the HCAHPS Survey excludes certain populations from the sampling 
frame (such as those with a primary substance use disorder diagnosis); 
and the addition of supplemental pain-related

[[Page 37219]]

survey questions by the hospital that are not formally part of the 
HCAHPS Survey or otherwise required by CMS.
    Because some hospitals have identified patient experience of care 
as a potential source of competitive advantage, we have heard from 
stakeholders that some hospitals may be disaggregating their raw HCAHPS 
Survey data to compare, assess, and incentivize individual physicians, 
nurses, and other hospital staff. Some hospitals also may be using the 
HCAHPS Survey to assess their emergency and outpatient departments. To 
be clear, the HCAHPS Survey was never designed or intended to be used 
in these ways.\133\ In our HCAHPS Quality Assurance Guidelines,\134\ 
which sets forth current survey administration protocols, we strongly 
discourage the unofficial use of HCAHPS scores for comparisons within 
hospitals, such as for comparisons of particular wards, floors, and 
individual staff hospital members. We also support the standardization 
of HCAHPS Survey administration and data collection methodologies by 
requiring hospitals/survey vendors to participate in introductory and 
annual update trainings.
---------------------------------------------------------------------------

    \133\ Tefera L, Lehrman WG, and Conway P. ``Measurement of the 
Patient Experience: Clarifying Facts, Myths, and Approaches.'' 
Journal of the American Medical Association. Available at: http://jama.jamanetwork.com/article.aspx?articleid=2503222.
    \134\ HCAHPS Quality Assurance Guidelines (v. 13.0), available 
at: http://www.hcahpsonline.org/en/quality-assurance/.
---------------------------------------------------------------------------

    We continue to believe that pain management is a critical part of 
routine patient care on which hospitals should focus and an important 
concern for patients, their families, and their caregivers. It is 
important to reiterate that the HCAHPS Survey does not specify any 
particular type of pain control method. The revised questions focus 
entirely on communication about pain with patients and do not refer to, 
recommend, or imply that any particular type of treatment is 
appropriate (82 FR 38333). In addition, appropriate pain management 
includes communication with patients about pain-related issues, setting 
expectations about pain, shared decision-making, proper prescription 
practices, and alternative treatments for pain management.
    Although we are not aware of any scientific studies that support an 
association between scores on the prior or current iterations of the 
Communication About Pain questions and opioid prescribing practices, 
out of an abundance of caution and to avoid any potential unintended 
consequences, we are proposing to update the HCAHPS Survey by removing 
the Communication About Pain questions effective with January 2022 
discharges, for the FY 2024 payment determination and subsequent years. 
This would reduce the overall length of the HCAHPS Survey from 32 to 29 
questions, and the final four quarters of reported Communication About 
Pain data (comprising data from the first, second, third, and fourth 
quarters 2021) would be publicly reported on Hospital Compare in 
October 2022 and then subsequently discontinued. As stated above, in 
its final report, the President's Commission on Combating Drug 
Addiction and the Opioid Crisis recommended removal of the HCAHPS Pain 
Management Survey questions in order to ensure providers are not 
incentivized to offer opioids to raise their HCAHPS Survey score.\135\
---------------------------------------------------------------------------

    \135\ Final Report, The President's Commission on Combating Drug 
Addiction and the Opioid Crisis, available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Final_Report_Draft_11-15-2017.pdf.
---------------------------------------------------------------------------

    In proposing removal of the Communication About Pain questions, we 
are not proposing to change how performance scores are calculated for 
the remaining questions on the HCAHPS Survey. The Hospital IQR Program 
is a quality data reporting program; payments to hospitals will not be 
affected so long as hospitals timely submit data on required measures 
and meet all other program requirements. We would continue to use the 
remaining 29 questions of the HCAHPS Survey to assess patients' 
experience of care, and would continue to publicly report hospital 
scores on those questions in order to ensure patients and consumers 
have access to these data while making decisions about their care. 
Patients and providers can continue to review data from responses to 
the remaining 29 questions of the HCAHPS Survey on the Hospital Compare 
website.
    In crafting our proposal, we considered whether the Communication 
About Pain questions should be retained in both the HCAHPS Survey and 
the Hospital IQR Program but with a further delay in public reporting. 
For example, instead of public reporting starting in October 2020 as 
previously finalized, we could delay public reporting of the 
Communication About Pain questions until October 2021. We are 
interested in feedback on whether the Communication About Pain 
questions should be retained in both the HCAHPS Survey and the Hospital 
IQR Program but with a further delay in public reporting. Delay in 
public reporting would allow further time to engage a broad range of 
stakeholders and assess their feedback regarding use of the 
Communication About Pain questions in the HCAHPS Survey and the 
Hospital IQR Program and to assess the impact of the new Communication 
About Pain questions. However, we chose to propose to remove the 
Communication About Pain questions as discussed above instead, so 
providers do not perceive that there are incentives for prescribing 
opioids to increase survey scores.
    In crafting our proposal, we also considered proposing earlier 
removal of the Communication About Pain questions from the HCAHPS 
Survey effective as early as January 2020 discharges, for the FY 2022 
payment determination and subsequent years. However, we believe 
removing the questions effective with January 2020 discharges would not 
allow sufficient time to make necessary updates to the data collection 
tools, including the CMS data submission warehouse and associated 
reporting tools, as well as to update the HCAHPS Survey administration 
protocols and the survey tool itself. In addition, our proposal to make 
these updates effective later, with January 2022 discharges, would 
allow time to assess the potential impact of using the Communication 
About Pain questions while monitoring unintended consequences. It would 
also allow time for empirical testing for any potential effect the 
removal of the Communication About Pain questions might have on 
responses to the remaining non-pain related survey items.
    We are inviting public comment on our proposal as discussed above 
and whether the questions should be removed from the HCAHPS Survey and 
Hospital IQR Program. We are particularly interested in receiving 
feedback on any potential implications on patient care related to 
removing these questions. We also are interested in feedback from 
stakeholders on: (1) The importance of receiving feedback from patients 
related to communication about pain management and the importance of 
publicly reporting this information for use both by patients in 
healthcare decision-making and by hospitals in focusing their quality 
improvement efforts; (2) additional analyses demonstrating a 
relationship between the use of pain questions in patient surveys and 
prescribing behavior, including unpublished data, if available; (3) 
input from clinicians and other providers concerning whether it would 
be valuable for CMS to issue

[[Page 37220]]

guidance suggesting that hospitals do not administer any surveys with 
pain-related questions, including adding hospital-specific supplemental 
items to HCAHPS, as well as the potential implementation of a third 
party quality assurance program to assure that hospitals are not 
misusing survey data by creating pressure on individual clinicians to 
provide inappropriate clinical care; (4) information from clinicians 
and other providers concerning instances of hospital administrators 
using results from the HCAHPS Survey to compare individual clinician 
performance directly to other clinicians at the same facility or 
institution and examples where, as a result, clinicians have felt 
pressured to prescribed opioids inappropriately (in terms of either 
quantity or appropriateness for particular patients); (5) suggestions 
for other measures that would capture facets of pain management and 
related patient education, for instance, for collecting data about a 
hospital's pain management plan, and provide that information back to 
consumers; and (6) how other measures could take into account provider-
supplied information on appropriate pain management and whether 
patients are informed about the risks of opioid use and about non-
opioid pain management alternatives.

XVII. Files Available to the Public via the Internet

    The Addenda to the OPPS/ASC proposed rules and the final rules with 
comment period are published and available via the internet on the CMS 
website. For CY 2019, we are proposing to change the format of the OPPS 
Addenda A, B, and C, by adding a column entitled ``Copayment Capped at 
the Inpatient Deductible of $1,340.00'' where we would flag, through 
use of an asterisk, those items and services with a copayment that is 
equal to or greater than the inpatient hospital deductible amount for 
any given year (the copayment amount for a procedure performed in a 
year cannot exceed the amount of the inpatient hospital deductible 
established under section 1813(b) of the Act for that year). We are 
requesting public comments on this proposed change of the OPPS Addenda 
A, B, and C for CY 2019.
    To view the Addenda to this proposed rule pertaining to proposed CY 
2019 payments under the OPPS, we refer readers to the CMS website at: 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html; 
select ``1695-P'' from the list of regulations. All OPPS Addenda to 
this proposed rule are contained in the zipped folder entitled ``2019 
OPPS 1695-P Addenda'' at the bottom of the page. To view the Addenda to 
this proposed rule period pertaining to CY 2019 payments under the ASC 
payment system, we refer readers to the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html; select ``1695-P'' from the list of 
regulations. All ASC Addenda to this proposed rule are contained in the 
zipped folders entitled ``Addendum AA, BB, DD1, DD2, and EE.''

XVIII. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and 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:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    In this proposed rule, we are soliciting public comment on each of 
these issues for the following sections of this document that contain 
information collection requirements (ICRs).

B. ICRs for the Hospital OQR Program

1. Background
    The Hospital OQR Program is generally aligned with the CMS quality 
reporting program for hospital inpatient services known as the Hospital 
IQR Program. We refer readers to the CY 2011 through CY 2018 OPPS/ASC 
final rules with comment periods (75 FR 72111 through 72114; 76 FR 
74549 through 74554; 77 FR 68527 through 68532; 78 FR 75170 through 
75172; 79 FR 67012 through 67015; 80 FR 70580 through 70582; 81 FR 
79862 through 79863; and 82 FR 59476 through 59479, respectively) for 
detailed discussions of Hospital OQR Program information collection 
requirements we have previously finalized. The information collection 
requirements associated with the Hospital OQR Program are currently 
approved under OMB control number 0938-1109. Below we discuss only the 
changes in burden that would result from the newly proposed provisions 
in this proposed rule.
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove a total of 10 measures. Specifically, beginning with the CY 2020 
payment determination, we are proposing to remove: (1) OP-27: Influenza 
Vaccination Coverage Among Healthcare Personnel; and beginning with the 
CY 2021 payment determination, we are proposing to remove: (2) OP-5: 
Median Time to ECG; (3) OP-9: Mammography Follow-up Rates; (4) OP-11: 
Thorax CT Use of Contrast Material; (5) OP-12: The Ability for 
Providers with HIT to Receive Laboratory Data Electronically Directly 
into Their Qualified/Certified EHR System as Discrete Searchable Data; 
(6) OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 
CT; (7) OP-17: Tracking Clinical Results between Visits; (8) OP-29: 
Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal 
Colonoscopy in Average Risk Patients; (9) OP-30: Endoscopy/Polyp 
Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use; and (10) OP-31: 
Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery. The reduction in burden associated with 
these proposals is discussed below in sections XVIII.B.3. and 4. of 
this proposed rule.
    In section XIII.D.2. of this proposed rule, we are proposing to 
update the frequency with which we would release HOPD Specifications 
Manuals such that instead of every 6 months, we would release 
specifications manuals every 6 to 12 months beginning with CY 2019 and 
for subsequent years. In section XIII.C.2. of this proposed rule, 
beginning with the CY 2020 payment determination, we are proposing to 
remove the Notice of Participation (NOP) form as a requirement for the 
Hospital OQR Program and to update 42 CFR 419.46(a) to reflect these 
policies. As discussed below, we do not expect these proposals to 
affect our collection of information burden estimates.

[[Page 37221]]

2. Proposal To Update the Frequency of Releasing Hospital Outpatient 
Quality Reporting Specifications Manuals Beginning With CY 2019 and for 
Subsequent Years
    In section XIII.D.2. of this proposed rule, we are proposing to 
update the frequency with which we would release Hospital Outpatient 
Quality Reporting Specifications Manuals, such that instead of every 6 
months, we would release specifications manuals every 6 to 12 months 
beginning with CY 2019 and for subsequent years. We anticipate that 
this proposed change would reduce hospital confusion, as potentially 
releasing fewer manuals per year reduces the need to review updates as 
frequently as previously necessary. However, because this proposed 
change does not affect Hospital OQR Program participation requirements 
or data reporting requirements, we do not expect a change in the 
information collection burden experienced by hospitals.
3. Estimated Burden of Hospital OQR Program Proposals for the CY 2020 
Payment Determination and Subsequent Years
a. Proposal To Remove the Notice of Participation (NOP) Form 
Requirement
    In section XIII.C.2.b. of this proposed rule, beginning with the CY 
2020 payment determination, we are proposing to remove the NOP form as 
a requirement. As a result, to be a participant in the Hospital OQR 
Program, hospitals would need to: (1) Register on the QualityNet 
website; (2) identify and register a QualityNet security administrator, 
and (3) submit data. In addition, we are proposing to update 42 CFR 
419.46(a) to reflect these policies. We have previously estimated in 
the CY 2014 OPPS/ASC final rule with comment period (78 FR 75171) that 
the burden associated with administrative requirements including 
completing program requirements, system requirements, and managing 
facility operations is 42 hours per hospital or 138,600 hours across 
3,300 hospitals. We believe that the proposal to remove the NOP, if 
finalized, would reduce administrative burden experienced by hospitals 
by only a nominal amount, as it is not required every year, but only at 
the start of a hospital's participation. As a result, this proposal 
does not influence our information collection burden estimates.
b. Proposed Removal of OP-27 for the CY 2020 Payment Determination and 
Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove the OP-27: Influenza Vaccination Coverage Among Healthcare 
Personnel (NQF #0431) measure beginning with the CY 2020 payment 
determination and for subsequent years. The burden associated with OP-
27, a National Healthcare Safety Network (NHSN) measure, is accounted 
for under a separate information collection request, OMB control number 
0920-0666. Because burden associated with submitting data for this 
measure is captured under a separate OMB control number, we are not 
providing an estimate of the information collection burden associated 
with this measure for the Hospital OQR Program.
4. Estimated Burden of Hospital OQR Program Proposals for the CY 2021 
Payment Determination and Subsequent Years
a. Proposed Removal of Chart-Abstracted Measures for the CY 2021 
Payment Determination and Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove one chart-abstracted measure for the CY 2021 payment 
determination and subsequent years: OP-5: Median Time to ECG. With 
regard to chart-abstracted measures for which patient-level data is 
submitted directly to CMS, we have previously estimated it would take 
2.9 minutes, or 0.049 hour, per measure to collect and submit the data 
for each submitted case (80 FR 70582). In addition, based on the most 
recent data, we estimate that 947 cases are reported per hospital for 
chart-abstracted measures. Therefore, we estimate that it will take 
approximately 46 hours (0.049 hours x 947 cases) to collect and report 
data for each chart-abstracted measure. Accordingly, we believe that 
the removal of this chart-abstracted measure for the CY 2021 payment 
determination would reduce burden by 151,800 hours (46 hours x 3,300 
hospitals) and $5.6 million (151,800 hours x $36.58 \136\).
---------------------------------------------------------------------------

    \136\ In the CY 2018 OPPS/ASC final rule with comment period (82 
FR 59477), we finalized a hourly labor cost to hospitals of $36.58 
and specified that this cost included both wage ($18.29) and 100 
percent overhead and fringe benefit costs (an additional $18.29). 
The estimate for this duty is available in the Bureau of Labor 
Statistics report on Occupation Employment and Wages for May 2016, 
29-2071 Medical Records and Health Information Technicians at: 
https://www.bls.gov/oes/2016/may/oes292071.htm.
---------------------------------------------------------------------------

b. Proposed Removal of Measures Submitted Via a Web-based Tool for the 
CY 2021 Payment Determination and Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove five measures submitted via a web-based tool beginning with the 
CY 2021 payment determination and for subsequent years: OP-12: The 
Ability for Providers with HIT to Receive Laboratory Data 
Electronically Directly into Their Qualified/Certified EHR System as 
Discrete Searchable Data; OP-17: Tracking Clinical Results between 
Visits; OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients; OP-30: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use; and OP-
31: Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery, a voluntary measure.
    As we stated in the CY 2016 OPPS/ASC final rule with comment period 
(80 FR 70582), we estimate that hospitals spend approximately 10 
minutes, or 0.167 hours, per measure to report web-based measures. 
Accordingly, we believe that the proposal to remove OP-12, OP-17, OP-
29, and OP-30 for the CY 2021 payment determination would reduce burden 
by 0.668 hours per hospital (4 measures x 0.167 hours per measure) and 
2,204 hours (0.668 hours x 3,300 hospitals) across 3,300 hospitals. In 
addition, we estimate that OP-29 and OP-30 measures require 25 
additional minutes (0.417 hours) per case per measure to chart-abstract 
and that a hospital would each abstract 384 cases per year (this number 
is based on previous analysis (78 FR 75171) where we estimate that each 
of the approximately 3,300 responding hospitals will have volume 
adequate to support quarterly sample sizes of 96 cases, for a total of 
384 cases (96 cases per quarter x 4 quarters) to be abstracted by each 
hospital annually for one new measure) for each of these measures. 
Therefore, we estimated an additional burden reduction of 1,056,845 
hours (3,300 hospitals x 0.417 hours x 384 cases per measure x 2 
measures) for all participating hospitals for OP-29 and OP-30. In 
total, we estimate a burden reduction of 1,059,049 hours (2,204 hours 
for web submission + 1,056,845 hours for chart-abstraction of OP-29 and 
OP-30) and $38.7 million (1,059,049 hours x $36.58) for the proposed 
removal of those four web-based

[[Page 37222]]

measures from the Hospital OQR Program.
    In addition, we estimate that approximately 20 percent of 
hospitals, or 660 hospitals (3,300 hospitals x 0.2), elect to report 
OP-31 on a voluntary basis, resulting in an additional burden reduction 
of 110 hours (0.167 hours per hospital x 660 hospitals) for web 
submission. We also estimate that OP-31 requires 25 additional minutes 
(0.417 hours) per case to chart-abstract and that a hospital would 
abstract 384 cases per year for this measure. Therefore, we estimate 
that the additional chart-abstraction burden reduction for this measure 
would be 105,684 hours (660 hospitals x 0.417 hours per case x 384 
cases) for participating hospitals. In total, we anticipate a burden 
reduction of 105,794 hours (110 hours for web-submission + 105,684 
hours for chart-abstraction) and $3.9 million (105,794 hours x $36.58) 
for the proposed removal of OP-31: Cataracts--Improvement in Patient's 
Visual Function within 90 Days Following Cataract Surgery.
    In total, we estimate that the removal of five web-based measures 
(OP-12, OP-17, OP-29, OP-30, and OP-31) would reduce burden by 
1,164,843 hours (1,059,049 hours for the removal of four measures + 
105,794 hours for the removal of one voluntary measure) and $42.6 
million (1,164,843 hours x $36.58).
c. Proposed Removal of Claims-Based Measures for the CY 2021 Payment 
Determination and Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove three claims-based measures beginning with the CY 2021 payment 
determination: OP-9: Mammography Follow-up Rates; OP-11: Thorax CT Use 
of Contrast Material; and OP-14: Simultaneous Use of Brain Computed 
Tomography (CT) and Sinus CT. Claims-based measures are derived through 
analysis of administrative claims data and do not require additional 
effort or burden on hospitals. As a result, we do not expect these 
proposals to affect collection of information burden for the CY 2021 
payment determination.
    In total for the CY 2021 payment determination, we expect the 
information collection burden would be reduced by 151,800 hours due to 
the proposed removal of one chart-abstracted measure, and 1,164,843 
hours due to the proposed removal of five measures submitted via a web-
based tool. In total, we estimate an information collection burden 
reduction of 1,316,643 hours (1,164,843 hours + 151,800 hours) and 
$48.2 million (1,316,643 hours x $36.58) for the CY 2021 payment 
determination.

C. ICRs for the ASCQR Program

1. Background
    We refer readers to the CY 2012 OPPS/ASC final rule with comment 
period (76 FR 74554), the FY 2013 IPPS/LTCH PPS final rule (77 FR 
53672), and the CY 2013, CY 2014, CY 2015, CY 2016, CY 2017, and CY 
2018 OPPS/ASC final rules with comment period (77 FR 68532 through 
68533; 78 FR 75172 through 75174; 79 FR 67015 through 67016; 80 FR 
70582 through 70584; 81 FR 79863 through 79865; and 82 FR 59479 through 
59481, respectively) for detailed discussions of the ASCQR Program 
information collection requirements we have previously finalized. The 
information collection requirements associated with the ASCQR Program 
are currently approved under OMB control number 0938-1270. Below we 
discuss only the changes in burden that would result from the newly 
proposed provisions in this proposed rule.
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove one measure beginning with the CY 2020 payment determination, 
ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel, and 
seven measures beginning with the CY 2021 payment determination: ASC-1: 
Patient Burn; ASC-2: Patient Fall; ASC-3: Wrong Site, Wrong Side, Wrong 
Patient, Wrong Procedure, Wrong Implant; ASC-4: All-Cause Hospital 
Transfer/Admission; ASC-9: Endoscopy/Polyp Surveillance Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients; ASC-10: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use; and ASC-
11: Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery. We expect these proposals would reduce the 
overall burden of reporting data for the ASCQR Program, as discussed 
below.
2. Estimated Burden of ASCQR Program Proposals Beginning With CY 2020 
Payment Determination and Subsequent Years: Proposed Removal of ASC-8 
for the CY 2020 Payment Determination and Subsequent Years
    In section XIV.B.3.c. of this proposed rule, we are proposing the 
removal of one measure beginning with the CY 2020 payment 
determination, ASC-8: Influenza Vaccination Coverage Among Healthcare 
Personnel. Data for ASC-8 are submitted via a non-CMS online data 
submission tool, to the NHSN. However, we note that the information 
collection burden associated with ASC-8, a NHSN measure, is accounted 
for under a separate information collection request, OMB control number 
0920-0666. As such, we are not providing an estimate of the information 
collection burden associated with this measure under the ASCQR Program 
OMB control number.
3. Estimated Burden of ASCQR Program Proposed Measure Removals for the 
CY 2021 Payment Determination
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove seven measures beginning with the CY 2021 payment determination: 
ASC-1: Patient Burn; ASC-2: Patient Fall; ASC-3: Wrong Site, Wrong 
Side, Wrong Patient, Wrong Procedure, Wrong Implant; ASC-4: All-Cause 
Hospital Transfer/Admission; ASC-9: Endoscopy/Polyp Surveillance 
Follow-up Interval for Normal Colonoscopy in Average Risk Patients; 
ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients 
with a History of Adenomatous Polyps--Avoidance of Inappropriate Use; 
and ASC-11: Cataracts--Improvement in Patient's Visual Function within 
90 Days Following Cataract Surgery.
a. Proposed Removal of QDC Claims-based Measures for the CY 2021 
Payment Determination and Subsequent Years
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove four QDC claims-based measures from the ASCQR Program measure 
set beginning with the CY 2021 payment determination: ASC-1: Patient 
Burn; ASC-2, Patient Fall; ASC-3: Wrong Site, Wrong Side, Wrong 
Patient, Wrong Procedure, Wrong Implant; and ASC-4: All-Cause Hospital 
Transfer/Admission. Data used to calculate scores for these measures 
are collected via Part A and Part B Medicare administrative claims and 
Medicare enrollment data; therefore, ASCs are not required to report 
any additional data. Because these measures do not require ASCs to 
submit any additional data, we do not believe there would be any 
information collection burden change associated with removing these 
measures.
b. Proposed Removal of Chart-Abstracted Measures for the CY 2021 
Payment Determination and Subsequent Years
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove three chart-abstracted measures from the ASCQR Program measure 
set beginning

[[Page 37223]]

with the CY 2021 payment determination: ASC-9: Endoscopy/Polyp 
Surveillance Follow-up Interval for Normal Colonoscopy in Average Risk 
Patients; ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use; and ASC-11: Cataracts--Improvement in Patient's 
Visual Function within 90 Days Following Cataract Surgery. We believe 
3,937 ASCs would experience a reduction in information collection 
burden associated with our proposals to remove ASC-9 and ASC-10 from 
the ASCQR Program measure set. For ASC-11, a voluntary measure, we 
previously estimated that approximately 20 percent of ASCs (5,260 ASCs 
nationwide x 0.20), 1,052, would elect to submit these data on a 
voluntary basis and, thus, would experience a reduction in information 
collection burden associated with reporting.
    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 
79864), we finalized our estimates that each participating ASC would 
spend 0.25 hours (15 minutes) per case per measure per year to collect 
and submit the required data for the ASC-9, ASC-10, and ASC-11 
measures. We estimate that the average number of patients per ASC is 63 
based on the historic average. In addition, we estimate the total 
annual information collection burden per ASC to be 15 hours and 45 
minutes (15.75 hours) per measure (0.25 hours x 63 cases). Therefore, 
for ASC-9 and ASC-10, we estimate the total annualized information 
collection burden associated with each measure to be 62,008 hours 
(3,937 ASCs x 15.75 hours per ASC) and $2,268,253 (62,008 hours x 
$36.58 per hour \137\). For ASC-11, we estimate a total annual 
information collection burden of 16,569 hours (1,052 ASCs x 15.75 
hours) and $606,094 (16,569 hours x $36.58 per hour). Therefore, we 
estimate a total reduction in information collection burden of 140,585 
hours (62,008 hours + 62,008 hours + 16,569 hours) and $5,142,600 
($2,268,253 + $2,268,253 + $606,094) as a result of our proposals to 
remove ASC-9; ASC-10; and ASC-11.
---------------------------------------------------------------------------

    \137\ In the CY 2018 OPPS/ASC final rule with comment period (82 
FR 59479 through 59480), we finalized an hourly labor cost to 
hospitals of $36.58 and specified that this cost included both wage 
and overhead and fringe benefit costs. The estimate for this duty is 
available in the Bureau of Labor Statistics report on Occupation 
Employment and Wages for May 2016, 29-2071 Medical Records and 
Health Information Technicians at: https://www.bls.gov/oes/2016/may/oes292071.htm.
---------------------------------------------------------------------------

    Therefore, as a result of our proposals to remove seven measures 
from the ASCQR measure set for the CY 2021 payment determination, ASC-
1; ASC-2; ASC-3; ASC-4; ASC-9; ASC-10; and ASC-11, we estimate a total 
annual reduction in information collection burden of 140,585 hours and 
$5,142,600. The reduction in information collection burden associated 
with these requirements is available for review and comment under OMB 
control number 0938-1270.

D. ICRs for the Proposed Update to the HCAHPS Survey Measure in the 
Hospital IQR Program

    As described in section XVI. of this proposed rule, we are 
proposing to update the HCAHPS Survey measure by removing the 
Communication About Pain questions beginning with patients discharged 
in January 2022, for the FY 2024 payment determination and subsequent 
years. While we anticipate that the removal of these questions will 
reduce the burden associated with reporting this measure, as further 
discussed below, the burden estimate for the Hospital IQR Program 
excludes the burden associated with the HCAHPS Survey measure, which is 
submitted under a separate information collection request and approved 
under OMB control number 0938-0981. For discussion of the burden 
estimate for the Hospital IQR Program under OMB control number 0938-
1022, we refer readers to the FY 2019 IPPS/LTCH PPS proposed rule (83 
FR 20555 through 20559). For details on the burden estimate 
specifically for the HCAHPS Survey, including use of the Communication 
About Pain questions, we refer readers to the notice published in the 
Federal Register on Information Collection for the National 
Implementation of the Hospital CAHPS Survey (83 FR 21296 through 
21297). We note that a revised information collection request under OMB 
control number 0938-0981 will be submitted to OMB based on the proposed 
update to the HCAHPS Survey in accordance with this proposed rule.
    As noted above, the proposal to remove the Communication About Pain 
questions does not change the estimated burden for the Hospital IQR 
Program under the program's OMB control number 0938-1022. However, we 
believe that overall cost and burden will change slightly for hospitals 
and HCAHPS Survey respondents. Under HCAHPS Survey OMB control number 
0938-0981, it is estimated that the average cost and hour burdens for 
hospitals are $4,000 and 1 hour per hospital for HCAHPS data collection 
activities. Because these estimates include administrative activities 
and overhead costs, we believe our proposal to remove the Communication 
About Pain questions from the HCAHPS Survey would not reduce these 
estimates of hospital burden or would only nominally and temporarily 
increase the average cost and hour burdens associated with the removal 
of these questions from the survey given the need to adjust the survey 
instrument and instructional materials and, therefore, marginally 
reduce the burden due to the shortening of the survey instrument.
    Under HCAHPS Survey OMB control number 0938-0981, the average time 
for a respondent to answer the 32 question survey is estimated at 8 
minutes, which we estimate to be 0.25 minutes per question (8 minutes/
32 questions = 0.25 minutes per question). In addition, under this OMB 
control number, the number of respondents is estimated at 3,104,200 
respondents. In this proposed rule, we are proposing to remove 3 
questions, which we estimate would reduce the time burden by 0.75 
minutes (0.25 minutes per question x 3 questions), or 0.0125 hours 
(0.75 minutes/60 minutes) per respondent. We anticipate a total hourly 
burden reduction for respondents of 38,803 hours (0.0125 hours x 
3,104,200 respondents). Further, under OMB control number 0938-0981, 
the cost of respondent time is based on the average hourly earnings of 
$26.71 per hour, as reported by the U.S. Bureau of Labor Statistics 
final January 2018 estimates available on the website at: https://www.bls.gov/eag/eag.us.htm.\138\ We anticipate a total cost reduction 
for respondents associated with the proposal to remove the 3 
Communication About Pain questions of $1,036,428 (38,803 total hours x 
respondent earnings estimate of $26.71 per hour).
---------------------------------------------------------------------------

    \138\ Average hourly earnings of $26.71 per hour based on the 
average hourly earnings of all employees on private non-farm 
payrolls, seasonally adjusted, per the U.S. Bureau of Labor 
Statistics.
---------------------------------------------------------------------------

E. Total Reduction in Burden Hours and in Costs

    The total reduction in the burden hours for the above ICRs is 
1,496,031 hours, and the reduction in cost is $54.3 million ($48.2 
million + $5.1 million + $1 million).

XIX. 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

[[Page 37224]]

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

XX. Economic Analyses

A. Statement of Need

    This proposed rule is necessary to make updates to 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 2019. 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, 2017, through and including December 31, 2017, and processed through 
December 31, 2017, and updated cost report information.
    We note that we are proposing to control for unnecessary increases 
in the volume of outpatient services by paying for clinic visits 
furnished at off-campus PBDs at an amount equal to the site-specific 
PFS payment rate for nonexcepted items and services furnished by a 
nonexcepted off-campus PBD (the PFS payment rate). We expect that by 
removing the payment differential, we will control unnecessary volume 
increases both in terms of the number of covered outpatient services 
furnished and the costs of those services.
    This proposed rule also is necessary to make updates to the ASC 
payment rates for CY 2019, 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 2019. Because ASC 
payment rates are based on the OPPS relative payment weights for most 
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.
    In addition, for CYs 2019 through 2023, we are proposing to update 
the ASC payment system rates using the hospital market basket update 
instead of the CPI-U but are requesting evidence from commenters to 
justify this higher payment update. We believe that this proposal could 
stabilize the differential between OPPS payments and ASC payments, 
given that the CPI-U has been generally lower than the hospital market 
basket, and encourage the migration of services to lower cost settings 
as clinically appropriate.

B. Overall Impact for Provisions of This Proposed Rule

    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), the Congressional Review Act (5 U.S.C. 
804(2)), and Executive Order 13771 on Reducing Regulation and 
Controlling Regulatory Costs (January 30, 2017). This section of this 
proposed rule contains the impact and other economic analyses for the 
provisions we are proposing to make for CY 2019.
    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 Congressional Review Act. Accordingly, this 
proposed rule has been reviewed by the Office of Management and Budget. 
We 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 in this 
proposed rule, and we will address any public comments we receive in 
the final rule with comment period, as appropriate.
    We estimate that the proposed total increase in Federal government 
expenditures under the OPPS for CY 2019, compared to CY 2018, due only 
to the proposed changes to OPPS in this proposed rule, would be 
approximately $90 million. Taking into account our estimated changes in 
enrollment, utilization, and case-mix for CY 2019, we estimate that the 
OPPS expenditures, including beneficiary cost-sharing, for CY 2019 
would be approximately $74.6 billion; approximately $4.9 billion higher 
than estimated OPPS expenditures in CY 2018. We note that these 
spending estimates include the CY 2019 proposal to control for 
unnecessary increases in the volume of outpatient service by paying for 
clinic visits furnished at excepted off-campus PBDs at a PFS-equivalent 
rate. Because the proposed provisions of the OPPS are part of a 
proposed rule that is economically significant, as measured by the 
threshold of an additional $100 million in expenditures in 1 year, we 
have prepared this regulatory impact analysis that, to the best of our 
ability, presents its costs and benefits. Table 42 displays the 
distributional impact of the proposed CY 2019 changes in OPPS payment 
to various groups of hospitals and for CMHCs.
    We are proposing for CY 2019 to pay for separately payable drugs 
and biological products that do not have pass-through payment status 
and are not acquired under the 340B program at WAC + 3 percent instead 
of WAC + 6 percent, if ASP data are unavailable for payment purposes. 
If WAC data are not available for a drug or biological product, we are 
proposing to continue our policy to pay separately payable drugs and 
biological products at 95 percent of the AWP. Drugs and biologicals 
that are acquired under the 340B Program would continue to be paid at 
ASP minus 22.5 percent, WAC minus 22.5 percent, or 69.46 percent of 
AWP, as applicable.
    We estimate that the proposed update to the conversion factor and 
other adjustments (not including the effects of outlier payments, the 
pass-through payment estimates, the application of the frontier State 
wage adjustment for CY 2018, and the proposal to control for 
unnecessary increases in the volume of covered outpatient department 
services described in section X.B. of this proposed rule) would 
increase total OPPS payments by 1.3 percent in CY 2019. The proposed 
changes to the APC relative payment 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

[[Page 37225]]

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 proposed change in 
payments between CY 2018 and CY 2019, considering all proposed budget 
neutral payment adjustments, proposed changes in estimated total 
outlier payments, proposed pass-through payments, the proposed 
application of the frontier State wage adjustment, and the proposal to 
control for unnecessary increases in the volume of outpatient as 
described in section X.B. of this proposed rule, 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 decrease total estimated OPPS payments by 
0.1 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 Medicare expenditures (not 
including beneficiary cost-sharing) under the ASC payment system for CY 
2019 compared to CY 2018, to be approximately $240 million. Because the 
proposed 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 this 
proposed rule. Tables 43 and 44 of this proposed rule display the 
redistributive impact of the proposed CY 2019 changes regarding ASC 
payments, grouped by specialty area and then grouped by procedures with 
the greatest ASC expenditures, respectively.

C. Detailed Economic Analyses

1. Estimated Effects of Proposed OPPS Changes in This Proposed Rule
a. Limitations of Our Analysis
    The distributional impacts presented here are the projected effects 
of the proposed CY 2019 policy changes on various hospital groups. We 
post on the CMS website our hospital-specific estimated payments for CY 
2019 with the other supporting documentation for this proposed rule. To 
view the hospital-specific estimates, we refer readers to the CMS 
website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At the website, select 
``regulations and notices'' from the left side of the page and then 
select ``CMS-1695-P'' from the list of regulations and notices. The 
hospital-specific file layout and the hospital-specific file are listed 
with the other supporting documentation for this proposed rule. We show 
hospital-specific data only for hospitals whose claims were used for 
modeling the impacts shown in Table 42 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 order 
to isolate the effects associated with specific policies or updates. In 
addition, we have not made adjustments for future changes in variables, 
such as service volume, service-mix, or number of encounters.
b. Estimated Effects of the Proposal To Control for Unnecessary 
Increases in the Volume of Outpatient Services
    In section X.B. of this proposed rule, we discuss our CY 2019 
proposal to control for unnecessary increases in the volume of 
outpatient service by paying for clinic visits furnished at an off-
campus provider-based department at an amount equal to the site-
specific PFS payment rate for nonexcepted items and services furnished 
by a nonexcepted off-campus PBD (the PFS payment rate). Specifically, 
we are proposing to pay for HCPCS code G0463 (Hospital outpatient 
clinic visit for assessment and management of a patient) when billed 
with modifier ``PO'' at an amount equal to the site-specific PFS 
payment rate for nonexcepted items and services furnished by a 
nonexcepted off-campus PBD (the PFS payment rate). For a discussion of 
the PFS relativity adjuster that will now also be used to pay for all 
outpatient clinic visits provided at all off-campus PBDs, we refer 
readers to the CY 2018 PFS final rule with comment period discussion 
(82 FR 53023 through 53024), as well as the CY 2019 PFS proposed rule.
    To develop an estimated impact of this proposal, we began with CY 
2017 outpatient claims data used in ratesetting for the CY 2019 
proposed OPPS. We then flagged all claim lines for HCPCS code G0463 
that contained modifier ``PO'' because the presence of this modifier 
indicates that such claims were billed for services furnished by an 
off-campus department of a hospital paid under the OPPS. Next, we 
excluded those that were billed as a component of comprehensive APC 
8011 (Comprehensive Observation Services) or packaged into another 
comprehensive APC because in those instances separate OPPS payment is 
made for a broader package of services. We then simulated payment for 
the remaining claim lines as if they were paid at the PFS-equivalent 
rate. An estimate of the proposed policy that includes the effects of 
estimated changes in enrollment, utilization, and case-mix based on the 
FY 2019 President's budget approximates the estimated decrease in total 
payment under the OPPS at $760 million, with Medicare OPPS payments 
decreasing by $610 million and beneficiary copayments decreasing by 
$150 million in CY 2019. This estimate is utilized for the accounting 
statement displayed in Table 45 of this proposed rule because the 
impact of this proposed CY 2019 policy, which is not budget neutral, is 
combined with the impact of the OPD update, which is also not budget 
neutral, to estimate changes in Medicare spending under the OPPS as a 
result of the changes proposed in this rule.
    We note our estimates may differ from the actual effect of the 
proposed policy due to offsetting factors, such as changes in provider 
behavior. We note that by removing this payment differential that may 
influence site-of-service decision-making, we anticipate an associated 
decrease in the volume of clinic visits provided in the excepted off-
campus PBD setting. We remind readers that this estimate could change 
in the final rule based on a number of factors such as the availability 
of updated data, changes in the final payment policy, and/or the method 
of assessing the payment impact in the final rule. As discussed in more 
detail in section X.B. of this proposed rule, we are seeking public 
comment on both our proposed payment policy for clinic visits furnished 
at off-campus provider based departments as well as how to apply 
methods for controlling overutilization of services more broadly.
c. Estimated Effects of Proposal To Apply the 340B Drug Payment Policy 
to Nonexcepted Off-Campus Departments of Hospitals
    In section X.C. of this proposed rule, we discuss our proposal to 
pay average sales price (ASP) minus 22.5 percent for 340B-acquired 
drugs furnished by nonexcepted, off-campus provider-based departments 
(PBDs) beginning in CY 2019. This is consistent with the payment 
methodology adopted in CY 2018 for 340B-acquired drugs furnished

[[Page 37226]]

in hospital departments paid under the OPPS.
    To develop an estimated impact of this proposal, we began with CY 
2017 outpatient claims data used in ratesetting for the CY 2019 
proposed OPPS. We then flagged all claim lines that contained modifier 
``PN'' because the presence of this modifier indicates that such claims 
were billed for services furnished by a nonexcepted off-campus 
department of a hospital paid under the PFS. We further subset this 
population by identifying 340B hospitals that billed for status 
indicator ``K'' drugs or biologicals (that is, nonpass-through, 
separately payable drugs) because such drugs may have been subject to 
the 340B discount. We found 115 unique nonexcepted off-campus PBDs 
associated with 340B hospitals billed for status indicator ``K'' drugs. 
Their ``K'' billing represents approximately $180 million in Medicare 
payments (including beneficiary copayments) based on a payment rate of 
ASP+6 percent. Based on our proposed adjustment, for CY 2019, we 
estimate that the Medicare Program and beneficiaries would save 
approximately $48.5 million, under the Physician Fee Schedule. This 
estimate represents an upper bound of potential savings under the 
Physician Fee Schedule for this proposed policy change and does not 
include adjustments for beneficiary enrollment, case-mix, or potential 
offsetting behaviors. Accordingly, this estimate could change in the 
final rule based on a number of factors such as the availability of 
updated data, changes in the final payment policy, and/or the method of 
assessing the payment impact in the final rule.
d. Estimated Effects of Proposed OPPS Changes on Hospitals
    Table 42 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 include a second line for all hospitals, 
excluding permanently held harmless hospitals and CMHCs.
    We present separate impacts for CMHCs in Table 42, 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 2019, we are proposing to pay CMHCs for 
partial hospitalization services under APC 5853 (Partial 
Hospitalization for CMHCs), and we are proposing to pay hospitals for 
partial hospitalization services under APC 5863 (Partial 
Hospitalization 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 2019 is 2.8 percent (83 
FR 20381). Section 1833(t)(3)(F)(i) of the Act reduces that 2.8 percent 
by the multifactor productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act, which is proposed to be 0.8 
percentage point for FY 2019 (which is also the proposed MFP adjustment 
for FY 2019 in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20381 
through 20382)), and sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of 
the Act further reduce the market basket percentage increase by 0.75 
percentage point, resulting in the proposed OPD fee schedule increase 
factor of 1.25 percent. We are using the proposed OPD fee schedule 
increase factor of 1.25 percent in the calculation of the proposed CY 
2019 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 1.0000. The amounts attributable to this frontier 
State wage index adjustment are incorporated in the CY 2019 estimates 
in Table 42 of this proposed rule.
    To illustrate the impact of the proposed CY 2019 changes, our 
analysis begins with a baseline simulation model that uses the CY 2018 
relative payment weights, the FY 2018 final IPPS wage indexes that 
include reclassifications, and the final CY 2018 conversion factor. 
Table 42 shows the estimated redistribution of the proposed increase or 
decrease in payments for CY 2019 over CY 2018 payments to hospitals and 
CMHCs as a result of the following factors: the impact of the APC 
reconfiguration and recalibration changes between CY 2018 and CY 2019 
(Column 2); the wage indexes and the provider adjustments (Column 3); 
the combined impact of all of the proposed changes described in the 
preceding columns plus the proposed 1.25 percent OPD fee schedule 
increase factor update to the conversion factor (Column 4); the 
proposed off-campus provider-based departments visits payment policy 
(Column 5), and the estimated impact taking into account all proposed 
payments for CY 2019 relative to all payments for CY 2018, including 
the impact of proposed changes in estimated outlier payments, the 
proposed frontier State wage adjustment, and proposed changes to the 
pass-through payment estimate (Column 6).
    We did not model an explicit budget neutrality adjustment for the 
rural adjustment for SCHs because we are proposing to maintain the 
current adjustment percentage for CY 2019. Because the proposed updates 
to the conversion factor (including the proposed update of the OPD fee 
schedule increase factor), the estimated cost of the proposed rural 
adjustment, and the estimated cost of projected pass-through payment 
for CY 2019 are applied uniformly across services, observed 
redistributions of payments in the impact table for hospitals largely 
depend on the mix of services furnished by a hospital (for example, how 
the APCs for the hospital's most frequently furnished services will 
change), and the impact of the proposed 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 will depend on changes in volume, practice 
patterns, and the mix of services billed between CY 2018 and CY 2019 by 
various groups of hospitals, which CMS cannot forecast.
    Overall, we estimate that the proposed rates for CY 2019 would 
decrease Medicare OPPS payments by an estimated 0.1 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 0.1 percent decrease 
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 42 shows the total number of 
facilities (3,806), including designated cancer and

[[Page 37227]]

children's hospitals and CMHCs, for which we were able to use CY 2017 
hospital outpatient and CMHC claims data to model CY 2018 and CY 2019 
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 2018 or CY 2019 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 DSH variable 
for hospitals that are not also paid under the IPPS because DSH 
payments are only made to hospitals paid under 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 (3,695), 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 the 44 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 proposed APC recalibration. 
Column 2 also reflects any proposed changes in multiple procedure 
discount patterns or conditional packaging that occur as a result of 
the proposed changes in the relative magnitude of payment weights. As a 
result of proposed APC recalibration, we estimate that urban hospitals 
would experience no change, with the impact ranging from an increase of 
0.5 percent to a decrease of 0.3 percent, depending on the number of 
beds. Rural hospitals would experience an increase of 0.3 percent, with 
the impact ranging from a decrease of 0.2 percent to an increase of 0.5 
percent, depending on the number of beds. Major teaching hospitals 
would experience a decrease of 0.3 percent.

Column 3: Proposed Wage Indexes and the Effect of the Proposed 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 FY 2019 IPPS post-reclassification wage indexes; the 
proposed rural adjustment; and the proposed cancer hospital payment 
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 2018 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 6. 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 2019, as described in section II.E. of 
this proposed rule. We also did not model a budget neutrality 
adjustment for the cancer hospital payment adjustment because we are 
using a payment-to-cost ratio target for the cancer hospital payment 
adjustment in CY 2019 of 0.89, which is the same ratio that was 
reported for the CY 2018 OPPS/ASC final rule with comment period (82 FR 
59266). We note that, in accordance with section 16002 of the 21st 
Century Cures Act, we are proposing to apply a budget neutrality factor 
calculated as if the cancer hospital adjustment target payment-to-cost 
ratio was 0.89, not the 0.88 target payment-to-cost ratio we are 
applying in section II.F. 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 2019 scaled weights and a CY 2018 conversion factor that included a 
budget neutrality adjustment for the effect of the proposed changes to 
the wage indexes between CY 2018 and CY 2019. The proposed FY 2019 wage 
policy would result in modest redistributions.

Column 4: All Proposed Budget Neutrality Changes Combined With the 
Proposed Market Basket Update

    Column 4 demonstrates the combined impact of all of the proposed 
changes previously described and the proposed update to the conversion 
factor of 1.25 percent. Overall, these proposed changes would increase 
payments to urban hospitals by 1.3 percent and to rural hospitals by 
1.5 percent. Urban hospitals would receive an increase in line with the 
1.3 percent overall increase for all facilities after the update is 
applied to the proposed budget neutrality adjustments. The increase for 
classes of rural hospitals would be more variable with sole community 
hospitals receiving a 1.3 percent increase and other rural hospitals 
receiving an increase of 1.7 percent.

Column 5--Proposed Off-Campus PBD Visits Payment Policy

    Column 5 displays the estimated effect of our proposed CY 2019 
policy to pay for clinic visit HCPCS code G0463 ((Hospital outpatient 
clinic visit for assessment and management of a patient) when billed 
with modifier ``PO'' at a PFS-equivalent rate. We note that the numbers 
provided in this column isolate the estimated effect of this proposed 
policy adjustment relative to the numerator of Column 4. Therefore, the 
numbers reported in Column 5 show how much of the difference between 
the estimates in Column 4 and the estimates in Column 6 are a result of 
the proposed off-campus PBD visits policy.

Column 6: All Proposed Changes for CY 2019

    Column 6 depicts the full impact of the proposed CY 2018 policies 
on each hospital group by including the effect of all proposed changes 
for CY 2019 and comparing them to all estimated payments in CY 2018. 
Column 6 shows the combined budget neutral effects of Columns 2 through 
3; the proposed OPD fee schedule increase; the effect of the proposed 
off-campus provider-based department visits policy, 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 proposed total OPPS payments 
dedicated to transitional pass-through payments.

[[Page 37228]]

    Of those hospitals that failed to meet the Hospital OQR Program 
reporting requirements for the full CY 2018 update (and assumed, for 
modeling purposes, to be the same number for CY 2019), we included 29 
hospitals in our model because they had both CY 2017 claims data and 
recent cost report data. We estimate that the cumulative effect of all 
proposed changes for CY 2019 would decrease payments to all facilities 
by 0.1 percent for CY 2019. We modeled the independent effect of all 
proposed changes in Column 6 using the final relative payment weights 
for CY 2018 and the proposed relative payment weights for CY 2019. We 
used the final conversion factor for CY 2018 of $78.636 and the 
proposed CY 2019 conversion factor of $79.546 discussed in section 
II.B. of this proposed rule.
    Column 6 contains simulated outlier payments for each year. We used 
the 1-year charge inflation factor used in the proposed FY 2019 IPPS/
LTCH PPS proposed rule (83 FR 20581) of 4.2 percent (1.04205) to 
increase individual costs on the CY 2017 claims, and we used the most 
recent overall CCR in the July 2018 Outpatient Provider-Specific File 
(OPSF) to estimate outlier payments for CY 2018. Using the CY 2017 
claims and a 4.2 percent charge inflation factor, we currently estimate 
that outlier payments for CY 2018, using a multiple threshold of 1.75 
and a fixed-dollar threshold of $4,150, would be approximately 1.02 
percent of total payments. The estimated current outlier payments of 
1.02 percent are incorporated in the comparison in Column 6. We used 
the same set of claims and a charge inflation factor of 8.6 percent 
(1.085868) and the CCRs in the April 2018 OPSF, with an adjustment of 
0.987842, to reflect relative changes in cost and charge inflation 
between CY 2017 and CY 2019, to model the proposed CY 2019 outliers at 
1.0 percent of estimated total payments using a multiple threshold of 
1.75 and a fixed-dollar threshold of $4,600. The charge inflation and 
CCR inflation factors are discussed in detail in the FY 2019 IPPS/LTCH 
PPS proposed rule (83 FR 20582).
    Overall, we estimate that facilities would experience a decrease of 
0.1 percent under this proposed rule in CY 2019 relative to total 
spending in CY 2018. This projected increase (shown in Column 6) of 
Table 42 reflects the proposed 1.25 percent OPD fee schedule increase 
factor, minus 1.2 percent for the proposed off-campus provider-based 
department visits policy, minus 0.13 percent for the proposed change in 
the pass-through payment estimate between CY 2018 and CY 2019, plus a 
proposed increase of 0.02 percent for the difference in estimated 
outlier payments between CY 2018 (1.02 percent) and CY 2019 (proposed 
1.00 percent). We estimate that the combined effect of all proposed 
changes for CY 2019 would decrease payments to urban hospitals by 0.1 
percent. Overall, we estimate that rural hospitals would experience a 
0.1 percent decrease as a result of the combined effects of all 
proposed changes for CY 2019. Among hospitals, by teaching status, we 
estimate that the impacts resulting from the combined effects of all 
proposed changes would include a decrease of 0.8 percent for major 
teaching hospitals and an increase of 0.5 percent for nonteaching 
hospitals. Minor teaching hospitals would experience an estimated 
decrease of 0.2 percent.
    In our analysis, we also have categorized hospitals by type of 
ownership. Based on this analysis, we estimate that voluntary hospitals 
would experience a decrease of 0.2 percent, proprietary hospitals would 
experience an increase of 0.7 percent, and governmental hospitals would 
experience a decrease of 0.3 percent.

                    Table 42--Estimated Impact of the Proposed CY 2019 Changes for the Hospital Outpatient Prospective Payment System
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           All proposed
                                                                                                          budget neutral   Proposed off-
                                                                           Proposed APC    Proposed new       changes         campus
                                                             Number of     recalibration  wage index and  (combined cols     provider-     All proposed
                                                             hospitals     (all proposed     provider      2 and 3) with       based          changes
                                                                             changes)       adjustments    market basket    department
                                                                                                              update       visits policy
                                                                     (1)             (2)             (3)             (4)             (5)             (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ALL FACILITIES *........................................           3,806             0.0             0.0             1.3            -1.2            -0.1
ALL HOSPITALS (excludes hospitals permanently held                 3,695             0.0             0.0             1.3            -1.2            -0.1
 harmless and CMHCs)....................................
URBAN HOSPITALS.........................................           2,900             0.0             0.0             1.3            -1.2            -0.1
    LARGE URBAN (GT 1 MILL.)............................           1,534             0.0            -0.1             1.2            -1.0             0.1
    OTHER URBAN (LE 1 MILL.)............................           1,366             0.0             0.1             1.3            -1.4            -0.2
RURAL HOSPITALS.........................................             795             0.3             0.0             1.5            -1.3            -0.1
    SOLE COMMUNITY......................................             367             0.2            -0.1             1.3            -1.5            -0.4
    OTHER RURAL.........................................             428             0.4             0.0             1.7            -1.2             0.3
BEDS (URBAN):
    0--99 BEDS..........................................             980             0.5            -0.2             1.6            -0.8             0.7
    100-199 BEDS........................................             844             0.2            -0.2             1.3            -1.0             0.1
    200-299 BEDS........................................             463             0.1             0.1             1.4            -0.9             0.3
    300-499 BEDS........................................             399            -0.1             0.0             1.2            -1.2            -0.2
    500 + BEDS..........................................             214            -0.3             0.1             1.1            -1.6            -0.6
BEDS (RURAL):
    0--49 BEDS..........................................             326             0.5             0.1             1.8            -0.5             1.1
    50-100 BEDS.........................................             287             0.3             0.0             1.6            -1.6            -0.2
    101-149 BEDS........................................              96             0.3             0.0             1.6            -1.0             0.4
    150-199 BEDS........................................              48             0.3            -0.2             1.4            -2.1            -1.0
    200 + BEDS..........................................              38            -0.2            -0.2             0.9            -1.2            -0.5
REGION (URBAN):
    NEW ENGLAND.........................................             140             0.2             0.3             1.7            -2.1            -0.4
    MIDDLE ATLANTIC.....................................             336             0.0            -0.2             1.0            -0.9             0.0
    SOUTH ATLANTIC......................................             463             0.0            -0.2             1.1            -1.1            -0.1

[[Page 37229]]

 
    EAST NORTH CENT.....................................             468             0.0            -0.2             1.1            -1.6            -0.7
    EAST SOUTH CENT.....................................             175            -0.1             0.1             1.2            -0.4             0.6
    WEST NORTH CENT.....................................             180            -0.2             0.1             1.1            -1.3            -0.5
    WEST SOUTH CENT.....................................             501             0.1             0.2             1.5            -1.0             0.3
    MOUNTAIN............................................             207             0.0            -0.6             0.7            -1.2            -0.6
    PACIFIC.............................................             384             0.0             0.6             1.9            -1.1             0.5
    PUERTO RICO.........................................              46            -0.8            -1.0            -0.5             0.0            -0.6
REGION (RURAL):
    NEW ENGLAND.........................................              21             0.0            -0.4             0.9            -4.1            -3.4
    MIDDLE ATLANTIC.....................................              54             0.3             0.1             1.7            -2.0            -0.5
    SOUTH ATLANTIC......................................             121             0.2            -0.1             1.4            -0.4             0.9
    EAST NORTH CENT.....................................             121             0.4            -0.1             1.6            -1.5            -0.2
    EAST SOUTH CENT.....................................             154             0.2             0.2             1.6            -0.6             0.9
    WEST NORTH CENT.....................................              96             0.0             0.0             1.2            -1.7            -0.8
    WEST SOUTH CENT.....................................             152             0.7             0.2             2.1            -0.5             1.4
    MOUNTAIN............................................              53             0.1            -0.3             1.1            -0.8             0.7
    PACIFIC.............................................              23             0.3            -0.6             1.0            -2.1            -1.3
TEACHING STATUS:
    NON-TEACHING........................................           2,578             0.3            -0.1             1.4            -0.8             0.5
    MINOR...............................................             769             0.0             0.1             1.3            -1.3            -0.2
    MAJOR...............................................             348            -0.3             0.1             1.1            -1.8            -0.8
DSH PATIENT PERCENT:
    0...................................................              10            -0.9             0.2             0.5             0.0             0.9
    GT 0-0.10...........................................             258             0.4            -0.2             1.4            -0.8             0.5
    0.10-0.16...........................................             244             0.2            -0.3             1.1            -0.7             0.4
    0.16-0.23...........................................             574             0.1            -0.1             1.2            -1.2            -0.1
    0.23-0.35...........................................           1,110             0.0             0.1             1.4            -1.4            -0.2
    GE 0.35.............................................             958            -0.1             0.0             1.2            -1.2            -0.2
    DSH NOT AVAILABLE **................................             541             1.6            -0.1             2.8            -0.6             2.0
URBAN TEACHING/DSH:
    TEACHING & DSH......................................           1,009            -0.1             0.1             1.2            -1.5            -0.4
    NO TEACHING/DSH.....................................           1,366             0.2            -0.1             1.3            -0.7             0.5
    NO TEACHING/NO DSH..................................               9             1.2            -0.1             2.3             0.0             2.1
    DSH NOT AVAILABLE **................................             515             1.5            -0.1             2.7            -0.6             1.9
TYPE OF OWNERSHIP:
    VOLUNTARY...........................................           1,970             0.0             0.0             1.3            -1.3            -0.2
    PROPRIETARY.........................................           1,248             0.3            -0.2             1.4            -0.4             0.7
    GOVERNMENT..........................................             477            -0.2             0.2             1.3            -1.4            -0.3
CMHCs...................................................              44           -19.1             0.3           -17.8             0.0           -17.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column (1) shows total hospitals and/or CMHCs.
Column (2) includes all proposed CY 2019 OPPS policies and compares those to the CY 2018 OPPS.
Column (3) shows the budget neutral impact of updating the wage index by applying the proposed FY 2019 hospital inpatient wage index. The proposed rural
  SCH adjustment would continue our current policy of 7.1 percent so the budget neutrality factor is 1. The proposed budget neutrality adjustment for
  the cancer hospital adjustment is 1 because in CY 2019 the target payment-to-cost ratio is the same as it was in CY 2018 (0.88).
Column (4) shows the impact of all budget neutrality adjustments and the addition of the proposed 1.25 percent OPD fee schedule update factor (2.8
  percent reduced by 0.8 percentage point for the productivity adjustment and further reduced by 0.75 percentage point as required by law).
Column (5) shows the impact of the proposal to pay for the visit service furnished at excepted off-campus provider-based departments at an MPFS
  equivalent rate.
Column (6) shows the additional proposed adjustments to the conversion factor resulting from the frontier adjustment, a change in the pass-through
  estimate, and adding estimated outlier payments.
* These 3,806 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.

e. Estimated Effects of Proposed OPPS Changes on CMHCs
    The last line of Table 42 demonstrates the isolated impact on 
CMHCs, which furnish only partial hospitalization services under the 
OPPS. In CY 2018, CMHCs are paid under APC 5853 (Partial 
Hospitalization (3 or more services) for CMHCs). We modeled the impact 
of this APC policy assuming CMHCs will continue to provide the same 
number of days of PHP care as seen in the CY 2019 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

[[Page 37230]]

beneficiary. We estimate that CMHCs would experience an overall 17.9 
percent decrease in payments from CY 2018 (shown in Column 6). We note 
that this includes the trimming methodology described in section 
VIII.B. of this proposed rule.
    Column 3 shows that the estimated impact of adopting the proposed 
FY 2019 wage index values would result in a small increase of 0.3 
percent to CMHCs. Column 4 shows that combining this proposed OPD fee 
schedule increase factor, along with proposed changes in APC policy for 
CY 2019 and the proposed FY 2019 wage index updates, would result in an 
estimated decrease of 17.8 percent. Column 5 shows that the off-campus 
provider-based department visits payment proposal has no effect on 
CMHCs. Column 6 shows that adding the proposed changes in outlier and 
pass-through payments would result in a total 17.9 percent decrease in 
payment for CMHCs. This reflects all proposed changes to CMHCs for CY 
2019.
f. 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's 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, section 1833(t)(8)(C)(i) of the Act 
limits beneficiary liability for copayment for a procedure performed in 
a year to the hospital inpatient deductible for the applicable year.
    We estimate that the aggregate beneficiary coinsurance percentage 
would be 18.5 percent for all services paid under the OPPS in CY 2019. 
The estimated aggregate beneficiary coinsurance reflects general system 
adjustments, including the proposed CY 2019 comprehensive APC payment 
policy discussed in section II.A.2.b. of this proposed rule.
g. 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.
h. Estimated Effects of Proposed OPPS Changes on the Medicare and 
Medicaid Programs
    The effect on the Medicare program is expected to be an increase of 
$90 million in program payments for OPPS services furnished in CY 2019. 
The effect on the Medicaid program is expected to be limited to 
copayments that Medicaid may make on behalf of Medicaid recipients who 
are also Medicare beneficiaries. We estimate that the proposed changes 
in this proposed rule would increase these Medicaid payments by 
approximately $7 million in CY 2019. This Medicaid impact is determined 
by starting with the estimated increase in Medicare payments of 
approximately $90 million, resulting in a beneficiary cost-sharing 
increase of approximtely $22 million. Currently, there are 
approximately 10 million dual-eligible beneficiaries, which represents 
approximtely one-third of Part B FFS beneficiaries. The impact on 
Medicaid was determined by taking one-third of the beneficiary cost-
sharing impact. The national average split of Medicaid payments is 57 
percent Federal payments and 43 percent State payments. Therefore, for 
the estimated $7 million Medicaid impact, approximately $4 million 
would be paid by the Federal Government and $3 million would be paid by 
the State programs. We refer readers to our discussion of the impact on 
beneficiaries in section XX.C.1.f. of this proposed rule.
i. 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.
<bullet> Alternatives Considered for the Methodology for Assigning Skin 
Substitutes to High or Low Cost Groups
    We refer readers to section V.B.1.d. of this proposed rule for a 
discussion of our proposal to assign any skin substitute product that 
was assigned to the high cost group in CY 2018 to the high cost group 
in CY 2019, regardless of whether the product's mean unit cost (MUC) or 
the product's per day cost (PDC) exceeds or falls below the overall CY 
2019 MUC or PDC threshold. We will continue to assign products that 
exceed either the overall CY 2019 MUC or PDC threshold to the high cost 
group. We also considered, but are not proposing, reinstating our 
methodology from CY 2017 and assigning skin substitutes to the high 
cost group based on whether an individual product's MUC or PDC exceeded 
the overall CY 2019 MUC or PDC threshold based on calculations done for 
either the proposed rule or the final rule with comment period.
<bullet> Alternatives Considered for the Methodology for Payment for 
Non-Opioid Pain Management Treatments
    We refer readers to sections II.A.3.b. and XII.D.3. of this 
proposed rule for a discussion of our proposal to change the packaging 
policy for certain drugs when administered in the ASC setting and 
provide separate payment for non-opioid pain management drugs that 
function as a supply when used in a surgical procedure when the 
procedure is performed in an ASC. In those sections, we are also 
soliciting comments on whether we should pay separately for other non-
opioid treatments for pain under the OPPS and the ASC payment system. 
We also considered and are soliciting comments on an alternative policy 
that would use our equitable adjustment authority under section 
1833(t)(2)(E) of the Act to establish an incentive payment for non-
opioid alternatives that would apply to drugs and devices in the 
hospital and ASC settings that are not currently separately paid, are 
supported by evidence that demonstrates such drugs and devices are 
effective at treating acute or chronic pain, and would result in 
decreased use of prescription opioid drugs and any associated opioid 
addiction.
2. Estimated Effects of Proposed CY 2019 ASC Payment System Policies
    Most ASC payment rates are calculated by multiplying the ASC 
conversion factor by the ASC relative payment weight. As discussed 
fully in section XII. of this proposed rule, we are proposing to set 
the CY 2019 ASC relative payment weights by scaling the proposed CY 
2019 OPPS relative payment weights by the proposed ASC scalar of 
0.8854. 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 43 and 44 below.
    Beginning in CY 2011, section 3401 of the Affordable Care Act 
requires that the annual update to the ASC payment system (which we are 
proposing will be the hospital market basket for CY 2019) 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

[[Page 37231]]

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 2019 
payment determinations will be based on the application of a 2.0 
percentage point reduction to the annual update factor, which we are 
proposing will be the hospital market basket for CY 2019. We calculated 
the proposed CY 2019 ASC conversion factor by adjusting the CY 2018 ASC 
conversion factor by 1.0003 to account for changes in the pre-floor and 
pre-reclassified hospital wage indexes between CY 2018 and CY 2019 and 
by applying the proposed CY 2019 MFP-adjusted hospital market basket 
update factor of 2.0 percent (projected hospital market basket update 
of 2.8 percent minus a projected productivity adjustment proposed to be 
0.8 percentage point). The proposed CY 2019 ASC conversion factor is 
$46.500.
a. Limitations of Our Analysis
    Presented here are the projected effects of the proposed changes 
for CY 2019 on Medicare payment to ASCs. A key limitation of our 
analysis is our inability to predict changes in ASC service-mix between 
CY 2017 and CY 2019 with precision. We believe the net effect on 
Medicare expenditures resulting from the proposed CY 2019 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.
b. Estimated Effects of Proposed ASC Payment System Policies on ASCs
    Some ASCs are multispecialty facilities that perform a wide range 
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 2019 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 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 2019 updates to the ASC payment system on 
Medicare payments to ASCs, assuming the same mix of services, as 
reflected in our CY 2017 claims data. Table 43 depicts the estimated 
aggregate percent change in payment by surgical specialty or ancillary 
items and services group by comparing estimated CY 2018 payments to 
estimated proposed CY 2019 payments, and Table 44 shows a comparison of 
estimated CY 2018 payments to estimated proposed CY 2019 payments for 
procedures that we estimate would receive the most Medicare payment in 
CY 2018.
    In Table 43, 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 43.
    <bullet> 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.
    <bullet> Column 2--Estimated CY 2018 ASC Payments were calculated 
using CY 2017 ASC utilization (the most recent full year of ASC 
utilization) and CY 2018 ASC payment rates. The surgical specialty and 
ancillary items and services groups are displayed in descending order 
based on estimated CY 2018 ASC payments.
    <bullet> Column 3--Estimated CY 2019 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 2019 compared to CY 2018.
    As shown in Table 43, for the six specialty groups that account for 
the most ASC utilization and spending, we estimate that the proposed 
update to ASC payment rates for CY 2019 would result in no change in 
aggregate payment amounts for eye and ocular adnexa procedures, a 4-
percent increase in aggregate payment amounts for nervous system 
procedures, 3-percent increase in aggregate payment amounts for 
digestive system procedures, a 4-percent increase in aggregate payment 
amounts for musculoskeletal system procedures, a 2-percent increase in 
aggregate payment amounts for genitourinary system procedures, and a 1-
percent increase in aggregate payment amounts for integumentary system 
procedures. We note that these changes can be a result of different 
factors, including updated data, payment weight changes, and proposed 
changes in policy. In general, spending in each of these categories of 
services increases due to the 2.0 percent proposed payment rate update. 
After the payment rate update is accounted for, aggregate payment 
increases or decreases for a category of services can be higher or 
lower than a 2.0 percent increase, depending on if payment weights in 
the OPPS APCs that correspond to the applicable services increased or 
decreased or if the most recent data show an increase or a decrease in 
the volume of services performed in an ASC for a category. For example, 
we estimate no change in proposed aggregate eye and ocular adnexa 
procedure payments due to a reduction in hospital reported costs for 
the primary payment grouping for this category under the OPPS. This 
lowers the payment weights for eye and ocular adnexa procedure payments 
and, overall, offsets the proposed 2.0 percent ASC rate update for 
these procedures. For a table that includes estimated changes for 
selected procedures, we refer readers to Table 44 provided later in 
this section.
    Also displayed in Table 43 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 increase by 
2 percent for CY 2019.

[[Page 37232]]



  Table 43--Estimated Impact of the Proposed CY 2019 Update to the ASC
    Payment System on Aggregate CY 2019 Medicare Program Payments by
        Surgical Specialty or Ancillary Items and Services Group
------------------------------------------------------------------------
                                           Estimated CY
                                             2018 ASC      Estimated CY
        Surgical specialty group           payments (in    2019 percent
                                             millions)        change
(1)                                                  (2)             (3)
------------------------------------------------------------------------
Total...................................          $4,772               2
Eye and ocular adnexa...................           1,737               0
Nervous system..........................             993               4
Digestive system........................             873               3
Musculoskeletal system..................             574               4
Genitourinary system....................             188               2
Integumentary system....................             145               1
Ancillary items and services............              64               2
------------------------------------------------------------------------

    Table 44 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 2019. The table displays 30 of 
the procedures receiving the greatest estimated CY 2018 aggregate 
Medicare payments to ASCs. The HCPCS codes are sorted in descending 
order by estimated CY 2018 program payment.
    <bullet> Column 1--CPT/HCPCS code.
    <bullet> Column 2--Short Descriptor of the HCPCS code.
    <bullet> Column 3--Estimated CY 2018 ASC Payments were calculated 
using CY 2017 ASC utilization (the most recent full year of ASC 
utilization) and the CY 2018 ASC payment rates. The estimated CY 2018 
payments are expressed in millions of dollars.
    <bullet> Column 4--Estimated CY 2019 Percent Change reflects the 
percent differences between the estimated ASC payment for CY 2018 and 
the estimated payment for CY 2019 based on the proposed update.

  Table 44--Estimated Impact of the Proposed CY 2019 Update to the ASC
      Payment System on Aggregate Payments for Selected Procedures
------------------------------------------------------------------------
                                           Estimated CY
                                             2018 ASC      Estimated CY
    CPT/HCPCS code      Short descriptor    payment (in    2019 percent
                                             millions)        change
(1)                    (2)..............             (3)             (4)
------------------------------------------------------------------------
66984................  Cataract surg w/           $1,206               0
                        iol 1 stage.
45380................  Colonoscopy and               228               4
                        biopsy.
63685................  Insrt/redo spine              221              -2
                        n generator.
43239................  Egd biopsy single/            180               2
                        multiple.
63650................  Implant                       166               0
                        neuroelectrodes.
45385................  Colonoscopy w/                156               4
                        lesion removal.
64483................  Inj foramen                   101              14
                        epidural l/s.
0191T................  Insert ant                     96               4
                        segment drain
                        int.
66982................  Cataract surgery               89               0
                        complex.
64635................  Destroy lumb/sac               75               1
                        facet jnt.
66821................  After cataract                 69               1
                        laser surgery.
29827................  Arthroscop                     65               2
                        rotator cuff
                        repr.
64493................  Inj paravert f                 63              14
                        jnt l/s 1 lev.
62323................  Njx interlaminar               53              11
                        lmbr/sac.
64590................  Insrt/redo pn/                 51               3
                        gastr stimul.
G0105................  Colorectal scrn;               47               4
                        hi risk ind.
G0121................  Colon ca scrn not              42               4
                        hi rsk ind.
45378................  Diagnostic                     41               4
                        colonoscopy.
64721................  Carpal tunnel                  34               1
                        surgery.
15823................  Revision of upper              33              -1
                        eyelid.
29881................  Knee arthroscopy/              29              -1
                        surgery.
C9740................  Cysto impl 4 or                28               2
                        more.
64561................  Implant                        26               1
                        neuroelectrodes.
67042................  Vit for macular                26               1
                        hole.
29880................  Knee arthroscopy/              25              -1
                        surgery.
26055................  Incise finger                  25              -3
                        tendon sheath.
28285................  Repair of                      24              -1
                        hammertoe.
63655................  Implant                        24               5
                        neuroelectrodes.
52000................  Cystoscopy.......              23              -1
G0260................  Inj for                        22              12
                        sacroiliac jt
                        anesth.
------------------------------------------------------------------------


[[Page 37233]]

c. Estimated Effects of Proposed ASC Payment System Policies on 
Beneficiaries
    We estimate that the proposed CY 2019 update to the ASC payment 
system would be generally positive for beneficiaries with respect to 
the new procedures we are proposing to add to the ASC list of covered 
surgical procedures and for those we are proposing to designate as 
office-based for CY 2019. For example, using 2017 utilization data and 
proposed CY 2019 OPPS and ASC payment rates, we estimate that if 5 
percent of cardiac catheterization procedures would migrate from the 
hospital outpatient setting to the ASC setting as a result of this 
proposed policy, Medicare payments would be reduced by approximately 
$35 million in CY 2019 and total beneficiary copayments would decline 
by approximately $14 million in CY 2019. 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. While the 
ASC payment system bases most of its payment rates on OPPS payment 
rates, services that are performed a majority of the time in a 
physician office are paid the lesser of ASC charges or at the office-
based amount payable under the PFS. Because ASC payment rates for 
services that are performed a majority of the time in the physician 
office are paid the lesser of ASC charges or at the office-based amount 
payable under the PFS, we do not believe that the increase in ASC 
payment rates that would result from this proposal would cause any 
significant migration of services from the physician office setting to 
the ASC setting. For those additional procedures that we are proposing 
to designate as office-based in CY 2019, the beneficiary coinsurance 
amount under the ASC payment system generally would be no greater than 
the beneficiary coinsurance under the PFS 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).
d. Alternative ASC Payment Policies Considered
    Alternatives to the ASC changes we are proposing to make and the 
reasons for our selected alternatives are discussed throughout this 
proposed rule.
<bullet> Alternatives Considered for the CY 2019 ASC Rate Update
    As discussed in section XII. of this proposed rule with comment 
period, for CY 2019 through CY 2023 (5 years total), in response to 
stakeholder concerns regarding the application of CPI-U to update ASC 
payment rates, we are proposing to update ASC payment rates using the 
hospital market basket and to revise our regulations under 42 CFR 
416.171(a), which address the annual update to the ASC conversion 
factor, to reflect this proposal.
    As an alternative proposal, we are considering whether to continue 
applying the CPI-U as the update factor. If we were to update ASC 
payment rates for CY 2019 with an update factor based on CPI-U, the 
update would have been 1.3 percent (the 2.1 percent CPI-U less the 0.8 
percent MFP update). This update factor would have resulted in 
increased payments to ASCs in CY 2019 of approximately $40 million, 
compared to the increased payments to ASCs in CY 2019 of approximately 
$70 million as a result of the 2.0 percent update based on the hospital 
market basket.
3. Accounting Statements and Tables
    As required by OMB Circular A-4 (available on the Office of 
Management and Budget website at: https://www.whitehouse.gov/omb/circulars_a004_a-4#a),we have prepared accounting statements to 
illustrate the impacts of the proposed OPPS and ASC changes in this 
proposed rule. The first accounting statement, Table 45 below, 
illustrates the classification of expenditures for the CY 2019 
estimated hospital OPPS incurred benefit impacts associated with the 
proposed CY 2019 OPD fee schedule increase. This $90 million in 
additional Medicare spending estimate includes the $700 million in 
additional Medicare spending associated with updating the CY 2018 OPPS 
payment rates by the hospital market basket update for CY 2019, offset 
by the $610 million in Medicare savings associated with the proposal to 
pay for clinic visits furnished at off-campus PBDs at a PFS-equivalent 
rate. Additionally, we estimate that proposed OPPS changes in this 
proposed rule would increase copayments that Medicaid may make on 
behalf of Medicaid recipients who are also Medicare beneficiaries by 
approximately $7 million in CY 2019. The second accounting statement, 
Table 46 below, illustrates the classification of expenditures 
associated with the proposed 2.0 percent CY 2019 update to the ASC 
payment system, based on the provisions of this proposed rule and the 
baseline spending estimates for ASCs. Both tables classify most 
estimated impacts as transfers.

     Table 45--Accounting Statement: CY 2019 Estimated Hospital OPPS
 Transfers From CY 2018 to CY 2019 Associated With the Proposed CY 2019
              Hospital Outpatient OPD Fee Schedule Increase
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $90 million.
From Whom to Whom......................  Federal Government to
                                          outpatient hospitals and other
                                          providers who receive payment
                                          under the hospital OPPS.
                                        --------------------------------
    Total..............................  $90 million.
------------------------------------------------------------------------


[[Page 37234]]


  Table 46--Accounting Statement: Classification of Estimated Transfers
  From CY 2018 to CY 2019 as a Result of the Proposed CY 2019 Update to
                         the ASC Payment System
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $70 million.
From Whom to Whom......................  Federal Government to Medicare
                                          Providers and Suppliers.
                                        --------------------------------
    Total..............................  $70 million.
------------------------------------------------------------------------


          Table 47--Estimated Costs, Cost Savings, and Benefits
------------------------------------------------------------------------
             Category                     Costs           Cost savings
------------------------------------------------------------------------
ICR Burden Savings................  .................    $54.3 million.*
Regulatory Familiarization........     $2.9 million *  .................
------------------------------------------------------------------------
* The annual estimates are in 2017 year dollars.
** Regulatory familiarization costs occur upfront only.

4. Effects of Proposed Changes in Requirements for the Hospital OQR 
Program
a. Background
    We refer readers to the CY 2018 OPPS/ASC final rule with comment 
period (82 FR 59492 through 59494), for the previously estimated 
effects of changes to the Hospital OQR Program for the CY 2018, CY 
2019, and CY 2020 payment determinations. Of the approximately 3,300 
hospitals that met eligibility requirements for the CY 2018 payment 
determination, we determined that 36 hospitals did not meet the 
requirements to receive the full OPD fee schedule increase factor. Many 
of these hospitals (18 of the 36), chose not to participate in the 
Hospital OQR Program for the CY 2018 payment determination. We are not 
proposing to add any quality measures to the Hospital OQR Program 
measure set for the CY 2020 or CY 2021 payment determinations, and are 
proposing to remove 10 measures from the program measure set, as 
discussed in section XIII.B.4.b. of this proposed rule. Therefore, we 
do not believe that these proposals would increase the number of 
hospitals that do not receive a full annual payment update for the CY 
2020 or CY 2021 payment determinations.
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove a total of 10 measures. Specifically, beginning with the CY 2020 
payment determination, we are proposing to remove: (1) OP-27: Influenza 
Vaccination Coverage Among Healthcare Personnel; and beginning with the 
CY 2021 payment determination, we are proposing to remove: (2) OP-5: 
Median Time to ECG; (3) OP-9: Mammography Follow-up Rates; (4) OP-11: 
Thorax CT Use of Contrast Material; (5) OP-12: The Ability for 
Providers with HIT to Receive Laboratory Data Electronically Directly 
into Their Qualified/Certified EHR System as Discrete Searchable Data; 
(6) OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 
CT; (7) OP-17: Tracking Clinical Results between Visits; (8) OP-29: 
Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 
Colonoscopy in Average Risk Patients; (9) OP-30: Endoscopy/Polyp 
Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use; and (10) OP-31: 
Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery. The reduction in burden associated with 
these proposals is discussed further below.
    In section XIII.B.4.a. of this proposed rule, beginning with the 
effective date of the CY 2019 OPPS/ASC final rule with comment period, 
we are proposing to update one removal factor and to add one removal 
factor. We are also proposing to codify our measure removal policies 
and factors at proposed 42 CFR 419.46(h) effective upon finalization of 
the CY 2019 OPPS/ASC final rule and for subsequent years. In addition, 
in section XIII.D.2. of this proposed rule, we are proposing to update 
the frequency with which we will release Hospital Outpatient Quality 
Reporting Specifications Manuals, such that instead of every 6 months, 
we would release Specifications Manuals every 6 to 12 months beginning 
with CY 2019 and for subsequent years. In section XIII.C.2. of this 
proposed rule, beginning with the CY 2020 payment determination, we are 
proposing to remove the Notice of Participation (NOP) form as a 
requirement for the Hospital OQR Program and to update 42 CFR 
419.46(a)(3) to reflect these policies. Finally, in section XIII.D.4.b. 
of this proposed rule, we are proposing to change the data collection 
period for OP-32: Facility Seven-Day Risk-Standardized Hospital Visit 
Rate after Outpatient Colonoscopy from one year to three years 
beginning with the CY 2020 payment determination. As discussed below, 
we do not expect these proposals to affect our burden estimates. 
However, as further explained in section XVIII.B. of this proposed 
rule, we believe that there will be an overall decrease in the 
estimated information collection burden for hospitals due to the other 
proposed policies. We refer readers to section XVIII.B. of this 
proposed rule for a summary of our information collection burden 
estimate calculations. The effects of these proposals are discussed in 
more detail further below.
b. Estimated Effects of Hospital OQR Program Beginning With the 
Effective Date of the CY 2019 OPPS/ASC Final Rule With Comment Period
    In section XIII.B.4.a. of this proposed rule, we are proposing to: 
(1) Update measure removal Factor 7; (2) add one new removal factor; 
and (3) codify our removal factors policy at 42 CFR 419.46(h). We do 
not expect a change in the information collection burden or other costs 
experienced by hospitals because these changes do not affect Hospital 
OQR Program participation requirements or data reporting requirements.
c. Proposal To Update the Frequency of Releasing the Hospital 
Outpatient Quality Reporting Specifications Manual Beginning With CY 
2019 and for Subsequent Years
    In section XIII.D.2. of this proposed rule, we are proposing to 
update the frequency with which we will release a Hospital Outpatient 
Quality Reporting Specifications Manual such that instead of every 6 
months, we would release

[[Page 37235]]

Specifications Manuals every 6 to 12 months beginning with CY 2019. We 
anticipate that this proposed change will reduce hospital confusion, as 
potentially releasing fewer manuals per year reduces the need to review 
updates as frequently as previously necessary. However, because this 
change does not affect Hospital OQR Program participation requirements 
or data reporting requirements, we do not estimate a change in our 
calculation of the information collection burden experienced by 
hospitals.
d. Estimated Effects of Hospital OQR Program Proposals for the CY 2020 
Payment Determination and Subsequent Years
(1) Proposal To Remove the Notice of Participation (NOP) Form 
Requirement
    In section XIII.C.2. of this proposed rule, beginning with the CY 
2020 payment determination, we are proposing to remove the NOP form as 
a requirement. As a result, to be a participant in the Hospital OQR 
Program, hospitals would need to: (1) Register on the QualityNet 
website, (2) identify and register a QualityNet security administrator, 
and (3) submit data. In addition, we are proposing to update 42 CFR 
419.46(a) to reflect these policies. We believe that the proposal to 
remove the NOP, if finalized, would reduce administrative burden 
experienced by hospitals by only a nominal amount. As a result, this 
proposal does not influence our information collection burden 
estimates. We refer readers to section XVIII.B. of this proposed rule, 
where our burden calculations for the Hospital OQR Program are 
discussed in detail. In addition, we do anticipate that this proposal 
will reduce the possibility of hospitals failing to meet Hospital OQR 
Program requirements due to a failure to submit the NOP.
(2) Proposed Extension of the Collection Period for OP-32: Facility 7-
Day Risk-Standardized Hospital Visit Rate After Outpatient Colonoscopy
    In section XIII.D.4.b. of this proposed rule, we are proposing to 
increase the data collection period for OP-32: Facility Seven-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy from 1 
year to 3 years beginning with the CY 2020 payment determination. We 
expect this proposal to increase the reliability of OP-32 data allowing 
better information to be publicly reported. However, the proposal does 
not change our data reporting requirements, such that hospitals will be 
required to continue reporting claims data that are used to calculate 
this measure. Therefore, we do not expect a change in the information 
collection burden experienced by hospitals.
(3) Proposed Removal of OP-27 for the CY 2020 Payment Determination and 
Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove OP-27: Influenza Vaccination Coverage Among Healthcare Personnel 
(NQF #0431) beginning with the CY 2020 payment determination and for 
subsequent years. The burden associated with OP-27, a NHSN measure, is 
accounted for under a separate Paperwork Reduction Act Package, OMB 
control number 0920-0666. Because burden associated with submitting 
data for this measure is captured under a separate OMB control number, 
we are not providing an estimate of the information collection burden 
associated with this measure for the Hospital OQR Program. Aside from 
burden associated with information collection however, we also 
anticipate that hospitals will experience a general burden and cost 
reduction associated with this proposal stemming from no longer having 
to review and track program requirements associated with this measure.
e. Estimated Effects of Hospital OQR Program Proposals for the CY 2021 
Payment Determination and Subsequent Years
(1) Proposed Removal of Chart-Abstracted Measures for the CY 2021 
Payment Determination and Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove OP-5: Median Time to ECG, a chart-abstracted measure, for the CY 
2021 payment determination and subsequent years. We believe that the 
removal of this chart-abstracted measure for the CY 2021 payment 
determination would reduce collection of information burden by 153,130 
hours and $5.6 million (153,130 hours x $36.58), as discussed in 
section XVIII.B. of this proposed rule. Aside from burden associated 
with information collection however, we also anticipate that hospitals 
will experience a general burden and cost reduction associated with 
this proposal stemming from no longer having to review and track 
program requirements associated with this measure.
(2) Proposed Removal of Measures Submitted Via a Web-Based Tool for the 
CY 2021 Payment Determination and Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove five measures submitted via a web-based tool beginning with the 
CY 2021 payment determination and for subsequent years: OP-12: The 
Ability for Providers with HIT to Receive Laboratory Data 
Electronically Directly into Their Qualified/Certified EHR System as 
Discrete Searchable Data; OP-17: Tracking Clinical Results between 
Visits; OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up 
Interval for Normal Colonoscopy in Average Risk Patients; OP-30: 
Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 
History of Adenomatous Polyps--Avoidance of Inappropriate Use; and OP-
31: Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery. As discussed in section XVIII.B. of this 
proposed rule, we anticipate a burden reduction of 1,164,843 hours and 
$42.6 million associated with the removal of OP-12, OP-17, OP-29, OP-
30, and OP-31 for the CY 2021 payment determination. Aside from burden 
associated with information collection however, we also anticipate that 
hospitals will experience a general burden and cost reduction 
associated with these proposals stemming from no longer having to 
implement, review, track, and maintain program requirements associated 
with these measures.
(3) Proposed Removal of Claims-Based Measures for the CY 2021 Payment 
Determination and Subsequent Years
    In section XIII.B.4.b. of this proposed rule, we are proposing to 
remove three claims-based measures beginning with the CY 2021 payment 
determination: OP-9: Mammography Follow-up Rates; OP-11: Thorax CT Use 
of Contrast Material; and OP-14: Simultaneous Use of Brain Computed 
Tomography (CT) and Sinus CT. These claims-based measures are 
calculated using only data already reported to the Medicare program for 
payment purposes, therefore, we do not believe removing these measures 
will affect the information collection burden on hospitals. 
Nonetheless, we anticipate that hospitals would experience a general 
burden reduction associated with these proposals stemming from no 
longer having to review and track various associated program 
requirements.

[[Page 37236]]

    In total for the CY 2021 payment determination, we expect 
information collection burden would be reduced by 151,800 hours due to 
our proposal to remove one chart-abstracted measure, and 1,164,843 
hours due to our proposals to remove five measures submitted via a web-
based tool. In total, we estimate an information collection burden 
reduction of 1,316,643 hours (1,164,843 hours + 151,800 hours) and 
$48.2 million (1,317,973 hours x $36.58) for the CY 2021 payment 
determination.
6. Effects of Proposed Requirements for the ASCQR Program
a. Background
    In section XIV. of this proposed rule, we discuss our proposals to 
adopt policies affecting the ASCQR Program. For the CY 2018 payment 
determination, of the 6,683 ASCs that met eligibility requirements for 
the ASCQR Program, 233 ASCs did not meet the requirements to receive 
the full annual payment update. We note that, in the CY 2017 OPPS/ASC 
final rule with comment period (81 FR 79874), we used the CY 2016 
payment determination numbers as a baseline, and estimated that 
approximately 200 ASCs will not receive the full annual payment update 
in CY 2019 due to failure to meet the ASCQR Program requirements (CY 
2017 and CY 2018 payment determination information were not yet 
available). We are not proposing to add any new quality measures to the 
ASCQR Program measure set for the CY 2020 payment determination and 
subsequent determinations, and we do not believe that the other 
measures we previously adopted would cause any additional ASCs to fail 
to meet the ASCQR Program requirements. Therefore, we do not believe 
that these proposals would increase the number of ASCs that do not 
receive a full annual payment update for the CY 2020 payment 
determination. Below we discuss only the effects that would result from 
the newly proposed provisions in this proposed rule.
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove one measure beginning with the CY 2020 payment determination, 
ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel, and 
to remove seven measures beginning with the CY 2021 payment 
determination: ASC-1: Patient Burn; ASC-2: Patient Fall; ASC-3: Wrong 
Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant; ASC-4: 
All-Cause Hospital Transfer/Admission; ASC-9: Endoscopy/Polyp 
Surveillance Follow-up Interval for Normal Colonoscopy in Average Risk 
Patients; ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval 
for Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use; and ASC-11: Cataracts--Improvement in Patient's 
Visual Function within 90 Days Following Cataract Surgery. We expect 
these proposals would reduce the overall burden of reporting data for 
the ASCQR Program, as discussed further below.
    In addition, in sections XIV.B.3.b. and XIV.D.4.b. of this proposed 
rule, beginning with the effective date of the CY 2019 OPPS/ASC final 
rule with comment period, we are proposing to: (1) Remove one measure 
removal factor; (2) add two new measure removal factors, and (3) update 
42 CFR 416.320(c) to better reflect our measure removal policies; we 
are also proposing to: (4) Extend the reporting period for ASC-12: 
Facility Seven-Day Risk Standardized Hospital Visit Rate after 
Outpatient Colonoscopy from 1 to 3 years beginning with the CY 2020 
payment determination. As discussed below, we do not expect these 
proposals would affect our burden estimates. However, as further 
explained in section XVIII.C. of this proposed rule, we believe that 
there would be an overall decrease in the estimated information 
collection burden for ASCs due to the other proposed policies. We refer 
readers to section XVIII.C. of this proposed rule for a summary of our 
information collection burden estimate calculations. The effects of 
these proposals are discussed in more detail below.
b. Estimated Effects of ASCQR Program Proposals Beginning With the 
Effective Date of the CY 2019 OPPS/ASC Final Rule With Comment Period
    In section XIV.B.3.a. of this proposed rule, we are proposing, 
beginning with the effective date of the CY 2019 OPPS/ASC final rule 
with comment period, to remove one measure removal factor, add two new 
measure removal factors, and update 42 CFR 416.320(c) to better reflect 
our measure removal policies for the ASCQR Program. Because these 
changes do not affect ASCQR Program participation requirements or data 
reporting requirements, we do not expect these proposals would change 
the information collection burden or other costs experienced by ASCs.
c. Estimated Effects of ASCQR Program Proposals for the CY 2020 Payment 
Determination and Subsequent Years
(1) Proposed Extension of the Reporting Period for ASC-12: Facility 7-
Day Risk-Standardized Hospital Visit Rate After Outpatient Colonoscopy
    In section XIV.D.4.b. of this proposed rule, we are proposing to 
increase the data reporting period for ASC-12: Facility Seven-Day Risk-
Standardized Hospital Visit Rate after Outpatient Colonoscopy from 1 
year to 3 years beginning with the CY 2020 payment determination. We 
expect this proposal to increase the reliability of ASC-12 data 
allowing better information to be publicly reported. However, the 
proposal does not change our data reporting requirements, because ASC-
12 is a claims-based measure that is calculated based on claims data 
that facilities already submit to CMS. Therefore, we do not expect a 
change in the information collection burden or other costs experienced 
by ASCs.
(2) Proposed Removal of ASC-8 for the CY 2020 Payment Determination and 
Subsequent Years
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove one measure from the ASCQR Program measure set beginning with 
the CY 2020 payment determination, ASC-8: Influenza Vaccination 
Coverage Among Healthcare Personnel. As discussed in section 
XVIII.C.3.b. of this proposed rule, the information collection burden 
associated with ASC-8, a NHSN measure, is accounted for under a 
separate information collection request, OMB control number 0920-0666. 
As such, we are not providing an estimate of the information collection 
burden associated with this measure under the ASCQR Program control 
number. Aside from burden associated with information collection 
however, we anticipate that facilities would experience a general 
burden and cost reduction associated with this proposal stemming from 
no longer having to review and track program requirements associated 
with this measure.
d. Estimated Effects of ASCQR Program Proposals for the CY 2021 Payment 
Determination and Subsequent Years
    In section XIV.B.3.c. of this proposed rule we are proposing to 
remove seven measures from the ASCQR Program measure set beginning with 
the CY 2021 payment determination: ASC-1: Patient Burn; ASC-2: Patient 
Fall; ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, 
Wrong Implant; ASC-4: All-Cause Hospital Transfer/

[[Page 37237]]

Admission; ASC-9: Endoscopy/Polyp Surveillance Follow-up Interval for 
Normal Colonoscopy in Average Risk Patients; ASC-10: Endoscopy/Polyp 
Surveillance: Colonoscopy Interval for Patients with a History of 
Adenomatous Polyps--Avoidance of Inappropriate Use; and ASC-11: 
Cataracts--Improvement in Patient's Visual Function within 90 Days 
Following Cataract Surgery.
(1) Proposed Removal of QDC Claims-based Measures for the CY 2021 
Payment Determination and Subsequent Years
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove four QDC claims-based measures from the ASCQR Program measure 
set beginning with the CY 2021 payment determination: ASC-1: Patient 
Burn; ASC-2: Patient Fall; ASC-3: Wrong Site, Wrong Side, Wrong 
Patient, Wrong Procedure, Wrong Implant; and ASC-4: All-Cause Hospital 
Transfer/Admission. As discussed in section XVIII.C.4.a. of this 
proposed rule, these measures do not require ASCs to report any 
additional data, and we do not believe there would be any information 
collection burden change associated with our proposals to remove these 
measures. Aside from burden associated with information collection 
however, we anticipate that facilities would experience a general 
burden and cost reduction associated with these proposals stemming from 
no longer having to review and track program requirements associated 
with these measures.
(2) Proposed Removal of Chart-Abstracted Measures for the CY 2021 
Payment Determination and Subsequent Years
    In section XIV.B.3.c. of this proposed rule, we are proposing to 
remove three chart-abstracted measures from the ASCQR Program measure 
set beginning with the CY 2021 payment determination: ASC-9: Endoscopy/
Polyp Surveillance Follow-up Interval for Normal Colonoscopy in Average 
Risk Patients; ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy 
Interval for Patients with a History of Adenomatous Polyps--Avoidance 
of Inappropriate Use; and ASC-11: Cataracts--Improvement in Patient's 
Visual Function within 90 Days Following Cataract Surgery. As discussed 
in section XVIII.C.4.b. of this proposed rule, we believe our proposals 
to remove ASC-9; ASC-10; and ASC-11, if finalized, would result in a 
burden reduction for ASCs. For ASC-9 and ASC-10, we estimate the total 
annualized burden reduction associated with each measure to be 62,008 
hours and $2,268,253 (62,008 hours x $36.58 per hour). For ASC-11, a 
voluntary measure, we estimate a total annual burden reduction of 
16,569 hours and $606,094 (16,569 hours x $36.58 per hour). Aside from 
burden associated with information collection however, we anticipate 
that facilities would experience a general burden and cost reduction 
associated with these proposals stemming from no longer having to 
review and track program requirements associated with these measures.
    Therefore, as noted in section XVIII.C.4. of this proposed rule, we 
believe our proposals to remove seven measures from the ASCQR measure 
set for the CY 2021 payment determination would result in a total 
annual reduction in information collection burden of 140,585 hours 
(62,008 hours + 62,008 hours + 16,569 hours) and $5,142,600 ($2,268,253 
+ $2,268,253 + $606,094).

D. Effects of the Proposed Update to the HCAHPS Survey Measure in the 
Hospital IQR Program

    As discussed in section XVI. of this proposed rule, we are 
proposing to update the HCAHPS Survey measure by removing the 
``Communication About Pain'' questions beginning with patients 
discharged in January 2022, for the FY 2024 payment determination and 
subsequent years. We anticipate that the removal of these questions 
will result in only a nominal and temporary increase on the information 
collection burden on providers associated with adjusting the survey 
instrument and instructional materials, and a burden decrease for 
survey respondents. We note that the burden estimate for the Hospital 
IQR Program under the program's OMB control number 0938-1022 excludes 
the burden associated with the HCAHPS Survey measure, which is 
submitted under a separate information collection request and approved 
under OMB control number 0938-0981. We address the anticipated 
information collection burden reduction in section XVIII.D. of this 
proposed rule.

E. Regulatory Review Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters on last year's proposed rule will be the number of reviewers 
of this proposed rule. We acknowledge that this assumption may 
understate or overstate the costs of reviewing this rule. It is 
possible that not all commenters will review this year's proposed rule 
in detail, and it is also possible that some reviewers will choose not 
to comment on the proposed rule. For these reasons, we believe that the 
number of past commenters would be a fair estimate of the number of 
reviewers of this proposed rule. We welcome any comments on the 
approach in estimating the number of entities that will review this 
proposed rule.
    We also recognize that different types of entities are, in many 
cases, affected by mutually exclusive sections of this proposed rule, 
and, therefore, for the purposes of our estimate, we assume that each 
reviewer reads approximately 50 percent of the rule. In this proposed 
rule, we are seeking public comments.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $107.38 per hour, including overhead and fringe benefits 
(https://www.bls.gov/oes/current/naics4_621100.htm). Assuming an 
average reading speed, we estimate that it will take approximately 8 
hours for the staff to review half of this proposed rule. For each 
facility that reviews the rule, the estimated cost is $859.04 (8 hours 
x $107.38). Therefore, we estimate that the total cost of reviewing 
this regulation is $2,912,146 ($859.04 x 3,390 reviewers).

F. Regulatory Flexibility Act (RFA) Analysis

    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
most hospitals, ASCs and CMHCs are small entities as that term is used 
in the RFA. For purposes of the RFA, most hospitals are considered 
small businesses according to the Small Business Administration's size 
standards with total revenues of $38.5 million or less in any single 
year or by the hospital's not-for-profit status. Most ASCs and most 
CMHCs are considered small businesses with total revenues of $15 
million or less in any single year. For details, see the Small Business 
Administration's ``Table of Small Business Size Standards'' at http://www.sba.gov/content/table-small-business-size-standards.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of

[[Page 37238]]

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 would 
increase payments to small rural hospitals by less than 3 percent; 
therefore, it should not have a significant impact on approximately 613 
small rural hospitals.
    The analysis above, together with the remainder of this preamble, 
provides a regulatory flexibility analysis and a regulatory impact 
analysis.

G. 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 $150 million. This proposed rule does 
not mandate any requirements for State, local, or tribal governments, 
or for the private sector.

H. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. It has been 
determined that this proposed rule, if finalized, would be a 
deregulatory action for the purposes of Executive Order 13771. We 
estimate that this proposed rule would generate $43.5 million in 
annualized cost savings at a 7-percent discount rate, discounted 
relative to 2016, over a perpetual time horizon.

I. 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 2019. Table 42 
demonstrates the estimated distributional impact of the OPPS budget 
neutrality requirements that would result in a 0.1 percent decrease in 
payments for all services paid under the OPPS in CY 2019, 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, the 
proposed off-campus provider-based department visits payment policy, 
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 or losses in OPPS payments in CY 2019.
    The proposed updates to the ASC payment system for CY 2019 would 
affect each of the approximately 5,500 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 the 
ASC payment system, and the extent to which the ASC provides a 
different set of procedures in the coming year. Table 43 demonstrates 
the estimated distributional impact among ASC surgical specialties of 
the proposed MFP-adjusted hospital market basket update factor of 1.25 
percent for CY 2019.

XXI. 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 will not have a substantial 
direct effect on State, local or tribal governments, preempt State law, 
or otherwise have a Federalism implication. As reflected in Table 42 of 
this proposed rule, we estimate that OPPS payments to governmental 
hospitals (including State and local governmental hospitals) would 
decrease by 0.3 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 416

    Health facilities, Health professions, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 419

    Hospitals, Medicare, Reporting and recordkeeping requirements.

    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 416--AMBULATORY SURGICAL SERVICES

0
 1. The authority citation for part 416 continues to read as follows:

     Authority:  Secs. 1102, 1138, and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1320b-8, and 1395hh) and section 371 of the 
Public Health Service Act (42 U.S.C. 273).

0
 2. Section 416.164 is amended by revising paragraph (a)(4) and adding 
paragraph (b)(6) to read as follows:


Sec.  416.164   Scope of ASC services.

    (a) * * *
    (4) Drugs and biologicals for which separate payment is not allowed 
under the hospital outpatient prospective payment system (OPPS), with 
the exception of non-opioid pain management drugs that function as a 
supply when used in a surgical procedure;
* * * * *
    (b) * * *
    (6) Non-opioid pain management drugs that function as a supply when 
used in a surgical procedure.
* * * * *
0
 3. Section 416.171 is amended by revising paragraphs (a)(2) and (b)(1) 
and (2) to read as follows:


Sec.  416.171   Determination of payment rates for ASC services.

    (a) * * *
    (2) Conversion factor for CY 2009 and subsequent calendar years. 
The conversion factor for a calendar year is equal to the conversion 
factor calculated for the previous year, updated as follows:
    (i) For CY 2009, the update is equal to zero percent;
    (ii) For CY 2010 through CY 2018, the update is 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.

[[Page 37239]]

    (iii) For CY 2019 through CY 2023, the update is the hospital 
inpatient market basket percentage increase applicable under section 
1886(b)(3)(B)(iii) of the Act.
    (iv) For CY 2024 and subsequent years, the update is 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.
    (v) For CY 2014 through CY 2018, the Consumer Price Index for All 
Urban Consumers update determined under paragraph (a)(2)(ii) of this 
section is reduced by 2.0 percentage points for an ASC that fails to 
meet the standards for reporting of ASC quality measures as established 
by the Secretary for the corresponding calendar year.
    (vi) For CY 2019 through CY 2023, the hospital inpatient market 
basket update determined under paragraph (a)(2)(iii) of this section is 
reduced by 2.0 percentage points for an ASC that fails to meet the 
standards for reporting of ASC quality measures as established by the 
Secretary for the corresponding calendar year.
    (vii) For CY 2024 and subsequent years, the Consumer Price Index 
for All Urban Consumers update determined under paragraph (a)(2)(iv) of 
this section is reduced by 2.0 percentage points for an ASC that fails 
to meet the standards for reporting of ASC quality measures as 
established by the Secretary for the corresponding calendar year.
    (viii) Productivity adjustment. (A) For CY 2011 through CY 2018, 
the Consumer Price Index for All Urban Consumers determined under 
paragraph (a)(2)(ii) of this section, after application of any 
reduction under paragraph (a)(2)(iv) of this section, is reduced by the 
productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of 
the Act.
    (B) For CY 2019 through CY 2023, the hospital inpatient market 
basket update determined under paragraph (a)(2)(iii) of this section, 
after application of any reduction under paragraph (a)(2)(vi) of this 
section, is reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act.
    (C) For CY 2024 and subsequent years, the Consumer Price Index for 
All Urban Consumers determined under paragraph (a)(2)(iv) of this 
section, after application of any reduction under paragraph (a)(2)(vii) 
of this section, is reduced by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II) of the Act.
    (D) The application of the provisions of paragraph (a)(2)(viii)(A), 
(B), or (C) of this section may result in the update being less than 
zero percent for a year, and may result in payment rates for a year 
being less than the payment rates for the preceding year.
    (b) * * *
    (1) Covered ancillary services specified in Sec.  416.164(b), with 
the exception of radiology services and certain diagnostic tests as 
provided in Sec.  416.164(b)(5) and non-opioid pain management drugs 
that function as a supply when used in a surgical procedure as provided 
in Sec.  416.164(b)(6).
    (2) The device portion of device-intensive procedures, which are 
procedures that--
    (i) Involve implantable devices assigned a CPT or HCPCS code;
    (ii) Utilize devices (including single-use devices) that must be 
surgically inserted or implanted; and
    (iii) Have a HCPCS code-level device offset of greater than 30 
percent when calculated according to the standard OPPS ASC ratesetting 
methodology.
* * * * *
0
 4. Section 416.320 is amended by revising paragraph (c) to read as 
follows:


Sec.  416.320  Retention and removal of quality measures under the 
ASCQR Program.

* * * * *
    (c) Removal of quality measures--(1) General rule for the removal 
of quality measures. Unless a measure raises specific safety concerns 
as set forth in paragraph (b) of this section, CMS will use the regular 
rulemaking process to remove, suspend, or replace quality measures in 
the ASCQR Program to allow for public comment.
    (2) Factors for consideration of removal of quality measures. CMS 
will weigh whether to remove measures based on the following factors:
    (i) Factor 1: Measure performance among ASCs is so high and 
unvarying that meaningful distinctions and improvements in performance 
can no longer be made (topped-out measures);
    (ii) Factor 2: Performance or improvement on a measure does not 
result in better patient outcomes;
    (iii) Factor 3: A measure does not align with current clinical 
guidelines or practice;
    (iv) Factor 4: The availability of a more broadly applicable 
(across settings, populations, or conditions) measure for the topic;
    (v) Factor 5: The availability of a measure that is more proximal 
in time to desired patient outcomes for the particular topic;
    (vi) Factor 6: The availability of a measure that is more strongly 
associated with desired patient outcomes for the particular topic;
    (vii) Factor 7: Collection or public reporting of a measure leads 
to negative unintended consequences other than patient harm; and
    (viii) Factor 8: The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    (3) Criteria to determine topped-out measures. For the purposes of 
the ASCQR Program, a measure is considered to be topped-out under 
paragraph (c)(2)(i) of this section when it meets both of the following 
criteria:
    (i) Statistically indistinguishable performance at the 75th and 
90th percentiles (defined as when the difference between the 75th and 
90th percentiles for an ASC's measure is within two times the standard 
error of the full data set); and
    (ii) A truncated coefficient of variation less than or equal to 
0.10.
    (4) Application of measure removal factors. The benefits of 
removing a measure from the ASCQR Program will be assessed on a case-
by-case basis. A measure will not be removed solely on the basis of 
meeting any specific factor or criterion.

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

0
 5. The authority citation for part 419 continues to read as follows:

     Authority: Secs. 1102, 1833(t), and 1871 of the Social Security 
Act (42 U.S.C. 1302, 1395l(t), and 1395hh).

0
6. Section 419.32 is amended by adding paragraph (b)(1)(iv)(B)(10) to 
read as follows:


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

* * * * *
    (b) * * *
    (1) * * *
    (iv) * * *
    (B) * * *
    (10) For calendar year 2019, a multifactor productivity adjustment 
(as determined by CMS) and 0.75 percentage point.
* * * * *
0
7. Section 419.46 is amended by revising paragraphs (a)(1) through (3) 
and adding paragraph (h) to read as follows:


Sec.  419.46   Participation, data submission, and validation 
requirements under the Hospital Outpatient Quality Reporting (OQR) 
Program.

    (a) * * *
    (1) Register on the QualityNet website before beginning to report 
data;
    (2) Identify and register a QualityNet security administrator as 
part of the registration process under paragraph (a)(1) of this 
section; and

[[Page 37240]]

    (3) Submit at least one data element.
* * * * *
    (h) Retention and removal of quality measures under the Hospital 
OQR Program. (1) General rule for the retention of quality measures. 
Quality measures adopted for the Hospital OQR Program measure set for a 
previous payment determination year are retained for use in subsequent 
payment determination years, except when they are removed, suspended, 
or replaced as set forth in paragraphs (h)(2) and (3) of this section.
    (2) Immediate measure removal. For cases in which CMS believes that 
the continued use of a measure as specified raises patient safety 
concerns, CMS will immediately remove a quality measure from the 
Hospital OQR Program and will promptly notify hospitals and the public 
of the removal of the measure and the reasons for its removal through 
the Hospital OQR Program ListServ and the QualityNet website.
    (3) Measure removal, suspension, or replacement through the 
rulemaking process. Unless a measure raises specific safety concerns as 
set forth in paragraph (h)(2) of this section, CMS will use the regular 
rulemaking process to remove, suspend, or replace quality measures in 
the Hospital OQR Program to allow for public comment.
    (i) Factors for consideration of removal of quality measures. CMS 
will weigh whether to remove measures based on the following factors:
    (A) Factor 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);
    (B) Factor 2: Performance or improvement on a measure does not 
result in better patient outcomes;
    (C) Factor 3: A measure does not align with current clinical 
guidelines or practice;
    (D) Factor 4: The availability of a more broadly applicable (across 
settings, populations, or conditions) measure for the topic;
    (E) Factor 5: The availability of a measure that is more proximal 
in time to desired patient outcomes for the particular topic;
    (F) Factor 6: The availability of a measure that is more strongly 
associated with desired patient outcomes for the particular topic;
    (G) Factor 7: Collection or public reporting of a measure leads to 
negative unintended consequences other than patient harm; and
    (H) Factor 8: The costs associated with a measure outweigh the 
benefit of its continued use in the program.
    (ii) Criteria to determine topped-out measures. For the purposes of 
the Hospital OQR Program, a measure is considered to be topped-out 
under paragraph (h)(3)(i)(A) of this section when it meets both of the 
following criteria:
    (A) Statistically indistinguishable performance at the 75th and 
90th percentiles (defined as when the difference between the 75th and 
90th percentiles for a hospital's measure is within two times the 
standard error of the full data set); and
    (B) A truncated coefficient of variation less than or equal to 
0.10.
    (iii) Application of measure removal factors. The benefits of 
removing a measure from the Hospital OQR Program will be assessed on a 
case-by-case basis. Under this case-by-case approach, a measure will 
not be removed solely on the basis of meeting any specific factor.
0
 8. Section 419.48 is amended by--
0
a. Revising paragraph (a);
0
 b. Redesignating paragraphs (b) and (c) as paragraphs (c) and (d), 
respectively;
0
c. Adding a new paragraph (b);
0
 d. Revising redesignated paragraph (d); and
0
e. Adding paragraph (e).
    The revisions and additions read as follows:


Sec.  419.48   Definition of excepted items and services.

    (a) Excepted items and services are items or services that are 
furnished--
    (1) On or after January 1, 2017--
    (i) By a dedicated emergency department (as defined at Sec.  
489.24(b) of this chapter); or
    (ii) By an excepted off-campus provider-based department defined in 
paragraph (c) of this section that has not impermissibly relocated or 
changed ownership.
    (2) On or after January 1, 2019--
    (i) By a dedicated emergency department (as defined at Sec.  
489.24(b) of this chapter); or
    (ii) By an excepted off-campus provider-based department described 
in paragraph (a)(1)(ii) of this section only from those clinical 
families of services described in paragraph (b) of this section for 
which the excepted off-campus provider-based department furnished an 
item or service (and subsequently billed for that item or service under 
the OPPS) during the following baseline periods:
    (A) For an off-campus provider-based department that first 
furnished a covered OPD service on or before November 1, 2014, November 
1, 2014 through November 1, 2015;
    (B) For an off-campus provider-based department that first 
furnished a covered OPD service between November 2, 2014 and November 
1, 2015, during a 1-year baseline period that begins on the first date 
the off-campus provider-based department furnished a covered OPD 
service; or
    (C) For an off-campus provider-based department that first 
furnished a covered OPD service after November 2, 2015, during a 1-year 
baseline period that begins on the first date the off-campus provider-
based department furnished a covered OPD service. This paragraph 
(a)(2)(ii)(C) only applies to provider-based departments that met the 
exception criteria as defined at either section 1833(t)(21)(B)(iii) or 
section 1833(t)(21)(B)(iv) of the Act.
    (b) For purposes of paragraph (a)(2)(ii) of this section, 
``clinical families of services'' means the following:
    (1) Airway endoscopy.
    (2) Blood product exchange.
    (3) Cardiac/pulmonary rehabilitation.
    (4) Diagnostic/screening test and related procedures.
    (5) Drug administration and clinical oncology.
    (6) Ear, nose throat (ENT).
    (7) General surgery and related procedures.
    (8) Gastrointestinal (GI).
    (9) Gynecology.
    (10) Major imaging.
    (11) Minor imaging.
    (12) Musculoskeletal surgery.
    (13) Nervous system procedures.
    (14) Ophthalmology.
    (15) Pathology.
    (16) Radiation oncology.
    (17) Urology.
    (18) Vascular/endovascular/cardiovascular.
    (19) Visits and related services.
* * * * *
    (d) Payment for items and services that do not meet the definition 
in paragraph (a)(1) of this section will generally be made under the 
Medicare Physician Fee Schedule on or after January 1, 2017.
    (e) Payment for items and services that do not meet the definition 
in paragraph (a)(2) of this section will generally be made under the 
Medicare Physician Fee Schedule on or after January 1, 2019.

    Dated: June 26, 2018.
 Seema Verma,
Administrator, Centers for Medicare and Medicaid Services.
    Dated: June 28, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-15958 Filed 7-25-18; 4:15 pm]
 BILLING CODE 4120-01-P


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