37046 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

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. 

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 Juan.Cortes@cms.hhs.gov or at 

410–786–4325. 

Advisory Panel on Hospital 

Outpatient Payment (HOP Panel), 

contact the HOP Panel mailbox at 

APCPanel@cms.hhs.gov. 

Ambulatory Surgical Center (ASC) 

Payment System, contact Scott Talaga 

via email Scott.Talaga@cms.hhs.gov or 

at 410–786–4142. 

Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program 

Administration, Validation, and 

Reconsideration Issues, contact Anita 

Bhatia via email Anita.Bhatia@

cms.hhs.gov or at 410–786–7236. 

Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program Measures, 

contact Vinitha Meyyur via email 

Vinitha.Meyyur@cms.hhs.gov or at 410– 

786–8819. 

Blood and Blood Products, contact 

Joshua McFeeters via email 

Joshua.McFeeters@cms.hhs.gov or at 

410–786–9732. 

Cancer Hospital Payments, contact 

Scott Talaga via email Scott.Talaga@

cms.hhs.gov or at 410–786–4142. 

CMS Web Posting of the OPPS and 

ASC Payment Files, contact Chuck 

Braver via email Chuck.Braver@

cms.hhs.gov or at 410–786–6719. 

CPT Codes, contact Marjorie Baldo via 

email Marjorie.Baldo@cms.hhs.gov or at 

410–786–4617. 

Collecting Data on Services Furnished 

in Off-Campus Provider-Based 

Emergency Departments, contact Twi 

Jackson via email Twi.Jackson@

cms.hhs.gov or at 410–786–1159. 

Comment Solicitation to Control for 

Unnecessary Increases in Volume of 

Outpatient Services, contact Elise 

Barringer via email Elise.Barringer@

cms.hhs.gov or at 410–786–9222. 

Composite APCs (Low Dose 

Brachytherapy and Multiple Imaging), 

contact Elise Barringer via email 

Elise.Barringer@cms.hhs.gov or at 410– 

786–9222. 

Comprehensive APCs (C–APCs), 

contact Lela Strong-Holloway via email 

Lela.Strong@cms.hhs.gov or at 410–786– 

3213. 

Expansion of Clinical Families of 

Services at Excepted Off-Campus 

Departments of a Provider, contact Juan 

Cortes via email Juan.Cortes@

cms.hhs.gov or at 410–786–4325. 

Hospital Outpatient Quality Reporting 

(OQR) Program Administration, 

Validation, and Reconsideration Issues, 

contact Anita Bhatia via email 

Anita.Bhatia@cms.hhs.gov or at 410– 

786–7236. 

Hospital Outpatient Quality Reporting 

(OQR) Program Measures, contact 

Vinitha Meyyur via email 

Vinitha.Meyyur@cms.hhs.gov or at 410– 

786–8819. 

Hospital Outpatient Visits (Emergency 

Department Visits and Critical Care 

Visits), contact Twi Jackson via email 


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Twi.Jackson@cms.hhs.gov or at 410– 

786–1159. 

Inpatient Only (IPO) Procedures List, 

contact Lela Strong-Holloway via email 

Lela.Strong@cms.hhs.gov or at 410–786– 

3213. 

New Technology Intraocular Lenses 

(NTIOLs), contact Scott Talaga via email 

Scott.Talaga@cms.hhs.gov or at 410– 

786–4142. 

No Cost/Full Credit and Partial Credit 

Devices, contact Twi Jackson via email 

Twi.Jackson@cms.hhs.gov or at 410– 

786–1159. 

OPPS Brachytherapy, contact Scott 

Talaga via email Scott.Talaga@

cms.hhs.gov 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 Erick.Chuang@cms.hhs.gov or 

at 410–786–1816 or Scott Talaga via 

email Scott.Talaga@cms.hhs.gov or at 

410–786–4142. 

OPPS Drugs, Radiopharmaceuticals, 

Biologicals, and Biosimilar Products, 

contact Josh McFeeters via email 

Josh.McFeeters@cms.hhs.gov or at 410– 

786–9732. 

OPPS New Technology Procedures/ 

Services, contact the New Technology 

APC email at 

NewTechAPCapplications@

cms.hhs.gov. 

OPPS Exceptions to the 2 Times Rule, 

contact Marjorie Baldo via email 

Marjorie.Baldo@cms.hhs.gov or at 410– 

786–4617. 

OPPS Packaged Items/Services, 

contact Lela Strong-Holloway via email 

Lela.Strong@cms.hhs.gov or at 410–786– 

3213. 

OPPS Pass-Through Devices, contact 

the Device Pass-Through email at 

DevicePTapplications@cms.hhs.gov. 

OPPS Status Indicators (SI) and 

Comment Indicators (CI), contact 

Marina Kushnirova via email 

Marina.Kushnirova@cms.hhs.gov or at 

410–786–2682. 

Partial Hospitalization Program (PHP) 

and Community Mental Health Center 

(CMHC) Issues, contact the PHP 

Payment Policy Mailbox at 

PHPPaymentPolicy@cms.hhs.gov. 

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 

CMMIPartBDrugCAP_RFI@cms.hhs.gov. 

Request for Information on Promoting 

Interoperability and Electronic 

Healthcare Information Exchange, 

contact Scott Cooper via email at 

Scott.Cooper@cms.hhs.gov 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 Elise.Barringer@cms.hhs.gov 

or at 410–786–9222. 

Rural Hospital Payments, contact 

Joshua McFeeters via email 

Joshua.McFeeters@cms.hhs.gov or at 

410–786–9732. 

Skin Substitutes, contact Josh 

McFeeters via email Joshua.McFeeters@

cms.hhs.gov 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 Marjorie.Baldo@cms.hhs.gov 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-Feefor-Service-Payment/HospitalOutpatient

PPS/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 PassThrough 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 


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1Meaningful Measures web page: https://

www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/QualityInitiativesGenInfo/ 

MMF/General-info-Sub-Page.html. 2Remarks 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. 

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 OffCampus 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 MedicareParticipating 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 Medicaidparticipating 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 


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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. 

The Meaningful Measures framework 

has the following objectives: 

• Address high-impact measure areas 

that safeguard public health; 

• Patient-centered and meaningful to 

patients; 

• Outcome-based where possible; 

• Fulfill each program’s statutory 

requirements; 

• Minimize the level of burden for 

health care providers; 

• Significant opportunity for 

improvement; 

• Address measure needs for 

population based payment through 

alternative payment models; and 

• 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 Caused in the Delivery of Care Healthcare-Associated Infections 

Preventable Healthcare Harm 

Strengthen Person and Family Engagement as Partners in Their Care Care is Personalized and 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 Coordination of Care ................. Medication Management 

Admissions and Readmissions to Hospitals 

Transfer of Health Information and Interoperability 

Promote Effective Prevention and Treatment of Chronic Disease .......... Preventive Care 

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 Practices of Healthy Living .... Equity of Care 

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: 

• Eliminating disparities; 

• Tracking measurable outcomes and 

impact; 

• Safeguarding public health; 

• Achieving cost savings; 

• Improving access for rural 

communities; and 

• 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 

• 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. 

• 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. 

• 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. 

• 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 


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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. 

• Expansion of Services at OffCampus 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. 

• 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. 

• Payment Policy for Biosimilar 

Biological Products without PassThrough Status That Are Acquired 

under the 340B Program: For CY 2019, 

we are proposing to pay nonpassthrough 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. 

• 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. 

• 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. 

• 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. 

• 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. 

• 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-tocost 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. 

• 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. 

• 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. 

• 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 


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added to the ASC covered procedures 

list. 

• 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. 

• 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. 

• 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 SevenDay 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. 

• 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 costsharing, 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. 


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(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 offcampus 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 costbased payment methodology with a 

prospective payment system (PPS). The 

Balanced Budget Act of 1997 (BBA) 

(Pub. L. 105–33) added section 1833(t) 

to the Act, authorizing implementation 

of a PPS for hospital outpatient services. 

The OPPS was first implemented for 

services furnished on or after August 1, 

2000. Implementing regulations for the 

OPPS are located at 42 CFR parts 410 

and 419. 

The Medicare, Medicaid, and SCHIP 

Balanced Budget Refinement Act of 

1999 (BBRA) (Pub. L. 106–113) made 

major changes in the hospital OPPS. 

The following Acts made additional 

changes to the OPPS: the Medicare, 


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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-perservice 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 laborrelated amount is adjusted for area wage 

differences using the hospital inpatient 

wage index value for the locality in 

which the hospital or CMHC is located. 

All services and items within an APC 

group are comparable clinically and 

with respect to resource use (section 

1833(t)(2)(B) of the Act). In accordance 

with section 1833(t)(2) of the Act, 

subject to certain exceptions, items and 

services within an APC group cannot be 

considered comparable with respect to 

the use of resources if the highest 

median cost (or mean cost, if elected by 

the Secretary) for an item or service in 

the APC group is more than 2 times 

greater than the lowest median cost (or 

mean cost, if elected by the Secretary) 

for an item or service within the same 

APC group (referred to as the ‘‘2 times 

rule’’). In implementing this provision, 

we generally use the cost of the item or 

service assigned to an APC group. 

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 speechlanguage pathology services, for which 

payment is made under a fee schedule. 

It also excludes screening 

mammography, diagnostic 

mammography, and effective January 1, 

2011, an annual wellness visit providing 

personalized prevention plan services. 

The Secretary exercises the authority 

granted under the statute to also exclude 

from the OPPS certain services that are 

paid under fee schedules or other 

payment systems. Such excluded 

services include, for example, the 

professional services of physicians and 

nonphysician practitioners paid under 

the 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 § 419.20(b) of the regulations, 

we specify the types of hospitals that are 

excluded from payment under the 

OPPS. These excluded hospitals 

include: 

• Critical access hospitals (CAHs); 

• Hospitals located in Maryland and 

paid under the Maryland All-Payer 

Model; 

• Hospitals located outside of the 50 

States, the District of Columbia, and 

Puerto Rico; and 

• Indian Health Service (IHS) 

hospitals. 

D. Prior Rulemaking 

On April 7, 2000, we published in the 

Federal Register a final rule with 

comment period (65 FR 18434) to 

implement a prospective payment 

system for hospital outpatient services. 

The hospital OPPS was first 


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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/HospitalOutpatient-Regulations-andNotices.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 fulltime, 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— 

• May advise on the clinical integrity 

of Ambulatory Payment Classification 

(APC) groups and their associated 

weights; 

• May advise on the appropriate 

supervision level for hospital outpatient 

services; 

• Continues to be technical in nature; 

• Is governed by the provisions of the 

FACA; 

• Has a Designated Federal Official 

(DFO); and 

• 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/AdvisoryPanelon

AmbulatoryPayment

ClassificationGroups.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: 

• 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; 

• Data Subcommittee, which is 

responsible for studying the data issues 

confronting the Panel and for 

recommending options for resolving 

them; and 

• 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 


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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 costto-charge ratios (CCRs) to convert 

charges to estimated costs through 

application of a revenue code-to-cost 

center crosswalk. To calculate the APC 

costs on which the proposed CY 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 codeto-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-ServicePayment/HospitalOutpatientPPS/ 

index.html. 

To ensure the completeness of the 

revenue code-to-cost center crosswalk, 

we reviewed changes to the list of 

revenue codes for CY 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 


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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

APC APC descriptor Percentage 

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

Cost allocation method 

CT MRI 

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-Feefor-Service-Payment/Hospital

OutpatientPPS/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 


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under a CMS data use agreement. The 

CMS website, http://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/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-ServicePayment/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 bloodspecific 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 bloodspecific 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 bloodspecific, CCR methodology better 

responds to the absence of a bloodspecific CCR for a hospital than 

alternative methodologies, such as 

defaulting to the overall hospital CCR or 

applying an average blood-specific CCR 

across hospitals. Because this 

methodology takes into account the 

unique charging and cost accounting 

structure of each hospital, we believe 

that it yields more accurate estimated 

costs for these products. We continue to 

believe that this methodology in CY 

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 


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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 


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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 mm2, 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; 


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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: 

• 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; 

• Contains 8 or more units of services 

described by HCPCS code G0378 

(Observation services, per hour); 

• 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 

• 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 


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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: 

• Frequency of 25 or more claims 

reporting the code combination 

(frequency threshold); and 

• 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 addon combinations may qualify for a 

complexity adjustment. As noted in the 

CY 2016 OPPS/ASC final rule with 

comment period (80 FR 70331), all addon 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 


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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

C–APC CY 2019 APC group title Clinical 

family 

Proposed 

new C-APC 

5072 .................. Level 2 Excision/Biopsy/Incision and Drainage ...................................................................... EBIDX ........................

5073 .................. Level 3 Excision/Biopsy/Incision and Drainage ...................................................................... EBIDX ........................

5091 .................. Level 1 Breast/Lymphatic Surgery and Related Procedures ................................................. BREAS ........................

5092 .................. Level 2 Breast/Lymphatic Surgery and Related Procedures ................................................. BREAS ........................

5093 .................. Level 3 Breast/Lymphatic Surgery & Related Procedures ..................................................... BREAS ........................

5094 .................. Level 4 Breast/Lymphatic Surgery & Related Procedures ..................................................... BREAS ........................

5112 .................. Level 2 Musculoskeletal Procedures ...................................................................................... ORTHO ........................

5113 .................. Level 3 Musculoskeletal Procedures ...................................................................................... ORTHO ........................

5114 .................. Level 4 Musculoskeletal Procedures ...................................................................................... ORTHO ........................

5115 .................. Level 5 Musculoskeletal Procedures ...................................................................................... ORTHO ........................

5116 .................. Level 6 Musculoskeletal Procedures ...................................................................................... ORTHO ........................

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 Pressure Monitor ........................................................................... WPMXX ........................

5211 .................. Level 1 Electrophysiologic Procedures ................................................................................... EPHYS ........................

5212 .................. Level 2 Electrophysiologic Procedures ................................................................................... EPHYS ........................

5213 .................. Level 3 Electrophysiologic Procedures ................................................................................... EPHYS ........................

5222 .................. Level 2 Pacemaker and Similar Procedures .......................................................................... AICDP ........................

5223 .................. Level 3 Pacemaker and Similar Procedures .......................................................................... AICDP ........................

5224 .................. Level 4 Pacemaker and Similar Procedures .......................................................................... AICDP ........................

5231 .................. Level 1 ICD and Similar Procedures ...................................................................................... AICDP ........................

5232 .................. Level 2 ICD and Similar Procedures ...................................................................................... AICDP ........................

5244 .................. Level 4 Blood Product Exchange and Related Services ....................................................... SCTXX ........................

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 and Related Procedures ........................................................... GIXXX ........................

5361 .................. Level 1 Laparoscopy & Related Services .............................................................................. LAPXX ........................


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TABLE 3—PROPOSED CY 2019 C–APCS—Continued 

C–APC CY 2019 APC group title Clinical 

family 

Proposed 

new C-APC 

5362 .................. Level 2 Laparoscopy & Related Services .............................................................................. LAPXX ........................

5373 .................. Level 3 Urology & Related Services ....................................................................................... UROXX ........................

5374 .................. Level 4 Urology & Related Services ....................................................................................... UROXX ........................

5375 .................. Level 5 Urology & Related Services ....................................................................................... UROXX ........................

5376 .................. Level 6 Urology & Related Services ....................................................................................... UROXX ........................

5377 .................. Level 7 Urology & Related Services ....................................................................................... UROXX ........................

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 & Related Procedures ..................................................................... NSTIM ........................

5463 .................. Level 3 Neurostimulator & Related Procedures ..................................................................... NSTIM ........................

5464 .................. Level 4 Neurostimulator & Related Procedures ..................................................................... NSTIM ........................

5471 .................. Implantation of Drug Infusion Device ..................................................................................... PUMPS ........................

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, and Plastic Eye Procedures ..................................................... EXEYE ........................

5504 .................. Level 4 Extraocular, Repair, and Plastic Eye Procedures ..................................................... EXEYE ........................

5627 .................. Level 7 Radiation Therapy ...................................................................................................... RADTX ........................

5881 .................. Ancillary Outpatient Services When Patient Dies .................................................................. N/A ........................

8011 .................. Comprehensive Observation Services ................................................................................... N/A ........................

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® 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 


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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 HospitalBased 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: 

• APC 8004 (Ultrasound Composite); 

• APC 8005 (CT and CTA without 

Contrast Composite); 

• APC 8006 (CT and CTA with 

Contrast Composite); 


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• APC 8007 (MRI and MRA without 

Contrast Composite); and 

• APC 8008 (MRI and MRA with 

Contrast Composite). 

We define the single imaging session 

for the ‘‘with contrast’’ composite APCs 

as having at least one or more imaging 

procedures from the same family 

performed with contrast on the same 

date of service. For example, if the 

hospital performs an MRI without 

contrast during the same session as at 

least one other MRI with contrast, the 

hospital will receive payment 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 composite) Proposed CY 2019 approximate 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 without contrast 

composite) * 

Proposed CY 2019 approximate 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 with contrast composite) Proposed CY 2019 approximate APC geometric mean cost = $501 

70487 ........................................................................................................ Ct maxillofacial w/dye. 

70460 ........................................................................................................ Ct head/brain w/dye. 


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TABLE 4—PROPOSED OPPS IMAGING FAMILIES AND MULTIPLE IMAGING PROCEDURE COMPOSITE APCS—Continued 

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 without contrast 

composite) * 

Proposed CY 2019 approximate 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 with contrast composite) Proposed CY 2019 approximate 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. 


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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 


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3President’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. 

6Available at: https://www.hhs.gov/about/ 

leadership/secretary/speeches/2017-speeches/ 

secretary-price-announces-hhs-strategy-for-fightingopioid-crisis/index.html. 

7Available at: https://www.hhs.gov/about/news/ 

2017/10/26/hhs-acting-secretary-declares-publichealth-emergency-address-national-opioidcrisis.html. 

8Available at: https://www.phe.gov/emergency/ 

news/healthactions/phe/Pages/default.aspx. 

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 nonopioid 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 nonopioid 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 nonopioid 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

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 


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9Available at: https://www.accessdata.fda.gov/ 

drugsatfda_docs/label/2011/022496s000lbl.pdf. 

10Food 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/AnestheticAndAnalgesicDrugProducts

AdvisoryCommittee/UCM596314.pdf. 

11 Ibid, page 9. 

12Available at: https://www.accessdata.fda.gov/ 

drugsatfda_docs/label/2018/022496s009lbledt.pdf. 

(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. 

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 peerreviewed evidence that such increased 

utilization would lead to a decrease in 

opioid use and addiction among 

Medicare beneficiaries. 

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 passthrough 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 


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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 nonopioid 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 nonopioid 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 peerreviewed 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 postsurgical 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, nonopioid 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 peerreviewed 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 passthrough 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 


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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 nonopioid 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 nonopioid 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 providerbased 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 


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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 


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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 passthrough 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 § 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 passthrough 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 laborrelated 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 

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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 § 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: 

• 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 


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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 

unadjusted 

wage index 

for new 

CBSA 46300 

Estimated 

occupational 

mix adjusted 

wage index 

for 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 


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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 nonIPPS 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 outmigration 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 postreclassification 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-ServicePayment/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 nonIPPS 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-Feefor-Service-Payment/Hospital

OutpatientPPS/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 hospitalspecific CCRs calculated from the 

hospital’s most recent cost report to 

determine outlier payments, payments 

for pass-through devices, and monthly 

interim transitional corridor payments 

under the OPPS during the PPS year. 

MACs cannot calculate a CCR for some 

hospitals because there is no cost report 

available. For these hospitals, CMS uses 

the statewide average default CCRs to 

determine the payments mentioned 

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 allinclusive 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

State Urban/Rural 

Proposed 

CY 2019 

default CCR 

Previous 

default CCR 

(CY 2018 

OPPS 

Final Rule) 

ALASKA ........................................................................ RURAL .......................................................................... 0.655 0.659 


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TABLE 5—PROPOSED CY 2019 STATEWIDE AVERAGE CCRS—Continued 

State Urban/Rural 

Proposed 

CY 2019 

default CCR 

Previous 

default CCR 

(CY 2018 

OPPS 

Final Rule) 

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 


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37078 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

TABLE 5—PROPOSED CY 2019 STATEWIDE AVERAGE CCRS—Continued 

State Urban/Rural 

Proposed 

CY 2019 

default CCR 

Previous 

default CCR 

(CY 2018 

OPPS 

Final Rule) 

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 § 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 § 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. 


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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 ‘‘preBBA 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 


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37080 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

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 hospitalweighted 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

Provider No. Hospital name 

Estimated 

percentage 

increase in 

OPPS 

payments for 

CY 2019 due 

to payment 

adjustment 

050146 .............. City of Hope Comprehensive Cancer Center ....................................................................................................... 37.1 

050660 .............. USC Norris Cancer Hospital ................................................................................................................................. 13.4 

100079 .............. Sylvester Comprehensive Cancer Center ............................................................................................................ 21.0 

100271 .............. H. Lee Moffitt Cancer Center & Research Institute ............................................................................................. 22.3 

220162 .............. Dana-Farber Cancer Institute ............................................................................................................................... 43.7 

330154 .............. Memorial Sloan-Kettering Cancer Center ............................................................................................................ 46.9 

330354 .............. Roswell Park Cancer Institute .............................................................................................................................. 16.2 

360242 .............. James Cancer Hospital & Solove Research Institute .......................................................................................... 22.6 

390196 .............. Fox Chase Cancer Center ................................................................................................................................... 8.4 

450076 .............. M.D. Anderson Cancer Center ............................................................................................................................. 53.6 

500138 .............. Seattle Cancer Care Alliance ............................................................................................................................... 54.3 

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-byservice basis when the cost of a service 

exceeds the APC payment amount 

multiplier threshold (the APC payment 

amount multiplied by a certain amount) 

as well as the APC payment amount 

plus a fixed-dollar amount threshold 

(the APC payment plus a certain amount 

of dollars). In CY 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—ProviderSpecific Data file on the CMS website at: 

https://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

HospitalOutpatientPPS/index.html. 


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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 fixeddollar 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 ProviderSpecific 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. 


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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 laborrelated share for hospital outpatient 

services is appropriate. 

The formula below is a mathematical 

representation of Step 1 and identifies 

the labor-related portion of a specific 

payment rate for a specific service. 

X is the labor-related portion of the 

national unadjusted payment rate. 

X = .60 * (national unadjusted payment 

rate). 

Step 2. Determine the wage index area 

in which the hospital is located and 

identify the wage index level that 

applies to the specific hospital. We note 

that, under the proposed CY 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 

§ 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-ServicePayment/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. 


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Y = .40 * (national unadjusted payment 

rate). 

Adjusted Medicare Payment = Y + Xa.

Step 6. If a provider is an SCH, as set 

forth in the regulations at § 412.92, or an 

EACH, which is considered to be an 

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

of the Act, and located in a rural area, 

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

being located in a rural area under 

§ 412.103, multiply the wage index 

adjusted payment rate by 1.071 to 

calculate the total payment. 

The formula below is a mathematical 

representation of Step 6 and applies the 

rural adjustment for rural SCHs. 

Adjusted Medicare Payment (SCH or 

EACH) = Adjusted Medicare 

Payment * 1.071. 

We are providing examples below of 

the calculation of both the 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. 

• 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. 

• 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. 

• 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 


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the prior year’s rate, the copayment 

amount remains constant (unless the 

resulting coinsurance percentage is less 

than 20 percent). 

• 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. 

• 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). 

• 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: 

• Category I CPT codes, which 

describe surgical procedures and 

medical services; 

• Category III CPT codes, which 

describe new and emerging 

technologies, services, and procedures; 

and 

• Level II HCPCS codes, which are 

used primarily to identify products, 

supplies, temporary procedures, and 

services not described by CPT codes. 

CPT codes are established by the 

American Medical Association (AMA) 

and the Level II HCPCS codes are 

established by the CMS HCPCS 

Workgroup. These codes are updated 

and changed throughout the year. CPT 

and HCPCS code changes that affect the 

OPPS are published both through the 

annual rulemaking cycle and through 

the OPPS quarterly update Change 

Requests (CRs). CMS releases new Level 

II HCPCS codes to the public or 

recognizes the release of new CPT codes 

by the AMA and makes these codes 

effective (that is, the codes can be 

reported on Medicare claims) outside of 

the formal rulemaking process via OPPS 

quarterly update CRs. Based on our 

review, we assign the new CPT and 

Level II HCPCS codes to interim status 

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 


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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 Codes .............. April 1, 2018 ........ CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

July 1, 2018 .......... Level II HCPCS Codes .............. July 1, 2018 ........ CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

Category I (certain vaccine 

codes) CPT Codes, Category 

III CPT codes.

July 1, 2018 ........ CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

October 1, 2018 ... Level II HCPCS Codes .............. October 1, 2018 .. CY 2019 OPPS/ASC final rule 

with comment period.

CY 2020 OPPS/ASC final rule 

with comment period. 

January 1, 2019 ... Category I and III CPT Codes ... January 1, 2019 .. CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

Level II HCPCS Codes .............. January 1, 2019 .. CY 2019 OPPS/ASC final rule 

with comment period.

CY 2020 OPPS/ASC final rule 

with 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 

CY 2018 HCPCS 

code CY 2018 Long descriptor Proposed CY 2019 SI 

Proposed 

CY 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, Durolane, for intra-articular injection, per dose ............................... G 9465 

C9466 ................ Injection, benralizumab, 1 mg ................................................................................................... G 9466 

C9467 ................ Injection, rituximab and hyaluronidase, 10 mg .......................................................................... G 9467 

C9468 ................ Injection, factor ix (antihemophilic factor, recombinant), glycopegylated, Rebinyn, 1 i.u. ........ G 9468 

C9469 * .............. Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg.G 9469 

C9749 ................ Repair of nasal vestibular lateral wall stenosis with implant(s) ................................................ J1 5164 

* 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). 


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TABLE 9—NEW CPT MAAA AND PROPRIETARY LABORATORY ANALYSES (PLA) CODES EFFECTIVE APRIL 1, 2018 

CY 2018 

HCPCS code CY 2018 Long descriptor 

Proposed 

CY 2019 

SI 

Proposed 

CY 2019 

APC 

0012M ............... Oncology (urothelial), mRNA, gene 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.

A N/A 

0013M ............... Oncology (urothelial), mRNA, gene 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.

A N/A 

0035U ................ Neurology (prion disease), cerebrospinal fluid, detection of prion protein by quaking-induced 

conformational conversion, qualitative.

Q4 N/A 

0036U ................ Exome (i.e., somatic mutations), paired formalin-fixed paraffin-embedded tumor tissue and normal specimen, sequence analyses.A N/A 

0037U ................ Targeted genomic sequence 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.

A N/A 

0038U ................ Vitamin D, 25 hydroxy D2 and D3, by LC–MS/MS, serum microsample, quantitative ................. Q4 N/A 

0039U ................ Deoxyribonucleic acid (DNA) antibody, double stranded, high avidity .......................................... Q4 N/A 

0040U ................ BCR/ABL1 (t(9;22)) (e.g., chronic myelogenous leukemia) translocation analysis, major breakpoint, quantitative.A N/A 

0041U ................ Borrelia burgdorferi, antibody detection of 5 recombinant protein groups, by immunoblot, IgM .. Q4 N/A 

0042U ................ Borrelia burgdorferi, antibody detection of 12 recombinant protein groups, by immunoblot, IgG Q4 N/A 

0043U ................ Tick-borne relapsing fever Borrelia group, antibody detection to 4 recombinant protein groups, 

by immunoblot, IgM.

Q4 N/A 

0044U ................ Tick-borne relapsing fever Borrelia group, antibody detection to 4 recombinant protein groups, 

by immunoblot, IgG.

Q4 N/A 

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 

CY 2018 

HCPCS code 

CY 2018 

long descriptor 

Proposed 

CY 2019 

SI 

Proposed 

CY 2019 

APC 

C9030 ................ Injection, copanlisib, 1 mg ............................................................................................................. G 9030 

C9031 ................ Lutetium Lu 177, dotatate, therapeutic, 1 mCi .............................................................................. G 9067 

C9032 ................ Injection, voretigene neparvovec-rzyl, 1 billion vector genome ..................................................... G 9070 

Q5105 ............... Injection, epoetin alfa, biosimilar, (Retacrit) (for esrd on dialysis), 100 units ............................... K 9096 

Q5106 ............... Injection, epoetin alfa, biosimilar, (Retacrit) (for non-esrd use), 1000 units ................................. K 9097 

Q9991 ............... Injection, buprenorphine extended-release (Sublocade), less than or equal to 100 mg .............. G 9073 

Q9992 ............... Injection, buprenorphine extended-release (Sublocade), greater than 100 mg ............................ G 9239 

Q9993 * ............. Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg.G 9469 

Q9994 ............... In-line cartridge containing digestive enzyme(s) for enteral feeding, each ................................... E1 N/A 

Q9995 ............... Injection, emicizumab-kxwh, 0.5 mg .............................................................................................. G 9257 

0505T ................ Endovenous femoral-popliteal 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.

J1 5193 

0506T ................ Macular pigment optical density measurement by heterochromatic flicker photometry, unilateral 

or bilateral, with interpretation and report.

Q1 5733 

0507T ................ Near-infrared dual imaging (i.e., simultaneous reflective and trans-illuminated light) of 

meibomian glands, unilateral or bilateral, with interpretation and report.

Q1 5733 


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TABLE 10—NEW HCPCS CODES EFFECTIVE JULY 1, 2018—Continued 

CY 2018 

HCPCS code 

CY 2018 

long descriptor 

Proposed 

CY 2019 

SI 

Proposed 

CY 2019 

APC 

0508T ................ Pulse-echo ultrasound bone density measurement resulting in indicator of axial bone mineral 

density, tibia.

S 5522 

* 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 carcinoma in situ), mRNA, gene expression profiling by realtime RT–PCR of 12 genes (7 content and 5 housekeeping), utilizing formalin-fixed 

paraffin-embedded tissue, algorithm reported as recurrence score.

A N/A. 

0046U ......................... FLT3 (fms-related tyrosine kinase 3) (e.g., acute myeloid leukemia) internal tandem 

duplication (ITD) variants, quantitative.

A N/A. 

0047U ......................... Oncology (prostate), mRNA, 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.

A N/A. 

0048U ......................... Oncology (solid organ 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).

A N/A. 

0049U ......................... NPM1 (nucleophosmin) (e.g., acute myeloid leukemia) gene analysis, quantitative ....... A N/A. 

0050U ......................... Targeted genomic sequence analysis panel, acute myelogenous leukemia, DNA analysis, 194 genes, interrogation for sequence variants, copy number variants or rearrangements.A N/A. 

0051U ......................... Prescription drug 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.

Q4 N/A. 

0052U ......................... Lipoprotein, blood, high resolution fractionation and quantitation of lipoproteins, including all five major lipoprotein classes and subclasses of HDL, LDL, and VLDL by 

vertical auto profile ultracentrifugation.

Q4 N/A. 

0053U ......................... Oncology (prostate cancer), FISH analysis of 4 genes (ASAP1, HDAC9, CHD1 and 

PTEN), needle biopsy specimen, algorithm reported as probability of higher tumor 

grade.

A N/A. 

0054U ......................... Prescription drug 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.

Q4 N/A. 

0055U ......................... Cardiology (heart transplant), cell-free DNA, PCR assay of 96 DNA target sequences 

(94 single nucleotide polymorphism targets and two control targets), plasma.

A N/A. 

0056U ......................... Hematology (acute myelogenous leukemia), DNA, whole genome next-generation sequencing to detect gene rearrangement(s), blood or bone marrow, report of specific 

gene rearrangement(s).

A N/A. 

0057U ......................... Oncology (solid organ 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.

A N/A. 

0058U ......................... Oncology (Merkel cell carcinoma), detection of antibodies to the Merkel cell polyoma 

virus oncoprotein (small T antigen), serum, quantitative.

Q4 N/A. 

0059U ......................... Oncology (Merkel cell carcinoma), detection of antibodies to the Merkel cell polyoma 

virus capsid protein (VP1), serum, reported as positive or negative.

Q4 N/A. 

0060U ......................... Twin zygosity, genomic targeted sequence analysis of chromosome 2, using circulating 

cell-free fetal DNA in maternal blood.

A N/A. 

0061U ......................... Transcutaneous measurement 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.

Q4 N/A. 


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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 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 


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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-Feefor-Service-Payment/Hospital

OutpatientPPS/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-ServicePayment/HospitalOutpatientPPS/ 

Addendum-A-and-Addendum-BUpdates.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: 

• Resource homogeneity; 

• Clinical homogeneity; 

• Hospital outpatient setting 

utilization; 

• Frequency of service (volume); and 

• 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, 


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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-ServicePayment/HospitalOutpatientPPS/ 

Hospital-Outpatient-Regulations-andNotices.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. 


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(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 LowVolume 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 lowvolume 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 lowvolume 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 


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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 


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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

CPT/HCPCS code Long descriptor CY 2018 

OPPS SI 

CY 2018 

OPPS APC 

CY 2018 

OPPS 

payment 

rate 

Proposed 

CY 2019 

OPPS SI 

Proposed 

CY 2019 

OPPS APC 

Proposed 

CY 2019 

OPPS payment rate 

0071T ................... Focused ultrasound ablation of uterine 

leiomyomata, including mr guidance; 

total leiomyomata volume less than 

200 cc of tissue.

J1 5414 $2,272.77 J1 5414 Refer to OPPS Addendum B. 

0072T ................... Focused ultrasound ablation of uterine 

leiomyomata, including mr guidance; 

total leiomyomata volume greater or 

equal to 200 cc of tissue.

J1 5414 2,272.77 J1 5414 Refer to OPPS Addendum B. 

0398T ................... Magnetic resonance image guided high 

intensity focused ultrasound (mrgfus), 

stereotactic ablation lesion, 

intracranial for movement disorder including stereotactic navigation and 

frame placement when performed.

S 1576 17,500.50 S 1575 Refer to OPPS Addendum B. 

C9734 ................... Focused ultrasound ablation/therapeutic 

intervention, other than uterine 

leiomyomata, with magnetic resonance (mr) guidance.

J1 5115 5,606.42 J1 5115 Refer to OPPS Addendum B. 

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® 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® 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® 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® 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® 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® 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® 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®

II procedure was $95,000.50. The 

payment rate increased to $150,000.50 


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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® 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® II procedure to APC 1904 (New 

Technology—Level 50 ($115,001– 

$130,000)), which established a 

payment rate for the Argus® 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® 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® 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® 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® 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® 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® II received transitional 

device pass-through payments and the 

first 2 years since device pass-through 

payment status for the Argus® 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® 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® 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® 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® 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® II 

device (HCPCS code C1841). 

The most recent claims data available 

have shown another payment issue with 

regard to the Argus® II procedure. We 

have found that payment for the Argus®

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® 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® 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 


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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

C-APC 

Proposed 

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

C-APC 

Potential 

approximate 

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 SIXLEVEL ENDOVASCULAR C–APC 

STRUCTURE

C–APC 

Potential 

approximate 

geometric 

mean cost 

5191—Level 1 Endovascular 

Procedures ........................ $2,880 

TABLE 16—REQUESTED CY 2019 SIXLEVEL ENDOVASCULAR C–APC 

STRUCTURE—Continued 

C–APC 

Potential 

approximate 

geometric 

mean cost 

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 


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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

CY 2019 APC CY 2019 APC title 

CY 2018 

APC 

geometric 

mean cost 

Proposed 

CY 2019 

APC 

geometric 

mean 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

APC Group title 

HCPCS 

codes 

assigned 

to APC 

Proposed APC 

geometric 

mean 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 lowvolume device-intensive procedures 

policy is discussed in more detail in 

section III.C.2. of this proposed rule. 


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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 passthrough 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 § 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 PassThrough 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 passthrough 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 § 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 § 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— 

• 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; 

• 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 § 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 


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13Chungtai B. Forde JC. Thomas DDM et al. 

Benign Prostatic Hyperplasia. Nature Reviews 

Disease Primers 2 (2016) article 16031. 

reasonable cost of the devices in the 

category exceeds the cost of the devicerelated 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 

§§ 419.66(c)(3) and (e)); and 

• 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 passthrough applications are still submitted 

to CMS through the quarterly 

subregulatory process, but the 

applications will be subject to noticeand-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-andcomment process, applicants may 

submit new evidence, such as clinical 

trial results published in a peerreviewed 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 passthrough 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-ServicePayment/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 passthrough 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, singleuse handpiece as well as other 

components that are considered capital 

equipment. 

With respect to the newness criterion 

at § 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 § 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 § 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 § 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 


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14Montorsi, 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. 

15Bachmann 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. 

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. 

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 

§ 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 

§ 419.66(b). 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 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 § 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

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-toone 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. 

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 § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 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 × 

100 = 67.5 percent). Therefore, we 

believe the AquaBeam System meets the 

first cost significance test. 

The second cost significance test, at 

§ 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 

§ 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 


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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 × 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® (Larval Debridement 

Therapy in a Contained Dressing) 

BioMonde US, LLC resubmitted an 

application for a new device passthrough category for the BioBag® (larval 

debridement therapy in a contained 

dressing), hereinafter referred to as the 

BioBag®. 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®

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® 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 § 419.66(b)(1), the applicant received 

FDA clearance for BioBag® through the 

premarket notification section 510(k) 

process on August 28, 2013, and the 

first U.S. sale of BioBag® 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® meets 

the newness criterion. 

With respect to the eligibility criterion 

at § 419.66(b)(3), the applicant claimed 

that the BioBag® 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® meets the device 

eligibility requirements of § 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® is not a material or supply 

furnished incident to a service. We are 

inviting public comments on whether 

BioBag® meets the eligibility criterion. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 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®, 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®. 

The second criterion for establishing 

a device category, at § 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®, another form of 

larval therapy that has been on the 

market since 2004, the relevant 

comparison is between the BioBag® and 

the Medical Maggots®. There are many 

reasons to suspect that the BioBag®

could improve outcomes and be 

preferable to the Medical Maggots®. 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®, 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® as opposed to the Medical 

Maggots®. However, the applicant did 

not provide any data that clinical 

outcomes are improved using the 

BioBag® as opposed to the Medical 

Maggots®. Based on the studies 

presented, we believe there is 

insufficient data to determine whether 

the BioBag® offers a substantial clinical 

improvement over other treatments for 

wound care. We are inviting public 

comments on whether BioBag® meets 

the substantial clinical improvement 

criterion. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

device is not insignificant, as described 

in § 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® would be reported 

with CPT code 97602 (Removal of 

devitalized tissue from wound(s), nonselective 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® 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®


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exceeds the applicable APC amount for 

the service related to the category of 

devices of $178.60 by 243.56 percent 

($435/$178.60 × 100 = 243.56 percent). 

Thus, the BioBag® appears to meet the 

first cost significance test. 

The second cost significance test, at 

§ 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® exceeds the 

device-related portion of the APC 

amount for the related service of $0.02 

by 2,175,000 percent ($435/$0.02 × 100 

= 2,175,000 percent). Thus, the BioBag®

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®

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 × 100 = 243.55 percent). Thus, 

the BioBag® appears to meet the third 

cost significance test and satisfies the 

cost significance criterion. We are 

inviting public comments on whether 

the BioBag® Wound Matrix meets the 

device pass-through payment criteria 

discussed in this section, including the 

cost criteria. 

(3) BlastXTM Antimicrobial Wound Gel 

Next ScienceTM has submitted an 

application for a new device category 

for transitional pass-through payment 

status for BlastXTM. According to the 

manufacturer, BlastXTM 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. BlastXTM received a 510(k) 

clearance from the FDA on March 6, 

2017. BlastXTM 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 BlastXTM 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 

BlastXTM is not harmful to host tissue 

and stated that BlastXTM 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, BlastXTM 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, BlastXTM 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. BlastXTM, 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 BlastXTM

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. BlastXTM 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 § 419.66(b)(3), we 

have determined that BlastXTM 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. 

BlastXTM 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 BlastXTM

for transitional pass-through payment 

for devices. 

(4) EpiCord®

MiMedx® submitted an application 

for a new OPPS device category for 

transitional pass-through payment 

status for EpiCord®, a skin substitute 

product. According to the applicant, 

EpiCord® 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® 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® 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® 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® for deep, tunneling wounds 

where other products cannot fill the 

entire wound bed or dead spaces. 

With respect to the newness criterion 

at § 419.66(b)(1), EpiCord® was added to 

the MiMedx® registration for human 

cells, tissues, and cellular and tissuebased products (HCT/Ps) on December 

31, 2015. In adding EpiCord, MiMedx®

asserted that EpiCord® 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®

provided documentation verifying that 

EpiCord® had been registered. However, 

no documentation regarding an FDA 

determination that EpiCord® is 

appropriate for regulation solely under 

section 361 of the Public Health Service 

Act had been submitted. According to 


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the applicant, December 31, 2015 was 

the first date of sale within the United 

States for EpiCord®. Therefore, it 

appears that market availability of 

EpiCord® 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 § 1271.10(a), and you do not 

qualify for any of the exceptions in 

§ 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® 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® meets the newness 

criterion. 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, EpiCord® 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® meets the device eligibility 

requirements of § 419.66(b)(4) because 

EpiCord® 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® meets 

these eligibility criteria. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 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®. 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® proposed a new 

device category descriptor of 

‘‘Dehydrated Human Umbilical Cord 

Allografts’’ for EpiCord®. 

The second criterion for establishing 

a device category, at § 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®

reduces the mortality rate with use of 

the device; reduces the rate of devicerelated 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® to other skin 

substitute products. Compared to NEOX 

CORD 1K Wound Allograft, EpiCord®

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® 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® 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® 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® 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® provides a 

substantial clinical improvement over 

other treatments for wound care. We are 

inviting public comments on whether 

EpiCord® meets the substantial clinical 

improvement criterion. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 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® 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® 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 × 100 percent = 231.90 

percent). Therefore, it appears that 

EpiCord® meets the first cost 

significance test. 

The second cost significance test, at 

§ 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 


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17Costanzo, 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. 

18Costanzo, M.R., et al. (2016). Transvenous 

neurostimulation for central sleep apnoea: a 

randomised controlled trial. The Lancet, 

388(10048): p. 974–982. 

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. 

20Costanzo, M.R., et al. (2016). Transvenous 

neurostimulation for central sleep apnoea: a 

randomised controlled trial. The Lancet, 

388(10048): p. 974–982. 

average reasonable cost of $3,695 for the 

3 cm x 5 cm product exceeds the devicerelated portion of the APC payment 

amount for the related service of $4.62 

by 79,978.35 percent ($3,695/$4.62 × 

100 percent = 79,978.35 percent). 

Therefore, it appears that EpiCord®

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) × 

100 percent = 231.61 percent). 

Therefore, it appears that EpiCord®

meets the third cost significance test. 

Based on the costs submitted by the 

applicant and the calculations noted 

earlier, it appears that EpiCord® meets 

the cost criterion at § 419.66(c)(3) for 

new device categories. We are inviting 

public comments on whether EpiCord®

meets the cost criterion for device passthrough payment. 

(5) remede ̄® System Transvenous 

Neurostimulator 

Respicardia, Inc. submitted an 

application for a new device category 

for transitional pass-through payment 

status for the remede ̄® System 

Transvenous Neurostimulator. 

According to the applicant, the remede ̄®

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 remede ̄® System is the 

first and only implantable 

neurostimulator to use transvenous 

sensing and stimulation technology. The 

applicant also stated that the remede ̄®

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 § 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 

remede ̄® 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 remede ̄®

System meets the newness criterion. 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, the remede ̄® 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 remede ̄®

System meets the device eligibility 

requirements of § 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 

§ 419.66(c). The first criterion, at 

§ 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 remede ̄® System. The 

applicant proposed a category 

descriptor for the remede ̄® 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 § 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

The applicant claims that the 

remede ̄® 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 remede ̄®

System pivotal trial. The applicant 

noted that the remede ̄® System was 

shown to improve AHI in small, selfcontrolled 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 remede ̄® 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 remede ̄® 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

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 remede ̄® 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

The applicant noted that patient 

symptoms and quality of life were 

improved with the remede ̄® System 

therapy. The mean Epworth Sleepiness 

Scale (ESS) score significantly 

decreased in remede ̄® System patients, 

indicating less daytime sleepiness.20

Adverse events associated with remede ̄®

System insertion and therapy included 

lead dislodgement/dislocation, 

hematoma, migraine, atypical chest 

pain, pocket perforation, pocket 

infection, extra-respiratory stimulation, 


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21Costanzo, M.R., et al. (2016).Transvenous 

neurostimulation for central sleep apnoea: a 

randomised controlled trial. The Lancet, 

388(10048): p. 974–982. 

concomitant device interaction, and 

elevated transaminases.21 There were no 

patient deaths that were related to the 

device implantation or therapy. 

One concern regarding the remede ̄®

System is the potential for 

complications in patients with 

coexisting cardiac devices, such as 

pacemakers or ICDs, given that the 

remede ̄® 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 

remede ̄® System implants. The pivotal 

trial included only 6 months of followup. 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 remede ̄® System, 

the translation of those effects to 

mortality benefit is yet to be 

determined. Further studies of the 

remede ̄® 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 remede ̄® System 

provides a substantial clinical 

improvement over other similar 

products. We are inviting public 

comments on whether the remede ̄®

System meets the substantial clinical 

improvement criterion. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 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 remede ̄®

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 remede ̄® 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 remede ̄® 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 × 100 = 127.5 

percent). Therefore, we believe the 

remede ̄® System meets the first cost 

significance test. 

The second cost significance test, at 

§ 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 remede ̄® 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) × 100 = 311 percent). 

Therefore, we believe that the remede ̄®

System meets the second cost 

significance test. 

The third cost significance test, at 

§ 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 remede ̄® 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 × 100 = 

86.6 percent). Therefore, we believe that 

the remede ̄® System meets the third cost 

significance test. 

We are inviting public comments on 

whether the remede ̄® System meets the 

device pass-through payment criteria 

discussed in this section, including the 

cost criteria for device pass-through 

payment. 

(6) Restrata® Wound Matrix 

Acera Surgical, Inc. submitted an 

application for a new device category 

for transitional pass-through payment 

status for Restrata® Wound Matrix. 

Restrata® Wound Matrix is a sterile, 

single-use product intended for use in 

local management of wounds. 

According to the applicant, Restrata®

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® Wound Matrix is made from 

synthetic biocompatible materials and 

was designed with a nanoscale nonwoven fibrous structure with high 

porosity, similar to native extracellular 

matrix. Restrata® 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® 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 § 419.66(b)(1), the applicant received 

FDA clearance for Restrata® 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 


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comment on whether Restrata® Wound 

Matrix meets the newness criterion. 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, Restrata® 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® Wound 

Matrix shows the product meets the 

device eligibility requirements of 

§ 419.66(b)(4) because Restrata® 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® Wound 

Matrix meets the eligibility criteria. 

The criteria for establishing new 

device categories are specified at 

§ 419.66(c). The first criterion, at 

§ 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® Wound Matrix. The applicant 

proposed a new device category 

descriptor of ‘‘Nanofiber Skin 

Substitute’’ for Restrata® Wound Matrix. 

We are inviting public comments on 

this issue. 

The second criterion for establishing 

a device category, at § 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® to address this 

criterion. The largest study is nonrandomized, 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®. The results of 

the study were mixed with Restrata®

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® offers a 

substantial clinical improvement over 

other treatments for wound care. We are 

inviting public comments on whether 

Restrata® meets the substantial clinical 

improvement criterion. 

The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires CMS to determine that the cost 

of the device is not insignificant, as 

described in § 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® 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® 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® 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 × 100 percent = 735.42 

percent). Therefore, it appears that 

Restrata® Wound Matrix meets the first 

cost significance test. 

The second cost significance test, at 

§ 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® 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 × 100 percent = 253,636.36 

percent). Therefore, it appears that 

Restrata® 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® 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 × 100 percent = 735.13 

percent). Therefore, it appears that 

Restrata® 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® Wound Matrix appears to 

meet the cost criterion at § 419.66(c)(3) 

for new device categories. We are 

inviting public comments on whether 

Restrata® Wound Matrix meets the 

device pass-through payment criteria 

discussed in this section, including the 

cost criteria. 

(7) SpaceOAR® System 

Augmenix, Inc. submitted an 

application for a new device category 

for transitional pass-through payment 

status for the SpaceOAR® System. 

According to the applicant, the 


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37106 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

22Hamstra 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. 

23Mariados 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. 

25Hamstra, 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. 

26Pinkawa, 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. 

SpaceOAR® 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® 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® 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 § 419.66(b)(1), FDA granted a De 

Novo request classifying the 

SpaceOAR® 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® 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® System meets 

the newness criterion. 

With respect to the eligibility criterion 

at § 419.66(b)(3), according to the 

applicant, the SpaceOAR® 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®

System meets the device eligibility 

requirements of § 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 

§ 419.66(c). The first criterion, at 

§ 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® System. The 

applicant proposed a category 

descriptor for the SpaceOAR® System of 

‘‘Absorbable perirectal spacer’’. We are 

inviting public comments on this issue. 

The second criterion for establishing 

a device category, at § 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® 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® 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® System treatment. 

Lastly, in an extended follow-up period, 

the probability of grade ≥1 rectal 

toxicity was decreased in the 

SpaceOAR® System arm (9 percent 

control group, 2 percent SpaceOAR®

System group, p<.03) and no ≥ grade 2 

rectal toxicity was observed in the 

SpaceOAR® 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

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® System injection, reported 

similar erectile function compared with 

the control group based on patientreported 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® System and 

showed that 5 years after radiation 

therapy, no patients who received the 

SpaceOAR® 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®

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® System is superior to 

existing alternative biodegradable 

biomaterials currently utilized for 

spacing in the context of prostate 

radiotherapy. 

Based on the evidence submitted with 

the application, we have insufficient 

evidence that the SpaceOAR® System 

provides a substantial clinical 

improvement over other similar 

products. We are inviting public 

comments on whether the SpaceOAR®

System meets the substantial clinical 

improvement criterion. 


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The third criterion for establishing a 

device category, at § 419.66(c)(3), 

requires us to determine that the cost of 

the device is not insignificant, as 

described in § 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®

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® 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® 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 × 100 = 112 percent). 

Therefore, we believe the SpaceOAR®

system meets the first cost significance 

test. 

The second cost significance test, at 

§ 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® 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) × 100 = 485 percent). 

Therefore, we believe that the 

SpaceOAR® System meets the second 

cost significance test. 

The third cost significance test, at 

§ 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® 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 × 100 = percent). 

Therefore, we believe that the 

SpaceOAR® System meets the third cost 

significance test. 

We are inviting public comments on 

whether the SpaceOAR® 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 deviceintensive 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 deviceintensive 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 highcost device, which ensures consistent 

device-intensive designation of 

procedures with a significant device 

cost. Further, we believe a HCPCS codelevel 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: 

• All procedures must involve 

implantable devices that would be 

reported if device insertion procedures 

were performed; 


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• 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 

• 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 deviceintensive 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 deviceintensive status, regardless of their APC 

placement. 

2. Proposed Changes to the DeviceIntensive 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 deviceintensive 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, singleuse 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 deviceintensive 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: 

• All procedures must involve 

implantable devices assigned a CPT or 

HCPCS code; 

• The required devices (including 

single-use devices) must be surgically 

inserted or implanted; and 

• 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: 

• 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; 

• Is an integral part of the service 

furnished; 

• Is used for one patient only; 

• Comes in contact with human 

tissue; 

• Is surgically implanted or inserted 

(either permanently or temporarily); and 

• 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 deviceintensive procedures provided in 

Addendum P to this proposed rule, 

which is available at: https://

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/Hospital

OutpatientPPS/Hospital-OutpatientRegulations-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 


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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 codelevel 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 outpatientpps@

cms.hhs.gov. 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 deviceintensive 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 Ccode. Reporting HCPCS code C1889 


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with a device-intensive procedure will 

satisfy the edit requiring a device code 

to be reported on a claim with a deviceintensive 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 deviceintensive 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 lowvolume 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 


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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 PassThrough Payment for Additional Costs 

of Drugs, Biologicals, and 

Radiopharmaceuticals 

1. Background 

Section 1833(t)(6) of the Act provides 

for temporary additional payments or 

‘‘transitional pass-through payments’’ 

for certain drugs and biologicals. 

Throughout this proposed rule, the term 

‘‘biological’’ is used because this is the 

term that appears in section 1861(t) of 

the Act. 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-PartB-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 passthrough 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. 


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3. Proposed Drugs and Biologicals With 

Expiring Pass-Through Payment Status 

in CY 2018 

We are proposing that the passthrough 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, passthrough 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 

HCPCS code CY 2018 long descriptor 

CY 2018 

status 

indicator 

CY 2018 

APC 

Passthrough 

payment 

effective 

date 

A9515 ................ Choline C 11, diagnostic, per study dose ............................................................ G 9461 04/01/2016 

C9460 ................ Injection, cangrelor, 1 mg .................................................................................... G 9460 01/01/2016 

C9482 ................ Injection, sotalol hydrochloride, 1 mg .................................................................. G 9482 10/01/2016 

J1942 ................ Injection, aripiprazole lauroxil, 1 mg .................................................................... G 9470 04/01/2016 

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 fusion protein (recombinant), Idelvion, 1 i.u. ......... G 9171 10/01/2016 

J7207 ................ Injection, Factor VIII (antihemophilic factor, recombinant) PEGylated, 1 I.U. ..... G 1844 04/01/2016 

J7209 ................ Injection, Factor VIII (antihemophilic factor, recombinant) (Nuwiq), per i.u. ....... G 1846 04/01/2016 

J7322 ................ Hyaluronan or derivative, Hymovis, for intra-articular injection, 1 mg ................. G 9471 04/01/2016 

J7342 ................ Instillation, ciprofloxacin otic suspension, 6 mg ................................................... G 9479 07/01/2016 

J7503 ................ Tacrolimus, extended release, (envarsus xr), oral, 0.25 mg ............................... G 1845 04/01/2016

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 mg .................................................................... G 9474 04/01/2016 

J9295 ................ Injection, necitumumab, 1 mg .............................................................................. G 9475 04/01/2016 

J9325 ................ Injection, talimogene laherparepvec, 1 million plaque forming units (PFU) ........ G 9472 04/01/2016 

J9352 ................ Injection, trabectedin, 0.1 mg ............................................................................... G 9480 07/01/2016 

Q5101 ............... Injection, filgrastim-sndz, biosimilar, (zarxio), 1 microgram ................................. G 1822 07/01/2015 

Q9982 ............... Flutemetamol F18, diagnostic, per study dose, up to 5 millicuries ..................... G 9459 01/01/2016 

Q9983 ............... Florbetaben F18, diagnostic, per study dose, up to 8.1 millicuries ..................... G 9458 01/01/2016 

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 passthrough 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 passthrough 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 


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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 passthrough 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 passthrough 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 passthrough 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 

CY 2018 

HCPCS code 

CY 2019 

HCPCS code CY 2019 long descriptor 

Proposed 

CY 2019 

status 

indicator 

Proposed 

CY 2019 

APC 

Passthrough 

payment 

effective 

date 

A9586 ................ A9586 Florbetapir f18, diagnostic, per study dose, up to 10 

millicuries.

G 9084 10/01/2018 

A9587 ................ A9587 Gallium ga-68, dotatate, diagnostic, 0.1 millicurie ................ G 9056 01/01/2017 

A9588 ................ A9588 Fluciclovine f-18, diagnostic, 1 millicurie ............................... G 9052 01/01/2017 

C9014 ............... C9014 Injection, cerliponase alfa, 1 mg ........................................... G 9014 01/01/2018 

C9015 ............... C9015 Injection, c-1 esterase inhibitor (human), Haegarda, 10 

units.

G 9015 01/01/2018 

C9016 ............... C9016 Injection, triptorelin extended release, 3.75 mg .................... G 9016 01/01/2018 

C9024 ............... C9024 Injection, liposomal, 1 mg daunorubicin and 2.27 mg 

cytarabine.

G 9302 01/01/2018 

C9028 ............... C9028 Injection, inotuzumab ozogamicin, 0.1 mg ............................ G 9028 01/01/2018 

C9029 ............... C9029 Injection, guselkumab, 1 mg ................................................. G 9029 01/01/2018 

C9030 ............... C9030 Injection, copanlisib, 1 mg ..................................................... G 9030 07/01/2018 

C9031 ............... C9031 Lutetium Lu 177, dotatate, therapeutic, 1 mCi ...................... G 9067 07/01/2018 

C9032 ............... C9032 Injection, voretigene neparvovec-rzyl, 1 billion vector genome.G 9070 07/01/2018 

C9447 ............... C9447 Injection, phenylephrine and ketorolac, 4 ml vial .................. G 9083 10/01/2018 

C9462 ............... C9462 Injection, delafloxacin, 1 mg .................................................. G 9462 04/01/2018 

C9463 ............... C9463 Injection, aprepitant, 1 mg ..................................................... G 9463 04/01/2018 

C9465 ............... C9465 Hyaluronan or derivative, Durolane, for intra-articular injection, per dose.G 9465 04/01/2018 

C9466 ............... C9466 Injection, benralizumab, 1 mg ............................................... G 9466 04/01/2018 

C9467 ............... C9467 Injection, rituximab and hyaluronidase, 10 mg ..................... G 9467 04/01/2018 

C9468 ............... C9468 Injection, factor ix (antihemophilic factor, recombinant), 

glycopegylated, Rebinyn, 1 i.u..

G 9468 04/01/2018 

C9469 ............... C9469 Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg.G 9469 04/01/2018 

C9488 ............... C9488 Injection, conivaptan hydrochloride, 1 mg ............................. G 9488 04/01/2017 

C9492 ............... C9492 Injection, durvalumab, 10 mg ................................................ G 9492 10/01/2017 

C9493 ............... C9493 Injection, edaravone, 1 mg .................................................... G 9493 10/01/2017 

J0565 ................ J0565 Injection, bezlotoxumab, 10 mg ............................................ G 9490 07/01/2017 

J0570 ................ J0570 Buprenorphine implant, 74.2 mg ........................................... G 9058 01/01/2017 


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TABLE 20—PROPOSED DRUGS AND BIOLOGICALS WITH PASS-THROUGH PAYMENT STATUS IN CY 2019—Continued 

CY 2018 

HCPCS code 

CY 2019 

HCPCS code CY 2019 long descriptor 

Proposed 

CY 2019 

status 

indicator 

Proposed 

CY 2019 

APC 

Passthrough 

payment 

effective 

date 

J0606 ................ J0606 Injection, etelcalcetide, 0.1 mg .............................................. G 9031 01/01/2018 

J1428 ................ J1428 Injection, eteplirsen, 10 mg ................................................... G 9484 04/01/2017 

J1627 ................ J1627 Injection, granisetron extended release, 0.1 mg ................... G 9486 04/01/2017 

J2326 ................ J2326 Injection, nusinersen, 0.1 mg ................................................ G 9489 07/01/2017 

J2350 ................ J2350 Injection, ocrelizumab, 1 mg ................................................. G 9494 10/01/2017 

J3358 ................ J3358 Ustekinumab, for Intravenous Injection, 1 mg ...................... G 9487 04/01/2017 

J7179 ................ J7179 Injection, von willebrand factor (recombinant), (Vonvendi), 1 

i.u. vwf:rco.

G 9059 01/01/2017 

J7210 ................ J7210 Injection, factor viii, (antihemophilic factor, recombinant), 

(afstyla), 1 i.u.

G 9043 01/01/2017 

J7328 ................ J7328 Hyaluronan or derivative, gelsyn-3, for intra-articular injection, 0.1 mg.G 1862 01/01/2016 

J7345 ................ J7345 Aminolevulinic acid hcl for topical administration, 10% gel, 

10 mg.

G 9301 01/01/2018 

J9023 ................ J9023 Injection, avelumab, 10 mg ................................................... G 9491 10/01/2017 

J9034 ................ J9034 Injection, bendamustine hcl (Bendeka), 1 mg ....................... G 1861 01/01/2017 

J9203 ................ J9203 Injection, gemtuzumab ozogamicin, 0.1 mg .......................... G 9495 01/01/2018 

J9285 ................ J9285 Injection, olaratumab, 10 mg ................................................. G 9485 04/01/2017 

Q2040 ............... Q2040 Tisagenlecleucel, up to 250 million car-positive viable t 

cells, including leukapheresis and dose preparation procedures, per infusion.

G 9081 01/01/2018 

Q2041 ............... Q2041 Axicabtagene Ciloleucel, up to 200 Million Autologous AntiCD19 CAR T Cells, Including Leukapheresis And Dose 

Preparation Procedures, Per Infusion.

G 9035 04/01/2018 

Q4172 ............... Q4172 PuraPly, and PuraPly Antimicrobial, any type, per square 

centimeter.

G 9082 10/01/2018 

Q5103 ............... Q5103 Injection, infliximab-dyyb, biosimilar, (inflectra), 10 mg ........ G 1847 04/01/2018 

Q5104 ............... Q5104 Injection, infliximab-abda, biosimilar, (renflexis), 10 mg ....... G 9036 04/01/2018 

Q9950 ............... Q9950 Injection, sulfur hexafluoride lipid microsphere, per ml ......... G 9085 10/01/2018 

Q9991 ............... Q9991 Injection, buprenorphine extended-release (Sublocade), 

less than or equal to 100 mg.

G 9073 07/01/2018 

Q9992 ............... Q9992 Injection, buprenorphine extended-release (Sublocade), 

greater than 100 mg.

G 9239 07/01/2018 

Q9993 ............... Q9993 Injection, rolapitant, 0.5 mg ................................................... G 9464 04/01/2018 

Q9995 ............... Q9995 Injection, emicizumab-kxwh, 0.5 mg ..................................... G 9257 07/01/2018 

5. Proposed Drugs, Biologicals, and 

Radiopharmaceuticals With PassThrough 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 passthrough 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 passthrough payment status ended on 

December 31, 2017. These products are 

listed in Table 21 below. For CY 2019, 

we are proposing to continue passthrough 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 passthrough 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). 


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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 passthrough 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 passthrough payment status as biologicals 

effective on or before January 1, 2015 

would continue to be paid as passthrough biologicals for the duration of 

their pass-through payment period. 

Because PuraPly was approved for passthrough 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 

CY 2018 

HCPCS 

code 

CY 2019 

HCPCS 

code 

CY 2019 long descriptor 

Proposed 

CY 2019 

status 

indicator 

Proposed 

CY 2019 

APC 

Passthrough 

payment 

effective 

date 

A9586 ................ A9586 Florbetapir f18, diagnostic, per study dose, up to 10 

millicuries.

G 9084 10/01/2018 

C9447 ............... C9447 Injection, phenylephrine and ketorolac, 4 ml vial .................. G 9083 10/01/2018 

Q4172 ............... Q4172 PuraPly, and PuraPly Antimicrobial, any type, per square 

centimeter.

G 9082 10/01/2018 

Q9950 ............... Q9950 Injection, sulfur hexafluoride lipid microsphere, per ml ......... G 9085 10/01/2018 

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 policypackaged 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, passthrough 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. 


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We are proposing to continue to post 

annually on the CMS website at: https:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/Hospital

OutpatientPPS/Annual-PolicyFiles.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 (‘‘ThresholdPackaged 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 policypackaged. 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 


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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: 

• 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. 

• 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. 

• 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 ‘‘policypackaged’’ drugs, biologicals, and 

radiopharmaceuticals. These policies 

are either longstanding or based on 

longstanding principles and inherent to 

the OPPS and are as follows: 

• 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 

(§ 419.2(b)(4)); 

• Intraoperative items and services 

(§ 419.2(b)(14)); 

• 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 (§ 419.2(b)(15)); and 

• 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) (§ 419.2(b)(16)). 

The policy at § 419.2(b)(16) is broader 

than that at § 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 § 419.2(b)(15) is large and 

includes diagnostic 

radiopharmaceuticals, contrast agents, 

stress agents, and some other products. 

The category described by § 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 


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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 cm2 (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 lowcost 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 


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

• Establish a lump-sum ‘‘episodebased’’ 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. 

• 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. 

• Allow for the payment of current 

add-on codes or create additional 

procedure codes to pay for skin graft 

services between 26 cm2 and 99 cm2

and substantially over 100 cm2. 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 cm2 or around 100 cm2 and will 

receive higher payments compared to 

the cost of the services. Conversely, 

services between 26 cm2 and 99 cm2 or 

those that are substantially larger than 

100 cm2 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. 

• 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 2019 

HCPCS 

code 

CY 2019 short descriptor 

CY 2018 

high/low 

assignment 

Proposed 

CY 2019 

high/low 

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. 


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TABLE 23—PROPOSED SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST AND LOW COST GROUPS FOR CY 2019— 

Continued 

CY 2019 

HCPCS 

code 

CY 2019 short descriptor 

CY 2018 

high/low 

assignment 

Proposed 

CY 2019 

high/low 

assignment 

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 core, per square centimeter .............................................................. High ............... High. 

Q4133 ............... Grafix prime and grafixpl prime, per square centimeter .......................................................... High ............... High. 

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, or clarix cord 1k, per square centimeter .................................... High ............... High. 

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 square centimeter ....................................................................... High ............... High. 

Q4157 ............... Revitalon 1 square cm ............................................................................................................. High ............... High.* 

Q4158 ............... Kerecis omega3, per square centimeter ................................................................................. High ............... High.* 

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 centimeter ............................................................................... High ............... High. 

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 cm .............................................................................................. High ............... High.* 

Q4170 ............... Cygnus, per square cm ........................................................................................................... Low ................ Low. 

Q4172 + ............. PuraPly, PuraPly antimic ......................................................................................................... High ............... High. 

Q4173 ............... Palingen or palingen xplus, per sq cm .................................................................................... High ............... High. 

Q4175 ............... Miroderm, per square cm ........................................................................................................ High ............... High. 

Q4176 ............... Neopatch, per square centimeter ............................................................................................ Low ................ Low. 

Q4178 ............... Floweramniopatch, per square centimeter .............................................................................. High ............... High. 

Q4179 ............... Flowerderm, per square centimeter ......................................................................................... Low ................ Low. 

Q4180 ............... Revita, per square centimeter ................................................................................................. High ............... High. 

Q4181 ............... Amnio wound, per square centimeter ...................................................................................... Low ................ Low. 

Q4182 ............... Transcyte, per square centimeter ............................................................................................ Low ................ Low. 

* 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. 


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Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 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 codespecific packaging determinations for 

these codes could lead to inappropriate 

payment incentives for hospitals to 

report certain HCPCS codes instead of 

others. We continue to believe that 

making packaging determinations on a 

drug-specific basis eliminates payment 

incentives for hospitals to report certain 

HCPCS codes for drugs and allows 

hospitals flexibility in choosing to 

report all HCPCS codes for different 

dosages of the same drug or only the 

lowest dosage HCPCS code. Therefore, 

we are proposing to continue our policy 

to make packaging determinations on a 

drug-specific basis, rather than a HCPCS 

code-specific basis, for those HCPCS 

codes that describe the same drug or 

biological but different dosages in CY 

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

CY 2019 

HCPCS 

code 

CY 2019 long descriptor 

Proposed 

CY 2019 

status 

indicator 

(SI) 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

J7100 ................ Infusion, dextran 40, 500 ml ................................................................................................................................. N 

J7110 ................ Infusion, dextran 75, 500 ml ................................................................................................................................. N 

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 


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27Medicare 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. 

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— 

• A drug or biological for which 

payment is first made on or after 

January 1, 2003, under the transitional 

pass-through payment provision in 

section 1833(t)(6) of the Act. 

• A drug or biological for which a 

temporary HCPCS code has not been 

assigned. 

• During CYs 2004 and 2005, an 

orphan drug (as designated by the 

Secretary). 

Section 1833(t)(14)(A)(iii) of the Act 

requires that payment for SCODs in CY 

2006 and subsequent years be equal to 

the average acquisition cost for the drug 

for that year as determined by the 

Secretary, subject to any adjustment for 

overhead costs and taking into account 

the hospital acquisition cost survey data 

collected by the Government 

Accountability Office (GAO) in CYs 

2004 and 2005, and later periodic 

surveys conducted by the Secretary as 

set forth in the statute. If hospital 

acquisition cost data are not available, 

the law requires that payment be equal 

to payment rates established under the 

methodology described in section 

1842(o), section 1847A, or section 

1847B of the Act, as calculated and 

adjusted by the Secretary as necessary 

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

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 addon 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 


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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 passthrough 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 passthrough 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 passthrough 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 nonpassthrough 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 


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28National 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. 

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 nonpassthrough, 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 NonHighly 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 Tc99m 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 nonHEU 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 Tc99m from non-HEU sources. 

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 nonHEU 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 nonpassthrough, separately payable drugs and 

biologicals, and to continue our policy 

for payment of the furnishing fee using 

an updated amount. Our policy to pay 

for a furnishing fee for blood clotting 

factors under the OPPS is consistent 

with the methodology applied in the 

physician’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 


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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-PartB-Drugs/McrPartBDrugAvgSalesPrice/ 

index.html. 

6. Proposed Payment for NonpassThrough 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 nonpassthrough 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 passthrough 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 340Bacquired 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/WACsimilar 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 340Bacquired 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 


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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 passthrough payments in that year would 

exceed the applicable percentage, 

section 1833(t)(6)(E)(iii) of the Act 

requires a uniform prospective 

reduction in the amount of each of the 

transitional pass-through payments 

made in that year to ensure that the 

limit is not exceeded. We estimate the 

pass-through spending to determine 

whether payments exceed the 

applicable percentage and the 

appropriate prorata reduction to the 

conversion factor for the projected level 

of pass-through spending in the 

following year to ensure that total 

estimated pass-through spending for the 

prospective payment year is budget 

neutral, as required by section 

1833(t)(6)(E) of the Act. 

For devices, developing 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 passthrough 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 passthrough 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 passthrough 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 nonpassthrough 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 passthrough 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 policypackaged drugs and biologicals with 

pass-through payment status would be 

paid at ASP+6 percent, like other passthrough drugs and biologicals, for CY 

2019. Therefore, our proposed estimate 

of pass-through payment for policypackaged 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 


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policy-packaged drugs or biologicals are 

already packaged into the existing APC 

structure. If we determine that a policypackaged 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 passthrough payment estimate consists of 

those products that were recently made 

eligible for pass-through payment and 

that will continue to be eligible for passthrough payment in CY 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 passthrough 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 passthrough 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 passthrough spending for drugs and 

biologicals in the first group, 

specifically those drugs and biologicals 

recently made eligible for pass-through 

payment and continuing on passthrough 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 policypackaged 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 policypackaged 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 passthrough spending for drugs and 

biologicals in the second group (that is, 

drugs and biologicals that we knew at 

the time of development of this 

proposed rule were newly eligible for 

pass-through payment in CY 2019, 

additional drugs and biologicals that we 

estimated could be approved for passthrough 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 passthrough applicants, pharmaceutical 

industry data, clinical information, 

recent trends in the per unit ASPs of 

hospital outpatient drugs, and projected 

annual changes in service volume and 

intensity as our basis for making the CY 

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. 


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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 


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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 hospitalbased PHP providers that were not 

captured using the existing OPPS ±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 (±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 hospitalbased 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 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37130 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

29Each revenue code on the CMHC claim must 

have a HCPCS code and charge associated with it. 

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 hospitalbased 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 providertype 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 ±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 ±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 ±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


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 37131 

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 ±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. 

30Each 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 ±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. 

31As 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/Hospital

OutpatientPPS/Hospital-Outpatient-Regulationsand-Notices.html. 

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. 

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 ±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 ±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 hospitalbased 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 ±3 standard 

deviation trim on costs per day. 

Therefore, we excluded 20 hospitalbased PHP providers [(3 with CCRs 

greater than 5) + (16 with zero daily 

costs) + (1 after applying the ±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 hospitalbased 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. 

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/HospitalOutpatient-Regulations-andNotices.html).31

TABLE 25—CY 2019 PROPOSED PHP APC GEOMETRIC MEAN PER DIEM COSTS

CY 2019 APC Group title 

Proposed PHP 

APC 

geometric mean 

per diem costs 

5853 .................. Partial Hospitalization (3 or more services per day) for CMHCs ................................................................. $119.51 

5863 .................. Partial Hospitalization (3 or more services per day) for hospital-based PHPs ........................................... 220.52 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37132 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

3. Proposed Changes to the RevenueCode-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/Regulationsand-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 centerlevel 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 RevenueCode-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/MedicareFee-for-Service-Payment/ 

HospitalOutpatientPPS/Downloads/ 

CMS–1678-FC-2018-OPPS-FR-RevenueCode-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 ±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 ±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 ±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 

±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 ±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 hospitalbased 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 RevenueCode-to-Cost-Center crosswalk. 

Therefore, we are proposing to create a 

separate PHP-only Revenue-Code-toCost-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, hospitalbased 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 PHPallowable 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-CostCenter 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. 


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Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 37133 

TABLE 26—CURRENT AND PROPOSED PHP-ONLY REVENUE—CODE-TO-COST-CENTER CROSSWALKS

PHP allowable 

revenue code 

Current hierarchy 

(applicable in CY 2018) 

Proposed new PHP-only hierarchy 

(applicable in CY 2019 and beyond) 

Primary cost 

center source for 

CCR 

Secondary cost 

center source for 

CCR 

Tertiary cost center 

source for CCR 

Primary cost center 

source for CCR 

Secondary cost 

center source for 

CCR 

Tertiary cost center 

source for CCR 

0430 ............... 6700 Occupational Therapy.............................. ................................ 9399 (PHP) ............ 6700 Occupational Therapy.

0431 ............... 6700 Occupational Therapy.............................. ................................ 9399 (PHP) ............ 6700 Occupational Therapy.

0432 ............... 6700 Occupational Therapy.............................. ................................ 9399 (PHP) ............ 6700 Occupational Therapy.

0433 ............... 6700 Occupational Therapy.............................. ................................ 9399 (PHP) ............ 6700 Occupational Therapy.

0434 ............... 6700 Occupational Therapy.............................. ................................ 9399 (PHP) ............ 6700 Occupational Therapy.

0435 ............... RESERVED. 

0436 ............... RESERVED. 

0437 ............... RESERVED. 

0438 ............... RESERVED. 

0439 ............... 6700 Occupational Therapy.............................. ................................ 9399 (PHP) ............ 6700 Occupational Therapy.

0900 ............... 3550 (Psychiatric/ 

Psychological 

Services.

9000 (Clinic) ........ ................................ 9399 (PHP) ............ 3550 (Psychiatric/ 

Psychological 

Services).

9000 (Clinic). 

0904 ............... 3580 (Recreational Therapy).3550 (Psychiatric/ 

Psychological 

Services.

9000 (Clinic) ........... 9399 (PHP) ............ 3550 (Psychiatric/ 

Psychological 

Services).

9000 (Clinic). 

0914 ............... 3550 (Psychiatric/ 

Psychological 

Services.

9000 (Clinic) ........ ................................ 9399 (PHP) ............ 3550 (Psychiatric/ 

Psychological 

Services).

9000 (Clinic). 

0915 ............... 3550 (Psychiatric/ 

Psychological 

Services.

9000 (Clinic) ........ ................................ 9399 (PHP) ............ 3550 (Psychiatric/ 

Psychological 

Services).

9000 (Clinic). 

0916 ............... 3550 (Psychiatric/ 

Psychological 

Services.

9000 (Clinic) ........ ................................ 9399 (PHP) ............ 3550 (Psychiatric/ 

Psychological 

Services).

9000 (Clinic). 

0918 ............... 3550 (Psychiatric/ 

Psychological 

Services.

9000 (Clinic) ........ ................................ 9399 (PHP) ............ 3550 (Psychiatric/ 

Psychological 

Services).

9000 (Clinic). 

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 

days with 3 

services only 

Percent of 

days with 4 

or 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 


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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

CY 2015 

(%) 

CY 2016 * 

(%) 

CY 2017 * 

(%) 

% Change ** 

(%) 

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 


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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: 

• 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 × Estimated Total OPPS Payments) 

= Estimated Total OPPS Outlier 

Payments. 

• 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 × 0.50) = Estimated CMHC Outlier 

Payment (before cap) = B. If B > (0.08 

× Provider’s Total Estimated Per Diem 

Payments), then cap-adjusted B = (0.08 

× Provider’s Total Estimated Per Diem 

Payments); otherwise, B = B. Sum (B or 

cap-adjusted B) for Each Provider = 

Total CMHC Outlier Payments. 

• 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 × 

(CMHC Cost¥(3.4 × 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 × (CMHC 

Cost¥(3.4 × 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-andGuidance/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 


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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. Fixeddollar 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 


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32Available at: https://www.cms.gov/Medicare/ 

Coverage/IDE/Approved-IDE-Studies.html. 

33Available at: http://www/medpac.gov/docs/ 

default-source/reports/jun17_reporttocongress_

sec.pdf. 

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. 

TABLE 29—PROPOSED CHANGES TO THE INPATIENT ONLY LIST FOR CY 2019 

CY 2019 CPT 

code CY 2019 long descriptor Proposed action 

Proposed CY 

2019 OPPS 

APC assignment 

Proposed CY 

2019 OPPS 

status indicator 

31241 ............. Nasal/sinus endoscopy, surgical; with ligation of sphenopalatine artery Remove from IPO 

list.

5153 ............... J1 

01402 ............. Anesthesia for open or surgical arthroscopic procedures on knee joint; 

total knee arthroplasty.

Remove from IPO 

list.

N/A ................. N 

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.

Add to IPO list .... N/A ................. C 

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 ProviderBased 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). 

MedPAC and other entities are 

concerned that these payment 


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34Available at: http://medpac.gov/docs/defaultsouce/reports/mar17_entirereport.pdf. 35Available at: https://www.ssa.gov/OP_Home/ 

ssact/title18/1833.htm. 

incentives may be a key contributing 

factor to the growth in the number of 

emergency departments located offcampus 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. 

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 offcampus 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. 

In the CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66611 

through 66612), we noted that we had 


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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 costbased 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 decisionmaking. 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 * 

Calendar year 

(CY) 

Percentage 

increase 

CY 2011 ....................................................................................................................................................................................... 3.7 

CY 2012 ....................................................................................................................................................................................... 5.1 

CY 2013 ....................................................................................................................................................................................... 5.5 

CY 2014 ....................................................................................................................................................................................... 8.0 

CY 2015 ....................................................................................................................................................................................... 3.5 


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36Available at: http://www.medpac.gov/docs/ 

default-source/reports/mar18_medpac_

entirereport_sec.pdf?sfvrsn=0. 37http://www.medpac.gov/docs/default-source/ 

reports/mar18_medpac_entirereport_

sec.pdf?sfvrsn=0. 38Available at: http://www.medpac.gov/docs/ 

default-source/reports/mar17_medpac_

ch3.pdf?sfvrsn=0. 39 Ibid. 

TABLE 31—PERCENTAGE INCREASE IN VOLUME AND INTENSITY OF HOSPITAL OUTPATIENT SERVICES *—Continued 

Calendar year 

(CY) 

Percentage 

increase 

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 costsharing 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. 

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, hospitalbased E&M visits per beneficiary grew 

by 22 percent, compared with a 1- 

percent decline in physician officebased visits.’’ 38

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 costsharing 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. 

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 offcampus 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 offcampus 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 


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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 offcampus 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 providerbased 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 ‘‘offcampus 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 ‘‘offcampus 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 § 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 offcampus 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 


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40Available at: http://www.medpac.gov/docs/ 

default-source/reports/march-2012-report-to-thecongress-medicare-payment-policy.pdf. 

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. 

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 PFSequivalent 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 offcampus 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 


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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: 

• 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? 

• 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? 

• For what reasons might it ever be 

appropriate to pay a higher OPPS rate 

for services that can be performed in 

lower cost settings? 

• Several private health plans use 

utilization management as a costcontainment 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? 

• 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? 

• 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? 

• 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 OffCampus 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 providerbased 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 


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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 offcampus 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 offcampus 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 offcampus 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 


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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 offcampus PBDs are no longer covered 

outpatient department services and, 

therefore, are not payable under the 

OPPS. This means that nonexcepted offcampus 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 offcampus 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 340Bacquired drugs to nonexcepted offcampus 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 


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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 offcampus 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 340Bacquired 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 offcampus 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 


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41Available at: http://medpac.gov/docs/defaultsource/comment-letters/08172016_opps_asc_

comment_2017_medpac_sec.pdf?sfvrsn=0. 

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 OffCampus 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 offcampus PBDs could expand the types of 

services provided at the excepted offcampus 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 offcampus 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 

§ 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). 

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 offcampus 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 


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42Available at: http://medpac.gov/docs/defaultsource/comment-letters/09082017_opps_asc_2018_

medpac_comment_sec.pdf?sfvrsn=0. 

43Available at: https://archivesenergycommerce.house.gov/sites/ 

republicans.energycommerce.house.gov/files/114/ 

Letters/20160205SiteNeutralLetter%5b1%5d.pdf. 

44 Ibid. 

45 Ibid. 

46 GA0–16–189, ‘‘Increasing Hospital-Physician 

Consolidation Highlights Need for Payment 

Reform.’’ Available at: https://www.gao.gov/assets/ 

680/674347.pdf. 

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. 

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 offcampus 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 offcampus 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

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

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 offcampus 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 offcampus 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 offcampus, 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, providerbased 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 offcampus 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 


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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 

§ 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 

§ 419.48) only from the clinical families 

of services (described later in this 

section) for which the excepted offcampus 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 offcampus 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 offcampus PBD, for purposes of OPPS 

payment eligibility, excepted offcampus 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 offcampus 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-Feefor-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 offcampus 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 offcampus PBD for the applicable period 

(such as November 1, 2014–November 

1, 2015) and such applicable periods 

would be subject to audit. 


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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 Procedures ............................... 5721–5724; 5731–5735; 5741–5743. 

Drug Administration and Clinical Oncology .............................................. 5691–5694. 

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-Feefor-Service-Payment/Hospital

OutpatientPPS/Hospital-OutpatientRegulations-and-Notices-Items/CMS1656-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-ServicePayment/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: 

• ‘‘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. 

• ‘‘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. 

• ‘‘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. 

• ‘‘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-ServicePayment/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 


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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 passthrough 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 § 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 

(§ 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 


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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® 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-InvasiveCardiology.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: 

• Category I CPT codes, which 

describe surgical procedures and 

vaccine codes; 

• Category III CPT codes, which 

describe new and emerging 

technologies, services, and procedures; 

and 

• 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 


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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 Codes .............. April 1, 2018 ........ CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

July 1, 2018 ........ Level II HCPCS Codes .............. July 1, 2018 ........ CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

Category I (certain vaccine 

codes) and III CPT codes.

July 1, 2018 ........ CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

October 1, 2018 .. Level II HCPCS Codes .............. October 1, 2018 .. CY 2019 OPPS/ASC final rule 

with comment period.

CY 2020 OPPS/ASC final rule 

with comment period. 

January 1, 2019 .. Category I and III CPT Codes ... January 1, 2019 .. CY 2019 OPPS/ASC proposed 

rule.

CY 2019 OPPS/ASC final rule 

with comment period. 

Level II HCPCS Codes .............. January 1, 2019 .. CY 2019 OPPS/ASC final rule 

with comment period.

CY 2020 OPPS/ASC final rule 

with 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 

CY 2018 

HCPCS 

code 

CY 2019 long descriptor 

Proposed 

CY 2019 

payment 

indicator 

C9462 ............... Injection, delafloxacin, 1 mg ................................................................................................................................. K2 

C9463 ............... Injection, aprepitant, 1 mg .................................................................................................................................... K2 

C9464 ............... Injection, rolapitant, 0.5 mg .................................................................................................................................. K2 

C9465 ............... Hyaluronan or derivative, Durolane, for intra-articular injection, per dose .......................................................... K2 

C9466 ............... Injection, benralizumab, 1 mg .............................................................................................................................. K2 

C9467 ............... Injection, rituximab and hyaluronidase, 10 mg ..................................................................................................... K2 

C9468 ............... Injection, factor ix (antihemophilic factor, recombinant), glycopegylated, Rebinyn, 1 i.u .................................... K2 

C9469 * ............. Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg .......... K2 

C9749 ............... Repair of nasal vestibular lateral wall stenosis with implant(s) ........................................................................... J8 

* 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. 


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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 

CY 2018 

HCPCS 

code 

CY 2018 long descriptor 

Proposed 

CY 2019 

payment 

indicator 

C9030 ............... Injection, copanlisib, 1 mg .................................................................................................................................... K2 

C9032 ............... Injection, voretigene neparvovec-rzyl, 1 billion vector genome ........................................................................... K2 

Q5105 ............... Injection, epoetin alfa, biosimilar, (Retacrit) (for esrd on dialysis), 100 units ...................................................... K2 

Q5106 ............... Injection, epoetin alfa, biosimilar, (Retacrit) (for non-esrd use), 1000 units ........................................................ K2 

Q9991 ............... Injection, buprenorphine extended-release (Sublocade), less than or equal to 100 mg ..................................... K2 

Q9992 ............... Injection, buprenorphine extended-release (Sublocade), greater than 100 mg .................................................. K2 

Q9993 * ............. Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg .......... K2 

Q9995 ............... Injection, emicizumab-kxwh, 0.5 mg .................................................................................................................... K2 

* 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 

CY 2018 

HCPCS 

code 

CY 2018 long descriptor 

Proposed 

CY 2019 

payment 

indicator 

0508T ............... Pulse-echo ultrasound bone density measurement resulting in indicator of axial bone mineral density, tibia ... Z2 

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 


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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’’ (Officebased surgical procedure added to ASC 

list in CY 2008 or later with MPFS 

nonfacility PE RVUs; payment based on 

OPPS relative payment weight); ‘‘P3’’ 

(Office-based surgical procedures added 

to ASC list in CY 2008 or later with 

MPFS nonfacility PE RVUs; payment 

based on MPFS nonfacility PE RVUs); or 

‘‘R2’’ (Office-based surgical procedure 

added to ASC list in CY 2008 or later 

without MPFS nonfacility PE RVUs; 

payment based on OPPS relative 

payment weight), depending on whether 

we estimated 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 officebased), 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. 


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TABLE 37—ASC COVERED SURGICAL PROCEDURES PROPOSED TO BE NEWLY DESIGNATED AS PERMANENTLY OFFICEBASED FOR CY 2019 

CY 2019 

CPT 

code 

CY 2019 long descriptor 

CY 2018 

ASC 

payment 

indicator 

Proposed 

CY 2019 

ASC 

payment 

indicator * 

31573 ................ Laryngoscopy, flexible; with therapeutic injection(s) (e.g., chemodenervation agent or 

corticosteroid, injected percutaneous, transoral, or via endoscope channel), unilateral.

G2 P3 

36513 ................ Therapeutic apheresis; for platelets ......................................................................................... G2 R2 

36902 ................ Introduction of needle(s) 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; with transluminal balloon angioplasty, peripheral dialysis segment, including all imaging and radiological supervision and interpretation necessary to perform the 

angioplasty.

G2 P3 

36905 ................ Percutaneous transluminal mechanical 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.

G2 P3 

* 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. 


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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 2019 CPT/ 

HCPCS code CY 2019 long descriptor 

CY 2018 ASC 

payment 

indicator * 

CY 2019 ASC 

proposed 

payment 

indicator ** 

38222 ................ Diagnostic bone marrow; biopsy(ies) and aspiration(s) .......................................................... P3 * P3 *** 

65785 ................ Implantation of intrastromal corneal ring segments ................................................................ P2 * P2 *** 

67229 ................ Treatment of extensive or 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.

R2 * R2 *** 

0402T ................ Collagen cross-linking of cornea (including removal of the corneal epithelium and 

intraoperative pachymetry when performed).

R2 * R2 *** 

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

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

P2 * G2 

36473 ................ Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; first vein treated.P2 * P3 ** 

36901 ................ Introduction of needle(s) 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.

P2 * P3 ** 

64461 ................ Paravertebral block (pvb) (paraspinous block), thoracic; single injection site (includes imaging guidance, when performed).P3 * G2 

64463 ................ Paravertebral block (pvb) (paraspinous block), thoracic; continuous infusion by catheter 

(includes imaging guidance, when performed).

P3 * G2 

G0429 ............... Dermal filler injection(s) for the treatment of facial lipodystrophy syndrome (lds) (e.g., as a 

result of highly active antiretroviral therapy).

P3 * P3 ** 

* 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 CMS 

placeholder code 

CY 2019 long descriptor 

Proposed CY 

2019 ASC 

payment 

indicator ** 

06X1T ................ Extracorporeal shock wave for integumentary wound healing, high energy, including topical application and 

dressing care; initial wound.

R2 * 

10X12 ................ Fine needle aspiration biopsy, including ultrasound guidance; first lesion ......................................................... P3 * 

10X14 ................ Fine needle aspiration biopsy, including fluoroscopic guidance; first lesion ...................................................... P3 * 

10X16 ................ Fine needle aspiration biopsy, including CT guidance; first lesion ..................................................................... P2 * 

10X18 ................ Fine needle aspiration biopsy, including MR guidance; first lesion .................................................................... R2 * 

11X02 ................ Tangential biopsy of skin (e.g., shave, scoop, saucerize, curette); single lesion ............................................... P3 * 

11X04 ................ Punch biopsy of skin (including simple closure, when performed); single lesion ............................................... P3 * 

11X06 ................ Incisional biopsy of skin (e.g., wedge) (including simple closure, when performed); single lesion ................... P3 * 

* 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. 


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b. Proposed ASC Covered Surgical 

Procedures To Be Designated as DeviceIntensive 

(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 deviceintensive 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 deviceintensive 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 deviceintensive 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 deviceintensive with a default device offset set 

at 41 percent until claims data are 

available to establish the HCPCS codelevel 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: 

• All procedures must involve 

implantable devices assigned a CPT or 

HCPCS code; 

• The required devices (including 

single-use devices) must be surgically 

inserted or implanted; and 

• 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 passthrough status, we are proposing to 

specify, for CY 2019 and subsequent 

years, that for purposes of satisfying the 

device-intensive criteria, a deviceintensive procedure must involve a 

device that: 

• 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; 

• Is an integral part of the service 

furnished; 

• Is used for one patient only; 

• Comes in contact with human 

tissue; 

• Is surgically implanted or inserted 

(either permanently or temporarily); and 

• 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 

§ 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 deviceintensive procedure payment 


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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 deviceintensive 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 deviceintensive 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 § 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 deviceintensive 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. 


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37160 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

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 

CY 2019 CPT 

code CY 2019 long descriptor 

Proposed CY 

2019 ASC 

payment 

indicator 

93451 ................ Right heart catheterization including measurement(s) of oxygen saturation and cardiac output, when performed.G2 

93452 ................ Left heart catheterization including intraprocedural injection(s) for left ventriculography, imaging supervision 

and interpretation, when performed.

G2 

93453 ................ Combined right and left heart catheterization including intraprocedural injection(s) for left ventriculography, 

imaging supervision and interpretation, when performed.

G2 

93454 ................ Catheter placement in coronary artery(s) for coronary angiography, including intraprocedural injection(s) for 

coronary angiography, imaging supervision and interpretation.

G2 

93455 ................ Catheter placement in 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.

G2 

93456 ................ Catheter placement in coronary artery(s) for coronary angiography, including intraprocedural injection(s) for 

coronary angiography, imaging supervision and interpretation; with right heart catheterization.

G2 

93457 ................ Catheter placement in 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.

G2 

93458 ................ Catheter placement in 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.

G2 

93459 ................ Catheter placement in 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.

G2 

93460 ................ Catheter placement in 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.

G2 

93461 ................ Catheter placement in 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.

G2 

93462 ................ Left heart catheterization by transseptal puncture through intact septum or by transapical puncture (list separately in addition to code for primary procedure).N1 


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

CY 2019 CPT 

code CY 2019 long descriptor 

CY 2018 ASC 

payment 

indicator 

Calendar year 

added to ASC 

CPL 

0171T ................ Insertion of posterior spinous process distraction device (including necessary removal of 

bone or ligament for insertion and imaging guidance), lumbar; single level.

J8 2016 

0172T ................ Insertion of posterior spinous process distraction device (including necessary removal of 

bone or ligament for insertion and imaging guidance), lumbar; each additional level.

N1 2016 

20936 ................ Autograft for spine surgery 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).

N1 2017 

20937 ................ Autograft for spine surgery only (includes harvesting the graft); morselized (through separate skin or fascial incision) (list separately in addition to code for primary procedure).N1 2017 

20938 ................ Autograft for spine surgery only (includes harvesting the graft); structural, bicortical or 

tricortical (through separate skin or fascial incision) (list separately in addition to code for 

primary procedure).

N1 2017 

22551 ................ Arthrodesis, anterior interbody, including disc space preparation, discectomy, 

osteophytectomy and decompression of spinal cord and/or nerve roots; cervical below 

c2.

J8 2015 

22552 ................ Arthrodesis, anterior 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).

N1 2017 

22554 ................ Arthrodesis, anterior interbody technique, including minimal discectomy to prepare interspace (other than for decompression); cervical below c2.J8 2015 

22612 ................ Arthrodesis, posterior or posterolateral technique, single level; lumbar (with lateral transverse technique, when performed).J8 2015 

22614 ................ Arthrodesis, posterior or posterolateral technique, single level; each additional vertebral 

segment (list separately in addition to code for primary procedure).

N1 2015 

22840 ................ Posterior non-segmental 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).

N1 2017 

22842 ................ Posterior segmental 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).

N1 2017 

22845 ................ Anterior instrumentation; 2 to 3 vertebral segments (list separately in addition to code for 

primary procedure).

N1 2017 


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37162 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

TABLE 41—ADDITIONS TO THE LIST OF ASC COVERED SURGICAL PROCEDURES FOR CY 2015, 2016, AND 2017— 

Continued 

CY 2019 CPT 

code CY 2019 long descriptor 

CY 2018 ASC 

payment 

indicator 

Calendar year 

added to ASC 

CPL 

22853 ................ Insertion of interbody 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).

N1 2017 

22854 ................ Insertion of intervertebral 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).

N1 2017 

22859 ................ Insertion of intervertebral 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).

N1 2017 

37241 ................ Vascular embolization or 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).

J8 2016 

37242 ................ Vascular embolization or 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).

J8 2016 

37243 ................ Vascular embolization or occlusion, inclusive of all radiological supervision and interpretation, intraprocedural roadmapping, and imaging guidance necessary to complete the 

intervention; for tumors, organ ischemia, or infarction.

J8 2016 

49406 ................ Image-guided fluid collection drainage by catheter (e.g., abscess, hematoma, seroma, 

lymphocele, cyst); peritoneal or retroperitoneal, percutaneous.

G2 2016 

57120 ................ Colpocleisis (le fort type) ......................................................................................................... G2 2016 

57310 ................ Closure of urethrovaginal fistula; ............................................................................................. G2 2016 

58260 ................ Vaginal hysterectomy, for uterus 250 g or less ....................................................................... G2 2016 

58262 ................ Vaginal hysterectomy, for uterus 250 g or less; with removal of tube(s), and/or ovary(s) ..... G2 2016 

58543 ................ Laparoscopy, surgical, supracervical hysterectomy, for uterus greater than 250 g ............... G2 2016 

58544 ................ Laparoscopy, surgical, supracervical hysterectomy, for uterus greater than 250 g; with removal of tube(s) and/or ovary(s).G2 2016 

58553 ................ Laparoscopy, surgical, with vaginal hysterectomy, for uterus greater than 250 g; ................ G2 2016 

58554 ................ Laparoscopy, surgical, with vaginal hysterectomy, for uterus greater than 250 g; with removal of tube(s) and/or ovary(s).G2 2016 

58573 ................ Laparoscopy, surgical, with total hysterectomy, for uterus greater than 250 g; with removal 

of tube(s) and/or ovary(s).

G2 2016 

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

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

cervical.

G2 2015 

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

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

lumbar.

G2 2015 

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

facetectomy, foraminotomy and/or excision of herniated intervertebral disc, reexploration, 

single interspace; lumbar.

G2 2015 

63044 ................ Laminotomy (hemilaminectomy), with decompression of nerve root(s), including partial 

facetectomy, foraminotomy and/or excision of herniated intervertebral disc, reexploration, 

single interspace; each additional lumbar interspace (list separately in addition to code 

for primary procedure).

N1 2015 

63045 ................ Laminectomy, facetectomy and 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.

G2 2015 

63046 ................ Laminectomy, facetectomy and 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.

G2 2016 

63047 ................ Laminectomy, facetectomy and 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.

G2 2015 

63055 ................ Transpedicular approach with decompression of spinal cord, equina and/or nerve root(s) 

(e.g., herniated intervertebral disc), single segment; thoracic.

G2 2016 

63056 ................ Transpedicular approach with 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).

G2 2015 


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

§ 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 deviceintensive 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 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37164 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

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 passthrough 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 passthrough 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 passthrough 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 


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47President’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. 

50Available at: https://www.hhs.gov/about/ 

leadership/secretary/speeches/2017-speeches/ 

secretary-price-announces-hhs-strategy-for-fightingopioid-crisis/index.html. 

51Available at: https://www.hhs.gov/about/news/ 

2017/10/26/hhs-acting-secretary-declares-publichealth-emergency-address-national-opioidcrisis.html. 

52Available at: https://www.phe.gov/emergency/ 

news/healthactions/phe/Pages/default.aspx. 

53Available at: https://www.accessdata.fda.gov/ 

drugsatfda_docs/label/2011/022496s000lbl.pdf. 

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-ServicePayment/PhysicianFeeSched/PFSFederal-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 nonopioid 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 nonopioid 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 nonopioid 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

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. 

From 2013 through 2017, there was an 

overall increase in the OPPS Medicare 


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54Food 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/AnestheticAndAnalgesicDrug

ProductsAdvisoryCommittee/UCM596314.pdf. 

55 Ibid, page 9. 

56https://www.accessdata.fda.gov/drugsatfda_

docs/label/2018/022496s009lbledt.pdf. 

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 peerreviewed evidence that such increased 

utilization would lead to a decrease in 

opioid use and addiction among 

Medicare beneficiaries. 

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 passthrough 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 nonopioid 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 


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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 nonopioid 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 nonopioid 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 nonopioid 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 nonopioid 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 nonopioid 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, nonopioid 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 


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or procedure. Some examples of 

evidence that may be relevant could 

include an indication on the product’s 

FDA label or studies published in peerreviewed 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 passthrough 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 nonopioid 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: 

• 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-ServicePayment/ASCPayment/NTIOLs.html. 

• We announce annually, in the 

proposed rule updating the ASC and 

OPPS payment rates for the following 

calendar year, a list of all requests to 

establish new NTIOL classes accepted 

for review during the calendar year in 

which the proposal is published. In 

accordance with section 141(b)(3) of 

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. 

• 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 


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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 deviceintensive or office-based, and the 

corresponding ASC payment 

methodology; and their classification as 

separately payable ancillary services, 

including radiology services, 

brachytherapy sources, OPPS passthrough devices, corneal tissue 

acquisition services, drugs or 

biologicals, or NTIOLs. 

We also created Addendum DD2 that 

lists the ASC comment indicators. The 

ASC comment indicators used in 

Addenda AA and BB to the proposed 

rules and final rules with comment 

period serve to identify, for the revised 

ASC payment system, the status of a 

specific HCPCS code and its payment 

indicator with respect to the timeframe 

when comments will be accepted. The 

comment indicator ‘‘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 


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always 20 percent for ASC services, this 

interpretation of expenditures has 

minimal impact for subsequent budget 

neutrality adjustments calculated within 

the revised ASC payment system. 

In the CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66857 

through 66858), we set out a step-bystep illustration of the final budget 

neutrality adjustment calculation based 

on the methodology finalized in the 

August 2, 2007 final rule (72 FR 42521 

through 42531) and as applied to 

updated data available for the CY 2008 

OPPS/ASC final rule with comment 

period. The application of that 

methodology to the data available for 

the CY 2008 OPPS/ASC final rule with 

comment period resulted in a budget 

neutrality adjustment of 0.65. 

For CY 2008, we adopted the OPPS 

relative payment weights as the ASC 

relative payment weights for most 

services and, consistent with the final 

policy, we calculated the CY 2008 ASC 

payment rates by multiplying the ASC 

relative payment weights by the final 

CY 2008 ASC conversion factor of 

$41.401. For covered office-based 

surgical procedures, 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 § 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: 

• 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). 


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Estimated 

unadjusted 

wage index for 

new CBSA 

46300 

Estimated 

occupational 

mix adjusted 

wage index 

for 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-Dataand-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 


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57MedPAC. Report to the Congress: March 2018. 

58 Medicare Beneficiaries Could Save Billions if 

CMS Reduces Hospital Outpatient Department 

Payment Rates for Ambulatory Surgical CenterApproved Procedures to Ambulatory Surgical 

Center Payment Rates, Department of Health and 

Human Services, Office of Inspector General, April 

2014. 

59Munnich EL, Parente ST. Returns to 

Specialization: Evidence from the Outpatient 

Surgery Market. Journal of Health Economics. 

Volume 57. January 2018. 

60Hollenbeck BK, Dunn RL, et. al. Ambulatory 

Surgery Centers and Their Intended Effects on 

Outpatient Surgery. HSR: Health Services Research. 

50:5. October 2015. 

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

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

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. 

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 


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61Munnich EL, Parente ST. Returns to 

Specialization: Evidence from the Outpatient 

Surgery Market. Journal of Health Economics. 

Volume 57. January 2018. 

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. 

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 


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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 

§§ 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 MFPadjusted update factor that is less than 

zero, the resulting update to the ASC 

payment rates would be negative and 

payments would decrease relative to the 

prior year. We refer readers to the CY 

2011 OPPS/ASC final rule with 

comment period (75 FR 72062 through 

72064) for 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 


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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/MFPadjusted 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 


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62See, for example United States Department of 

Health and Human Services. ‘‘Healthy People 2020: 

Disparities. 2014.’’ Available at: http://

www.healthypeople.gov/2020/about/foundationhealth-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 ValueBased Purchasing Programs.’’ December 2016. 

Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 

64National Quality Forum. Final ReportDisparities Project. September 2017. Available at: 

http://www.qualityforum.org/SES_Trial_

Period.aspx. 

65National Quality Forum. Health Equity 

Program: Social Risk Initiative 2.0. 2017. Available 

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


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at: http://www.qualityforum.org/WorkArea/ 

linkit.aspx?LinkIdentifier=id&ItemID=86357. 

66We 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. 

67We 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. 

68We 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. 

allowing further examination of social 

risk factors in outcome measures. 

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. 

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). 

(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: 

• 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). 

• Factor 2. Performance or 

improvement on a measure does not 

result in better patient outcomes. 

• Factor 3. A measure does not align 

with current clinical guidelines or 

practice. 

• Factor 4. The availability of a more 

broadly applicable (across settings, 

populations, or conditions) measure for 

the topic. 

• Factor 5. The availability of a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic. 

• Factor 6. The availability of a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic. 

• 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 


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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 ‘‘toppedout’’ 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: 

• 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 valuebased 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 


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69Rose-Hulman Institute of Technology. 

Denominator approaching zero. Available at: 

https://www.rose-hulman.edu/media/89584/ 

lclimitsguide.pdf. 

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: 

• 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). 

• Factor 2. Performance or 

improvement on a measure does not 

result in better patient outcomes. 

• Factor 3. A measure does not align 

with current clinical guidelines or 

practice. 

• Factor 4. The availability of a more 

broadly applicable (across settings, 

populations, or conditions) measure for 

the topic. 

• Factor 5. The availability of a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic. 

• Factor 6. The availability of a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic. 

• Factor 7. Collection or public 

reporting of a measure leads to negative 

unintended consequences other than 

patient harm. 

• 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. 

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 rareevent 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 


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70CDC, 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). 

71CDC, Influenza Vaccination Information for 

Health Care Workers. Available at: https://

www.cdc.gov/flu/healthcareworkers.htm. 

72QPP 2017 Measures Selection: Influenza. 

Retrieved from: https://qpp.cms.gov/mips/qualitymeasures. 

73 Ibid. 

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

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 MIPSeligible clinicians nationwide will 

report on the Preventive Care and 

Screening: Influenza Immunization 

measure through the Quality Payment 

Program (QPP).72 Although MIPSeligible 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. 

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 chartabstracted measure. 


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74This measure was formerly called ‘‘ED–AMI– 

4—Median Time to Electrocardiogram (ECG)’’ in the 

cited Federal Register. 

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. 

• 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 chartabstracted 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. 

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 

Period Number of 

hospitals 25th Percentile 75th Percentile 90th 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. 

• 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 


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37182 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

75QPP Measure Selection: Appropriate Follow-up 

Interval for Normal Colonoscopy in Average Risk 

Patients. Available at: https://qpp.cms.gov/mips/ 

quality-measures. 

76CMS 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). 

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 Followup 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 Followup 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 resourceconsuming 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 RiskStandardized 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 MIPSeligible 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. 

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 Followup 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. 

• 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 chartabstracted 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 


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Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 37183 

77CMS 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). 

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 allcause, unplanned hospital visits 

(admissions, observation stays, and 

emergency department visits) within 7 

days of an outpatient colonoscopy 

procedure (79 FR 66949). This claimsbased 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 MIPSeligible 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. 

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. 

• 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 postoperative 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 


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37184 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

78OQR Hospital Compare. Available at: https://

data.medicare.gov/Hospital-Compare/Timely-andEffective-Care-Hospital/yv7e-xc69. 

79Hospital Outpatient Quality Reporting 

Specifications Manual. Version 11.0a. Available at: 

http://www.qualitynet.org/dcs/ContentServer?c=

Page&pagename=QnetPublic%2FPage

%2FSpecsManualTemplate&cid=1228776146046. 

80Bernardi, 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. 

81Bian, 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. 

82Pozz, 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. 

83Mainiero 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® breast cancer screening. 

Reston (VA): American College of Radiology (ACR); 

2016. 7 p. 

84 Ibid. 

determination, due to continued 

concerns (https://www.qualitynet.org/ 

dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnet

Tier3&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. 

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.80 81 82

In addition, in 2016, the American 

College of Radiology (ACR) updated its 

Breast Cancer Screening 

Appropriateness Criteria® 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 


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85Hardesty 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. 

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®) to include 

DBT, use of this technology is expected 

to increase. 

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. 

• 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

Encounters Number of 

hospitals 

75th 

Percentile 

90th 

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. 

• 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

Encounters Number of 

hospitals 

75th 

percentile 

90th 

percentile 

Truncated 

COV 

CY 2012 ........................................................................................................... 1,478 97.8 98.3 0.012 


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OP–14: SIMULTANEOUS USE OF BRAIN COMPUTED TOMOGRAPHY (CT) AND SINUS CT TOPPED-OUT ANALYSIS— 

Continued 

Encounters Number of 

hospitals 

75th 

percentile 

90th 

percentile 

Truncated 

COV 

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. 

• 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 ‘‘outcomebased 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. 

• 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 


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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 † 

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 † 

0496 ................ OP–18: Median Time from ED Arrival to ED Departure for Discharged ED Patients 

0499 ................ OP–22: Left Without Being Seen † 

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 *** 

† 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. 

** 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. † 

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.*** 

† We note that NQF endorsement for this measure was removed. 

ß 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. 

* 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). 


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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 valuebased 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/Content

Server?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). 

• 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. 

• 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 


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determination and subsequent years are 

illustrated in the table below. 

CY 2020 PAYMENT DETERMINATION

AND SUBSEQUENT YEARS

Patient encounter quarter 

Clinical data 

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%2FSpecsManual

Template&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: 

• OP–2: Fibrinolytic Therapy 

Received Within 30 Minutes of ED 

Arrival (NQF #0288); 

• OP–3: Median Time to Transfer to 

Another Facility for Acute Coronary 

Intervention (NQF #0290); 

• OP–18: Median Time from ED 

Arrival to ED Departure for Discharged 

ED Patients (NQF #0496); and 

• 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 


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86We 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. 

87Snijders TA, Bosker RJ. Multilevel Analysis: An 

introduction to basic and advanced multilevel 

modeling. SAGE Publications. 2000. London. 

88Additional methodology details and 

information obtained from public comments for 

measure development are available at: https://

www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/ 

Measure-Methodology.html under ‘‘Hospital 

Outpatient Colonoscopy.’’ 

89Landis JR, Koch GG. The Measurement of 

Observer Agreement for Categorical Data. 

Biometrics. 1977;33(1):159–174. 

90Current and past measure specifications are 

available at: https://www.qualitynet.org/dcs/ 

ContentServer?c=Page&pagename=QnetPublic%2F

Page%2FQnetTier3&cid=1228775214597. 

period 86 for OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy. 

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 Followup 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: 

• OP–8: MRI Lumbar Spine for Low 

Back Pain (NQF #0514); 

• OP–10: Abdomen CT—Use of 

Contrast Material; 

• OP–13: Cardiac Imaging for 

Preoperative Risk Assessment for NonCardiac, Low Risk Surgery (NQF #0669); 

• OP–32: Facility 7-Day RiskStandardized Hospital Visit Rate after 

Outpatient Colonoscopy (NQF #2539); 

• OP–35: Admissions and Emergency 

Department Visits for Patients Receiving 

Outpatient Chemotherapy; and 

• OP–36: Hospital Visits after 

Hospital Outpatient Surgery (NQF 

#2687). 

b. Proposed Extension of the Reporting 

Period for OP–32: Facility 7-Day RiskStandardized 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

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. 

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 lowrisk 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 


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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 determination CY 2021 payment determination CY 2022 payment determination 

Public display ................................. January 2020 ................................ January 2021 ................................ January 2022. 

Reporting period ............................ January 1, 2016–December 31, 

2018.

January 1, 2017–December 31, 

2019.

January 1, 2018–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%2FQnetTier

2&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: 

• OP–12: The Ability for Providers 

with HIT to Receive Laboratory Data 

Electronically Directly into their ONCCertified EHR System as Discrete 

Searchable Data (via CMS’ QualityNet 

website); 

• OP–17: Tracking Clinical Results 

between Visits (NQF #0491) (via CMS’ 

QualityNet website); 

• OP–22: Left Without Being Seen 

(NQF #0499) (via CMS’ QualityNet 

website); 

• OP–29: Appropriate Follow-up 

Interval for Normal Colonoscopy in 

Average Risk Patients (NQF #0658) (via 

CMS’ QualityNet website); 

• OP–30: Colonoscopy Interval for 

Patients with a History of Adenomatous 

Polyps—Avoidance of Inappropriate 

Use (NQF #0659) (via CMS’ QualityNet 

website); 

• OP–31: Cataracts: Improvement in 

Patient’s Visual Function within 90 

Days Following Cataract Surgery (NQF 

#1536) (via CMS’ QualityNet website); 

and 

• 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 PolypsAvoidance 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: 

• OP–22: Left Without Being Seen 

(NQF #0499) (via CMS’ QualityNet 

website); and 

• 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 


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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 

§ 419.41 of our regulations, prior to any 

adjustment for a hospital’s failure to 

meet the quality reporting standards 

according to § 419.43(h). Beneficiaries 

and secondary payers thereby share in 

the reduction of payments to these 

hospitals. 

In the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68772), we 

established the policy that all other 

applicable adjustments to the OPPS 

national unadjusted payment rates 

apply when the OPD fee schedule 


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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. 


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91See, for example, United States Department of 

Health and Human Services. ‘‘Healthy People 2020: 

Disparities. 2014.’’ Available at: http://

www.healthypeople.gov/2020/about/foundationhealth-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 ValueBased Purchasing Programs.’’ December 2016. 

Available at: https://aspe.hhs.gov/pdf-report/reportcongress-social-risk-factors-and-performanceunder-medicares-value-based-purchasingprograms. 

93National Quality Forum. Final ReportDisparities Project. September 2017. Available at: 

http://www.qualityforum.org/SES_Trial_

Period.aspx. 94National Quality Forum. Health Equity 

Program: Social Risk Initiative 2.0. 2017. Available 

at: http://www.qualityforum.org/WorkArea/ 

linkit.aspx?LinkIdentifier=id&ItemID=86357. 

95We 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 

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. 

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 


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reporting and pay for performance (value-based 

purchasing) programs. 

remove ASCQR Program measures as 

follows: 

• 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). 

• Factor 2. Availability of alternative 

measures with a stronger relationship to 

patient outcomes. 

• Factor 3. A measure does not align 

with current clinical guidelines or 

practice. 

• Factor 4. The availability of a more 

broadly applicable (across settings, 

populations, or conditions) measure for 

the topic. 

• Factor 5. The availability of a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic. 

• Factor 6. The availability of a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic. 

• 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-bycase 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: 

• 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 


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96Rose-Hulman Institute of Technology. 

Denominator approaching zero. Retrieved from: 

https://www.rose-hulman.edu/media/89584/ 

lclimitsguide.pdf. 

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: 

• 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). 

• Factor 2. Performance or 

improvement on a measure does not 

result in better patient outcomes. 

• Factor 3. A measure does not align 

with current clinical guidelines or 

practice. 

• Factor 4. The availability of a more 

broadly applicable (across settings, 

populations, or conditions) measure for 

the topic. 

• Factor 5. The availability of a 

measure that is more proximal in time 

to desired patient outcomes for the 

particular topic. 

• Factor 6. The availability of a 

measure that is more strongly associated 

with desired patient outcomes for the 

particular topic. 

• Factor 7. Collection or public 

reporting of a measure leads to negative 

unintended consequences other than 

patient harm. 

• 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. 

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 


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97Available 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). 

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 nonadverse 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 rareevent 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 Followup 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. 

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 


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98CDC, Influenza Vaccination Information for 

Health Care Workers. Available at: https://

www.cdc.gov/flu/healthcareworkers.htm. 

99QPP 2017 Measures Selection: Influenza. 

Retrieved from: https://qpp.cms.gov/mips/qualitymeasures. 

100 Ibid. 

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 MIPSeligible 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. 

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. 

• 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 


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Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 37199 

101National Quality Forum. Available at: http:// 

www.qualityforum.org/QPS/0263. 

102National Quality Forum. Available at: http:// 

www.qualityforum.org/QPS/0267. 

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

• 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), claimsbased 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. 

• 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

• Proposed Removal of ASC–4: AllCause 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 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37200 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

103National Quality Forum. Available at: http:// 

www.qualityforum.org/QPS/0265. 

104QPP Measure Selection: Appropriate Followup Interval for Normal Colonoscopy in Average 

Risk Patients. Retrieved from: https://qpp.cms.gov/ 

mips/quality-measures. 

105CMS 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). 

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

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. 

• 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 Followup 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 resourceconsuming 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 RiskStandardized 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 MIPSeligible 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. 

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 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 37201 

106QPP Measure Selection: Appropriate Followup Interval for Normal Colonoscopy in Average 

Risk Patients. Retrieved from: https://qpp.cms.gov/ 

mips/quality-measures. 

107CMS 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). 

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. 

• 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 chartabstracted 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 allcause, unplanned hospital visits 

(admissions, observation stays, and 

emergency department visits) within 7 

days of an outpatient colonoscopy 

procedure (79 FR 66970). This claimsbased 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. 

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 


daltland on DSKBBV9HB2PROD with PROPOSALS2
37202 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

108ASCQR Compare Data. Available at: https://

data.medicare.gov/Hospital-Compare/AmbulatorySurgical-Quality-Measures-Facility/4jcv-atw7/data. 

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. 

• 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 postoperative 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%2

FQnetTier3&cid=1228772879036). We 

issued additional guidance on April 2, 

2014, stating that we would further 

delay the implementation of ASC–11 for 

an additional 9 months, until January 1, 

2015 for the CY 2016 payment 

determination, due to continued 

concerns (https://www.qualitynet.org/ 

dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2

FQnetTier3&cid=1228773811586). 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. 

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 


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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† ............. Patient Burn. 

ASC–2 ............. 0266 ............... Patient Fall. 

ASC–3 ............. 0267† ............. Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant. 

ASC–4 ............. 0265† ............. 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 PolypsAvoidance 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.** 

† 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). 


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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 postanesthesia 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. 


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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: 

• ASC–1: Patient Burn; 

• ASC–2: Patient Fall; 

• ASC–3: Wrong Site, Wrong Side, 

Wrong Patient, Wrong Procedure, 

Wrong Implant; and 

• 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/Content

Server?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/Content

Server?c=Page&pagename=Qnet

Public%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 


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109We 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). 

110Snijders TA, Bosker RJ. Multilevel Analysis: 

An introduction to basic and advanced multilevel 

modeling. SAGE Publications. 2000. London. 

111Additional methodology details and 

information obtained from public comments for 

measure development are available at: https://

www.cms.gov/Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospitalQualityInits/ 

Measure-Methodology.html under ‘‘Hospital 

Outpatient Colonoscopy.’’ 

112Landis JR, Koch GG. The Measurement of 

Observer Agreement for Categorical Data. 

Biometrics. 1977;33(1):159–174. 

113Current and past measure specifications are 

available at: https://www.qualitynet.org/dcs/ 

ContentServer?c=Page&

pagename=QnetPublic%2FPage%2FQnetTier3

&cid=1228775214597. 

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: 

• ASC–13: Normothermia Outcome 

• 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 RiskStandardized 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: 

• 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) 

• CY 2022 payment determination and 

subsequent years: 

•• ASC–17: Hospital Visits after 

Orthopedic Ambulatory Surgical 

Center Procedures (82 FR 59455 

through 59470) 

•• 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

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. 

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 lowrisk 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. 


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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 claimsbased 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 determination CY 2021 Payment determination CY 2022 Payment determination 

Public display ................................. January 2020 ................................ January 2021 ................................ January 2022. 

Reporting period ............................ January 1, 2016–December 31, 

2018.

January 1, 2017–December 31, 

2019.

January 1, 2018–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 


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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 RVUbased 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 RVUbased 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. 


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114These statistics can be accessed at: https://

dashboard.healthit.gov/quickstats/pages/FIGHospital-EHR-Adoption.php. 

115The draft version of the trusted Exchange 

Framework may be accessed at: https://

beta.healthit.gov/topic/interoperability/trustedexchange-framework-and-common-agreement. 

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 Medicaidparticipating 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 Medicaidparticipating 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 postdischarge has not been achieved by 

providers and suppliers in many 

localities and regions throughout the 

Nation. 

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 publicprivate 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 longterm: 

• Professional care providers, who 

deliver care across the continuum, can 

access health information about their 

patients, regardless of where the patient 

received care. 

• 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. 

• 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 atrisk populations; and track progress on 

quality improvement initiatives. 

• 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 


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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, longterm 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: 

• 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; 

• 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 

• 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 communitybased provider or practitioner (42 CFR 

483.15(c)(2)(iii)). We specified that 

necessary information must include the 

following: 

• Contact information of the 

practitioner responsible for the care of 

the resident; 

• Resident representative information 

including contact information; 

• Advance directive information; 

• Special instructions or precautions 

for ongoing care; 

• The resident’s comprehensive care 

plan goals; and 

• 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 postdischarge 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: 

• 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? 

• 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? 

• 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? 

• 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)? 

• 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? 

• 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 


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116For example, Medicare Provider Utilization 

and Payment Data, available at: https://

www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/MedicareProvider-Charge-Data/index.html. 

provider, supplier, or patient/resident 

cannot receive the information 

electronically? 

• 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? 

• 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 postacute 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. 

In general, we encourage all providers 

and suppliers of health care services to 

undertake efforts to engage in consumerfriendly 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 


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117CMS 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. 

118President 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-drugprices/. 

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: 

• 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? 

• 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? 

• 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-ofpocket obligations will be? 

• 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: 

• How does Medigap coverage affect 

patients’ understanding of their out-ofpocket 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-ofpocket 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, 


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119MedPAC Report to the Congress Medicare and 

the Health Care Delivery System, June 2015, pp. 65– 

72. Available at: http://medpac.gov/docs/defaultsource/reports/june-2015-report-to-the-congressmedicare-and-the-health-care-deliverysystem.pdf?sfvrsn=0. 

120OMB Control Number 0938–0921. 

121Spending and Enrollment Data from Centers 

for Medicare and Medicaid Services Office of 

Enterprise Data and Analytics. 

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 CAPlike 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. 

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 addon 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 costsharing is set at a percentage of the total 

Medicare payment amount. Meanwhile, 

the ASP-based methodology creates no 

direct incentives for furnishing highvalue drug therapies. 

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 data120 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. 

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 antiemetic 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 


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37214 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

122National 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. 

123The 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. 

who received them than by increases in 

enrollment and utilization. 

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. 

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 costsharing 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-Dataand-Systems/Statistics-Trends-andReports/Reports/Research-ReportsItems/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 singlesource 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. 

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 


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124New Direction RFI and public comments are 

available at https://innovation.cms.gov/initiatives/ 

direction. 

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

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 vendoradministered 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’ vendoradministered 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 


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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 

• 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? 

• 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? 

• 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 

• 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? 

• 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? 

• 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? 

• 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 outcomesbased agreements? 

c. Beneficiary Cost Sharing, Protections 

and Fiscal Considerations 

• How could a potential CAP-like 

model be structured to improve 

beneficiaries’ access to Part B drugs and 

biologicals? 

• How can access to and quality of 

care for beneficiaries be improved or 

maintained under a potential vendoradministered payment arrangement? 

Should these arrangements be 

constructed so beneficiaries share in the 

value created? How could the sharing of 

value with beneficiaries be structured? 

• How can CMS ensure a potential 

CAP-like model includes beneficiary 

protections, including ensuring the 

quality of and access to care? 

• What key considerations should 

CMS assess related to beneficiary costsharing, experience of care, choice of 

health care provider and drug or 

biological, and access to care in 

potentially designing such a model test? 

• What challenges would need to be 

addressed to allow for collection of 

beneficiary outcomes data by model 

vendors or other CMS contractors? 

• 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 

• 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? 

• 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? 

• 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? 

• How should CMS balance the need 

for potential model vendors to have 


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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? 

• 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? 

• 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? 

• 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? 

• 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? 

• What types of structures (such as 

group purchasing organizations, single 

or affiliated entities) could support a 

model vendor role for a potential CAPlike model for included drugs and 

biologicals? 

• What financial protection(s) may be 

necessary to encourage private-sector 

vendor participation in a potential CAPlike model? 

• 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? 

• What, if any, formulary and/or 

utilization management strategies, such 

as step therapy, should model vendors 

be allowed to include in their valuebased payment arrangements with 

manufacturers? 

e. Regulatory Barriers and Transparency 

Issues 

• 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? 

• 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? 

• What specific engagement 

strategies, information sharing, and 

transparency would be necessary as part 

of a test of value-based vendoradministered 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? 

• 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? 

• 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? 

• 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 

• What features should CMS consider 

that would incentivize manufacturers to 

participate in vendor-administered 

payment arrangements? Should 

participation by manufacturers be 

mandatory? 

• 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. 

• 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? 

• Under a potential CAP-like model, 

how geographically broad should a 

model be in order to allow for a robust 

model test and evaluation? 

• 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? 

• 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? 

• 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 vendoradministered arrangement with a 

manufacturer not be appropriate? 

• 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. 


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126The HCAHPS measure also includes the NQFendorsed 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. 

127We 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. 

129Available at: http://www.qualityforum.org/ 

Publications/2008/08/National_Voluntary_

Consensus_Standards_for_Hospital_Care_2007__

Performance_Measures.aspx. 

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. 

131Available at: http://hcahpsonline.org/en/ 

survey-instruments/. 

132Available at: https://www.whitehouse.gov/ 

sites/whitehouse.gov/files/images/Final_Report_

Draft_11-15-2017.pdf. 

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. 

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/qualityassurance/. 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

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: 

• HP1: ‘‘During this hospital stay, did 

you have any pain?’’ 

b Yes 

b No 

• HP2: ‘‘During this hospital stay, 

how often did hospital staff talk with 

you about how much pain you had?’’ 

b Never 

b Sometimes 

b Usually 

b Always 

• HP3: ‘‘During this hospital stay, 

how often did hospital staff talk with 

you about how to treat your pain?’’ 

b Never 

b Sometimes 

b Usually 

b 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

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 


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133Tefera 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. 

134HCAHPS Quality Assurance Guidelines (v. 

13.0), available at: http://www.hcahpsonline.org/en/ 

quality-assurance/. 

135Final 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. 

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. 

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

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 


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guidance suggesting that hospitals do 

not administer any surveys with painrelated 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-Feefor-Service-Payment/ 

HospitalOutpatientPPS/HospitalOutpatient-Regulations-andNotices.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-ServicePayment/ASCPayment/ASCRegulations-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: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

In this proposed rule, we are 

soliciting public 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. 


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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. 

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 ChartAbstracted 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 × 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 × 3,300 hospitals) and $5.6 

million (151,800 hours × $36.58 136). 

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 webbased 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 × 0.167 hours per 

measure) and 2,204 hours (0.668 hours 

× 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 × 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 × 0.417 hours × 384 

cases per measure × 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 × $36.58) for the proposed 

removal of those four web-based 


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measures from the Hospital OQR 

Program. 

In addition, we estimate that 

approximately 20 percent of hospitals, 

or 660 hospitals (3,300 hospitals × 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 × 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 chartabstraction burden reduction for this 

measure would be 105,684 hours (660 

hospitals × 0.417 hours per case × 384 

cases) for participating hospitals. In 

total, we anticipate a burden reduction 

of 105,794 hours (110 hours for websubmission + 105,684 hours for chartabstraction) and $3.9 million (105,794 

hours × $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 × 

$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 chartabstracted 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 × $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 Claimsbased 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 ChartAbstracted 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 


daltland on DSKBBV9HB2PROD with PROPOSALS2
Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 37223 

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. 

138Average 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. 

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 × 

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 × 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 × 15.75 hours 

per ASC) and $2,268,253 (62,008 hours 

× $36.58 per hour 137). For ASC–11, we 

estimate a total annual information 

collection burden of 16,569 hours (1,052 

ASCs × 15.75 hours) and $606,094 

(16,569 hours × $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. 

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 × 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 × 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 × 

respondent earnings estimate of $26.71 

per hour). 

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 


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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 sitespecific 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 


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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-Feefor-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 hospitalspecific 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 offcampus provider-based department at 

an amount equal to the site-specific PFS 

payment rate for nonexcepted items and 

services furnished by a nonexcepted offcampus 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 PFSequivalent 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 decisionmaking, 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 providerbased departments (PBDs) beginning in 

CY 2019. This is consistent with the 

payment methodology adopted in CY 

2018 for 340B-acquired drugs furnished 


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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 HospitalBased 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 passthrough 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 


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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 offcampus 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 passthrough payments. 


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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

Number of 

hospitals 

Proposed APC 

recalibration 

(all proposed 

changes) 

Proposed new 

wage index 

and provider 

adjustments 

All proposed 

budget neutral 

changes 

(combined 

cols 2 and 3) 

with market 

basket update 

Proposed 

off-campus 

providerbased 

department 

visits policy 

All proposed 

changes 

(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 harmless and 

CMHCs) ................................................ 3,695 0.0 0.0 1.3 ¥1.2 ¥0.1 

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 


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TABLE 42—ESTIMATED IMPACT OF THE PROPOSED CY 2019 CHANGES FOR THE HOSPITAL OUTPATIENT PROSPECTIVE

PAYMENT SYSTEM—Continued 

Number of 

hospitals 

Proposed APC 

recalibration 

(all proposed 

changes) 

Proposed new 

wage index 

and provider 

adjustments 

All proposed 

budget neutral 

changes 

(combined 

cols 2 and 3) 

with market 

basket update 

Proposed 

off-campus 

providerbased 

department 

visits policy 

All proposed 

changes 

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

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 passthrough 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 


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37230 Federal Register / Vol. 83, No. 147 / Tuesday, July 31, 2018 / Proposed Rules 

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 onethird of Part B FFS beneficiaries. The 

impact on Medicaid was determined by 

taking one-third of the beneficiary costsharing 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. 

• 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. 

• Alternatives Considered for the 

Methodology for Payment for NonOpioid 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 nonopioid 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 nonopioid 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 


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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 prereclassified hospital wage indexes 

between CY 2018 and CY 2019 and by 

applying the proposed CY 2019 MFPadjusted 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. 

• Column 1—Surgical Specialty or 

Ancillary Items and Services Group 

indicates the surgical specialty into 

which ASC procedures are grouped and 

the ancillary items and services group 

which includes all HCPCS codes for 

covered ancillary items and services. To 

group surgical procedures by surgical 

specialty, we used the CPT code range 

definitions and Level II HCPCS codes 

and Category III CPT codes, as 

appropriate, to account for all surgical 

procedures to which the Medicare 

program payments are attributed. 

• Column 2—Estimated CY 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. 

• 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. 


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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

Surgical specialty group 

Estimated 

CY 2018 

ASC payments 

(in millions) 

Estimated 

CY 2019 

percent 

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. 

• Column 1—CPT/HCPCS code. 

• Column 2—Short Descriptor of the 

HCPCS code. 

• 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. 

• 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

CPT/HCPCS 

code Short descriptor 

Estimated 

CY 2018 

ASC payment 

(in millions) 

Estimated 

CY 2019 

percent 

change 

(1) (2) (3) (4) 

66984 ............. Cataract surg w/iol 1 stage ......................................................................................................... $1,206 0 

45380 ............. Colonoscopy and biopsy ............................................................................................................. 228 4 

63685 ............. Insrt/redo spine n generator ........................................................................................................ 221 ¥2 

43239 ............. Egd biopsy single/multiple ........................................................................................................... 180 2 

63650 ............. Implant neuroelectrodes .............................................................................................................. 166 0 

45385 ............. Colonoscopy w/lesion removal .................................................................................................... 156 4 

64483 ............. Inj foramen epidural l/s ................................................................................................................ 101 14 

0191T ............. Insert ant segment drain int ........................................................................................................ 96 4 

66982 ............. Cataract surgery complex ........................................................................................................... 89 0 

64635 ............. Destroy lumb/sac facet jnt ........................................................................................................... 75 1 

66821 ............. After cataract laser surgery ......................................................................................................... 69 1 

29827 ............. Arthroscop rotator cuff repr ......................................................................................................... 65 2 

64493 ............. Inj paravert f jnt l/s 1 lev .............................................................................................................. 63 14 

62323 ............. Njx interlaminar lmbr/sac ............................................................................................................. 53 11 

64590 ............. Insrt/redo pn/gastr stimul ............................................................................................................. 51 3 

G0105 ............ Colorectal scrn; hi risk ind ........................................................................................................... 47 4 

G0121 ............ Colon ca scrn not hi rsk ind ........................................................................................................ 42 4 

45378 ............. Diagnostic colonoscopy ............................................................................................................... 41 4 

64721 ............. Carpal tunnel surgery .................................................................................................................. 34 1 

15823 ............. Revision of upper eyelid .............................................................................................................. 33 ¥1 

29881 ............. Knee arthroscopy/surgery ........................................................................................................... 29 ¥1 

C9740 ............ Cysto impl 4 or more ................................................................................................................... 28 2 

64561 ............. Implant neuroelectrodes .............................................................................................................. 26 1 

67042 ............. Vit for macular hole ..................................................................................................................... 26 1 

29880 ............. Knee arthroscopy/surgery ........................................................................................................... 25 ¥1 

26055 ............. Incise finger tendon sheath ......................................................................................................... 25 ¥3 

28285 ............. Repair of hammertoe ................................................................................................................... 24 ¥1 

63655 ............. Implant neuroelectrodes .............................................................................................................. 24 5 

52000 ............. Cystoscopy .................................................................................................................................. 23 ¥1 

G0260 ............ Inj for sacroiliac jt anesth ............................................................................................................ 22 12 


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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. 

• 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. 


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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 RiskStandardized 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 


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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 RiskStandardized 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 ChartAbstracted 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 chartabstracted measure for the CY 2021 

payment determination would reduce 

collection of information burden by 

153,130 hours and $5.6 million (153,130 

hours × $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. 


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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 × $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 Followup 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 RiskStandardized 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/ 


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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 Claimsbased 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 ChartAbstracted 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 × $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 × $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 × $107.38). Therefore, 

we estimate that the total cost of 

reviewing this regulation is $2,912,146 

($859.04 × 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-smallbusiness-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 


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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 offcampus 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 

■ 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). 

■ 2. Section 416.164 is amended by 

revising paragraph (a)(4) and adding 

paragraph (b)(6) to read as follows: 

§ 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. 

* * * * * 

■ 3. Section 416.171 is amended by 

revising paragraphs (a)(2) and (b)(1) and 

(2) to read as follows: 

§ 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. 


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(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 § 416.164(b), with the 

exception of radiology services and 

certain diagnostic tests as provided in 

§ 416.164(b)(5) and non-opioid pain 

management drugs that function as a 

supply when used in a surgical 

procedure as provided in 

§ 416.164(b)(6). 

(2) The device portion of deviceintensive procedures, which are 

procedures that— 

(i) Involve implantable devices 

assigned a CPT or HCPCS code; 

(ii) Utilize devices (including singleuse 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. 

* * * * * 

■ 4. Section 416.320 is amended by 

revising paragraph (c) to read as follows: 

§ 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 

■ 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). 

■ 6. Section 419.32 is amended by 

adding paragraph (b)(1)(iv)(B)(10) to 

read as follows: 

§ 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. 

* * * * * 

■ 7. Section 419.46 is amended by 

revising paragraphs (a)(1) through (3) 

and adding paragraph (h) to read as 

follows: 

§ 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 


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(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-bycase basis. Under this case-by-case 

approach, a measure will not be 

removed solely on the basis of meeting 

any specific factor. 

■ 8. Section 419.48 is amended by— 

■ a. Revising paragraph (a); 

■ b. Redesignating paragraphs (b) and 

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

respectively; 

■ c. Adding a new paragraph (b); 

■ d. Revising redesignated paragraph 

(d); and 

■ e. Adding paragraph (e). 

The revisions and additions read as 

follows: 

§ 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 § 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 § 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 offcampus 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 providerbased 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 offcampus 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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