DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Centers for Medicare & Medicaid Services 

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

[CMS-1613-P] 

RIN 0938-AS15 

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and 

Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; 

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

Certification of Inpatient Hospital Services; Medicare Advantage Organizations and 

Part D Sponsors: Appeals Process for Overpayments Associated with Submitted 

Data 

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

ACTION: Proposed rule. 

SUMMARY: This proposed rule would revise the Medicare hospital outpatient 

prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) 

payment system for CY 2015 to implement applicable statutory requirements and 

changes arising from our continuing experience with these systems. In this proposed 

rule, we describe the proposed changes to the amounts and factors used to determine the 

payment rates for Medicare services paid under the OPPS and those paid under the ASC 

payment system. In addition, this proposed rule would update and refine the 

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

Quality Reporting (ASCQR) Program. 
CMS-1613-P 2 

 In this document, we also are proposing changes to the data sources used for 

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

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

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

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

to establish a three-level appeals process for Medicare Advantage (MA) organizations 

and Part D sponsors that would be applicable to CMS-identified overpayments associated 

with data submitted by these organizations and sponsors. 

DATES: Comment Period: To be assured consideration, comments on all sections of 

this proposed rule must be received at one of the addresses provided in the ADDRESSES

section no later than 5 p.m. EST on [Insert 60 days from date of display at the Office 

of the Federal Register]. 

ADDRESSES: In commenting, please refer to file code CMS-1613-P. Because of staff 

and resource limitations, we cannot accept comments by facsimile (FAX) transmission. 

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

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

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

under the “submit a comment” tab. 

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

ONLY: 

Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 
CMS-1613-P 3 

 Attention: CMS-1613-P, 

 P.O. Box 8013, 

 Baltimore, MD 21244-1850. 

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

of the comment period. 

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

overnight mail to the following address ONLY: 

Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Attention: CMS-1613-P, 

 Mail Stop C4-26-05, 

 7500 Security Boulevard, 

 Baltimore, MD 21244-1850. 

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

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

addresses: 

 a. For delivery in Washington, DC— 

 Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Room 445-G, Hubert H. Humphrey Building, 

 200 Independence Avenue, S.W., 

 Washington, DC 20201. 
CMS-1613-P 4 

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

available to persons without Federal Government identification, commenters are 

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

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

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

 b. For delivery in Baltimore, MD— 

 Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 7500 Security Boulevard, 

 Baltimore, MD 21244-1850. 

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

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

staff members. 

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

delivery may be delayed and received after the comment period. 

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

the “SUPPLEMENTARY INFORMATION” section. 

FOR FURTHER INFORMATION, CONTACT:

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

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

CPT codes, and exceptions to the 2 times rule. 
CMS-1613-P 5 

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

Center Quality Reporting (ASCQR) Program – Program Administration and 

Reconsideration Issues, and for issues related to the Hospital Outpatient Quality 

Reporting - Program Administration, Validation, and Reconsideration Issues. 

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

OPPS & ASC payment files. 

 Erick Chuang, (410) 786-1816, for issues related to OPPS APC weights, OPPS 

data claims, geometric mean calculation, copayments, rural hospital payments, and wage 

index. 

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

related to partial hospitalization and community mental health center (CMHC) issues. 

 Eva Fung, (410) 786-7539, or Fiona Larbi, (410) 786-7224, or Felicia Diggs, 

(410) 786-1591, for issues related to HOQR and ASCQR measures issues and publication 

of HOQR program data issues. 

 Julie Gover, (410) 786-0525, for issues related to Medicare Advantage (MA) 

organizations and Medicare Part D sponsor overpayments. 

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

extended assessment and management composite APCs, hospital outpatient visits, 

inpatient procedures list, and no cost/full credit and partial credit devices. 

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

and comment indicators. 
CMS-1613-P 6 

 Barry Levi, (410) 786-4529, for issues related to OPPS pass-through devices, 

brachytherapy sources, brachytherapy composite APC, and multiple imaging composite 

APCs. 

 John McInnes, (410) 786-0791, for issues related to comprehensive APCs, 

provider-based issues, packaged items/services, OPPS 

drugs/radiopharmaceuticals/biologicals payments, new technology intraocular lenses 

(NTIOLs), and ambulatory surgical center (ASC) payments. 

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

cancer hospital payments, conversion factor, cost-to-charge ratios (CCRs), and outlier 

payments. 

 Daniel Schroder, (410) 786-7452, for issues related to physician certification of 

hospital inpatient services. 

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

Hospital Outpatient Payment (HOP Panel). 

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

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

process. 

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

and ambulatory surgical center payments not previously identified. 

SUPPLEMENTARY INFORMATION:

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

comment period are available for viewing by the public, including any personally 
CMS-1613-P 7 

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

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

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

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

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

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

Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 

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

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

1-800-743-3951. 

Electronic Access

 This Federal Register document is also available from the Federal Register

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

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

http://www.gpo.gov/fdsys/. 

Addenda Available Only Through the Internet on the CMS Web Site 

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

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

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

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

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

lengthy tables. Instead, these Addenda are published and available only on the CMS 
CMS-1613-P 8 

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

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

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

Alphabetical List of Acronyms Appearing in This Federal Register Document 

AHA American Hospital Association 

AMA American Medical Association 

APC Ambulatory Payment Classification 

ASC Ambulatory surgical center 

ASCQR Ambulatory Surgical Center Quality Reporting 

ASP Average sales price 

AWP Average wholesale price 

BBA Balanced Budget Act of 1997, Pub. L. 105-33 

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

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

BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection 

Act of 2000, Pub. L. 106-554 

BLS Bureau of Labor Statistics 

CAH Critical access hospital 

CAP Competitive Acquisition Program 

C-APC Comprehensive Ambulatory Payment Classification 
CMS-1613-P 9 

CASPER Certification and Survey Provider Enhanced Reporting 

CAUTI Catheter-associated urinary tract infection 

CBSA Core-Based Statistical Area 

CCI Correct Coding Initiative 

CCN CMS Certification Number 

CCR Cost-to-charge ratio 

CDC Centers for Disease Control and Prevention 

CEO Chief executive officer 

CERT Comprehensive Error Rate Testing 

CFR Code of Federal Regulations 

CLFS Clinical Laboratory Fee Schedule 

CMHC Community mental health center 

CMS Centers for Medicare & Medicaid Services 

CPI-U Consumer Price Index for All Urban Consumers 

CPT Current Procedural Terminology (copyrighted by the American Medical 

Association) 

CQM Clinical quality measure 

CR Change request 

CSAC Consensus Standards Approval Committee 

CY Calendar year 

DFO Designated Federal Official 

DRA Deficit Reduction Act of 2005, Pub. L. 109-171 
CMS-1613-P 10 

DRG Diagnosis-Related Group 

DSH Disproportionate share hospital 

EACH Essential access community hospital 

eCQM Electronically specified clinical quality measure 

ECT Electroconvulsive therapy 

ED Emergency department 

E/M Evaluation and management 

EHR Electronic health record 

ESRD End-stage renal disease 

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

FDA Food and Drug Administration 

FFS [Medicare] Fee-for-service 

FY Fiscal year 

FFY Federal fiscal year 

GAO Government Accountability Office 

HAI Healthcare-associated infection 

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

HCPCS Healthcare Common Procedure Coding System 

HCRIS Healthcare Cost Report Information System 

HEU Highly enriched uranium 

HIPAA Health Insurance Portability and Accountability Act of 1996, 

Pub. L. 104-191 
CMS-1613-P 11 

HITECH Health Information Technology for Economic and Clinical Health [Act] 

(found in the American Recovery and Reinvestment Act of 2009, Pub. L. 

111-5) 

HOP Hospital Outpatient Payment [Panel] 

HOPD Hospital outpatient department 

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

Modification 

ICD Implantable cardioverter defibrillator 

ICU Intensive care unit 

IHS Indian Health Service 

IMRT Intensity Modulated Radiation Therapy 

I/OCE Integrated Outpatient Code Editor 

IOL Intraocular lens 

IOM Institute of Medicine 

IORT Intraoperative radiation treatment 

IPPS [Hospital] Inpatient Prospective Payment System 

IQR [Hospital] Inpatient Quality Reporting 

LDR Low dose rate 

LOS Length of stay 

LTCH Long-term care hospital 

MAC Medicare Administrative Contractor 

MAP Measure Application Partnership 
CMS-1613-P 12 

MedPAC Medicare Payment Advisory Commission 

MEI Medicare Economic Index 

MFP Multifactor productivity 

MGCRB Medicare Geographic Classification Review Board 

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

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

MIPPA Medicare Improvements for Patients and Providers Act of 2008, 

Pub. L. 110-275 

MMA Medicare Prescription Drug, Improvement, and Modernization Act of 

2003, Pub. L. 108-173 

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

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

MPFS Medicare Physician Fee Schedule 

MRA Magnetic resonance angiography 

MRI Magnetic resonance imaging 

MSA Metropolitan Statistical Area 

NCCI National Correct Coding Initiative 

NHSN National Healthcare Safety Network 

NQF National Quality Forum 

NTIOL New technology intraocular lens 

NUBC National Uniform Billing Committee 

OACT [CMS] Office of the Actuary 
CMS-1613-P 13 

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

OIG [HHS] Office of the Inspector General 

OMB Office of Management and Budget 

OPD [Hospital] Outpatient Department 

OPO Organ Procurement Organization 

OPPS [Hospital] Outpatient Prospective Payment System 

OPSF Outpatient Provider-Specific File 

OQR [Hospital] Outpatient Quality Reporting 

OT Occupational therapy 

PBD Provider-Based Department 

PCR Payment-to-cost ratio 

PE Practice expense 

PEPPER Program for Evaluating Payment Patterns Electronic Report 

PHP Partial hospitalization program 

PHS Public Health Service [Act], Pub. L. 96-88 

PPI Producer Price Index 

PPS Prospective payment system 

PQRS Physician Quality Reporting System 

PT Physical therapy 

QDC Quality data code 

QIO Quality Improvement Organization 

RFA Regulatory Flexibility Act 
CMS-1613-P 14 

RTI Research Triangle Institute, International 

RVU Relative value unit 

SCH Sole community hospital 

SCOD Specified covered outpatient drugs 

SI Status indicator 

SIR Standardized infection ratio 

SLP Speech-language pathology 

SNF Skilled nursing facility 

SRS Stereotactic radiosurgery 

TEP Technical Expert Panel 

TMS Transcranial Magnetic Stimulation Therapy 

TOPs Transitional Outpatient Payments 

UR Utilization review 

USPSTF United States Preventive Services Task Force 

UTI Urinary tract infection 

VBP Value-based purchasing 

WAC Wholesale acquisition cost 

Table of Contents 

I. Summary and Background 

 A. Executive Summary of This Document 

 1. Purpose 

 2. Summary of the Major Provisions 
CMS-1613-P 15 

 3. Summary of Costs and Benefits 

 B. Legislative and Regulatory Authority for the Hospital OPPS 

 C. Excluded OPPS Services and Hospitals 

 D. Prior Rulemaking 

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

Formerly Named the Advisory Panel on Ambulatory Payment Classification Groups 

(APC Panel) 

 1. Authority of the Panel 

 2. Establishment of the Panel 

 3. Panel Meetings and Organizational Structure 

 F. Public Comments Received in Response to the CY 2014 OPPS/ASC Final 

Rule with Comment Period 

 II. Proposed Updates Affecting OPPS Payments 

 A. Proposed Recalibration of APC Relative Payment Weights 

 1. Database Construction 

 a. Database Source and Methodology 

 b. Proposed Use of Single and Multiple Procedure Claims 

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

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

Ratesetting 

 a. Claims Preparation 

 b. Splitting Claims and Creation of “Pseudo” Single Procedure Claims 
CMS-1613-P 16 

 (1) Splitting Claims 

 (2) Creation of “Pseudo” Single Procedure Claims 

 c. Completion of Claim Records and Geometric Mean Cost Calculations 

 (1) General Process 

 (2) Recommendations of the Panel Regarding Data Development 

 d. Proposed Calculation of Single Procedure APC Criteria-Based Costs 

 (1) Device-Dependent APCs 

 (2) Blood and Blood Products 

 (3) Brachytherapy Source Payment 

 e. Establishment of Comprehensive APCs 

 (1) Background 

 (2) Public Comments 

 (3) Proposed CY 2015 Policy for Comprehensive APCs 

 (4) Summary of Proposed CY 2015 Policies for Comprehensive APCs 

 f. Proposed Calculation of Composite APC Criteria-Based Costs 

 (1) Extended Assessment and Management Composite APCs (APCs 8002 and 

8003) 

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

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

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

8008) 

 3. Proposed Changes to Packaged Items and Services 
CMS-1613-P 17 

 a. Background and Rationale for Packaging in the OPPS 

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

Described by Add-On Codes 

 c. Proposed Packaging Policies for CY 2015 

 (1) Ancillary Services 

 (2) Prosthetic Supplies 

 4. Proposed Calculation of OPPS Scaled Payment Weights 

 B. Proposed Conversion Factor Update 

 C. Proposed Wage Index Changes 

 D. Proposed Statewide Average Default CCRs 

 E. Proposed Adjustment for Rural SCHs and EACHs under Section 

1833(t)(13)(B) of the Act 

 F. Proposed OPPS Payment to Certain Cancer Hospitals Described by Section 

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

 1. Background 

 2. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2015 

 G. Proposed Hospital Outpatient Outlier Payments 

 1. Background 

 2. Proposed Outlier Calculation 

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

Unadjusted Medicare Payment 

 I. Proposed Beneficiary Copayments 
CMS-1613-P 18 

 1. Background 

 2. Proposed OPPS Copayment Policy 

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

III. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies 

 A. Proposed OPPS Treatment of New CPT and Level II HCPCS Codes 

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

Effective April 1, 2014 and July 1, 2014 for Which We Are Soliciting Public Comments 

in this CY 2015 OPPS/ASC Proposed Rule 

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

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

January 1, 2015 for Which We Will Solicit Public Comments in the CY 2015 OPPS/ASC 

Final Rule with Comment Period 

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

That Would Be Released by AMA Before the January 1 Effective Date 

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

Effective January 1 

 b. Proposal to Modify the Current Process for Accepting Comments on New and 

Revised CPT Codes That Are Effective January 1 

 B. Proposed OPPS Changes--Variations within APCs 

 1. Background 

 2. Application of the 2 Times Rule 

 3. Proposed Exceptions to the 2 Times Rule 

 C. Proposed OPPS APC-Specific Policies 
CMS-1613-P 19 

1. Ophthalmic Procedures and Services 

 2. Female Reproductive Procedures (APCs 0188, 0189, 0192, 0193, and 0202) 

3. Image-Guided Breast Biopsy Procedures (APC 0005) 

4. Image-Guided Abscess Drainage Procedures (APCs 0005 and 0007) 

 5. Cystourethroscopy and Other Genitourinary Procedures (APCs 0160, 0161, 0162, and 

0163) 

6. Wound Treatments and Services (APCs 0015 and 0327) 

 a. Epidermal Autograft (APC 0327) 

 b. Negative Pressure Wound Therapy (NPWT) (APC 0015) 

7. Endoscopic Retrograde Cholangiopancreatography (ERCP) with Stent (APC 

0384) 

8. Radiation Therapy (APCs 0066, 0067, 0412, 0446, 0648, and 0667) 

IV. Proposed OPPS Payment for Devices 

 A. Proposed Pass-Through Payments for Devices 

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

 a. Background 

 b. Proposed CY 2015 Policy 

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

Packaged into APC Groups 

 a. Background 

 b. Proposed CY 2015 Policy 

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

Credit Devices 
CMS-1613-P 20 

 1. Background 

 2. Proposed Policy for CY 2015 

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

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

Drugs, Biologicals, and Radiopharmaceuticals 

 1. Background 

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

CY 2014 

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

Continuing Pass-Through Status in CY 2015 

 4. Proposed Provisions for Reducing Transitional Pass-Through Payments for 

Diagnostic Radiopharmaceuticals; Contrast Agents; Drugs, Biologicals, and 

Radiopharmaceuticals That Function as Supplies When Used in a Diagnostic Test or 

Procedure; and Drugs and Biologicals That Function as Supplies When Used in a 

Surgical Procedure to Offset Costs Packaged into APC Groups 

 a. Background 

 b. Proposed Payment Offset Policy for Diagnostic Radiopharmaceuticals 

 c. Proposed Payment Offset Policy for Contrast Agents 

 d. Proposed Payment Offset Policy for Products Packaged According to the 

Policy to Package Drugs, Biologicals, and Radiopharmaceuticals That Function as 

Supplies When Used in a Diagnostic Test or Procedure and Drugs and Biologicals That 

Function as Supplies When Used in a Surgical Procedure 
CMS-1613-P 21 

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

without Pass-Through Status 

 1. Background 

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

Radiopharmaceuticals 

 a. Background 

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

Describe Certain Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals 

(“Threshold-Packaged Drugs”) 

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

 d. Proposed Pass-Through Evaluation Process for Skin Substitutes 

 e. Proposed Packaging Determination for HCPCS Codes That Describe the Same 

Drug or Biological But Different Dosages 

 3. Proposed Payment for Drugs and Biologicals without Pass-Through Status 

That Are Not Packaged 

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

Other Separately Payable and Packaged Drugs and Biologicals 

 b. Proposed CY 2015 Payment Policy 

 4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals 

 5. Proposed Payment for Blood Clotting Factors 

 6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 

Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital Claims Data 
CMS-1613-P 22 

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

Biologicals, Radiopharmaceuticals, and Devices 

 A. Background 

 B. Proposed Estimate of Pass-Through Spending 

VII. Proposed OPPS Payment for Hospital Outpatient Visits 

 A. Background 

 B. Proposed Payment for Hospital Outpatient Clinic and Emergency Department 

Visits 

 C. Proposed Payment for Critical Care Services 

VIII. Proposed Payment for Partial Hospitalization Services 

 A. Background 

 B. Proposed PHP APC Update for CY 2015 

 C. Proposed Separate Threshold for Outlier Payments to CMHCs 

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

 A. Background 

 B. Proposed Changes to the Inpatient List 

X. Proposed Nonrecurring Policy Changes: Collecting Data on Services Furnished in 

Off-Campus Provider-Based Departments 

XI. Proposed CY 2015 OPPS Payment Status and Comment Indicators 

 A. Proposed CY 2015 OPPS Payment Status Indicator Definitions 

 B. Proposed CY 2015 Comment Indicator Definitions 

XII. Proposed Updates to the Ambulatory Surgical Center (ASC) Payment System 
CMS-1613-P 23 

 A. Background 

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

Payment System 

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

Covered Surgical Procedures and Covered Ancillary Services 

 B. Proposed Treatment of New Codes 

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

Codes and Level II HCPCS Codes 

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

Codes Implemented in April 2014 and July 2014 for Which We Are Soliciting Public 

Comments in This Proposed Rule 

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

Category III CPT Codes for Which We Will Be Soliciting Public Comments in the 

CY 2015 OPPS/ASC Final Rule with Comment Period 

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

Covered Ancillary Services 

 1. Covered Surgical Procedures 

 a. Proposed Additions to the List of ASC Covered Surgical Procedures 

 b. Proposed Covered Surgical Procedures Designated as Office-Based 

 (1) Background 

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

as Office-Based 
CMS-1613-P 24 

 c. Proposed ASC Covered Surgical Procedures Designated as Device-Intensive 

 (1) Background 

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

Device-Intensive for CY 2015 

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

Credit Devices 

 e. ASC Treatment of Surgical Procedures Proposed for Removal from the OPPS 

Inpatient List for CY 2015 

 2. Covered Ancillary Services 

 D. Proposed ASC Payment for Covered Surgical Procedures and Covered 

Ancillary Services 

 1. Proposed ASC Payment for Covered Surgical Procedures 

 a. Background 

 b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for 

CY 2015 

 c. Waiver of Coinsurance and Deductible for Certain Preventive Services 

 d. Proposed Payment for Cardiac Resynchronization Therapy Services 

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

Composite 

 2. Proposed Payment for Covered Ancillary Services 

 a. Background 

 b. Proposed Payment for Covered Ancillary Services for CY 2015 
CMS-1613-P 25 

 E. New Technology Intraocular Lenses (NTIOLs) 

 1. NTIOL Application Cycle 

 2. Requests to Establish New NTIOL Classes for CY 2015 

 3. Payment Adjustment 

 F. Proposed ASC Payment and Comment Indicators 

 1. Background 

 2. Proposed ASC Payment and Comment Indicators 

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

Payment Rates 

 1. Background 

 2. Proposed Calculation of the ASC Payment Rates 

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

 b. Updating the ASC Conversion Factor 

 3. Display of Proposed CY 2015 ASC Payment Rates 

XIII. Hospital Outpatient Quality Reporting Program Updates 

 A. Background 

 1. Overview 

 2. Statutory History of the Hospital OQR Program 

 3. Measure Updates and Data Publication 

 a. Maintenance of Technical Specifications for Quality Measures 

 b. Public Display of Quality Measures 
CMS-1613-P 26 

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

Previous Payment Determinations 

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

 1. Considerations in Removing Quality Measures from the Hospital OQR 

Program 

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

 3. Proposed Removal of Measures from the Hospital OQR Program for the 

CY 2017 Payment Determination and Subsequent Years 

 D. Quality Measures Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

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

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

Payment Determination and Subsequent Years 

 a. Clarification of Submission Deadline and Data Submitted 

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

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

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

Following Cataract Surgery 

 a. Correction of Response to Public Comments 

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

Payment Determination Measure Set 
CMS-1613-P 27 

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

Determination and Subsequent Years 

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

Subsequent Years 

 F. Possible Hospital OQR Program Measures and Topics for Future 

Consideration 

 1. Electronic Clinical Quality Measures 

 2. Partial Hospitalization Program Measures 

 3. Behavioral Health Measures 

 4. National Quality Strategy and CMS Quality Strategy Measure Domains 

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

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

Update 

 1. Background 

 2. Proposed Reporting Ratio Application and Associated Adjustment Policy for 

CY 2015 

 H. Proposed Requirements for Reporting Hospital OQR Program Data for the 

CY 2017 Payment Determination and Subsequent Years 

 1. Administrative Requirements for the CY 2017 Payment Determination and 

Subsequent Years 

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

 a. General Procedural Requirements 
CMS-1613-P 28 

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

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

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

Determination and Subsequent Years 

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

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

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

Determination and Subsequent Years 

 f. Proposed Review and Corrections Period for Chart-Abstracted Measures 

 3. Hospital OQR Program Validation Requirements for Chart-Abstracted 

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

Subsequent Years 

 a. Background 

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

Measures for the CY 2017 Payment Determination and Subsequent Years 

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

Determination and Subsequent Years 

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

and Subsequent Years 

 e. Proposed Medical Record Documentation Requests for Validation and 

Validation Score Calculation for the CY 2017 Payment Determination and Subsequent 

Years 
CMS-1613-P 29 

 I. Hospital OQR Program Reconsideration and Appeals Procedures for the 

CY 2017 Payment Determination and Subsequent Years 

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

Subsequent Years 

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

Program 

 A. Background 

 1. Overview 

 2. Statutory History of the Ambulatory Surgical Center Quality Reporting 

(ASCQR) Program 

 3. Regulatory History of the ASCQR Program 

 B. ASCQR Program Quality Measures 

 1. Considerations in the Selection of ASCQR Program Quality Measures 

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

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

 4. ASCQR Program Quality Measures Adopted in Previous Rulemaking 

 5. Proposed New ASCQR Program Quality Measure for the CY 2017 Payment 

Determination and Subsequent Years 

 6. ASCQR Program Measures for Future Consideration 

 a. ASCQR Program Measure Domains 

 b. Accelerating Health Information Exchange 

 7. Maintenance of Technical Specifications for Quality Measures 
CMS-1613-P 30 

 8. Public Reporting of ASCQR Program Data 

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

Requirements 

 1. Statutory Background 

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

Program Requirements for a Payment Determination Year 

 D. Administrative Requirements 

 1. Requirements Regarding QualityNet Account and Security Administrator 

 2. Requirements Regarding Participation Status 

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

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

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

Claims‐Based Measures Using QDCs 

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

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

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

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

Payment Determination and Proposed Voluntary Data Collection for ASC-11 for 

CY 2017 and Subsequent Payment Determination Years 

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

the CY 2017 Payment Determination and Subsequent Years 
CMS-1613-P 31 

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

Among Healthcare Personnel) Reported via the National Healthcare Safety Network 

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

 a. Previously Adopted Requirements for the CY 2016 Payment Determination 

 b. Proposed Data Collection Timeframes for the CY 2017 Payment 

Determination and Subsequent Years and Proposed Submission Deadlines for the 

CY 2016 Payment Determination and Subsequent Years 

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

 7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017 

Payment Determination and Subsequent Years 

 8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

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

to the Physician Self-Referral Law: Expansion Exception Process 

 A. Background 

 1. Statutory Basis 

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

Ownership Exceptions to the Physician Self-Referral Law 

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

Data 

 1. Medicaid Managed Care Data 

 2. Hospitals That Lack Filed Cost Reports for the Relevant Fiscal Years 
CMS-1613-P 32 

 C. Proposed Changes to Permit Supplemental Data Sources in the Expansion 

Exception Process 

 D. Additional Considerations 

 XVI. Proposed Revision of the Requirements for Physician Certification of 

Hospital Inpatient Services Other Than Psychiatric Inpatient Services 

 XVII. CMS-Identified Overpayments Associated with Payment Data Submitted 

by Medicare Advantage (MA) Organizations and Medicare Part D Sponsors (Proposed 

§§ 422.330 and 423.352) 

 A. Background 

 1. Medicare Part C Background 

 2. Medicare Part D Background 

 B. Provisions of our Proposals 

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

Date” 

 2. Request for Corrections of Payment Data 

 3. Proposed Payment Offset 

 a. Offset Amount 

 b. Payment Offset Notification 

 4. Proposed Appeals Process for MA Organizations and Part D Sponsors 

 a. Reconsideration 

 b. Informal Hearing 

 c. Review by Administrator 
CMS-1613-P 33 

 5. Matters Subject to Appeal and Burden of Proof 

 6. Effective Date of Proposed Appeals Process Provisions 

 XVIII. Files Available to the Public Via the Internet 

 XIX. Collection of Information Requirements 

 A. Legislative Requirements for Solicitation of Comments 

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

and Hospital Ownership Exceptions to the Physician Self-Referral Law: Expansion 

Exception Process (§ 411.362) 

 C. Associated Information Collections Not Specified in Regulatory Text 

 1. Hospital OQR Program 

 a. Revisions to the CY 2016 Payment Determination Estimates 

 b. Hospital OQR Program Requirements for the CY 2017 Payment 

Determination and Subsequent Years 

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

Determination and Subsequent Years 

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

Determination and Subsequent Years 

 e. Extraordinary Circumstances Extensions or Exemptions Process 

 f. Reconsideration and Appeals 

 2. ASCQR Program Requirements 
CMS-1613-P 34 

 a. Background 

 b. Revisions to the CY 2016 Payment Determination Estimates 

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

Subsequent Years 

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

Subsequent Years 

 e. Extraordinary Circumstances Extension or Exemptions Process 

 f. Reconsiderations and Appeals 

XX. Response to Comments 

XXI. Economic Analyses 

 A. Regulatory Impact Analysis 

 1. Introduction 

 2. Statement of Need 

 3. Overall Impacts for the Proposed OPPS and ASC Payment Provisions 

 4. Detailed Economic Analyses 

 a. Estimated Effects of Proposed OPPS Changes in this Proposed Rule 

 (1) Limitations of Our Analysis 

 (2) Estimated Effects of Proposed OPPS Changes on Hospitals 

 (3) Estimated Effects of Proposed OPPS Changes on CMHCs 

 (4) Estimated Effect of Proposed OPPS Changes on Beneficiaries 

 (5) Estimated Effects of Proposed OPPS Changes on Other Providers 
CMS-1613-P 35 

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

Programs 

 (7) Alternative OPPS Policies Considered 

 b. Estimated Effects of CY 2015 ASC Payment System Proposed Policies 

 (1) Limitations of Our Analysis 

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

ASCs 

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

Beneficiaries 

 (4) Alternative ASC Payment Policies Considered 

 c. Accounting Statements and Tables 

 d. Effects of Proposed Requirements for the Hospital OQR Program 

 e. Effects of CY 2014 Proposed Policies for the ASCQR Program 

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

Exceptions to the Physician Self-Referral Law 

 g. Effects of Proposed Policies Related to CMS-Identified Overpayments 

Associated with Payment Data Submitted by Medicare Advantage (MA) Organizations 

and Medicare Part D Sponsors 

 B. Regulatory Flexibility Act (RFA) Analysis 

 C. Unfunded Mandates Reform Act Analysis 

 D. Conclusion 

XXII. Federalism Analysis 
CMS-1613-P 36 

Regulation Text 

I. Summary and Background 

A. Executive Summary of This Document 

1. Purpose 

 In this proposed rule, we are proposing to update the payment policies and 

payment rates for services furnished to Medicare beneficiaries in hospital outpatient 

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

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

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

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

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

other statutory authorities in the relevant sections of this proposed rule. In addition, this 

proposed rule would update and refine the requirements for the Hospital Outpatient 

Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. 

 In this document, we also are proposing changes to the data sources used for 

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

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

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

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

to establish a three-level appeals process for Medicare Advantage (MA) organizations 

and Part D sponsors that would be applicable to CMS-identified overpayments associated 

with data submitted by these organizations and sponsors. 
CMS-1613-P 37 

2. Summary of the Major Provisions 

● OPPS Update: For CY 2015, we are proposing to increase the payment rates 

under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 2.1 

percent. This proposed increase is based on the proposed hospital inpatient market basket 

percentage increase of 2.7 percent for inpatient services paid under the hospital inpatient 

prospective payment system (IPPS), minus the proposed multifactor productivity (MFP) 

adjustment of 0.4 percentage points, and minus a 0.2 percentage point adjustment 

required by the Affordable Care Act. Under this proposed rule, we estimate that 

proposed total payments for CY 2015, including beneficiary cost-sharing, to the 

approximate 4,000 facilities paid under the OPPS (including general acute care hospitals, 

children’s hospitals, cancer hospitals, and community mental health centers (CMHCs)), 

will be approximately $56.5 billion, an increase of approximately $5.2 billion compared 

to CY 2014 payments, or $800 million excluding our estimated changes in enrollment, 

utilization, and case-mix. 

 We are proposing to continue to implement the statutory 2.0 percentage point 

reduction in payments for hospitals failing to meet the hospital outpatient quality 

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

and copayments for all applicable services. 

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

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

essential access community hospitals (EACHs). This adjustment will apply to all services 
CMS-1613-P 38 

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

under the pass-through payment policy, and items paid at charges reduced to cost. 

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

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

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

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

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

proposed CY 2015 cancer hospital payment adjustment to be paid at cost report 

settlement. That is, the proposed payment adjustments will be the additional payments 

needed to result in a PCR equal to 0.89 for each cancer hospital. 

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

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

drugs and biologicals that do not have pass-through status would be set at the statutory 

default of average sales price (ASP) plus 6 percent. 

● Packaging Policies: We are proposing to conditionally package certain 

ancillary services when they are integral, ancillary, supportive, dependent, or adjunctive 

to a primary service. The initial set of services proposed to be packaged under this 

ancillary service policy are the services assigned to APCs having a proposed APC 

geometric mean cost (prior to application of status indicator Q1) of less than or equal to 

$100. This proposed $100 geometric mean cost limit for the APC is part of the 

methodology of establishing an initial set of conditionally packaged ancillary service 

APCs, and is not meant to represent a threshold above which a given ancillary service 
CMS-1613-P 39 

would not be packaged, but as a basis for selecting an initial set of APCs that would 

likely be updated and expanded in future years. 

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

implement, with several modifications, the policy for comprehensive APCs that was 

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

January 1, 2015. We are proposing to continue to define the services assigned to 

comprehensive APCs as primary services, and to define a comprehensive APC as a 

classification for the provision of a primary service and all adjunctive services and 

supplies provided to support the delivery of the primary service. We would continue to 

consider the entire hospital stay, defined as all services reported on the hospital claim 

reporting the primary service, to be one comprehensive service for the provision of a 

primary service into which all other services appearing on the claim would be packaged. 

This would result in a single Medicare payment and a single beneficiary copayment 

under the OPPS for the comprehensive service based on all included charges on the 

claim. 

 We are proposing a total of 28 comprehensive APCs for CY 2015, including all of 

the device-dependent APCs remaining after some restructuring and consolidation of these 

APCs and two comprehensive APCs for other procedures that are either largely device 

dependent or represent single session services with multiple components (single-session 

cranial stereotactic radiosurgery and intraocular telescope implantation). We are 

proposing to modify the complexity adjustment criteria finalized last year, proposing 

lower volume and cost threshold criteria for complexity adjustments. Finally, we are 
CMS-1613-P 40 

proposing to package all add-on codes furnished as part of a comprehensive service, 

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

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

primary service for a potential complexity adjustment. 

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

to increase payment rates under the ASC payment system by 1.2 percent. This proposed 

increase is based on a projected CPI–U update of 1.7 percent minus a multifactor 

productivity adjustment required by the Affordable Care Act that is projected to be 0.5 

percent. Based on this proposed update, we estimate that total payments to ASCs 

(including beneficiary cost-sharing and estimated changes in enrollment, utilization, and 

case-mix), for CY 2015 would be approximately $4.086 billion, an increase of 

approximately $243 million compared to estimated CY 2014 payments. 

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

OQR Program, we are proposing to add one claims-based quality measure for the 

CY 2017 payment determination and subsequent years. We are proposing to refine the 

criteria for determining when to remove a measure because it is “topped-out” and we are 

proposing to remove three measures due to “topped-out” status. In addition, we are 

updating several previously adopted measures. We are proposing to exclude one 

previously adopted measure from the measure set for the CY 2016 payment 

determination and to change this measure from required to voluntary for the CY 2017 

payment determination and subsequent years. Hospitals would not be subject to payment 

reductions with respect to this measure. In addition, we are proposing to formalize a 
CMS-1613-P 41 

review and corrections period for chart-abstracted measures. We also are proposing 

updates to validation procedures and changes to regulation text to correct typographical 

errors. Finally, we are clarifying how we refer to the extraordinary circumstances 

extensions or exemptions process. 

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

ASCQR Program, we are proposing to adopt one new quality measure for the CY 2017 

payment determination and subsequent years. The measure would be computed using 

Medicare claims data and would not impose any additional burden on ASC facilities. We 

also are proposing that one measure previously adopted for the CY 2016 and subsequent 

years’ payment determinations be excluded from the CY 2016 measure set and that this 

measure be voluntarily reported for the CY 2017 payment determination and subsequent 

years, rather than mandatorily reported. We would not subject ASCs to payment 

reductions with respect to this measure for the CY 2016 payment determination or during 

the period of voluntary reporting. In addition, we are proposing to define the data 

collection timeframes and submission deadlines for one previously adopted measure, 

noting the delayed data collection of two measures for the CY 2016 payment 

determination, and clarifying how we refer to the extraordinary circumstances extensions 

or exemptions process. 

3. Summary of Costs and Benefits 

 In sections XXI. and XXII. of this proposed rule, we set forth a detailed analysis 

of the regulatory and federalism impacts that the proposed changes would have on 

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

a. Impacts of the OPPS Update 
CMS-1613-P 42 

(1) Impacts of All Proposed OPPS Changes 

 Table 52 in section XXI. of this proposed rule displays the distributional impact all the 

proposed OPPS changes on various groups of hospitals and CMHCs for CY 2015 compared to all 

estimated OPPS payments in CY 2014. We estimate that the proposed policies in this proposed 

rule would result in a 2.2 percent overall increase in OPPS payments to providers. We estimate 

that proposed total OPPS payments for CY 2015, including beneficiary cost-sharing, to 

the approximate 4,000 facilities paid under the OPPS (including general acute care 

hospitals, children’s hospitals, cancer hospitals, and community mental health centers 

(CMHCs)), will be approximately $56.5 billion, an increase of approximately $5.2 billion 

compared to CY 2014 payments, or $800 million, excluding our estimated changes in 

enrollment, utilization, and case-mix.

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

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

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

the type of provider furnishing the service, we estimate a -1.6 percent decrease in CY 2015 

payments to CMHCs relative to their CY 2014 payments. 

(2) Impacts of the Proposed Updated Wage Indexes 

 We estimate that our proposal to update the wage indexes and apply the frontier State 

wage index, including changes resulting from the proposed adoption of the new OMB labor 

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

have a positive impact on payments to hospitals. 

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

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

that are eligible for the rural adjustment or for the cancer hospital payment adjustment. We are 
CMS-1613-P 43 

not proposing to make any change in policies for determining the rural and cancer hospital 

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

budget neutrality adjustments for these proposed policies. 

(4) Impacts of the Proposed OPD Fee Schedule Increase Factor 

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

increase factor of 2.1 percent to the conversion factor for CY 2015 would mitigate the small 

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

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

would experience increases of approximately 2.1 percent for urban hospitals and 2.4 percent for 

rural hospitals. Classifying hospitals by teaching status or type of ownership suggests that these 

hospitals will receive similar increases. 

b. Impacts of the Proposed ASC Payment Update 

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

aggregated into surgical specialty groups using CPT and HCPCS code range definitions. The 

proposed percentage change in estimated total payments by specialty groups under the proposed 

CY 2015 payment rates compared to estimated CY 2014 payment rates ranges between -3.0 

percent for cardiovascular system procedures and 12 percent for hematologic and lymphatic 

system procedures. 

c. Impacts of the Hospital OQR Program 

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

hospitals that do not receive a full annual payment update. 

d. Impacts of the ASCQR Program 

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

number of ASCs that do not receive a full annual payment update. 
CMS-1613-P 44 

B. Legislative and Regulatory Authority for the Hospital OPPS 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

on February 8, 2006; the Medicare Improvements and Extension Act under Division B of 

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

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

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

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

enacted on July 15, 2008; the Patient Protection and Affordable Care Act 
CMS-1613-P 45 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

and certain inpatient hospital services that are paid under Part B. 

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

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

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

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

locality in which the hospital or CMHC is located. 
CMS-1613-P 46 

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

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

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

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

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

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

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

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

or service assigned to an APC group. 

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

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

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

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

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

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

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

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

which we refer to as New Technology APCs. These New Technology APCs are 

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, 
CMS-1613-P 47 

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

assign it to a clinically appropriate APC group. 

C. Excluded OPPS Services and Hospitals 

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

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

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

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

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

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

annual wellness visit providing personalized prevention plan services. The Secretary 

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

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

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

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

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

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

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

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

payment under the OPPS in regulations at 42 CFR 419.22. 

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

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

hospitals, but only for services that are paid under a cost containment waiver in 
CMS-1613-P 48 

accordance with section 1814(b)(3) of the Act; critical access hospitals (CAHs); hospitals 

located outside of the 50 States, the District of Columbia, and Puerto Rico; and 

Indian Health Service (IHS) hospitals. 

D. Prior Rulemaking 

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

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

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

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

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

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

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

data, and other relevant information and factors. 

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

Federal Register annually to implement statutory requirements and changes arising from 

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

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

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

Authority of the Panel 

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

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

we consult with an external advisory panel of experts to annually review the clinical 
CMS-1613-P 49 

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

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

the Secretary established the Advisory Panel on Ambulatory Payment Classification 

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

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

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

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

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

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

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

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

2. Establishment of the Panel 

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

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

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

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

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

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

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

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

the Panel continues to be technical in nature; is governed by the provisions of the FACA; 
CMS-1613-P 50 

may convene up to three meetings per year; has a Designated Federal Official (DFO); and 

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

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

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

therefore to add CAHs to its membership. 

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

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

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

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

ps.asp#TopOfPage. 

3. Panel Meetings and Organizational Structure 

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

March 10, 2014. Prior to each meeting, we publish a notice in the Federal Register to 

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

and to announce new members. 

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

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

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

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

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

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

Subcommittee reviews and makes recommendations to the Panel on all technical issues 
CMS-1613-P 51 

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

example, APC configurations and APC relative payment weights). The Subcommittee 

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

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

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

appropriate APC placement of HCPCS codes regarding services for which separate 

payment is made. 

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

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

meeting that the subcommittees continue. We accepted this recommendation. 

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

Panel meeting are included in the sections of this proposed rule that are specific to each 

recommendation. For discussions of earlier Panel meetings and recommendations, we 

refer readers to previously published OPPS/ASC proposed and final rules, the CMS Web 

site mentioned earlier in this section, and the FACA database at: 

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

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

Period 

 We received 490 timely pieces of correspondence on the CY 2014 OPPS/ASC 

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

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

APC assignments and/or status indicators of new or replacement HCPCS codes 
CMS-1613-P 52 

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

Summaries of the public comments on new or replacement codes will be set forth in the 

CY 2015 final rule with comment period under the appropriate subject-matter headings. 

However, we are summarizing the public comments on the CY 2014 OPPS/ASC final 

rule with comment period regarding comprehensive APCs in this proposed rule rather 

than the CY 2015 final rule with comment period, as we are proposing several 

methodological changes in response to these public comments. 

II. Proposed Updates Affecting OPPS Payments 

A. Proposed Recalibration of APC Relative Payment Weights 

1. Database Construction 

a. Database Source and Methodology 

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

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

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

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

each APC group. 

 For the CY 2015 OPPS, we are proposing to recalibrate the APC relative payment 

weights for services furnished on or after January 1, 2015, and before January 1, 2016 

(CY 2015), using the same basic methodology that we described in the CY 2014 

OPPS/ASC final rule with comment period. That is, we are proposing to recalibrate the 

relative payment weights for each APC based on claims and cost report data for hospital 

outpatient department (HOPD) services, using the most recent available data to construct 
CMS-1613-P 53 

a database for calculating APC group weights. Therefore, for the purpose of recalibrating 

the proposed APC relative payment weights for CY 2015, we used approximately 

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

resolved and payment has been made) for hospital outpatient department services 

furnished on or after January 1, 2013, and before January 1, 2014. For exact counts of 

claims used, we refer readers to the claims accounting narrative under supporting 

documentation for this CY 2015 OPPS/ASC proposed rule on the CMS Web site at: 

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

 Of the approximately 149 million final action claims for services provided in 

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

proposed rule, approximately 119 million claims were the type of bill potentially 

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

services payable under the OPPS). Of the approximately 119 million claims, 

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

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

or no HCPCS codes reported on the claim). From the remaining approximately 114 

million claims, we created approximately 94 million single records, of which 

approximately 46 million were “pseudo” single or “single session” claims (created from 

approximately 21 million multiple procedure claims using the process we discuss later in 

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

excess of +/- 3 standard deviations from the geometric mean, yielding approximately 
CMS-1613-P 54 

94 million single bills for ratesetting. As described in section II.A.2. of this proposed 

rule, our data development process is designed with the goal of using appropriate cost 

information in setting the APC relative payment weights. The bypass process is 

described in section II.A.1.b. of this proposed rule. This section discusses how we 

develop “pseudo” single procedure claims (as defined below), with the intention of using 

more appropriate data from the available claims. In some cases, the bypass process 

allows us to use some portion of the submitted claim for cost estimation purposes, while 

the remaining information on the claim continues to be unusable. Consistent with the 

goal of using appropriate information in our data development process, we only use 

claims (or portions of each claim) that are appropriate for ratesetting purposes. 

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

and B to this proposed rule (which are available via the Internet on the CMS Web site) 

were calculated using claims from CY 2013 that were processed through December 31, 

2013. While prior to CY 2013 we historically based the payments on median hospital 

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

the cost-based relative payment weights for the OPPS using geometric mean costs, as 

discussed in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 

through 68271). For the CY 2015 OPPS, we are proposing to use this same 

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

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

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

to believe that it is appropriate to use the most current full calendar year claims data and 
CMS-1613-P 55 

the most recently submitted cost reports to calculate the relative costs underpinning the 

APC relative payment weights and the CY 2015 payment rates. 

b. Proposed Use of Single and Multiple Procedure Claims 

 For CY 2015, in general, we are proposing to continue to use single procedure 

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

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

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

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

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

across multiple procedures performed on the same date of service. 

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

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

procedures. As we have for several years, we are proposing to continue to use date of 

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

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

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

multiple procedure claims. In many cases, this enables us to create multiple “pseudo” 

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

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

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

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

bypass list to generate “pseudo” single procedure claims is well documented, most 
CMS-1613-P 56 

recently in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74849 

through 74851). In addition, for CY 2008 (72 FR 66614 through 66664), we increased 

packaging and created the first composite APCs, and continued those policies through 

CY 2014. Increased packaging and creation of composite APCs also increased the 

number of bills that we were able to use for ratesetting by enabling us to use claims that 

contained multiple major procedures that previously would not have been usable. 

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

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

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

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

services through CY 2014, and we are proposing to continue this policy for CY 2015. 

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

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

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

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

policies for CY 2014. In addition, we are proposing to establish additional packaging 

policies for the CY 2015 OPPS, as discussed in section II.A.3. of this proposed rule. 

 We are proposing to continue to apply these processes to enable us to use as much 

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

us to create, for this proposed rule, approximately 46 million “pseudo” single procedure 

claims, including multiple imaging composite “single session” bills (we refer readers to 
CMS-1613-P 57 

section II.A.2.f.(5) of this proposed rule for further discussion), to add to the 

approximately 48 million “natural” single procedure claims. 

 For CY 2015, we are proposing to bypass 227 HCPCS codes that are identified in 

Addendum N to this proposed rule (which is available via the Internet on the CMS Web 

site). Since the inception of the bypass list, which is the list of codes to be bypassed to 

convert multiple procedure claims to “pseudo” single procedure claims, we have 

calculated the percent of “natural” single bills that contained packaging for each HCPCS 

code and the amount of packaging on each “natural” single bill for each code. Each year, 

we generally retain the codes on the previous year’s bypass list and use the updated 

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

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

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

used to model the payment rates for CY 2014) to determine whether it would be 

appropriate to add additional codes to the previous year’s bypass list. For CY 2015, we 

are proposing to continue to bypass all of the HCPCS codes on the CY 2014 OPPS 

bypass list, with the exception of HCPCS codes that we are proposing to delete for 

CY 2015, which are listed in Table 1 of this proposed rule. We also are proposing to 

remove HCPCS codes that are not separately paid under the OPPS because the purpose of 

the bypass list is to obtain more data for those codes relevant to ratesetting. Some of the 

codes we are proposing to remove from the CY 2015 bypass list are affected by the 

CY 2015 proposed packaging policy, discussed in section II.A.3. of this proposed rule. 

In addition, we are proposing to add to the bypass list for CY 2015 HCPCS codes not on 
CMS-1613-P 58 

the CY 2014 bypass list that, using either the CY 2014 final rule data (CY 2012 claims) 

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

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

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

geometric mean costs, we also are proposing that the packaged cost criterion continue to 

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

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

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

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

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

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

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

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

number of single procedure claims ensures that observed outcomes are sufficiently 

representative of packaging that might occur in the multiple claims. 

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

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

limiting the amount of packaging being redistributed to the separately payable procedures 

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

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

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

procedure claims is equal to or less than $55. This criterion also limits the amount of 
CMS-1613-P 59 

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

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

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

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

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

 We note that, as we did for CY 2014, we are proposing to continue to establish 

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

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

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

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

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

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

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

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

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

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

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

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

comment period (78 FR 74838), we are proposing for CY 2015 to continue to update the 

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

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

(78 FR 74838), we determined that the threshold remains for CY 2015 at $55 ($55.66 
CMS-1613-P 60 

rounded to $55, the nearest $5 increment). Therefore, we are proposing to set the 

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

considered for addition to the CY 2015 OPPS bypass list. 

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

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

 In addition, we are proposing to continue to include on the bypass list HCPCS 

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

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

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

commenters with specialized knowledge of the packaging associated with specific 

services. We also are proposing to continue to include certain HCPCS codes on the 

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

companion code where services always appear together and where there would otherwise 

be few single procedure claims available for ratesetting. For example, we have 

previously discussed our reasoning for adding HCPCS code G0390 (Trauma response 

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

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

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

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

creating the set of “pseudo” single procedure claims, claims that contain “overlap bypass 

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

multiple imaging composite APCs) were identified first. These HCPCS codes were then 
CMS-1613-P 61 

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

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

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

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

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

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

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

rule for further discussion of the treatment of “overlap bypass codes.”) This process also 

created multiple imaging composite “single session” bills that could be used for 

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

proposed multiple imaging composite APCs are identified by asterisks (*) in Addendum 

N to this proposed rule (which is available via the Internet on the CMS Web site). 

 Addendum N to this proposed rule (which is available via the Internet on the 

CMS Web site) includes the proposed list of bypass codes for CY 2015. The proposed 

list of bypass codes contains codes that were reported on claims for services in CY 2013 

and, therefore, includes codes that were in effect in CY 2013 and used for billing but 

were deleted for CY 2014. We retained these deleted bypass codes on the proposed 

CY 2015 bypass list because these codes existed in CY 2013 and were covered OPD 

services in that period, and CY 2013 claims data are used to calculate CY 2015 payment 

rates. Keeping these deleted bypass codes on the bypass list potentially allows us to 

create more “pseudo” single procedure claims for ratesetting purposes. “Overlap bypass 

codes” that were members of the proposed multiple imaging composite APCs are 
CMS-1613-P 62 

identified by asterisks (*) in the third column of Addendum N to this proposed rule. 

HCPCS codes that we are proposing to add for CY 2015 are identified by asterisks (*) in 

the fourth column of Addendum N. 

 Table 1 below contains the list of codes that we are proposing to remove from the 

CY 2015 bypass list because these codes were either deleted from the HCPCS before 

CY 2013 (and therefore were not covered OPD services in CY 2013) or are not 

separately payable codes under the proposed CY 2015 OPPS because these codes are not 

used for ratesetting through the bypass process. The list of codes proposed for removal 

from the bypass list includes those that would be affected by the proposed CY 2015 

OPPS packaging policy described in section II.A.3. of this proposed rule. 

TABLE 1.—HCPCS CODES PROPOSED TO BE REMOVED FROM THE 

CY 2015 BYPASS LIST 

HCPCS 

Code HCPCS Short Descriptor 

11056 Trim skin lesions 2 to 4 

11300 Shave skin lesion 0.5 cm/< 

11301 Shave skin lesion 0.6-1.0 cm 

11719 Trim nail(s) any number 

11720 Debride nail 1-5 

11721 Debride nail 6 or more 

17000 Destruct premalg lesion 

17110 Destruct b9 lesion 1-14 

29240 Strapping of shoulder 

29260 Strapping of elbow or wrist 

29280 Strapping of hand or finger 

29520 Strapping of hip 

29530 Strapping of knee 

51741 Electro-uroflowmetry first 

51798 Us urine capacity measure 

53601 Dilate urethra stricture 

53661 Dilation of urethra 
CMS-1613-P 63 

HCPCS 

Code HCPCS Short Descriptor 

54240 Penis study 

67820 Revise eyelashes 

69210 Remove impacted ear wax uni 

69220 Clean out mastoid cavity 

70030 X-ray eye for foreign body 

70100 X-ray exam of jaw <4views 

70110 X-ray exam of jaw 4/> views 

70120 X-ray exam of mastoids 

70130 X-ray exam of mastoids 

70140 X-ray exam of facial bones 

70150 X-ray exam of facial bones 

70160 X-ray exam of nasal bones 

70200 X-ray exam of eye sockets 

70210 X-ray exam of sinuses 

70220 X-ray exam of sinuses 

70240 X-ray exam pituitary saddle 

70250 X-ray exam of skull 

70260 X-ray exam of skull 

70320 Full mouth x-ray of teeth 

70328 X-ray exam of jaw joint 

70330 X-ray exam of jaw joints 

70355 Panoramic x-ray of jaws 

70360 X-ray exam of neck 

71021 Chest x-ray frnt lat lordotc 

71022 Chest x-ray frnt lat oblique 

71023 Chest x-ray and fluoroscopy 

71030 Chest x-ray 4/> views 

71035 Chest x-ray special views 

71100 X-ray exam ribs uni 2 views 

71101 X-ray exam unilat ribs/chest 

71110 X-ray exam ribs bil 3 views 

71111 X-ray exam ribs/chest4/> vws 

71120 X-ray exam breastbone 2/>vws 

71130 X-ray strenoclavic jt 3/>vws 

72020 X-ray exam of spine 1 view 

72040 X-ray exam neck spine 2-3 vw 

72050 X-ray exam neck spine 4/5vws 

72052 X-ray exam neck spine 6/>vws 
CMS-1613-P 64 

HCPCS 

Code HCPCS Short Descriptor 

72069 X-ray exam trunk spine stand 

72070 X-ray exam thorac spine 2vws 

72072 X-ray exam thorac spine 3vws 

72074 X-ray exam thorac spine4/>vw 

72080 X-ray exam trunk spine 2 vws 

72090 X-ray exam scloiosis erect 

72100 X-ray exam l-s spine 2/3 vws 

72110 X-ray exam l-2 spine 4/>vws 

72114 X-ray exam l-s spine bending 

72120 X-ray bend only l-s spine 

72170 X-ray exam of pelvis 

72190 X-ray exam of pelvis 

72202 X-ray exam si joints 3/> vws 

72220 X-ray exam sacrum tailbone 

73000 X-ray exam of collar bone 

73010 X-ray exam of shoulder blade 

73020 X-ray exam of shoulder 

73030 X-ray exam of shoulder 

73050 X-ray exam of shoulders 

73060 X-ray exam of humerus 

73070 X-ray exam of elbow 

73080 X-ray exam of elbow 

73090 X-ray exam of forearm 

73100 X-ray exam of wrist 

73110 X-ray exam of wrist 

73120 X-ray exam of hand 

73130 X-ray exam of hand 

73140 X-ray exam of finger(s) 

73510 X-ray exam of hip 

73520 X-ray exam of hips 

73540 X-ray exam of pelvis & hips 

73550 X-ray exam of thigh 

73560 X-ray exam of knee 1 or 2 

73562 X-ray exam of knee 3 

73564 X-ray exam knee 4 or more 

73565 X-ray exam of knees 

73590 X-ray exam of lower leg 

73600 X-ray exam of ankle 
CMS-1613-P 65 

HCPCS 

Code HCPCS Short Descriptor 

73610 X-ray exam of ankle 

73620 X-ray exam of foot 

73630 X-ray exam of foot 

73650 X-ray exam of heel 

73660 X-ray exam of toe(s) 

74000 X-ray exam of abdomen 

74010 X-ray exam of abdomen 

74020 X-ray exam of abdomen 

74022 X-ray exam series abdomen 

76100 X-ray exam of body section 

76510 Ophth us b & quant a 

76514 Echo exam of eye thickness 

76516 Echo exam of eye 

76519 Echo exam of eye 

76645 Us exam breast(s) 

76816 Ob us follow-up per fetus 

76882 Us xtr non-vasc lmtd 

76970 Ultrasound exam follow-up 

76977 Us bone density measure 

77072 X-rays for bone age 

77073 X-rays bone length studies 

77074 X-rays bone survey limited 

77076 X-rays bone survey infant 

77077 Joint survey single view 

77078 Ct bone density axial 

77079 Ct bone density peripheral 

77080 Dxa bone density axial 

77081 Dxa bone density/peripheral 

77082 Dxa bone density vert fx 

77083 Radiographic absorptiometry 

80500 Lab pathology consultation 

80502 Lab pathology consultation 

85097 Bone marrow interpretation 

86510 Histoplasmosis skin test 

86850 Rbc antibody screen 

86870 Rbc antibody identification 

86880 Coombs test direct 

86885 Coombs test indirect qual 
CMS-1613-P 66 

HCPCS 

Code HCPCS Short Descriptor 

86886 Coombs test indirect titer 

86900 Blood typing abo 

86901 Blood typing rh (d) 

86904 Blood typing patient serum 

86905 Blood typing rbc antigens 

86906 Blood typing rh phenotype 

86930 Frozen blood prep 

86970 Rbc pretx incubatj w/chemicl 

86977 Rbc serum pretx incubj/inhib 

88104 Cytopath fl nongyn smears 

88106 Cytopath fl nongyn filter 

88107 Cytopath fl nongyn sm/fltr 

88108 Cytopath concentrate tech 

88112 Cytopath cell enhance tech 

88120 Cytp urne 3-5 probes ea spec 

88160 Cytopath smear other source 

88161 Cytopath smear other source 

88162 Cytopath smear other source 

88172 Cytp dx eval fna 1st ea site 

88173 Cytopath eval fna report 

88182 Cell marker study 

88184 Flowcytometry/ tc 1 marker 

88189 Flowcytometry/read 16 & > 

88300 Surgical path gross 

88302 Tissue exam by pathologist 

88304 Tissue exam by pathologist 

88305 Tissue exam by pathologist 

88307 Tissue exam by pathologist 

88312 Special stains group 1 

88313 Special stains group 2 

88321 Microslide consultation 

88323 Microslide consultation 

88325 Comprehensive review of data 

88329 Path consult introp 

88331 Path consult intraop 1 bloc 

88342 Immunohisto antibody slide 

88346 Immunofluorescent study 

88347 Immunofluorescent study 
CMS-1613-P 67 

HCPCS 

Code HCPCS Short Descriptor 

88348 Electron microscopy 

88358 Analysis tumor 

88360 Tumor immunohistochem/manual 

88361 Tumor immunohistochem/comput 

88365 Insitu hybridization (fish) 

88368 Insitu hybridization manual 

88385 Eval molecul probes 51-250 

88386 Eval molecul probes 251-500 

89049 Chct for mal hyperthermia 

89220 Sputum specimen collection 

89230 Collect sweat for test 

89240 Pathology lab procedure 

92020 Special eye evaluation 

92025 Corneal topography 

92060 Special eye evaluation 

92081 Visual field examination(s) 

92082 Visual field examination(s) 

92083 Visual field examination(s) 

92133 Cmptr ophth img optic nerve 

92134 Cptr ophth dx img post segmt 

92136 Ophthalmic biometry 

92225 Special eye exam initial 

92226 Special eye exam subsequent 

92230 Eye exam with photos 

92250 Eye exam with photos 

92285 Eye photography 

92286 Internal eye photography 

92520 Laryngeal function studies 

92541 Spontaneous nystagmus test 

92542 Positional nystagmus test 

92550 Tympanometry & reflex thresh 

92552 Pure tone audiometry air 

92553 Audiometry air & bone 

92555 Speech threshold audiometry 

92556 Speech audiometry complete 

92557 Comprehensive hearing test 

92567 Tympanometry 

92570 Acoustic immitance testing 
CMS-1613-P 68 

HCPCS 

Code HCPCS Short Descriptor 

92582 Conditioning play audiometry 

92603 Cochlear implt f/up exam 7/> 

92604 Reprogram cochlear implt 7/> 

92626 Eval aud rehab status 

93005 Electrocardiogram tracing 

93017 Cardiovascular stress test 

93225 Ecg monit/reprt up to 48 hrs 

93226 Ecg monit/reprt up to 48 hrs 

93270 Remote 30 day ecg rev/report 

93278 Ecg/signal-averaged 

93279 Pm device progr eval sngl 

93280 Pm device progr eval dual 

93281 Pm device progr eval multi 

93282 Icd device progr eval 1 sngl 

93283 Icd device progr eval dual 

93284 Icd device progr eval mult 

93285 Ilr device eval progr 

93288 Pm device eval in person 

93289 Icd device interrogate 

93290 Icm device eval 

93291 Ilr device interrogate 

93292 Wcd device interrogate 

93293 Pm phone r-strip device eval 

93296 Pm/icd remote tech serv 

93299 Icm/ilr remote tech serv 

93701 Bioimpedance cv analysis 

93786 Ambulatory bp recording 

93788 Ambulatory bp analysis 

93875 Extracranial study 

94015 Patient recorded spirometry 

94690 Exhaled air analysis 

95803 Actigraphy testing 

95869 Muscle test thor paraspinal 

95900 Motor nerve conduction test 

95921 Autonomic nrv parasym inervj 

95970 Analyze neurostim no prog 

96900 Ultraviolet light therapy 

96910 Photochemotherapy with uv-b 
CMS-1613-P 69 

HCPCS 

Code HCPCS Short Descriptor 

96912 Photochemotherapy with uv-a 

96921 Laser tx skin 250-500 sq cm 

98925 Osteopath manj 1-2 regions 

98926 Osteopath manj 3-4 regions 

98927 Osteopath manj 5-6 regions 

98928 Osteopath manj 7-8 regions 

98929 Osteopath manj 9-10 regions 

98940 Chiropract manj 1-2 regions 

98941 Chiropract manj 3-4 regions 

98942 Chiropractic manj 5 regions 

G0127 Trim nail(s) 

G0130 Single energy x-ray study 

G0166 Extrnl counterpulse, per tx 

G0239 Oth resp proc, group 

G0389 Ultrasound exam aaa screen 

G0404 Ekg tracing for initial prev 

G0424 Pulmonary rehab w exer 

Q0091 Obtaining screen pap smear 

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

 For CY 2015, we are proposing to continue to use the hospital-specific overall 

ancillary and departmental cost-to-charge ratios (CCRs) to convert charges to estimated 

costs through application of a revenue code-to-cost center crosswalk. To calculate the 

APC costs on which the proposed CY 2015 APC payment rates are based, we calculated 

hospital-specific overall ancillary CCRs and hospital-specific departmental CCRs for 

each hospital for which we had CY 2013 claims data by comparing these claims data to 

the most recently available hospital cost reports, which, in most cases, are from CY 2012. 

For the CY 2015 OPPS proposed rates, we used the set of claims processed during 

CY 2013. We applied the hospital-specific CCR to the hospital’s charges at the most 
CMS-1613-P 70 

detailed level possible, based on a revenue code-to-cost center crosswalk that contains a 

hierarchy of CCRs used to estimate costs from charges for each revenue code. That 

crosswalk is available for review and continuous comment on the CMS Web site at: 

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

 To ensure the completeness of the revenue code-to-cost center crosswalk, we 

reviewed changes to the list of revenue codes for CY 2013 (the year of claims data we 

used to calculate the proposed CY 2015 OPPS payment rates) and found that the National 

Uniform Billing Committee (NUBC) did not add any new revenue codes to the NUBC 

2013 Data Specifications Manual. 

 In accordance with our longstanding policy, we calculated CCRs for the standard 

and nonstandard cost centers accepted by the electronic cost report database. In general, 

the most detailed level at which we calculated CCRs was the hospital-specific 

departmental level. For a discussion of the hospital-specific overall ancillary CCR 

calculation, we refer readers to the CY 2007 OPPS/ASC final rule with comment period 

(71 FR 67983 through 67985). The calculation of blood costs is a longstanding exception 

(since the CY 2005 OPPS) to this general methodology for calculation of CCRs used for 

converting charges to costs on each claim. This exception is discussed in detail in the 

CY 2007 OPPS/ASC final rule with comment period and discussed further in section 

II.A.2.d.(2) of this proposed rule. 

 For the CCR calculation process, we used the same general approach that we used 

in developing the final APC rates for CY 2007 and thereafter, using the revised CCR 
CMS-1613-P 71 

calculation that excluded the costs of paramedical education programs and weighted the 

outpatient charges by the volume of outpatient services furnished by the hospital. We 

refer readers to the CY 2007 OPPS/ASC final rule with comment period for more 

information (71 FR 67983 through 67985). We first limited the population of cost 

reports to only those hospitals that filed outpatient claims in CY 2013 before determining 

whether the CCRs for such hospitals were valid. 

 We then calculated the CCRs for each cost center and the overall ancillary CCR 

for each hospital for which we had claims data. We did this using hospital-specific data 

from the Hospital Cost Report Information System (HCRIS). We used the most recent 

available cost report data, which, in most cases, were from cost reports with cost 

reporting periods beginning in CY 2012. For this proposed rule, we used the most 

recently submitted cost reports to calculate the CCRs to be used to calculate costs for the 

proposed CY 2015 OPPS payment rates. If the most recently available cost report was 

submitted but not settled, we looked at the last settled cost report to determine the ratio of 

submitted to settled cost using the overall ancillary CCR, and we then adjusted the most 

recent available submitted, but not settled, cost report using that ratio. We then 

calculated both an overall ancillary CCR and cost center-specific CCRs for each hospital. 

We used the overall ancillary CCR referenced above for all purposes that require use of 

an overall ancillary CCR. We are proposing to continue this longstanding methodology 

for the calculation of costs for CY 2015. 

 Since the implementation of the OPPS, some commenters have raised concerns 

about potential bias in the OPPS cost-based weights due to “charge compression,” which 
CMS-1613-P 72 

is the practice of applying a lower charge markup to higher cost services and a higher 

charge markup to lower cost services. As a result, the cost-based weights may reflect 

some aggregation bias, undervaluing high-cost items and overvaluing low-cost items 

when an estimate of average markup, embodied in a single CCR, is applied to items of 

widely varying costs in the same cost center. This issue was evaluated in a report by the 

Research Triangle Institute, International (RTI). The RTI final report can be found on 

RTI’s Web site at: http://www.rti.org/reports/cms/HHSM-500-2005-

0029I/PDF/Refining_Cost_to_Charge_ratios_200807_Final.pdf. For a complete 

discussion of the RTI recommendations, public comments, and our responses, we refer 

readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519 through 

68527). 

 We addressed the RTI finding that there was aggregation bias in both the IPPS 

and the OPPS cost estimation of expensive and inexpensive medical supplies in the 

FY 2009 IPPS final rule (73 FR 48458 through 45467). Specifically, we created one cost 

center for “Medical Supplies Charged to Patients” and one cost center for “Implantable 

Devices Charged to Patients,” essentially splitting the then current cost center for 

“Medical Supplies Charged to Patients” into one cost center for low-cost medical 

supplies and another cost center for high-cost implantable devices in order to mitigate 

some of the effects of charge compression. In determining the items that should be 

reported in these respective cost centers, we adopted commenters’ recommendations that 

hospitals should use revenue codes established by the AHA’s NUBC to determine the 

items that should be reported in the “Medical Supplies Charged to Patients” and the 
CMS-1613-P 73 

“Implantable Devices Charged to Patients” cost centers. For a complete discussion of the 

rationale for the creation of the new cost center for “Implantable Devices Charged to 

Patients,” a summary of public comments received, and our responses to those public 

comments, we refer readers to the FY 2009 IPPS final rule. 

 The cost center for “Implantable Devices Charged to Patients” has been available 

for use for cost reporting periods beginning on or after May 1, 2009. In the CY 2013 

OPPS/ASC final rule with comment period, we determined that a significant volume of 

hospitals were utilizing the “Implantable Devices Charged to Patients” cost center. 

Because a sufficient amount of data from which to generate a meaningful analysis was 

available, we established in the CY 2013 OPPS/ASC final rule with comment period a 

policy to create a distinct CCR using the “Implantable Devices Charged to Patients” cost 

center (77 FR 68225). We retained this policy for the CY 2014 OPPS and are proposing 

to continue this practice for the CY 2015 OPPS. 

 In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080), we 

finalized our proposal to create new standard cost centers for “Computed Tomography 

(CT),” “Magnetic Resonance Imaging (MRI),” and “Cardiac Catheterization,” and to 

require that hospitals report the costs and charges for these services under these new cost 

centers on the revised Medicare cost report Form CMS 2552-10. As we discussed in the 

FY 2009 IPPS and CY 2009 OPPS/ASC proposed and final rules, RTI also found that the 

costs and charges of CT scans, MRIs, and cardiac catheterization differ significantly from 

the costs and charges of other services included in the standard associated cost center. 

RTI concluded that both the IPPS and the OPPS relative payment weights would better 
CMS-1613-P 74 

estimate the costs of those services if CMS were to add standard costs centers for CT 

scans, MRIs, and cardiac catheterization in order for hospitals to report separately the 

costs and charges for those services and in order for CMS to calculate unique CCRs to 

estimate the cost from charges on claims data. We refer readers to the FY 2011 

IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a more detailed discussion 

on the reasons for the creation of standard cost centers for CT scans, MRIs, and cardiac 

catheterization. The new standard cost centers for CT scans, MRIs, and cardiac 

catheterization were effective for cost report periods beginning on or after May 1, 2010, 

on the revised cost report Form CMS-2552-10. 

 Using the December 2013 HCRIS update which we used to estimate costs in the 

CY 2015 OPPS ratesetting process, we were able to calculate a valid implantable device 

CCR for 2,895 hospitals, a valid MRI CCR for 1,886 hospitals, a valid CT scan CCR for 

1,976 hospitals, and a valid Cardiac Catheterization CCR for 1,364 hospitals. 

 In our CY 2014 OPPS/ASC proposed rule discussion (78 FR 43549), we noted 

that, for CY 2014, the estimated changes in geometric mean estimated APC cost of using 

data from the new standard cost centers for CT scans and MRIs appeared consistent with 

RTI’s analysis of cost report and claims data in the July 2008 final report (pages 5 and 6). 

RTI concluded that “in hospitals that aggregate data for CT scanning, MRI, or nuclear 

medicine services with the standard line for Diagnostic Radiology, costs for these 

services all appear substantially overstated, while the costs for plain films, ultrasound and 

other imaging procedures are correspondingly understated.” We also noted that there 

were limited additional impacts in the implantable device-related APCs from adopting 
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the new cost report Form CMS 2552-10 because we had used data from the standard cost 

center for implantable medical devices beginning in CY 2013 OPPS ratesetting, as 

discussed above. 

 As we indicated in prior rulemaking (77 FR 68223 through 68225), once we 

determined that cost report data for the new standard cost centers were sufficiently 

available, we would analyze that data and, if appropriate, we would propose to use the 

distinct CCRs for new standard cost centers described above in the calculation of the 

OPPS relative payment weights. As stated in the CY 2014 OPPS/ASC proposed rule 

(78 FR 43550), we have conducted our analysis and concluded that we should develop 

distinct CCRs for each of the new cost centers and use them in ratesetting. Therefore, we 

began in the CY 2014 OPPS, and are proposing to continue for the CY 2015 OPPS, to 

calculate the OPPS relative payment weights using distinct CCRs for cardiac 

catheterization, CT scan, MRI, and implantable medical devices. Section XXIII. of this 

proposed rule includes the impacts of calculating the proposed CY 2015 OPPS relative 

payment weights using these new standard cost centers. 

TABLE 2.—CCR STATISTICAL VALUES BASED ON USE OF DIFFERENT 

COST ALLOCATION METHODS 

 CT MRI 

Cost Allocation Method Median 

CCR 

Mean 

CCR 

Median 

CCR 

Mean 

CCR 

All Providers 0.0480 0.0620 0.0918 0.1164

Square Feet Only 0.0383 0.0503 0.0793 0.1036

Direct Assign 0.0683 0.0761 0.1069 0.1312

Dollar Value 0.0584 0.0739 0.1055 0.1299

Direct Assign and Dollar 

Value 0.0584 0.0738 0.1053 0.1294
CMS-1613-P 76 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74847), we 

finalized a policy to remove claims from providers that use a cost allocation method of 

“square feet” to calculate CCRs used to estimate costs associated with the CT and MRI 

APCs. This change allows hospitals additional time to use one of the more accurate cost 

allocation methods, and thereby improve the accuracy of the CCRs on which the OPPS 

relative payment weights are developed. As part of this transitional policy to estimate the 

CT and MRI APC relative payment weights using only cost data from providers that do 

not use “square feet” as the cost allocation statistic, we stated in the CY 2014 OPPS/ASC 

final rule with comment period that we will sunset this policy in 4 years once the updated 

cost report data become available for ratesetting purposes. We stated that we believe that 

4 years is sufficient time for hospitals that have not done so to transition to a more 

accurate cost allocation method and for the related data to be available for ratesetting 

purposes. Therefore, in CY 2018, we will estimate the CT and MRI APC relative 

payment weights using cost data from all providers, regardless of the cost allocation 

statistic employed. 
CMS-1613-P 77 

TABLE 3.—PERCENTAGE CHANGE IN ESTIMATED COST FOR CT AND 

MRI APCs WHEN EXCLUDING CLAIMS FROM PROVIDERS USING 

“SQUARE FEET” AS THE COST ALLOCATION METHOD 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC Descriptor Percent 

Change 

0283 Computed Tomography with Contrast 9.3%

0284 

Magnetic Resonance Imaging and Magnetic Resonance 

Angiography with Contrast 4.2%

0331 Combined Abdomen and Pelvis CT without Contrast 12.0%

0332 Computed Tomography without Contrast 14.1%

0333 

Computed Tomography without Contrast followed by 

Contrast 12.1%

0334 Combined Abdomen and Pelvis CT with Contrast 10.1%

0336 

Magnetic Resonance Imaging and Magnetic Resonance 

Angiography without Contrast 7.4%

0337 

Magnetic Resonance Imaging and Magnetic Resonance 

Angiography without Contrast f 6.0%

0383 Cardiac Computed Tomographic Imaging 4.3%

0662 CT Angiography 10.3%

8005 CT and CTA without Contrast Composite 12.7%

8006 CT and CTA with Contrast Composite 9.2%

8007 MRI and MRA without Contrast Composite 6.3%

8008 MRI and MRA with Contrast Composite 6.3%
CMS-1613-P 78 

 In summary, we are proposing to continue using data from the “Implantable 

Devices Charged to Patients” and “Cardiac Catheterization” cost centers to create distinct 

CCRs for use in calculating the OPPS relative payment weights for the CY 2015 OPPS. 

For the “Magnetic Resonance Imaging (MRI)” and “Computed Tomography (CT) Scan” 

APCs identified in Table 3 of this proposed rule, we are proposing to continue our policy 

of removing claims from cost modeling for those providers using “square feet” as the cost 

allocation statistic for the CY 2015 OPPS. 

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

 In this section of this proposed rule, we discuss the use of claims to calculate the 

proposed OPPS payment rates for CY 2015. The Hospital OPPS page on the CMS 

Web site on which this proposed rule is posted (http://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of 

claims used in the development of the proposed payment rates. That accounting provides 

additional detail regarding the number of claims derived at each stage of the process. In 

addition, below in this section we discuss the file of claims that comprises the data set 

that is available for purchase under a CMS data use agreement. The CMS Web site, 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html, includes information about purchasing the 

“OPPS Limited Data Set,” which now includes the additional variables previously 

available only in the OPPS Identifiable Data Set, including ICD-9-CM diagnosis codes 
CMS-1613-P 79 

and revenue code payment amounts. This file is derived from the CY 2013 claims that 

were used to calculate the proposed payment rates for the CY 2015 OPPS. 

 In the history of the OPPS, we have traditionally established the scaled relative 

weights on which payments are based using APC median costs, which is a process 

described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). 

However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final 

rule with comment period (77 FR 68259 through 68271), we finalized the use of 

geometric mean costs to calculate the relative weights on which the CY 2013 OPPS 

payment rates were based. While this policy changed the cost metric on which the 

relative payments are based, the data process in general remained the same, under the 

methodologies that we used to obtain appropriate claims data and accurate cost 

information in determining estimated service cost. For CY 2015, we are proposing to 

continue to use geometric mean costs to calculate the relative weights on which the 

proposed CY 2015 OPPS payments rates are based. 

 We used the methodology described in sections II.A.2.a. through II.A.2.f. of this 

proposed rule to calculate the costs we used to establish the proposed relative weights 

used in calculating the proposed OPPS payment rates for CY 2015 shown in Addenda A 

and B to this proposed rule (which are available via the Internet on the CMS Web site). 

We refer readers to section II.A.4. of this proposed rule for a discussion of the conversion 

of APC costs to scaled payment weights. 
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a. Claims Preparation 

 For this proposed rule, we used the CY 2013 hospital outpatient claims processed 

through December 31, 2013, to calculate the geometric mean costs of APCs that underpin 

the proposed relative payment weights for CY 2015. To begin the calculation of the 

proposed relative payment weights for CY 2015, we pulled all claims for outpatient 

services furnished in CY 2013 from the national claims history file. This is not the 

population of claims paid under the OPPS, but all outpatient claims (including, for 

example, critical access hospital (CAH) claims and hospital claims for clinical laboratory 

tests for persons who are neither inpatients nor outpatients of the hospital). 

 We then excluded claims with condition codes 04, 20, 21, and 77 because these 

are claims that providers submitted to Medicare knowing that no payment would be 

made. For example, providers submit claims with a condition code 21 to elicit an official 

denial notice from Medicare and document that a service is not covered. We then 

excluded claims for services furnished in Maryland, Guam, the U.S. Virgin Islands, 

American Samoa, and the Northern Mariana Islands because hospitals in those 

geographic areas are not paid under the OPPS, and, therefore, we do not use claims for 

services furnished in these areas in ratesetting. 

 We divided the remaining claims into the three groups shown below. 

Groups 2 and 3 comprise the 119 million claims that contain hospital bill types paid 

under the OPPS. 

 1. Claims that were not bill types 12X (Hospital Inpatient (Medicare Part B 

only)), 13X (Hospital Outpatient), 14X (Hospital--Laboratory Services Provided to 
CMS-1613-P 81 

Nonpatients), or 76X (Clinic--Community Mental Health Center). Other bill types are 

not paid under the OPPS; therefore, these claims were not used to set OPPS payment. 

 2. Claims that were bill types 12X, 13X or 14X. Claims with bill types 12X and 

13X are hospital outpatient claims. Claims with bill type 14X are laboratory specimen 

claims. 

 3. Claims that were bill type 76X (CMHC). 

 To convert charges on the claims to estimated cost, we multiplied the charges on 

each claim by the appropriate hospital-specific CCR associated with the revenue code for 

the charge as discussed in section II.A.1.c. of this proposed rule. We then flagged and 

excluded CAH claims (which are not paid under the OPPS) and claims from hospitals 

with invalid CCRs. The latter included claims from hospitals without a CCR; those from 

hospitals paid an all-inclusive rate; those from hospitals with obviously erroneous CCRs 

(greater than 90 or less than 0.0001); and those from hospitals with overall ancillary 

CCRs that were identified as outliers (that exceeded +/-3 standard deviations from the 

geometric mean after removing error CCRs). In addition, we trimmed the CCRs at the 

cost center (that is, departmental) level by removing the CCRs for each cost center as 

outliers if they exceeded +/- 3 standard deviations from the geometric mean. We used a 

four-tiered hierarchy of cost center CCRs, which is the revenue code-to-cost center 

crosswalk, to match a cost center to every possible revenue code appearing in the 

outpatient claims that is relevant to OPPS services, with the top tier being the most 

common cost center and the last tier being the default CCR. If a hospital’s cost center 

CCR was deleted by trimming, we set the CCR for that cost center to “missing” so that 
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another cost center CCR in the revenue center hierarchy could apply. If no other cost 

center CCR could apply to the revenue code on the claim, we used the hospital’s overall 

ancillary CCR for the revenue code in question as the default CCR. For example, if a 

visit was reported under the clinic revenue code but the hospital did not have a clinic cost 

center, we mapped the hospital-specific overall ancillary CCR to the clinic revenue code. 

The revenue code-to-cost center crosswalk is available for inspection on the CMS Web 

site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. Revenue codes that we do not use in 

establishing relative costs or to model impacts are identified with an “N” in the revenue 

code-to-cost center crosswalk. 

 We applied the CCRs as described above to claims with bill type 12X, 13X, or 

14X, excluding all claims from CAHs and hospitals in Maryland, Guam, the U.S. Virgin 

Islands, American Samoa, and the Northern Mariana Islands and claims from all hospitals 

for which CCRs were flagged as invalid. 

 We identified claims with condition code 41 as partial hospitalization services of 

hospitals and moved them to another file. We note that the separate file containing 

partial hospitalization claims is included in the files that are available for purchase as 

discussed above. 

 We then excluded claims without a HCPCS code. We moved to another file 

claims that contained only influenza and pneumococcal pneumonia (PPV) vaccines. 

Influenza and PPV vaccines are paid at reasonable cost; therefore, these claims are not 

used to set OPPS rates. 
CMS-1613-P 83 

 We next copied line-item costs for drugs, blood, and brachytherapy sources to a 

separate file (the lines stay on the claim, but are copied onto another file). No claims 

were deleted when we copied these lines onto another file. These line-items are used to 

calculate a per unit arithmetic and geometric mean and median cost and a per day 

arithmetic and geometric mean and median cost for drugs and nonimplantable 

biologicals, therapeutic radiopharmaceutical agents, and brachytherapy sources, as well 

as other information used to set payment rates, such as a unit-to-day ratio for drugs. 

 Prior to CY 2013, our payment policy for nonpass-through separately paid drugs 

and biologicals was based on a redistribution methodology that accounted for pharmacy 

overhead by allocating cost from packaged drugs to separately paid drugs. This 

methodology typically would have required us to reduce the cost associated with 

packaged coded and uncoded drugs in order to allocate that cost. However, for CY 2013, 

we paid for separately payable drugs and biologicals under the OPPS at ASP+6 percent, 

based upon the statutory default described in section 1833(t)(14)(A)(iii)(II) of the Act. 

Under that policy, we did not redistribute the pharmacy overhead costs from packaged 

drugs to separately paid drugs. For the CY 2014 OPPS, we continued the CY 2013 

payment policy for separately payable drugs and biologicals, and we are proposing to 

continue this payment policy for CY 2015. We refer readers to section V.B.3. of this 

proposed rule for a complete discussion of our CY 2015 proposed payment policy for 

separately paid drugs and biologicals. 

 We then removed line-items that were not paid during claim processing, 

presumably for a line-item rejection or denial. The number of edits for valid OPPS 
CMS-1613-P 84 

payment in the Integrated Outpatient Code Editor (I/OCE) and elsewhere has grown 

significantly in the past few years, especially with the implementation of the full 

spectrum of National Correct Coding Initiative (NCCI) edits. To ensure that we are using 

valid claims that represent the cost of payable services to set payment rates, we removed 

line-items with an OPPS status indicator that were not paid during claims processing in 

the claim year, but have a status indicator of “S,” “T,” and “V” in the prospective year’s 

payment system. This logic preserves charges for services that would not have been paid 

in the claim year but for which some estimate of cost is needed for the prospective year, 

such as services newly removed from the inpatient list for CY 2014 that were assigned 

status indicator “C” in the claim year. It also preserves charges for packaged services so 

that the costs can be included in the cost of the services with which they are reported, 

even if the CPT codes for the packaged services were not paid because the service is part 

of another service that was reported on the same claim or the code otherwise violates 

claims processing edits. 

 For CY 2015, we are proposing to continue the policy we implemented for 

CY 2013 and CY 2014 to exclude line-item data for pass-through drugs and biologicals 

(status indicator “G” for CY 2013) and nonpass-through drugs and biologicals (status 

indicator “K” for CY 2013) where the charges reported on the claim for the line were 

either denied or rejected during claims processing. Removing lines that were eligible for 

payment but were not paid ensures that we are using appropriate data. The trim avoids 

using cost data on lines that we believe were defective or invalid because those rejected 

or denied lines did not meet the Medicare requirements for payment. For example, edits 
CMS-1613-P 85 

may reject a line for a separately paid drug because the number of units billed exceeded 

the number of units that would be reasonable and, therefore, is likely a billing error (for 

example, a line reporting 55 units of a drug for which 5 units is known to be a fatal dose). 

As with our trimming in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74849) of line-items with a status indicator of “S,” “T,” “V,” or “X,” we believe 

that unpaid line-items represent services that are invalidly reported and, therefore, should 

not be used for ratesetting. We believe that removing lines with valid status indicators 

that were edited and not paid during claims processing increases the accuracy of the data 

used for ratesetting purposes. 

 For the CY 2015 OPPS, as part of our proposal to continue packaging clinical 

diagnostic laboratory tests, we also are proposing to apply the line item trim to these 

services if they did not receive payment in the claims year. Removing these lines ensures 

that, in establishing the CY 2015 OPPS relative payments weights, we appropriately 

allocate the costs associated with packaging these services. 

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

(1) Splitting Claims 

 For the CY 2015 OPPS, we then split the remaining claims into five groups: 

single majors; multiple majors; single minors; multiple minors; and other claims. 

(Specific definitions of these groups are presented below.) We note that, under the 

proposed CY 2015 OPPS packaging policy, we are proposing to delete status indicator 

“X” and revise the title and description of status indicator “Q1” to reflect that deletion, as 

discussed in sections II.A.3. and XI. of this proposed rule. We note that we also are 
CMS-1613-P 86 

proposing to create status indicator “J1” to reflect the comprehensive APCs discussed in 

section II.A.2.e. of this proposed rule. For CY 2015, we are proposing to define major 

procedures as any HCPCS code having a status indicator of “J1,” “S,” “T,” or “V”; define 

minor procedures as any code having a status indicator of “F,” “G,” “H,” “K,” “L,” “R,” 

“U,” or “N”; and classify “other” procedures as any code having a status indicator other 

than one that we have classified as major or minor. For CY 2015, we are proposing to 

continue to assign status indicator “R” to blood and blood products; status indicator “U” 

to brachytherapy sources; status indicator “Q1” to all “STV-packaged codes”; status 

indicator “Q2” to all “T-packaged codes”; and status indicator “Q3” to all codes that may 

be paid through a composite APC based on composite-specific criteria or paid separately 

through single code APCs when the criteria are not met. 

 As discussed in the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68709), we established status indicators “Q1,” “Q2,” and “Q3” to facilitate 

identification of the different categories of codes. We are proposing to treat these codes 

in the same manner for data purposes for CY 2015 as we have treated them since 

CY 2008. Specifically, we are continuing to evaluate whether the criteria for separate 

payment of codes with status indicator “Q1” or “Q2” are met in determining whether they 

are treated as major or minor codes. Codes with status indicator “Q1” or “Q2” are 

carried through the data either with status indicator “N” as packaged or, if they meet the 

criteria for separate payment, they are given the status indicator of the APC to which they 

are assigned and are considered as “pseudo” single procedure claims for major codes. 

Codes assigned status indicator “Q3” are paid under individual APCs unless they occur in 
CMS-1613-P 87 

the combinations that qualify for payment as composite APCs and, therefore, they carry 

the status indicator of the individual APC to which they are assigned through the data 

process and are treated as major codes during both the split and “pseudo” single creation 

process. The calculation of the geometric mean costs for composite APCs from multiple 

procedure major claims is discussed in section II.A.2.f. of this proposed rule. 

 Specifically, we are proposing to divide the remaining claims into the following 

five groups: 

 1. Single Procedure Major Claims: Claims with a single separately payable 

procedure (that is, status indicator “S,” “T,” or “V” which includes codes with status 

indicator “Q3”); claims with status indicator “J1,” which receive special processing for 

comprehensive APCs, as discussed in section II.A.2.e. of this proposed rule; claims with 

one unit of a status indicator “Q1” code (“STV-packaged”) where there was no code with 

status indicator “S,” “T,” or “V” on the same claim on the same date; or claims with one 

unit of a status indicator “Q2” code (“T-packaged”) where there was no code with a 

status indicator “T” on the same claim on the same date. 

 2. Multiple Procedure Major Claims: Claims with more than one separately 

payable procedure (that is, status indicator “S,” “T,” or “V” which includes codes with 

status indicator “Q3”), or multiple units of one payable procedure. These claims include 

those codes with a status indicator “Q2” code (“T-packaged”) where there was no 

procedure with a status indicator “T” on the same claim on the same date of service but 

where there was another separately paid procedure on the same claim with the same date 

of service (that is, another code with status indicator “S” or “V”). We also include in this 
CMS-1613-P 88 

set claims that contained one unit of one code when the bilateral modifier was appended 

to the code and the code was conditionally or independently bilateral. In these cases, the 

claims represented more than one unit of the service described by the code, 

notwithstanding that only one unit was billed. 

 3. Single Procedure Minor Claims: Claims with a single HCPCS code that was 

assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N” and not status 

indicator “Q1” (“STV-packaged”) or status indicator “Q2” (“T-packaged”) code. 

 4. Multiple Procedure Minor Claims: Claims with multiple HCPCS codes that 

are assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N”; claims that 

contain more than one code with status indicator “Q1” (“STV-packaged”) or more than 

one unit of a code with status indicator “Q1” but no codes with status indicator “S,” “T,” 

or “V” on the same date of service; or claims that contain more than one code with status 

indicator “Q2” (T-packaged), or “Q2” and “Q1,” or more than one unit of a code with 

status indicator “Q2” but no code with status indicator “T” on the same date of service. 

 5. Non-OPPS Claims: Claims that contain no services payable under the OPPS 

(that is, all status indicators other than those listed for major or minor status). These 

claims were excluded from the files used for the OPPS. Non-OPPS claims have codes 

paid under other fee schedules, for example, durable medical equipment, and do not 

contain a code for a separately payable or packaged OPPS service. Non-OPPS claims 

include claims for therapy services paid sometimes under the OPPS but billed, in these 

non-OPPS cases, with revenue codes indicating that the therapy services would be paid 

under the Medicare Physician Fee Schedule (MPFS). 
CMS-1613-P 89 

 The claims listed in numbers 1, 2, 3, and 4 above are included in the data file that 

can be purchased as described above. Claims that contain codes to which we have 

assigned status indicators “Q1” (“STV-packaged”) and “Q2” (“T-packaged”) appear in 

the data for the single major file, the multiple major file, and the multiple minor file used 

for ratesetting. Claims that contain codes to which we have assigned status indicator 

“Q3” (composite APC members) appear in both the data of the single and multiple major 

files used in this proposed rule, depending on the specific composite calculation. 

(2) Creation of “Pseudo” Single Procedure Claims 

 To develop “pseudo” single procedure claims for this proposed rule, we examined 

both the multiple procedure major claims and the multiple procedure minor claims. We 

first examined the multiple major procedure claims for dates of service to determine if we 

could break them into “pseudo” single procedure claims using the dates of service for all 

lines on the claim. If we could create claims with single major procedures by using dates 

of service, we created a single procedure claim record for each separately payable 

procedure on a different date of service (that is, a “pseudo” single procedure claim). 

 We also are proposing to use the bypass codes listed in Addendum N to this 

proposed rule (which is available via the Internet on our Web site) and discussed in 

section II.A.1.b. of this proposed rule to remove separately payable procedures which we 

determined contained limited or no packaged costs or that were otherwise suitable for 

inclusion on the bypass list from a multiple procedure bill. As discussed above, we 

ignore the “overlap bypass codes,” that is, those HCPCS codes that are both on the 

bypass list and are members of the multiple imaging composite APCs, in this initial 
CMS-1613-P 90 

assessment for “pseudo” single procedure claims. The proposed CY 2015 “overlap 

bypass codes” are listed in Addendum N to this proposed rule (which is available via the 

Internet on the CMS Web site). When one of the two separately payable procedures on a 

multiple procedure claim was on the bypass list, we split the claim into two “pseudo” 

single procedure claim records. The single procedure claim record that contained the 

bypass code did not retain packaged services. The single procedure claim record that 

contained the other separately payable procedure (but no bypass code) retained the 

packaged revenue code charges and the packaged HCPCS code charges. We also 

removed lines that contained multiple units of codes on the bypass list and treated them 

as “pseudo” single procedure claims by dividing the cost for the multiple units by the 

number of units on the line. If one unit of a single, separately payable procedure code 

remained on the claim after removal of the multiple units of the bypass code, we created 

a “pseudo” single procedure claim from that residual claim record, which retained the 

costs of packaged revenue codes and packaged HCPCS codes. This enabled us to use 

claims that would otherwise be multiple procedure claims and could not be used. 

 We then assessed the claims to determine if the proposed criteria for the multiple 

imaging composite APCs, discussed in section II.A.2.f.(5) of this proposed rule, were 

met. If the criteria for the imaging composite APCs were met, we created a “single 

session” claim for the applicable imaging composite service and determined whether we 

could use the claim in ratesetting. For HCPCS codes that are both conditionally 

packaged and are members of a multiple imaging composite APC, we first assessed 

whether the code would be packaged and, if so, the code ceased to be available for further 
CMS-1613-P 91 

assessment as part of the composite APC. Because the packaged code would not be a 

separately payable procedure, we considered it to be unavailable for use in setting the 

composite APC costs on which the proposed CY 2015 OPPS relative payment weights 

are based. Having identified “single session” claims for the imaging composite APCs, 

we reassessed the claim to determine if, after removal of all lines for bypass codes, 

including the “overlap bypass codes,” a single unit of a single separately payable code 

remained on the claim. If so, we attributed the packaged costs on the claim to the single 

unit of the single remaining separately payable code other than the bypass code to create 

a “pseudo” single procedure claim. We also identified line-items of overlap bypass codes 

as a “pseudo” single procedure claim. This allowed us to use more claims data for 

ratesetting purposes. 

 We also are proposing to examine the multiple procedure minor claims to 

determine whether we could create “pseudo” single procedure claims. Specifically, 

where the claim contained multiple codes with status indicator “Q1” (“STV-packaged”) 

on the same date of service or contained multiple units of a single code with status 

indicator “Q1,” we selected the status indicator “Q1” HCPCS code that had the highest 

CY 2014 relative payment weight, and set the units to one on that HCPCS code to reflect 

our policy of paying only one unit of a code with a status indicator of “Q1.” We then 

packaged all costs for the following into a single cost for the “Q1” HCPCS code that had 

the highest CY 2014 relative payment weight to create a “pseudo” single procedure claim 

for that code: additional units of the status indicator “Q1” HCPCS code with the highest 

CY 2014 relative payment weight; other codes with status indicator “Q1”; and all other 
CMS-1613-P 92 

packaged HCPCS codes and packaged revenue code costs. We changed the status 

indicator for the selected code from the data status indicator of “N” to the status indicator 

of the APC to which the selected procedure was assigned for further data processing and 

considered this claim as a major procedure claim. We used this claim in the calculation 

of the APC geometric mean cost for the status indicator “Q1” HCPCS code. 

 Similarly, if a multiple procedure minor claim contained multiple codes with 

status indicator “Q2” (“T-packaged”) or multiple units of a single code with status 

indicator “Q2,” we selected the status indicator “Q2” HCPCS code that had the highest 

CY 2014 relative payment weight and set the units to one on that HCPCS code to reflect 

our policy of paying only one unit of a code with a status indicator of “Q2.” We then 

packaged all costs for the following into a single cost for the “Q2” HCPCS code that had 

the highest CY 2014 relative payment weight to create a “pseudo” single procedure claim 

for that code: additional units of the status indicator “Q2” HCPCS code with the highest 

CY 2014 relative payment weight; other codes with status indicator “Q2”; and other 

packaged HCPCS codes and packaged revenue code costs. We changed the status 

indicator for the selected code from a data status indicator of “N” to the status indicator 

of the APC to which the selected code was assigned, and we considered this claim as a 

major procedure claim. 

 If a multiple procedure minor claim contained multiple codes with status indicator 

“Q2” (“T-packaged”) and status indicator “Q1” (“STV-packaged”), we selected the 

T-packaged status indicator “Q2” HCPCS code that had the highest relative payment 

weight for CY 2014 and set the units to one on that HCPCS code to reflect our policy of 
CMS-1613-P 93 

paying only one unit of a code with a status indicator of “Q2.” We then packaged all 

costs for the following into a single cost for the selected (“T-packaged”) HCPCS code to 

create a “pseudo” single procedure claim for that code: additional units of the status 

indicator “Q2” HCPCS code with the highest CY 2014 relative payment weight; other 

codes with status indicator “Q2”; codes with status indicator “Q1” (“STV-packaged”); 

and other packaged HCPCS codes and packaged revenue code costs. We selected status 

indicator “Q2” HCPCS codes instead of “Q1” HCPCS codes because “Q2” HCPCS 

codes have higher CY 2014 relative payment weights. If a status indicator “Q1” HCPCS 

code had a higher CY 2014 relative payment weight, it became the primary code for the 

simulated single bill process. We changed the status indicator for the selected status 

indicator “Q2” (“T-packaged”) code from a data status indicator of “N” to the status 

indicator of the APC to which the selected code was assigned and we considered this 

claim as a major procedure claim. 

 We then applied our proposed process for creating “pseudo” single procedure 

claims to the conditionally packaged codes that do not meet the criteria for packaging, 

which enabled us to create single procedure claims from them, if they met the criteria for 

single procedure claims. Conditionally packaged codes are identified using status 

indicators “Q1” and “Q2,” and are described in section XI.A. of this proposed rule. 

 Lastly, we excluded those claims that we were not able to convert to single 

procedure claims even after applying all of the techniques for creation of “pseudo” single 

procedure claims to multiple procedure major claims and to multiple procedure minor 

claims. As has been our practice in recent years, we also excluded claims that contained 
CMS-1613-P 94 

codes that were viewed as independently or conditionally bilateral and that contained the 

bilateral modifier (Modifier 50 (Bilateral procedure)) because the line-item cost for the 

code represented the cost of two units of the procedure, notwithstanding that hospitals 

billed the code with a unit of one. 

 We are proposing to continue to apply the methodology described above for the 

purpose of creating “pseudo” single procedure claims for the CY 2015 OPPS. 

c. Completion of Claim Records and Geometric Mean Cost Calculations 

(1) General Process 

 We then packaged the costs of packaged HCPCS codes (codes with status 

indicator “N” listed in Addendum B to this proposed rule (which is available via the 

Internet on the CMS Web site) and the costs of those lines for codes with status indicator 

“Q1” or “Q2” when they are not separately paid), and the costs of the services reported 

under packaged revenue codes in Table 4 below that appeared on the claim without a 

HCPCS code into the cost of the single major procedure remaining on the claim. For a 

more complete discussion of our proposed CY 2015 OPPS packaging policy, we refer 

readers to section II.A.3. of this proposed rule. 

 As noted in the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation that 

CMS should review the final list of packaged revenue codes for consistency with OPPS 

policy and ensure that future versions of the I/OCE edit accordingly. As we have in the 

past, we are proposing to continue to compare the final list of packaged revenue codes 
CMS-1613-P 95 

that we adopt for CY 2015 to the revenue codes that the I/OCE will package for CY 2015 

to ensure consistency. 

 In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68531), we 

replaced the NUBC standard abbreviations for the revenue codes listed in Table 2 of the 

CY 2009 OPPS/ASC proposed rule with the most current NUBC descriptions of the 

revenue code categories and subcategories to better articulate the meanings of the 

revenue codes without changing the list of revenue codes. In the CY 2010 OPPS/ASC 

final rule with comment period (74 FR 60362 through 60363), we finalized changes to 

the packaged revenue code list based on our examination of the updated NUBC codes 

and public comment on the CY 2010 proposed list of packaged revenue codes. 

 For CY 2015, as we did for CY 2014, we reviewed the changes to revenue codes 

that were effective during CY 2013 for purposes of determining the charges reported with 

revenue codes but without HCPCS codes that we would propose to package for CY 2015. 

We believe that the charges reported under the revenue codes listed in Table 4 below 

continue to reflect ancillary and supportive services for which hospitals report charges 

without HCPCS codes. Therefore, for CY 2015, we are proposing to continue to package 

the costs that we derive from the charges reported without HCPCS codes under the 

revenue codes displayed in Table 4 below for purposes of calculating the geometric mean 

costs on which the proposed CY 2015 OPPS/ASC payment rates are based. 
CMS-1613-P 96 

TABLE 4.—PROPOSED CY 2015 PACKAGED REVENUE CODES 

Revenue 

Code Description 

0250 Pharmacy; General Classification 

0251 Pharmacy; Generic Drugs 

0252 Pharmacy; Non-Generic Drugs 

0254 Pharmacy; Drugs Incident to Other Diagnostic Services 

0255 Pharmacy; Drugs Incident to Radiology 

0257 Pharmacy; Non-Prescription 

0258 Pharmacy; IV Solutions 

0259 Pharmacy; Other Pharmacy 

0260 IV Therapy; General Classification 

0261 IV Therapy; Infusion Pump 

0262 IV Therapy; IV Therapy/Pharmacy Svcs 

0263 IV Therapy; IV Therapy/Drug/Supply Delivery 

0264 IV Therapy; IV Therapy/Supplies 

0269 IV Therapy; Other IV Therapy 

0270 Medical/Surgical Supplies and Devices; General Classification 

0271 Medical/Surgical Supplies and Devices; Non-sterile Supply 

0272 Medical/Surgical Supplies and Devices; Sterile Supply 

0275 Medical/Surgical Supplies and Devices; Pacemaker 

0276 Medical/Surgical Supplies and Devices; Intraocular Lens 

0278 Medical/Surgical Supplies and Devices; Other Implants 

0279 Medical/Surgical Supplies and Devices; Other Supplies/Devices 

0280 Oncology; General Classification 

0289 Oncology; Other Oncology 

0343 Nuclear Medicine; Diagnostic Radiopharmaceuticals 

0344 Nuclear Medicine; Therapeutic Radiopharmaceuticals 

0370 Anesthesia; General Classification 

0371 Anesthesia; Anesthesia Incident to Radiology 

0372 Anesthesia; Anesthesia Incident to Other DX Services 

0379 Anesthesia; Other Anesthesia 

0390 

Administration, Processing and Storage for Blood and Blood Components; 

General Classification 

0392 

Administration, Processing and Storage for Blood and Blood Components; 

Processing and Storage 
CMS-1613-P 97 

Revenue 

Code Description 

0399 

Administration, Processing and Storage for Blood and Blood Components; 

Other Blood Handling 

0621 

Medical Surgical Supplies – Extension of 027X; Supplies Incident to 

Radiology 

0622 

Medical Surgical Supplies – Extension of 027X; Supplies Incident to Other 

DX Services 

0623 Medical Supplies – Extension of 027X, Surgical Dressings 

0624 Medical Surgical Supplies – Extension of 027X; FDA Investigational Devices

0630 Pharmacy – Extension of 025X; Reserved 

0631 Pharmacy – Extension of 025X; Single Source Drug 

0632 Pharmacy – Extension of 025X; Multiple Source Drug 

0633 Pharmacy – Extension of 025X; Restrictive Prescription 

0681 Trauma Response; Level I Trauma 

0682 Trauma Response; Level II Trauma 

0683 Trauma Response; Level III Trauma 

0684 Trauma Response; Level IV Trauma 

0689 Trauma Response; Other 

0700 Cast Room; General Classification 

0710 Recovery Room; General Classification 

0720 Labor Room/Delivery; General Classification 

0721 Labor Room/Delivery; Labor 

0732 EKG/ECG (Electrocardiogram); Telemetry 

0762 Specialty services; Observation Hours 

0801 Inpatient Renal Dialysis; Inpatient Hemodialysis 

0802 Inpatient Renal Dialysis; Inpatient Peritoneal Dialysis (Non-CAPD) 

0803 

Inpatient Renal Dialysis; Inpatient Continuous Ambulatory Peritoneal 

Dialysis (CAPD) 

0804 

Inpatient Renal Dialysis; Inpatient Continuous Cycling Peritoneal Dialysis 

(CCPD) 

0809 Inpatient Renal Dialysis; Other Inpatient Dialysis 

0810 Acquisition of Body Components; General Classification 

0819 Acquisition of Body Components; Other Donor 

0821 Hemodialysis-Outpatient or Home; Hemodialysis Composite or Other Rate 

0824 Hemodialysis-Outpatient or Home; Maintenance – 100% 

0825 Hemodialysis-Outpatient or Home; Support Services 
CMS-1613-P 98 

Revenue 

Code Description 

0829 Hemodialysis-Outpatient or Home; Other OP Hemodialysis 

0942 

Other Therapeutic Services (also see 095X, an extension of 094x); 

Education/Training 

0943 

Other Therapeutic Services (also see 095X, an extension of 094X), Cardiac 

Rehabilitation 

0948 

Other Therapeutic Services (also see 095X, an extension of 094X), 

Pulmonary Rehabilitation 

 In accordance with our longstanding policy, we are proposing to continue to 

exclude: (1) claims that had zero costs after summing all costs on the claim; and 

(2) claims containing packaging flag number 3. Effective for services furnished after 

July 1, 2014, the I/OCE assigned packaging flag number 3 to claims on which hospitals 

submitted token charges less than $1.01 for a service with status indicator “S” or “T” (a 

major separately payable service under the OPPS) for which the Medicare Administrative 

Contractor (MAC) was required to allocate the sum of charges for services with a status 

indicator equaling “S” or “T” based on the relative payment weight of the APC to which 

each code was assigned. We do not believe that these charges, which were token charges 

as submitted by the hospital, are valid reflections of hospital resources. Therefore, we 

deleted these claims. We also deleted claims for which the charges equaled the revenue 

center payment (that is, the Medicare payment) on the assumption that, where the charge 

equaled the payment, to apply a CCR to the charge would not yield a valid estimate of 

relative provider cost. We are proposing to continue these processes for the CY 2015 

OPPS. 
CMS-1613-P 99 

 For the remaining claims, we are proposing to then standardize 60 percent of the 

costs of the claim (which we have previously determined to be the labor-related portion) 

for geographic differences in labor input costs. We made this adjustment by determining 

the wage index that applied to the hospital that furnished the service and dividing the cost 

for the separately paid HCPCS code furnished by the hospital by that wage index. The 

claims accounting that we provide for the proposed and final rule contains the formula we 

use to standardize the total cost for the effects of the wage index. As has been our policy 

since the inception of the OPPS, we are proposing to use the pre-reclassified wage 

indices for standardization because we believe that they better reflect the true costs of 

items and services in the area in which the hospital is located than the 

post-reclassification wage indices and, therefore, would result in the most accurate 

unadjusted geometric mean costs. We are proposing to use these pre-reclassified wage 

indices for standardization using the new OMB labor market area delineations described 

in section II.C. of this proposed rule. 

 In accordance with our longstanding practice, we also are proposing to exclude 

single and “pseudo” single procedure claims for which the total cost on the claim was 

outside 3 standard deviations from the geometric mean of units for each HCPCS code on 

the bypass list (because, as discussed above, we used claims that contain multiple units of 

the bypass codes). 

 After removing claims for hospitals with error CCRs, claims without HCPCS 

codes, claims for immunizations not covered under the OPPS, and claims for services not 

paid under the OPPS, approximately 114 million claims were left. Using these 
CMS-1613-P 100 

approximately 114 million claims, we created approximately 94 million single and 

“pseudo” single procedure claims, of which we used approximately 94 million single 

bills (after trimming out approximately 1 million claims as discussed in section II.A.1.a. 

of this proposed rule) in the CY 2015 geometric mean cost development and ratesetting. 

 As discussed above, the OPPS has historically developed the relative weights on 

which APC payments are based using APC median costs. For the CY 2013 OPPS and 

the CY 2014 OPPS, we calculated the APC relative payment weights using geometric 

mean costs, and we are proposing to do the same for CY 2015. Therefore, the following 

discussion of the 2 times rule violation and the development of the relative payment 

weight refers to geometric means. For more detail about the CY 2015 OPPS/ASC policy 

to calculate relative payment weights based on geometric means, we refer readers to 

section II.A.2.f. of this proposed rule. 

 We are proposing to use these claims to calculate the CY 2015 geometric mean 

costs for each separately payable HCPCS code and each APC. The comparison of 

HCPCS code-specific and APC geometric mean costs determines the applicability of the 

2 times rule. Section 1833(t)(2) of the Act provides that, subject to certain exceptions, 

the items and services within an APC group shall not be treated as comparable with 

respect to the use of resources if the highest median cost (or mean cost, if elected by the 

Secretary) for an item or service within the group is more than 2 times greater than the 

lowest median cost (or mean cost, if so elected) for an item or service within the same 

group (the 2 times rule). While we have historically applied the 2 times rule based on 

median costs, in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68270), 
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as part of the CY 2013 policy to develop the OPPS relative payment weights based on 

geometric mean costs, we also applied the 2 times rule based on geometric mean costs. 

For the CY 2015 OPPS, we are proposing to continue to develop the APC relative 

payment weights based on geometric mean costs. 

 We note that, for purposes of identifying significant HCPCS codes for 

examination in the 2 times rule, we consider codes that have more than 1,000 single 

major claims or codes that have both greater than 99 single major claims and contribute 

at least 2 percent of the single major claims used to establish the APC geometric mean 

cost to be significant. This longstanding definition of when a HCPCS code is significant 

for purposes of the 2 times rule was selected because we believe that a subset of 1,000 

claims is negligible within the set of approximately 94 million single procedure or single 

session claims we use for establishing geometric mean costs. Similarly, a HCPCS code 

for which there are fewer than 99 single bills and which comprises less than 2 percent of 

the single major claims within an APC will have a negligible impact on the APC 

geometric mean. We note that this method of identifying significant HCPCS codes 

within an APC for purposes of the 2 times rule was used in prior years under the 

median-based cost methodology. Under our proposed CY 2015 policy to continue to 

base the relative payment weights on geometric mean costs, we believe that this same 

consideration for identifying significant HCPCS codes should apply because the 

principles are consistent with their use in the median-based cost methodology. Unlisted 

codes are not used in establishing the percent of claims contributing to the APC, nor are 

their costs used in the calculation of the APC geometric mean. Finally, we reviewed the 
CMS-1613-P 102 

geometric mean costs for the services for which we are proposing to pay separately under 

this proposed rule, and we reassigned HCPCS codes to different APCs where it was 

necessary to ensure clinical and resource homogeneity within the APCs. The APC 

geometric means were recalculated after we reassigned the affected HCPCS codes. Both 

the HCPCS code-specific geometric means and the APC geometric means were weighted 

to account for the inclusion of multiple units of the bypass codes in the creation of 

“pseudo” single procedure claims. 

 As we discuss in sections II.A.2.d., II.A.2.f., and VIII.B. of this proposed rule, in 

some cases, APC geometric mean costs are calculated using variations of the process 

outlined above. Specifically, section II.A.2.d. of this proposed rule addresses the 

proposed calculation of single APC criteria-based geometric mean costs. Section 

II.A.2.f. of this proposed rule discusses the proposed calculation of composite APC 

criteria-based geometric mean costs. Section VIII.B. of this proposed rule addresses the 

methodology for calculating the proposed geometric mean costs for partial hospitalization 

services. 

(2) Recommendations of the Panel Regarding Data Development 

 At the March 2014 meeting of the Panel, we discussed the claims accounting 

process for the CY 2014 OPPS final rule, the final CY 2014 policy of adopting the new 

standard cost centers for CT, MRI, and cardiac catheterization in the new Medicare cost 

report Form CMS-2552-10, as well as the calculation of estimated cost for those APCs. 
CMS-1613-P 103 

 At the March 2014 Panel meeting, the Panel made a number of recommendations 

related to the data process. The Panel’s data-related recommendations and our responses 

follow. 

 Recommendation: The Panel recommends that the work of the Data 

Subcommittee continue. 

 CMS Response: We are accepting this recommendation. 

 Recommendation: The Panel recommends that CMS provide the Panel with a list 

of APCs for which costs fluctuate by more than 10 percent. 

 CMS Response: We are accepting this recommendation. 

 Recommendation: The Panel recommends that CMS provide the Panel with data 

on comprehensive APCs as well as the effect of conditional packaging on visit codes. 

 CMS Response: We are accepting this recommendation. 

d. Proposed Calculation of Single Procedure APC Criteria-Based costs 

(1) Device-Dependent APCs 

 Historically, device-dependent APCs are populated by HCPCS codes that usually, 

but not always, require that a device be implanted or used to perform the procedure. The 

standard methodology for calculating device-dependent APC costs utilizes claims data 

that generally reflect the full cost of the required device by using only the subset of single 

procedure claims that pass the procedure-to-device and device-to-procedure edits; do not 

contain token charges (less than $1.01) for devices; and, until January 1, 2014, did not 

contain the “FB” modifier signifying that the device was furnished without cost to the 

provider, or where a full credit was received; and do not contain the “FC” modifier 
CMS-1613-P 104 

signifying that the hospital received partial credit for the device. For a full history of how 

we have calculated payment rates for device-dependent APCs in previous years and a 

detailed discussion of how we developed the standard device-dependent APC ratesetting 

methodology, we refer readers to the CY 2008 OPPS/ASC final rule with comment 

period (72 FR 66739 through 66742). Overviews of the procedure-to-device edits and 

device-to-procedure edits used in ratesetting for device-dependent APCs are available in 

the CY 2005 OPPS final rule with comment period (69 FR 65761 through 65763) and the 

CY 2007 OPPS/ASC final rule with comment period (71 FR 68070 through 68071). 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74857 through 

74859), we finalized a policy to define 29 device-dependent APCs as single complete 

services and to assign them to comprehensive APCs that provide all-inclusive payments 

for those services, but we delayed implementation of this policy until CY 2015 

(78 FR 74862). This policy is a further step toward improving the prospective nature of 

our payments for these services where the cost of the device is relatively high compared 

to the other costs that contribute to the cost of the service. Table 5 of the CY 2014 

OPPS/ASC final rule with comment period provided a list of the 39 APCs recognized as 

device-dependent APCs and identified the 29 device-dependent APCs that are converted 

to comprehensive APCs. In addition, in the CY 2014 OPPS/ASC final rule with 

comment period we finalized a policy for the treatment of the remaining 10 devicedependent APCs that applied our standard APC ratesetting methodology to calculate the 

CY 2014 payment rates for these APCs, but implementation of this policy was also 

delayed until CY 2015. 
CMS-1613-P 105 

 As proposed in the CY 2014 OPPS/ASC proposed rule (78 FR 43556 through 

43557), for CY 2015, we are proposing to no longer implement procedure-to-device edits 

and device-to-procedure edits for any APC. Under this proposed policy, which was 

discussed but not finalized in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74857 through 74858), hospitals are still expected to adhere to the guidelines of 

correct coding and append the correct device code to the claim, when applicable. 

However, claims would no longer be returned to providers when specific procedure and 

device code pairings do not appear on a claim. As we stated in both the CY 2014 

OPPS/ASC proposed rule (78 FR 43556 through 43557) and the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 74857 through 748598), we believe that this is 

appropriate because of the experience hospitals now have had in coding and reporting 

these claims fully and, for the more costly devices, the comprehensive APCs will reliably 

reflect the cost of the device if it is included anywhere on the claim. Therefore, we do 

not believe that the burden imposed upon hospitals to adhere to the procedure-to-device 

edits and device-to-procedure edits and the burden imposed upon the Medicare program 

to maintain those edits continued to be warranted. As with all other items and services 

recognized under the OPPS, we expect hospitals to code and report their costs 

appropriately, regardless of whether there are claims processing edits in place. 

 The proposed CY 2015 comprehensive APC policy consolidates and restructures 

the 39 current device-dependent APCs into 26 (of the total 28) comprehensive APCs, 

which are listed below in Table 5. The comprehensive APC policy is discussed in section 

II.A.2.e. of this proposed rule. As a result of the proposed CY 2015 comprehensive APC 
CMS-1613-P 106 

policy, device-dependent APCs would no longer exist in CY 2015 because these APCs 

will have all been converted to comprehensive APCs. In conjunction with the proposed 

termination of device-dependent APCs and as discussed in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 74857 through 74858), we are proposing to no longer 

use procedure-to-device edits and device-to-procedure edits for any APC because we 

continue to believe that the elimination of device-to-procedure edits and 

procedure-to-device edits is appropriate considering the experience that hospitals now 

have in coding and reporting these claims fully and, for the more costly devices, the 

comprehensive APCs will reliably reflect the cost of the device if it is included anywhere 

on the claim. 

 While we believe that device-to-procedure edits and procedure-to-device edits are 

no longer necessary, we are sensitive to the concerns raised by stakeholders in the past 

about the costs of devices being reported and captured. In light of these concerns, we are 

proposing to create claims processing edits that require any of the device codes used in 

the previous device-to-procedure edits to be present on the claim whenever a procedure 

code assigned to any 1 of the 26 proposed comprehensive APCs (of a total of 28 

proposed comprehensive APCs) listed below in Table 5 is reported on the claim to ensure 

that device costs are captured by hospitals. We expect that hospitals would use an 

appropriate device code consistent with correct coding in order to ensure that device costs 

are always reported on the claim, so that costs are appropriately captured in claims that 

CMS uses for ratesetting. 
CMS-1613-P 107 

 Table 5 below provides a list of the 26 proposed CY 2015 comprehensive APCs, 

which we previously recognized as device-dependent APCs for CY 2014. This proposal 

would result in the term “device-dependent APC” no longer being employed beginning in 

CY 2015. 
CMS-1613-P 108 

TABLE 5.—PROPOSED APCs THAT WOULD REQUIRE A DEVICE CODE TO 

BE REPORTED ON A CLAIM WHEN A PROCEDURE ASSIGNED TO ONE OF 

THESE APCs IS REPORTED 

APC APC Title 

0039 Level III Neurostimulator 

0061 Level II Neurostimulator 

0083 Level I Endovascular 

0084 Level I EP 

0085 Level II EP 

0086 Level III EP 

0089 Level III Pacemaker 

0090 Level II Pacemaker 

0107 Level I ICD 

0108 Level II ICD 

0202 Level V Female Reproductive 

0227 Implantation of Drug Infusion 

0229 Level II Endovascular 

0259 Level VII ENT Procedures 

0293 Level IV Intraocular 

0318 Level IV Neurostimulator 

0319 Level III Endovascular 

0384 GI Procedures with Stents 

0385 Level I Urogenital 

0386 Level II Urogenital 

0425 Level V Musculoskeletal 

0427 Level II Tube/Catheter 

0622 Level II Vascular Access 

0648 Level IV Breast Surgery 

0652 Insertion of IP/Pl. Cath. 

0655 Level IV Pacemaker 

(2) Blood and Blood Products 

 Since the implementation of the OPPS in August 2000, we have made separate payments 

for blood and blood products through APCs rather than packaging payment for them into 

payments for the procedures with which they are administered. Hospital payments for the costs 
CMS-1613-P 109 

of blood and blood products, as well as for the costs of collecting, processing, and storing blood 

and blood products, are made through the OPPS payments for specific blood product APCs. 

 For CY 2015, we are proposing to continue to establish payment rates for blood and 

blood products using our blood-specific CCR methodology, which utilizes actual or simulated 

CCRs from the most recently available hospital cost reports to convert hospital charges for blood 

and blood products to costs. This methodology has been our standard ratesetting methodology 

for blood and blood products since CY 2005. It was developed in response to data analysis 

indicating that there was a significant difference in CCRs for those hospitals with and without 

blood-specific cost centers, and past public comments indicating that the former OPPS policy of 

defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center 

often resulted in an underestimation of the true hospital costs for blood and blood products. 

Specifically, in order to address the differences in CCRs and to better reflect hospitals’ costs, we 

are proposing to continue to simulate blood CCRs for each hospital that does not report a blood 

cost center by calculating the ratio of the blood-specific CCRs to hospitals’ overall CCRs for 

those hospitals that do report costs and charges for blood cost centers. We would apply this mean 

ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on 

their cost reports in order to simulate blood-specific CCRs for those hospitals. We are proposing 

to calculate the costs upon which the proposed CY 2015 payment rates for blood and blood 

products are based using the actual blood-specific CCR for hospitals that reported costs and 

charges for a blood cost center and a hospital-specific simulated blood-specific CCR for hospitals 

that did not report costs and charges for a blood cost center. 

 We continue to believe that the hospital-specific simulated blood-specific CCR 

methodology better responds to the absence of a blood-specific CCR for a hospital than 

alternative methodologies, such as defaulting to the overall hospital CCR or applying an average 

blood-specific CCR across hospitals. Because this methodology takes into account the unique 
CMS-1613-P 110 

charging and cost accounting structure of each hospital, we believe that it yields more accurate 

estimated costs for these products. We continue to believe that this methodology in CY 2015 will 

result in costs for blood and blood products that appropriately reflect the relative estimated costs 

of these products for hospitals without blood cost centers and, therefore, for these blood products 

in general. 

 We note that, as discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with 

comment period and this proposed rule, we established comprehensive APCs that will provide 

all-inclusive payments for certain device-dependent procedures. Under this policy, we include 

the costs of blood and blood products when calculating the overall costs of these comprehensive 

APCs. We are proposing to continue to apply the blood-specific CCR methodology described in 

this section when calculating the costs of the blood and blood products that appear on claims with 

services assigned to the comprehensive APCs. Because the costs of blood and blood products 

would be reflected in the overall costs of the comprehensive APCs (and, as a result, in the 

proposed payment rates of the comprehensive APCs), we are proposing not to make separate 

payments for blood and blood products when they appear on the same claims as services assigned 

to the comprehensive APCs. 
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 We refer readers to Addendum B to this proposed rule (which is available via the Internet 

on the CMS Web site) for the proposed CY 2015 payment rates for blood and blood products 

(which are identified with status indicator “R”). For a more detailed discussion of the bloodspecific CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 50524 

through 50525). For a full history of OPPS payment for blood and blood products, we refer 

readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 

66810). 

(3) Brachytherapy Sources 

 Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of 

covered OPD services that classify devices of brachytherapy consisting of a seed or seeds 

(or radioactive source) (“brachytherapy sources”) separately from other services or 

groups of services. The statute provides certain criteria for the additional groups. For the 

history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final 

rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 

through 68241). As we have stated in prior OPPS updates, we believe that adopting the 

general OPPS prospective payment methodology for brachytherapy sources is 

appropriate for a number of reasons (77 FR 68240). The general OPPS payment 

methodology uses costs based on claims data to set the relative payment weights for 

hospital outpatient services. This payment methodology results in more consistent, 

predictable, and equitable payment amounts per source across hospitals by averaging the 

extremely high and low values, in contrast to payment based on hospitals’ charges 

adjusted to cost. We believe that the OPPS prospective payment methodology, as 

opposed to payment based on hospitals’ charges adjusted to cost, would also provide 
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hospitals with incentives for efficiency in the provision of brachytherapy services to 

Medicare beneficiaries. Moreover, this approach is consistent with our payment 

methodology for the vast majority of items and services paid under the OPPS. We refer 

readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66779 through 

66787), the CY 2009 OPPS/ASC final rule with comment period(73 FR 68668 through 

68670, the CY 2010 OPPS/ASC final rule with comment period (74 FR 60533 through 

60537), the CY 2011 OPPS/ASC final rule with comment period (75 FR 71978 through 

71981), and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74160 

through 74163) for further discussion of the history of OPPS payment for brachytherapy 

sources. 

 For CY 2015, we are proposing to use the costs derived from CY 2013 claims 

data to set the proposed CY 2015 payment rates for brachytherapy sources, as we are 

proposing to use to set the proposed payment rates for most other items and services that 

would be paid under the CY 2015 OPPS. We based the proposed payment rates for 

brachytherapy sources on the geometric mean unit costs for each source, consistent with 

the methodology proposed for other items and services paid under the OPPS, as discussed 

in section II.A.2. of this proposed rule. We also are proposing to continue the other 

payment policies for brachytherapy sources that we finalized and first implemented in the 

CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). We are proposing 

to pay for the stranded and non-stranded not otherwise specified (NOS) codes, HCPCS 

codes C2698 and C2699, at a rate equal to the lowest stranded or non-stranded 

prospective payment rate for such sources, respectively, on a per source basis (as opposed 
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to, for example, a per mCi), which is based on the policy we established in the CY 2008 

OPPS/ASC final rule with comment period (72 FR 66785). We also are proposing to 

continue the policy we first implemented in the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60537) regarding payment for new brachytherapy sources for 

which we have no claims data, based on the same reasons we discussed in the CY 2008 

OPPS/ASC final rule with comment period (72 FR 66786; which was delayed until 

January 1, 2010 by section 142 of Pub. L. 110-275). That policy is intended to enable us 

to assign new HCPCS codes for new brachytherapy sources to their own APCs, with 

prospective payment rates set based on our consideration of external data and other 

relevant information regarding the expected costs of the sources to hospitals. 

 We refer readers to Addendum B to this proposed rule (which is available via the 

Internet on the CMS Web site) for the proposed CY 2015 payment rates for 

brachytherapy sources, which are identified with status indicator “U.” We are inviting 

public comments on this proposed policy and requesting recommendations for new 

HCPCS codes to describe new brachytherapy sources consisting of a radioactive isotope, 

including a detailed rationale to support recommended new sources. Such 

recommendations should be directed to the Division of Outpatient Care, Mail Stop 

C4-05-17, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, 

Baltimore, MD 21244. We will continue to add new brachytherapy source codes and 

descriptors to our systems for payment on a quarterly basis through our program 

transmittals. 

e. Establishment of Comprehensive APCs 
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 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 

74910), effective January 1, 2015, we finalized a comprehensive payment policy that 

bundles or “packages” payment for the most costly medical device implantation 

procedures under the OPPS at the claim level. We defined a comprehensive APC 

(C-APC) as a classification for the provision of a primary service and all adjunctive 

services provided to support the delivery of the primary service. We established 

comprehensive APCs as a category broadly for OPPS payment and established 29 

comprehensive APCs to prospectively pay for 167 of the most costly device-dependent 

services beginning in CY 2015 (78 FR 74910). Under this policy, we designated each 

service described by a HCPCS code assigned to a comprehensive APC as the primary 

service and, with few exceptions, consider all other services reported on a hospital 

Medicare Part B claim in combination with the primary service to be related to the 

delivery of the primary service (78 FR 74869). In addition, under this policy, we 

calculate a single payment for the entire hospital stay, defined by a single claim, 

regardless of the date of service span. This comprehensive APC packaging policy 

“packages” payment for all items and services typically packaged under the OPPS, but 

also packages payment for other items and services that are not typically packaged under 

the OPPS, except in the context of comprehensive APC payments (78 FR 74909). 

 Because of the overall complexity of this new policy and our introduction of 

complexity adjustments in the CY 2014 OPPS/ASC final rule with comment period, we 

modeled the dynamics of the policy as if we were implementing it for CY 2014, but 

delayed the effective date until January 1, 2015, to allow additional time for analysis, 
CMS-1613-P 115 

opportunity for public comment, and systems preparation. In this section of this CY 2015 

OPPS/ASC proposed rule, we review the policies finalized in the CY 2014 OPPS/ASC 

final rule with comment period for comprehensive APCs. We then outline our proposed 

policy for CY 2015, which includes several clarifications and proposed modifications in 

response to public comments received. Finally, we summarize and respond to the public 

comments we received in response to the comprehensive APC policy outlined in the 

CY 2014 OPPS/ASC final rule with comment period. In this section, we use the terms 

“service” and “procedure” interchangeably. 

(1) Background 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 

74910), we finalized a policy with a delayed implementation date of CY 2015, whereby 

we designated certain covered OPD services as “primary services” (identified by a new 

OPPS status indicator of “J1”) assigned to comprehensive APCs. When such a primary 

service is reported on a hospital Medicare Part B claim, taking into account the few 

exceptions that are discussed below, we treat all other items and services reported on the 

claim as integral, ancillary, supportive, dependent, and adjunctive to the primary service 

(hereinafter collectively referred to as “adjunctive services”) and representing 

components of a comprehensive service (78 FR 74865). This results in a single 

prospective payment for the primary, comprehensive service based on the cost of all 

reported services at the claim level. We only exclude charges for services that are not 

payable under the OPPS, such as certain mammography and ambulance services that are 

never covered OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; 
CMS-1613-P 116 

brachytherapy seeds, which must receive separate payment under section 1833(t)(2)(H) 

of the Act; pass-through drugs and devices, which also require separate payment under 

section 1833(t)(6) of the Act; and self-administered drugs (SADs) that are not otherwise 

packaged as supplies because they are not covered under Medicare Part B under section 

1861(s)(2)(B) of the Act (78 FR 74865). 

 The ratesetting process set forth in the CY 2014 OPPS/ASC final rule with 

comment period for the comprehensive APC payment bundle policy is summarized as 

follows(78 FR 74887): 

 APC assignment of primary (“J1”) services. During ratesetting, single claims 

reporting a single procedure described by a HCPCS code assigned to status indicator “J1” 

are used to establish an APC assignment for each procedure described by that HCPCS 

code. The geometric mean of the total estimated costs on each claim is used to establish 

resource similarity for each procedure code’s APC assignment and is evaluated within the 

context of clinical similarity, with assignment starting from the APC assignments in 

effect for the current payment year. Claims reporting multiple procedures described by 

HCPCS codes assigned to status indicator “J1” are identified and the procedures are then 

assigned to a comprehensive APC based on the primary HCPCS code that has the highest 

APC geometric mean cost. This ensures that multiple procedures described by HCPCS 

codes assigned to status indicator “J1” reported on claims are always paid through and 

assigned to the comprehensive APC that would generate the highest APC payment. If 

multiple procedures described by HCPCS codes assigned to status indicator “J1” that are 

reported on the same claim have the same APC geometric mean estimated cost, as would 
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be the case when two different procedures described by HCPCS codes assigned to status 

indicator “J1” are assigned to the same APC, identification of the primary service is then 

based on the procedure described by the HCPCS code assigned to status indicator “J1” 

with the highest HCPCS-level geometric mean cost. When there is no claims data 

available upon which to establish a HCPCS-level comprehensive geometric mean cost, 

we model a HCPCS-level geometric mean cost for the sole purpose of appropriately 

assigning the primary service reported on a claim. The comprehensive APC assignment 

of each procedure described by HCPCS codes assigned to status indicator “J1” is then 

confirmed by verifying that the APC assignment remains appropriate when considering 

the clinical similarity, as well as the estimated cost of all claims reporting each procedure 

described by HCPCS codes assigned to status indicator “J1,” including simple and 

complex claims, with multiple device-related procedures (78 FR 74887). 

 Complexity adjustments and determination of final comprehensive APC 

groupings. We then considered reassigning complex subsets of claims for each primary 

service described by a HCPCS code assigned to status indicator “J1.” All claims 

reporting more than one procedure described by HCPCS codes assigned to status 

indicator “J1” are evaluated for the existence of commonly occurring combinations of 

procedure codes reported on claims that exhibit a materially greater comprehensive 

geometric mean cost relative to the geometric mean cost of the claims reporting that 

primary service. This indicates that the subset of procedures identified by the secondary 

HCPCS code has increased resource requirements relative to less complex subsets of that 

procedure (78 FR 74887). The CY 2014 complexity adjustment criteria are as follows: 
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● The comprehensive geometric mean cost of the claims reporting the 

combination of procedures was more than two times the comprehensive geometric mean 

cost of the single major claims reporting only the primary service; 

● There were more than 100 claims in the data year reporting the specific code 

combination; 

● The number of claims reporting the specific code combination exceeded 5 

percent of the volume of all claims reporting the designated primary service; and 

● There would be no violation of the “2 times” rule within the receiving 

comprehensive APC (78 FR 74886). 

 If a combination of procedure codes reported on claims is identified that meets 

these requirements, that is, commonly occurring and exhibiting materially greater 

resource requirements, the combination of procedure codes is further evaluated to 

confirm clinical validity as a complex subset of the primary procedure and the 

combination of procedure codes is then identified as complex, and primary service claims 

with that combination of procedure codes are subsequently reassigned as appropriate. If 

a combination of procedure codes does not meet the requirement for a materially greater 

resource requirement or does not occur commonly, the combination of procedure codes is 

not considered to be complex, and primary service claims with that combination of 

procedure codes are not reassigned. All combinations of procedures described by 

HCPCS codes assigned to status indicator “J1” for each primary service are similarly 

evaluated. Once all combinations of procedures described by HCPCS codes assigned to 

status indicator “J1” have been evaluated, all claims identified for reassignment for each 
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primary service are combined and the group is assigned to a higher level comprehensive 

APC within a clinical family of comprehensive APCs, that is, an APC with greater 

estimated resource requirements than the initially assigned comprehensive APC and with 

appropriate clinical homogeneity. We assessed resource variation for reassigned claims 

within the receiving APC using the geometric mean cost for all reassigned claims for the 

primary service relative to other services assigned to that APC using the 2 times rule 

criteria (78 FR 74887). 

 For new HCPCS codes and codes without data, we use the best data available to 

us to identify combinations of procedure codes that represent a more complex form of the 

primary service and warrant reassignment to a higher level APC. We will reevaluate our 

APC assignments and identification and APC placement of complex claims once claims 

data become available. 

(2) Proposed CY 2015 Policy for Comprehensive APCs 

(a) Proposed Methodology 

 After consideration of the public comments we received, which are discussed in 

detail below, in this section we describe our proposed payment methodology for 

comprehensive APCs for CY 2015. The basic steps for calculating the comprehensive 

APC payments remain the same as those finalized in the CY 2014 OPPS/ASC final rule 

with comment period, except for the complexity adjustment criteria described briefly 

above (78 FR 74885 through 74888). For CY 2015, we are proposing to restructure and 

consolidate some of the current device-dependent APCs to improve both the resource and 

clinical homogeneity of these APCs. In addition, instead of assigning any add-on codes 
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to status indicator “J1” as finalized in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74873 through 74883), we are proposing to package all add-on codes, but 

to allow certain add-on codes to qualify a procedure code combination for a complexity 

adjustment. 

 Further, we are proposing to convert all current device-dependent APCs 

remaining after the proposed restructuring and consolidation of some of these APCs to 

comprehensive APCs. We also are proposing two new comprehensive APCs, C-APC 

0067 for single-session cranial stereotactic radiosurgery (SRS) and C-APC 0351 for 

intraocular telescope implantation. In addition, we are proposing to reassign CPT codes 

77424 and 77425 that describe intraoperative radiation therapy treatment (IORT) to CAPC 0648 (Level IV Breast and Skin Surgery). We discuss in detail below our proposed 

new complexity adjustment criteria and our proposal to package all add-on codes, but to 

allow complexity adjustments for qualifying code combinations of primary codes and 

add-on codes currently assigned to device-intensive comprehensive APCs. The steps are 

as follows: 

 Step 1: Select primary (“J1”) services. We continue to believe that the 

comprehensive packaging of adjunctive services into a primary service will further 

improve cost validity, payment accuracy, beneficiary transparency, and hospital 

efficiency (78 FR 74861). As in CY 2014, for CY 2015, we are proposing that services 

assigned to comprehensive APCs be designated as primary services for comprehensive 

APCs, using new status indicator “J1” as listed in Addendum J and Addendum B to this 

proposed rule (which are available via the Internet on the CMS Web site). We also are 
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proposing to package all add-on codes, as discussed in detail below, and that none of 

these add-on codes will be considered primary services assigned to status indicator “J1.” 

Treatment of add-on codes. We are proposing to assign all add-on codes status 

indicator “N” (unconditionally packaged). Therefore, under this proposal no add-on 

codes will be assigned to status indicator “J1.” However, we are proposing to evaluate a 

limited set of add-on codes assigned to the current device-dependent APCs, and to 

establish that when these add-on codes are reported in conjunction with a primary service 

a potential complexity adjustment under the proposed complexity adjustment criteria may 

be warranted (discussed further in Step 5 below). 

 Step 2: Definition of the payment package (comprehensive service). We are 

proposing the following changes to the comprehensive APCs payment packaging policy 

for the services that are assigned to status indicator “J1” or designated as primary services 

assigned to a comprehensive APC: 

● We are proposing to restructure and consolidate the current device-dependent 

APCs, including some procedure code reassignments to improve clinical and resource 

homogeneity; 

● We are proposing to package all of the add-on procedure codes, after we 

review and evaluate add-on codes reported in conjunction with primary “J1” services 

under the proposed complexity adjustment criteria for a potential complexity adjustment; 

● We are proposing to create more comprehensive APCs, including converting 

all device-dependent APCs (including those that were not included in the CY 2014 
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policy) and to create new comprehensive APCs for single session cranial stereotactic 

radiosurgery and intraocular telescope implantation. 

 As stated in the CY 2014 OPPS/ASC final rule with comment period, we define 

the comprehensive APC payment packaging policy as including all covered OPD 

services on a hospital Medicare Part B claim reporting a primary service that is assigned 

to status indicator “J1,” excluding services that cannot be covered OPD services or that 

cannot by statute be paid under the OPPS. Services packaged for payment under the 

comprehensive APC payment packaging policy, that is, services that are typically 

integral, ancillary, supportive, dependent, or adjunctive to the primary service, provided 

during the delivery of the comprehensive service, include diagnostic procedures, 

laboratory tests and other diagnostic tests and treatments that assist in the delivery of the 

primary procedure; visits and evaluations performed in association with the procedure; 

uncoded services and supplies used during the service; outpatient department services 

that are similar to therapy and delivered either by therapists or non-therapists as part of 

the comprehensive service; durable medical equipment as well as prosthetic and orthotic 

items and supplies when provided as part of the outpatient service; and any other 

components reported by HCPCS codes that are provided during the comprehensive 

service, except excluded services that are described below (78 FR 74865). Items 

packaged for payment provided in conjunction with the primary service also include all 

drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with 

pass-through payment status and those drugs that are usually self-administered (SADs), 

unless they function as packaged supplies (78 FR 74868 through 74869 and 74909). We 
CMS-1613-P 123 

refer readers to the Medicare Benefit Policy Manual, Chapter 15, Covered Medical and 

Other Health Services, Section 50.2.M, for a description of our policy on selfadministered drugs treated as hospital outpatient supplies, including lists of SADs that 

function as supplies and those that do not function as supplies. 

 Services excluded from the comprehensive APC payment packaging policy are as 

follows: SADs that are not considered supplies, because they are not covered under 

Medicare Part B under section 1861(s)(2)(B) of the Act; services excluded from the 

OPPS according to section 1833(t)(1)(B) of the Act including recurring therapy services, 

which we considered unrelated to the comprehensive service (defined as therapy services 

reported on a separate facility claim for recurring services), ambulance services, 

diagnostic and screening mammography, the annual wellness visit providing personalized 

prevention plan services, and pass-through drugs and devices that are paid according to 

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

 We also exclude preventive services defined in 42 CFR 410.2, “(1) [t]he specific 

services listed in section 1861(ww)(2) of the Act, with the explicit exclusion of 

electrocardiograms; (2) [t]he Initial Preventive Physical Examination (IPPE) (as specified 

by section 1861(ww)(1) of the Act); and (3) Annual Wellness Visit (AWV), providing 

Personalized Prevention Plan Services (PPPS) (as specified by section 1861(hhh)(1) of 

the Act).” These preventive services are listed by their HCPCS codes in Addendum J to 

this proposed rule and include: annual wellness visits providing personalized prevention 

plan services; initial preventive physical examinations; pneumococcal, influenza, and 

hepatitis B vaccines and administrations; mammography screenings; pap smear 
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screenings and pelvic examination screenings; prostate cancer screening tests; colorectal 

cancer screening tests; diabetes outpatient self-management training services; bone mass 

measurements; glaucoma screenings; medical nutrition therapy services; cardiovascular 

screening blood tests; diabetes screening tests; ultrasound screenings for abdominal aortic 

aneurysm; and additional preventive services as defined in section 1861(ddd)(1) of the 

Act. We defined and discussed these services in detail for hospital billing purposes in the 

CY 2011 OPPS/ASC final rule with comment period pursuant to coverage and payment 

provisions in the Affordable Care Act (75 FR 72013 through 72020). 

 This proposed policy is consistent with our policy to exclude preventive services 

from the proposed ancillary services packaging policy, will encourage the provision of 

preventive services, and provide maximum flexibility to beneficiaries across different 

sites of service in receiving preventive services. In addition, the statute does not permit 

assessment of beneficiary cost-sharing for most preventive services, and some receive 

cost-based payment (75 FR 72013 through 72020; 78 FR 74962). While any beneficiary 

cost-sharing attributable to preventive services, if they were packaged, would be very 

small in relation to the comprehensive service overall, we believe that we should exclude 

these services from the OPPS beneficiary copayment calculations, as discussed in section 

II.I. of this proposed rule. We note that one preventive service (HCPCS code G0102 

(Prostate cancer screening; digital rectal examination)) is proposed for continued 

packaging under the OPPS in CY 2015, both broadly and in the context of 

comprehensive services. Currently, this HCPCS code is packaged because it is included 
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in evaluation and management services. We note that beneficiary cost-sharing is not 

waived for the service described by HCPCS code G0102. 

 Consistent with the policy finalized in the CY 2014 OPPS/ASC final rule with 

comment period, we exclude brachytherapy services and pass-through drugs, biologicals 

and devices that are separately payable by statute (78 FR 74868, 74909). In addition, we 

exclude services assigned to OPPS status indicator “F” that are not paid under the OPPS 

and are instead paid on a reasonable cost basis (certain CRNA services, Hepatitis B 

vaccines, and corneal tissue acquisition, which is not part of a comprehensive service for 

CY 2015). In Addendum J to this proposed rule, we list the HCPCS codes that describe 

the services proposed for exclusion from the comprehensive APC payment bundling 

policy. 

 As we discussed in the CY 2014 OPPS/ASC final rule with comment period, we 

did not model a budget neutrality adjustment for newly included services that would 

otherwise be paid under non-OPPS fee schedules (for example, therapy and DMEPOS) 

because the policy would not be implemented until CY 2015, and the estimated costs 

were very low (78 FR 74901). We reflect the inclusion of the proposed new costs (which 

remain very low) in our annual adjustment for CY 2015 budget neutrality (we refer 

readers to section XXI. of this proposed rule). 
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TABLE 6.—PROPOSED COMPREHENSIVE APC PAYMENT BUNDLING 

POLICY EXCLUSIONS FOR CY 2015 

Ambulance services 

Brachytherapy 

Diagnostic and mammography screenings 

Physical therapy, speech-language pathology and occupational therapy services - 

Therapy services reported on a separate facility claim for recurring services 

Pass-through drugs, biologicals and devices 

Preventive services defined in 42 CFR 410.2: 

• Annual wellness visits providing personalized prevention plan services 

• Initial preventive physical examinations 

• Pneumococcal, influenza, and hepatitis B vaccines and administrations 

• Mammography Screenings 

• Pap smear screenings and pelvic examination screenings 

• Prostate cancer screening tests 

• Colorectal cancer screening tests 

• Diabetes outpatient self-management training services 

• Bone mass measurements 

• Glaucoma screenings 

• Medical nutrition therapy services 

• Cardiovascular screening blood tests 

• Diabetes screening tests 

• Ultrasound screenings for abdominal aortic aneurysm 

• Additional preventive services (as defined in section 1861(ddd)(1) of the Act) 

Self-administered drugs - Drugs that are usually self-administered and do not function 

as supplies in the provision of the comprehensive service 

Services assigned to OPPS status indicator “F” (Certain CRNA services, Hepatitis B 

vaccines and corneal tissue acquisition) 

Services assigned to OPPS status indicator “L” (Influenza and pneumococcal 

pneumonia vaccines) 

Certain Part B inpatient services – Ancillary Part B inpatient services payable under 

Part B when the primary “J1” service for the claim is not a payable Part B inpatient 

service (for example, exhausted Medicare Part A benefits, beneficiaries with Part B 

only) 

 Step 3: Ranking of primary services initial comprehensive APC assignments. We 

are proposing to continue to define each hospital Medicare Part B claim reporting a single 

unit of a single primary service assigned to status indicator “J1” (approximately 80 
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percent of the CY 2013 claims) as a single major procedure claim (78 FR 74871). We 

would sum all line item charges for services included in the comprehensive APC 

payment, convert the charges to costs, and calculate the “comprehensive” geometric 

mean cost of one unit of each service assigned to status indicator “J1.” (We note that we 

use the term “comprehensive” to describe the geometric mean cost of a claim reporting 

“J1” service(s) or the geometric mean cost of a comprehensive APC, inclusive of all of 

the items and services in the comprehensive APC payment bundle). Charges for services 

that would otherwise have been separately payable subject to longstanding adjustments, 

including the multiple procedure reduction (for example, HCPCS codes assigned to status 

indicators “A,” “S,” “T,” or “V”) would be added to the charges for the primary service. 

This process differs from our traditional cost accounting methodology only in that all 

such services on the claim are packaged (except certain services as described above). We 

would apply our standard data trim, excluding claims with extremely high primary units 

or extreme costs. 

 The comprehensive geometric mean costs are used to establish resource similarity 

and, along with clinical similarity, dictate the assignment of the primary services to the 

comprehensive APCs. We are proposing to establish a ranking of each primary service 

(single unit only) assigned to status indicator “J1” according to their comprehensive 

geometric mean costs. For CY 2015, we are proposing not to assign any add-on codes to 

status indicator “J1” because they are proposed to be packaged. 

 For the minority of claims reporting more than one primary service assigned to 

status indicator “J1” or units thereof (approximately 20 percent of CY 2013 claims), we 
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are proposing to continue to identify one “J1” service as the primary service for the claim 

based on our cost-based ranking of primary services. We then assign these multiple “J1” 

procedure claims to the comprehensive APC to which the service designated as the 

primary service is assigned. If the reported “J1” services reported on a claim map to 

different comprehensive APCs, we designate the “J1” service assigned to the 

comprehensive APC with the highest comprehensive geometric mean cost as the primary 

service for that claim. If the reported multiple “J1” services on a claim map to the same 

comprehensive APC, we designate the most costly service as the primary service for that 

claim. This process results in initial assignments of claims for the primary services 

assigned to status indicator “J1” to the most appropriate comprehensive APCs based on 

both single and multiple procedure claims reporting these services and clinical and 

resource homogeneity. 

 Step 4 - Complexity adjustments and determination of final comprehensive APC 

groupings. We are proposing to use the proposed complexity adjustments to provide 

increased payment for certain comprehensive services. We are proposing to apply a 

complexity adjustment by promoting qualifying “J1” service code combinations or code 

combinations of a “J1” services and certain add-on codes (as described further below) 

from the originating comprehensive APC (the comprehensive APC to which the 

designated primary service is first assigned) to a higher paying comprehensive APC in 

the same clinical family of comprehensive APCs, if reassignment is clinically appropriate 

and the reassignment would not create a 2 times rule violation in the receiving APC (the 

higher paying comprehensive APC in the same clinical family of comprehensive APCs). 
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We are proposing to implement this type of complexity adjustment when the code 

combination represents a complex, costly form or version of the primary service 

according to the following criteria: 

● Frequency of 25 or more claims reporting the code combination (frequency 

threshold); and 

● Violation of the 2 times rule, that is, the comprehensive geometric mean cost of 

the complex code combination exceeds the comprehensive geometric mean cost of the 

lowest significant HCPCS code assigned to the comprehensive APC (cost threshold). 

 After designating a single primary service for a claim, we are proposing to 

evaluate that service in combination with each of the other procedure codes reported on 

the claim assigned to status indicator “J1” (or certain add-on codes) to determine if they 

meet the complexity adjustment criteria. For new HCPCS codes, we are proposing to 

determine initial comprehensive APC assignments and complexity adjustments using the 

best data available, mapping the new HCPCS codes to predecessor codes wherever 

possible. 

 Once we have determined that a particular code combination of “J1” services (or 

combinations of “J1” services reported in conjunction with certain add-on codes) 

represents a complex version of the primary service because it is sufficiently costly, 

frequent, and a subset of the primary comprehensive service overall according to the 

criteria described above, we are proposing to promote the complex version of the primary 

service as described by the code combination to the next higher cost comprehensive APC 

within the clinical family, unless the APC reassignment is not clinically appropriate, the 
CMS-1613-P 130 

reassignment would create a 2 times rule violation in the receiving APC, or the primary 

service is already assigned to the highest cost APC within the comprehensive APC 

clinical family. We are not proposing to create new APCs with a geometric mean cost 

that is higher than the highest cost comprehensive APC in a clinical family just to 

accommodate potential complexity adjustments. Therefore, the highest payment for any 

code combination for services assigned to a comprehensive APC will be the highest 

paying comprehensive APC in the clinical family. 

 As discussed below, we are proposing that add-on codes reported in conjunction 

with a “J1” service would receive complexity adjustments when a qualifying add-on code 

is reported in conjunction with the primary service assigned to status indicator “J1” and 

satisfies the criteria described above for a complexity adjustment (≥ 25 claims with the 

code combination and no violations of the 2 times rule). Any combinations of HCPCS 

codes that fail to meet the proposed complexity adjustment criteria (frequency and cost 

thresholds) would not be identified as complex subsets of the primary procedure and 

would not be reassigned to a higher paying comprehensive APC within the same clinical 

family of comprehensive APCs. We are providing the proposed list of qualifying code 

combinations (including add-on codes) in Addendum J to this proposed rule (which is 

available via the Internet on the CMS Web site). 

 Complexity Test for Eligible Add-On Codes. We are proposing to package all 

add-on codes into the payment for the comprehensive APC. However, add-on codes that 

are assigned to the current device-dependent APCs listed in Table 5 of this proposed rule 

will be evaluated for a possible complexity adjustment when they are reported in 
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conjunction with a designated primary service assigned to status indicator “J1.” We are 

proposing to only evaluate the add-on codes that are assigned to the current 

device-dependent APCs for potential complexity adjustments because we believe that, in 

certain cases, these procedure codes may represent services with additional medical 

device costs that result in significantly more complex and costly procedures. To 

determine which combinations of primary service codes reported in conjunction with the 

add-on code may qualify for a complexity adjustment for CY 2015, we are proposing to 

apply the proposed frequency and cost criteria discussed above (25 or more claims and no 

“2 times” rule violations), testing claims reporting one unit of a single primary service 

assigned to status indicator “J1” and any number of units of a single add-on code. If the 

frequency and cost criteria for a complexity adjustment are met, and reassignment to the 

next higher cost APC in the clinical family is appropriate, we are proposing to make a 

complexity adjustment for the code combination; that is, we are proposing to reassign the 

primary service code reported in conjunction with the add-on code combination to a 

higher cost comprehensive APC within the same clinical family of comprehensive APCs. 

If any add-on code combination reported in conjunction with the primary service code 

does not qualify for a complexity adjustment, payment for these services will be 

packaged. We are listing the complexity adjustments proposed for add-on code 

combinations for CY 2015, along with all of the other proposed complexity adjustments, 

in Addendum J to this proposed rule (which is available via the Internet on the CMS Web 

site). One primary service code and add-on code combination (CPT code 37225 and 

37233) that satisfied the frequency and cost criteria is not being proposed for a 
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complexity adjustment because we believe that these claims are miscoded. Of the 35 

qualifying claims reporting this code combination, only three claims contained the 

appropriate base code (CPT code 37228) for CPT add-on code 37233. 

 We note that, in response to public comments received, we are providing in 

Addendum J to this proposed rule a breakdown of cost statistics for each code 

combination that would qualify for a complexity adjustment (including primary code and 

add-on code combinations). Addendum J to this proposed rule also contains summary 

cost statistics for each of the code combinations proposed to be reassigned under a given 

primary code. The combined statistics for all proposed reassigned complex code 

combinations are represented by an alphanumeric code with the last 4 digits of the 

designated primary service followed by “A” (indicating “adjustment”). For example, the 

geometric mean cost listed in Addendum J for the code combination described by CPT 

code 33208A assigned to C-APC 0655 includes all code combinations that are proposed 

to be reassigned to C-APC 0655 when CPT code 33208 is the primary code. Providing 

the information contained in Addendum J in this proposed rule will allow stakeholders 

the opportunity to better assess the impact associated with the proposed reassignment of 

each of the code combinations eligible for a complexity adjustment. 

(b) Additional Proposed Comprehensive APCs 

 Several commenters to the CY 2014 OPPS/ASC proposed rule questioned why 

we only converted a subset of the device-dependent APCs to comprehensive APCs 

(78 FR 74864). We responded that while we were initially adopting a subset of the most 

costly device-dependent services, we may extend comprehensive payments to other 
CMS-1613-P 133 

procedures in future years as part of a broader packaging initiative (78 FR 74864). Upon 

further review for CY 2015, we believe that the entire set of the currently 

device-dependent APCs (after the proposed reorganization and consolidation of the 

current device-dependent APCs) are appropriate candidates for comprehensive APC 

payment because the device-dependent APCs not included in last year’s comprehensive 

APC payment proposal are similar to the original 29 device-dependent APCs that were 

proposed as comprehensive APCs in CY 2014. Similar to the original 29 devicedependent APCs for CY 2014 that were converted to C-APCs, the additional devicedependent APCs that are being proposed for conversion to C-APCs contain 

comprehensive services primarily intended for the implantation of costly medical 

devices. Therefore, we are proposing to apply the comprehensive APC payment policy 

to the remaining device-dependent APCs for CY 2015. 

 In addition, since the publication of the CY 2014 OPPS/ASC final rule with 

comment period, stakeholders brought several services to our attention as appropriate 

candidates for comprehensive APC payment. Stakeholders recommended that we create 

comprehensive APCs for these procedures and technologies or assign them to a 

previously proposed comprehensive APC. We agree with the stakeholders. Similar to 

the other services designated as C-APCs in CY 2014, these procedures are 

comprehensive single-session services with high-cost implantable devices or high-cost 

equipment. For CY 2015, we are proposing to convert the following existing APCs into 

comprehensive APCs: APC 0067 (Single Session Cranial Stereotactic Radiosurgery) and 

APC 0351 (Level V Intraocular Surgery)). APC 0351 only contains one procedure – 
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0308T (Insertion of ocular telescope prosthesis including removal of crystalline lens). 

We also are proposing to assign the CPT codes for IORT (CPT codes 77424 and 77425) 

to C-APC 0648 (Level IV Breast and Skin Surgery) because IORT is a single session 

comprehensive service that includes breast surgery combined with a special type of 

radiation therapy that is delivered inside the surgical cavity but is not technically 

brachytherapy. The HCPCS codes that we are proposing to assign to these APCs in 

CY 2015 would be assigned to status indicator “J1.” 

(c) Proposed Reconfiguration and Restructuring of the Comprehensive APCs 

 Based on further examination of the structure of the comprehensive APCs 

illustrated in the CY 2014 OPPS/ASC final rule with comment period and an evaluation 

of their comprehensive geometric mean costs (using the updated CY 2013 claims data), 

we are proposing to reorganize, combine, and restructure some of the comprehensive 

APCs. The purpose of this APC restructuring is to improve resource and clinical 

homogeneity among the services assigned to certain comprehensive APCs and to 

eliminate APCs for clinically similar services, but with overlapping geometric mean 

costs. The services we are proposing to assign to each of the comprehensive APCs for 

CY 2015, along with the relevant cost statistics, are provided in Addendum J to this 

proposed rule. Addendum J is available at the CMS Web site at: 

http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. Table 7 below lists the additional 28 APCs 

proposed under the CY 2015 comprehensive APC policy. 
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 In summary, our proposal to reorganize, combine, and restructure some of the 

comprehensive APCs includes the following proposed changes: 

● Endovascular clinical family (renamed Vascular Procedures, VASCX). We are 

proposing to combine C-APCs 0082, 0083, 0104, 0229, 0319, and 0656 illustrated for 

CY 2014 to form three proposed levels of comprehensive endovascular procedure APCs: 

C-APC 0083 (Level I Endovascular Procedures); C-APC 0229 (Level II Endovascular 

Procedures); and C-APC 0319 (Level IV Endovascular Procedures). 

● Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related 

Devices (AICDP). We are proposing to combine C-APCs 0089, 0090, 0106, 0654, 0655, 

and 0680 as illustrated for CY 2014 to form three proposed levels of comprehensive 

APCs within a broader series of APCs for pacemaker implantation and similar procedures 

as follows: APC 0105 (Level I Pacemaker and Similar Procedures), a noncomprehensive APC; C-APC 0090 (Level II Pacemaker and Similar Procedures); C-APC 

0089 (Level III Pacemaker and Similar Procedures); and C-APC 0655 (Level IV 

Pacemaker and Similar Procedures). 

● We are proposing to delete the clinical family for Event Monitoring, which 

only had one comprehensive APC (C-APC 0680 (Insertion of Patient Activated Event)) 

with a single CPT code 33282 as illustrated for CY 2014. We also are proposing to 

reassign CPT code 33282 to C-APC 0090, which contains clinically similar procedures. 

● In the urogenital family, we are proposing two levels instead of three levels for 

Urogenital Procedures, and to reassign several codes from APC 0195 to C-APC 0202 

(Level V Female Reproductive Procedures). 
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● We are proposing to rename the arthroplasty family of APCs to Orthopedic 

Surgery. We also are proposing to reassign several codes from APC 0052 to C-APC 

0425, which we are proposing to rename “Level V Musculoskeletal Procedures Except 

Hand and Foot.” 

● We are proposing three levels of electrophysiologic procedures, using the 

current inactive APC “0086” instead of APC 0444, to have consecutive APC grouping 

numbers for this clinical family and renaming APC 0086 “Level III Electrophysiologic 

Procedures.” In addition, we are proposing to replace composite APC 8000 with 

proposed C-APC 0086 as illustrated in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 74870). 

 We also are proposing three new clinical families: Gastrointestinal Procedures 

(GIXXX) for gastrointestinal stents, Tube/Catheter Changes (CATHX) for insertion of 

various catheters, and Radiation Oncology (RADTX), which would include C-APC 0067 

for single session cranial SRS. 

(3) Public Comments 

 We received nine public comments in response to the CY 2014 OPPS/ASC final 

rule with comment period regarding our policy for comprehensive APCs from device 

manufacturers, the hospital community, and others. The commenters generally supported 

broader payment bundles, as long as the payment bundles are appropriately and 

accurately structured and provide adequate payment. Commenters expressed continued 

concern regarding the data provided in support of the comprehensive APC policy, the 

ability to replicate the methodology, and the ability of comprehensive APCs to 
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adequately pay for complex services for patients. The comments, which were largely 

provided in the context of specific devices or drugs, or in regard to a specific clinical 

family of comprehensive APCs, are summarized below and accompanied by our 

responses. 

Endovascular Family 

 Comment: Several commenters addressed the endovascular family of 

comprehensive APCs. The commenters expressed difficulty replicating CMS’ 

methodology, especially complexity reassignments for procedures in this family of 

services that is historically component-based and include many new codes and add-on 

codes. The commenters requested clarification of how CMS determined comprehensive 

APC assignments and complexity adjustments associated with add-on codes and other 

procedures. 

 One commenter expressed concern regarding payment levels for vascular 

procedures involving multiple vessels. The commenter recommended changes to the 

complexity adjustment criteria in order to allow for adjustments and to provide adequate 

payment for seven code combinations of lower extremity endovascular revascularization 

procedures assigned to C-APCs 0083 (Level I Endovascular Procedures), 0229 (Level II 

Endovascular Procedures) and 0445 (Level III Endovascular Procedures). The code 

combinations identified by the commenter were CPT code 37221 and 37222; 37229 and 

37232; 37230 and 37232; 37231 and 37232; 37229 and 37234; 37231 and 37233; and 

37231 and 37234. Procedures described by add-on codes (CPT codes 37222, 37232, 

37233 and 37234) are furnished in conjunction with each of these code combinations. 
CMS-1613-P 138 

The commenter stated that each of the code combinations failed to meet the CY 2014 

finalized cost threshold for a complexity adjustment (for example, the comprehensive 

geometric mean cost of the code combination was more than two times the 

comprehensive geometric mean cost of the single major claims reporting only the 

primary “J1” service), but that some of the code combinations met the CY 2014 

frequency of ≥ 100 claims and ≥ 5 percent of the total claims volume for the primary 

service, including CPT codes 37221 and 37222 (Iliac artery revascularization (multiple 

vessels) with stent), 37229 and 37232 (Tibial/peroneal artery revascularization (multiple 

vessels) with atherectomy), and 37230 and 37232 (Tibial/peroneal artery 

revascularization (multiple vessels) with stent). The other four code combinations met 

the ≥ 5 percent volume threshold for the claims reporting the primary service, but in the 

relevant data year the frequency of these code combinations ranged from 13 to 22 cases, 

including CPT codes 37231 and 37232 (Tibial/peroneal artery revascularization (multiple 

vessels) with stent and atherectomy), 37229 and 37234 (Tibial/peroneal artery 

revascularization with atherectomy (multiple vessels) and with stent (multiple vessels)), 

37231 and 37233 (Tibial/peroneal artery revascularization with stent and atherectomy 

(multiple vessels)), and 37231 and 37234 (Tibial/peroneal artery revascularization with 

stent (multiple vessels) and atherectomy). In no case did the geometric mean cost of the 

code combinations exceed the geometric mean cost of the single “J1” claims for the 

primary service alone by at least two times. 

 To qualify these code combinations for a complexity adjustment, the commenter 

recommended using a 1.5 instead of 2 times rule, patterned after the 50 percent multiple 
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procedure reduction and based on the inability of hospitals to garner 100 percent 

efficiency when performing multiple procedures. The commenter stated that this slightly 

lower cost threshold would still be significant and, therefore, would appropriately allow 

complexity reassignment only for cases that are meaningfully underpaid under the 

threshold. (We received similar inquiries from other commenters regarding our 

application of the statutory “2 times” rule that are discussed below.) 

 In addition, the commenter recommended that CMS omit the CY 2014 required 

claim frequency threshold of greater than 100 claims with the specific combination of 

procedure codes. The commenter believed that the frequency threshold requiring that 

complex claims for a particular procedure code combination exceed 5 percent of the total 

volume of claims reporting the primary service alone is sufficient to ensure additional 

payment for only higher volume cases, and that an additional frequency threshold is not 

necessary. The commenter believed that the threshold should not depend on the 

procedures’ frequency in prior years, which can fluctuate significantly. 

 The commenter asked for clarification regarding our treatment of add-on codes, 

recommending that all add-on codes assigned to the endovascular comprehensive APCs 

be equally eligible for complexity adjustments. The commenter noted that Table 10 of 

the CY OPPS/ASC 2014 final rule with comment period (78 FR 74889 through 74900) 

listed complexity adjustments for only a small number of add-on codes (for example, 

certain drug-eluting stent codes), and did not list complexity adjustments for any of the 

add-on codes for peripheral artery revascularization associated with procedures assigned 

to C-APCs 0083, 0229 and 0445. The commenter could not assess whether only some 
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add-on code combinations were considered for complexity adjustments, or whether all 

combinations were considered but eliminated due to not meeting the cost or frequency 

criteria. 

 Similarly, another commenter requested additional information regarding 

application of the complexity criteria to all of the percutaneous coronary intervention 

(PCI) related code combinations in Table 10 of the CY 2014 OPPS/ASC final rule with 

comment period. In particular, the commenter was not sure whether the C9600-C9602 

code combination required intervention in an additional vessel, whether a second stent in 

a new vessel is required, or whether one stent and rotational atherectomy together with an 

additional stent in the same vessel would qualify the procedure(s) for a complexity 

adjustment. The commenter believed that it would not be appropriate to apply an 

adjustment only when the second intervention was in a separate vessel, where a 

procedure involving placement of a stent in one vessel and a second stent in a branch of 

the same vessel would not be eligible for complexity adjustment, but placement of two 

stents in two separate vessels would be eligible because the resources required are 

potentially very similar. Regarding claims with more than one unit of HCPCS code 

C9606, the commenter was not sure whether the second revascularization procedure must 

involve a second episode of acute myocardial infarction (AMI) in the same outpatient 

encounter, or whether the complexity adjustment would apply when there is a single 

episode of AMI in two separate vessels or in the same vessel. Regardless of CMS’ intent, 

the commenter questioned why interventions involving patients with AMI or total 
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chronic occlusions are mapped to the same APCs as those that involve patients with 

lower levels of complexity. 

 Response: We begin by clarifying how we treated add-on codes, which are 

particularly common in the vascular family of comprehensive APCs, in modeling the 

CY 2014 payments for comprehensive APCs. The CPT Editorial Panel defines add-on 

codes as codes that describe procedures that are commonly carried out in addition to the 

primary procedure performed, listing add-on codes in Appendix D of the CPT codebook 

(2014 CPT Codebook Professional Edition, page xiv). The CPT codebook states that 

add-on codes are always performed in addition to the primary or “base” service or 

procedure and must never be reported as a stand-alone code. Add-on codes can also be 

Level II HCPCS codes, such as HCPCS codes C9601, C9603, C9605 and C9608, which 

are the drug-eluting stent insertion add-on codes that parallel the non-drug eluting stent 

insertion add-on CPT codes 92929, 92934, 92938 and 92944, respectively. In Table 15 

of the CY 2014 OPPS/ASC final rule with comment period, we listed all add-on codes 

that are currently assigned to device-dependent APCs (78 FR 74944). 

 Historically and in most cases, the OPPS assigned add-on codes to the same APC 

as the base code and applied a multiple procedure reduction when these codes were 

reported with the base code. Because add-on codes represent an extension or 

continuation of or are adjunctive to a primary service, beginning in CY 2014, we 

unconditionally packaged add-on codes, except for drug administration services, and addon codes assigned to device-dependent APCs due to the delayed implementation of the 

comprehensive APC policy until CY 2015 (78 FR 74943). We discussed in that same 
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final rule with comment period how this policy will improve the accuracy of OPPS 

ratesetting, as we would no longer be reliant on incorrectly coded single add-on code 

claims to set OPPS payment rates for add-on codes (78 FR 74942). 

 In the CY 2014 OPPS/ASC proposed rule, we proposed to unconditionally 

package add-on codes assigned to comprehensive APCs and to assign the procedures to 

status indicator “N” (78 FR 43559). They were not proposed as primary services 

assigned to status indicator “J1” because they would always be furnished adjunctive to 

another primary service assigned status indicator “J1.” We had not proposed a 

complexity adjustment, so there was no need to consider whether the multiple procedure 

claims that correctly report an add-on code should be promoted to a higher 

comprehensive APC. 

 In the CY 2014 OPPS/ASC final rule with comment period, we designated certain 

especially costly add-on codes as primary services assigned to status indicator “J1.” (We 

refer readers to Table 9 in the 2014 OPPS final rule with comment period (78 FR 74873 

through 74883), which provided the APC assignments for HCPCS codes proposed to be 

assigned to status indicator “J1” for CY 2014 and were displayed for illustration.) Other 

add-on codes assigned to the device-dependent APCs illustrated as comprehensive APCs 

were packaged because of the CY 2014 policy to package most add-on codes under the 

OPPS. Because these packaged add-on codes were not sufficiently costly, they were not 

designated as primary “J1” services. As a result, for example, CPT codes 37222, 37232, 

37233, and 37234 were not assigned status indicator “J1” in the CY 2014 OPPS/ASC 

final rule with comment period and instead were packaged similar to almost all of the 
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other add-on codes. However, for CY 2014, because the implementation of the 

comprehensive APC policy was delayed until CY 2015, payment for services described 

by add-on codes assigned to a device-dependent APC are paid separately under the OPPS 

(78 FR 74943). 

 In response to the comments we received on the CY 2014 OPPS/ASC final rule 

with comment period, we considered ways to refine and simplify the complexity test 

when add-on codes that are currently assigned to the device-dependent APCs are reported 

with primary services proposed to be assigned to comprehensive APCs for CY 2015 in 

this proposed rule. Because services described by add-on codes are by definition 

adjunctive and furnished in addition to primary services assigned status indicator “J1,” 

we believe that the add-on codes should not be classified as primary services themselves 

because they cannot serve as the primary service provided to a patient. However, we 

continue to believe that we should recognize the additional cost and complexity of certain 

cases involving procedures described by certain especially costly add-on codes that are 

currently assigned to a device-dependent APC in CY 2014 because like certain 

combinations of “J1” procedure codes, primary service code and add-on code 

combinations can represent more complex and significantly more costly variations of the 

primary service. Therefore, we are proposing to revert to our original CY 2014 proposal 

for comprehensive APCs in which we would not consider any add-on codes that are 

currently assigned to device-dependent APCs as primary services assigned to status 

indicator “J1” (78 FR 43559). For CY 2015, we are proposing to allow certain 

combinations of primary service codes and especially costly add-on codes representing a 
CMS-1613-P 144 

more costly, complex variation of a procedure to trigger a complexity adjustment. We 

refer readers to section II.A.2.e.(3)(a) of this proposed rule for a detailed description of 

our proposed new methodology of evaluating primary service procedures reported in 

conjunction with add-on codes for complexity adjustments. 

 Also, in evaluating the comprehensive APC assignments based on CY 2013 

claims data, we are proposing to consolidate and restructure the vascular comprehensive 

APCs, in addition to other APCs. We refer readers to section II.A.2.e.(3)(c) of this 

proposed rule for a discussion of the proposed reconfiguration, and to Addendum J to this 

proposed rule for the updated cost statistics and proposed complexity adjustments for the 

services to address the commenters’ concerns. We are proposing complexity adjustments 

for several of the services indicated by the commenters, although some of the services 

continue to fail one or both of the proposed complexity criteria even under the proposed 

relaxed frequency and cost thresholds. 

 We agree with the commenters that we should revise the criteria for complexity 

adjustments. The delay in implementation afforded additional time for CMS and 

commenters to further analyze and consider the cost data. After further analysis and 

consideration of the public comments in response to the CY 2014 OPPS/ASC final rule 

with comment period, we believe that the complexity adjustment criteria in that final rule 

with comment period were too restrictive. None of the code combinations illustrated as 

qualifying for complexity adjustments in the CY 2014 OPPS/ASC final rule with 

comment period met all of the frequency and cost thresholds set forth in the CY 2014 

OPPS/ASC final rule with comment period, and no code combinations would qualify 
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under those criteria in CY 2015 using the CY 2013 cost data. However, we believe that 

especially costly and sufficiently frequent code combinations should qualify for a 

complexity adjustment. 

 In calculating the geometric mean costs for comprehensive APC services using 

the claims data for CY 2013, we noted that many of the comprehensive APCs in the same 

clinical family illustrated in the CY 2014 OPPS/ASC final rule with comment period had 

similar or overlapping comprehensive geometric mean costs, meaning that the geometric 

mean costs were close to one another or that the range of costs for procedures assigned to 

one comprehensive APC significantly overlapped the range of costs for procedures 

assigned to another comprehensive APC in the same clinical family. We are proposing to 

restructure and consolidate these comprehensive APCs, as further described in section 

II.A.2.e.(3)(c) of this proposed rule, in order to better distinguish service groups having 

different resource requirements. The proposed restructuring and consolidation eliminates 

the need for many of the complexity adjustments illustrated in the CY 2014 OPPS/ASC 

final rule with comment period because we are proposing to promote the primary service 

to a higher cost comprehensive APC for CY 2015 as compared to its illustrated 

comprehensive APC assignment for CY 2014. For example, for CY 2014, we illustrated 

complexity adjustments for the CPT code combinations 37228 and 35476, 37228 and 

37220, 37228 and 37224, and multiple units of CPT code 37228 from C-APC 0083, the 

primary service CPT code 37228 was assigned with a comprehensive geometric mean 

cost of $4,230 to C-APC 0104 with a comprehensive geometric mean cost of $8,554. For 

CY 2015, we are proposing to consolidate C-APCs 0104 and 0229, and to retain C-APC 
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0229. Considering our proposed initial assignment of CPT code 37228 to C-APC 0229, 

CPT code 37228 has a proposed CY 2015 geometric mean cost of $7,250 and C-APC 

0229 has a CY 2015 proposed comprehensive geometric mean cost of approximately 

$9,998. 

 We agree with the commenters that complexity adjustments should be based upon 

criteria that demonstrate that the complex combination is both sufficiently frequent and 

sufficiently costly such that a payment adjustment is warranted within a similar clinical 

family, if possible. Our reliance on clinical comparisons of each code combination in 

determining the complexity adjustments illustrated for CY 2014 likely contributed to the 

difficulty experienced by commenters in reproducing the results of the policy. 

Accordingly, we further analyzed the cost data in order to identify viable alternatives for 

complexity adjustment criteria. For CY 2015, we are proposing the following new 

complexity adjustment criteria to evaluate HCPCS code combinations for complexity 

adjustments: 

● Frequency of 25 or more claims reporting the code combination (frequency 

threshold); and 

● Violation of the “2 times” rule; that is, the comprehensive geometric mean cost 

of the “complex” code combination exceeds the comprehensive geometric mean cost of 

the lowest significant HCPCS code assigned to the originating comprehensive APC by at 

least 2 times (cost threshold). (“Significant” means frequency >1000 claims, or 

frequency > 99 claims and contributing at least 2 percent of the single major claims used 
CMS-1613-P 147 

to establish the originating comprehensive APC’s geometric mean cost, including the 

claims reporting the complex code pair). 

 To illustrate how this second criterion is applied, for example, consider CPT code 

33208 as the primary service reported in conjunction with HCPCS code C9600. CPT 

code 33208 is assigned to APC 0089. The lowest cost significant procedure assigned to 

APC 0089 is CPT code 33228, with a geometric mean cost of $8,669. There are 43 

instances of the code combination of CPT code 33208 and HCPCS code C9600 in the 

CY 2013 claims data with a geometric mean cost of $21,914, which exceeds the 

geometric mean cost of CPT code 33228 ($8,669) by greater than two times ($21,914 > 

$17,338). Therefore, the code combination of CPT code 33208 and HCPCS code C9600 

is assigned through a complexity adjustment to APC 0655, which is the next higher cost 

APC in the AIDCP clinical family of comprehensive APCs. 

 Whereas the criteria finalized in the CY 2014 OPPS/ASC final rule with comment 

period evaluated the marginal cost contribution of the additional procedure in comparison 

to the designated primary service alone (78 FR 74886), the proposed complexity 

adjustment criterion would employ our standard “2 times” rule (discussed in section 

III.B.2. of this proposed rule), comparing the costs associated with the code combination 

to the cost of other services assigned to the same comprehensive APC. We are proposing 

to make a complexity adjustment by reassigning a particular code combination to a 

higher cost comprehensive APC if there are 25 or more claims reporting the code 

combination in the data year and their comprehensive geometric mean cost exceeds the 

geometric mean cost of the lowest significant HCPCS code in the initial comprehensive 
CMS-1613-P 148 

APC by more than two times according to our standard “2 times” rule comparison. By 

“significant HCPCS code,” we mean our standard threshold for volume significance of 

the other codes being compared to the complex code combinations requiring a frequency 

>1000; or frequency > 99 and contributing at least 2 percent of the single major claims 

used to establish the comprehensive APC geometric mean cost, including the claims 

reporting the complex code pair). We are proposing to apply the same test in assessing 

whether the complexity reassignment would create a “2 times” rule violation in the newly 

assigned comprehensive APC. However, if the claims comprise significant volume and 

violate the “2 times” rule cost differential, we are proposing to consider alternative 

comprehensive APC assignments, such as not making a complexity adjustment for the 

code combination, or not assigning the case to a higher cost APC within the same clinical 

family. In doing so, we also would require the complex code combination to be clinically 

similar to other procedures assigned to the comprehensive APC to which the complex 

code combination is reassigned. This is usually the case because complexity adjustments 

are confined to higher cost APCs within the same clinical family. 

 Comment: One commenter questioned the assignment of procedures within 

C-APCs 0083 (Level I Endovascular Procedures), 0229 (Level II Endovascular 

Procedures) and 0319 (Level IV Endovascular Procedures). The commenters believed 

that some of the procedures assigned to C-APC 0083 should be assigned to C-APC 0229, 

and stated that the adjunctive service rather than the primary service appeared to be 

driving the comprehensive APC mapping, specifically CPT code combinations 35476 

and 37205, 35475 and 37205, 35471 and 37205, and 37220 and 37205. 
CMS-1613-P 149 

 Response: CPT code 37205 was deleted for CY 2014, and we are proposing to 

cross-walk CPT code 37205 to CPT code 37236 for CY 2015 based on the code 

descriptors. Until claims data are available for new codes, we are proposing to continue 

to make comprehensive APC assignments based on our best assessment of clinical and 

resource similarity (as we do for standard APC assignments), including examining the 

historical cost data for any predecessor code(s). Applying our proposed CY 2015 

complexity adjustment criteria (significant volume of 25 or more complex claims and a 

“2 times” rule violation assessment relative to the lowest service within the originating 

comprehensive APC) would result in several complexity adjustments related to CPT code 

37205, which are listed in Addendum J to this proposed rule (which is available via the 

Internet on the CMS Web site). We are proposing to provide these complexity 

adjustments when CPT code 37236 is reported in lieu of CPT code 37205 for each of 

these code combinations. 

 Comment: One commenter expressed concern regarding payment for certain 

anticoagulant and other drugs that are commonly furnished with services assigned to the 

endovascular family of comprehensive APCs, particularly Angiomax, Cleviprex, 

Recothrom and Agratroban. The commenter asked CMS to clarify that the proposed 

definition of a comprehensive APC includes adjunctive supplies, as well as adjunctive 

services. The commenter asserted that the proposed comprehensive APC payment 

methodology violates the OPPS statutory requirements for separate payment of specified 

covered outpatient drugs (SCODs) and the “2 times” rule. The commenter stated that 

CMS did not discuss application of the “2 times” rule in the statutory context, and noted 
CMS-1613-P 150 

that by design CMS selected primary procedures that were far more costly than the other 

services included in the comprehensive APC payment bundle. The commenter also 

asserted that the comprehensive APC policy is premature because it lacks clinical quality 

metrics and other safeguards for quality of outpatient care. The commenter 

recommended alternative policies to incentivize cost-effectiveness, such as required data 

submission on hospital treatment decisions and making hospitals whole for use of 

cost-effective items and services including drugs. The commenter did not believe that 

Medicare’s three hospital inpatient quality incentive programs include measures that are 

relevant for the comprehensive device-dependent procedures when they are furnished on 

an outpatient basis. 

 Response: In finalizing our CY 2014 policy to package drugs and biologicals that 

function as surgical supplies, we explained that CMS has the statutory authority to 

package the payment of any drugs, biologicals, and radiopharmaceuticals, including those 

that meet the statutory definition of a SCOD (78 FR 74931). Also, in finalizing our 

CY 2008 policy packaging all diagnostic radiopharmaceuticals and contrast agents, 

except those with pass-through status, we explained that CMS has the statutory authority 

to package the payment of any drugs, biologicals, and radiopharmaceuticals, including 

those that meet the statutory definition of a SCOD (72 FR 66766). 

 Our proposed definition of a comprehensive APC includes adjunctive supplies, as 

well as adjunctive services. In the CY 2014 OPPS/ASC final rule with comment period, 

we packaged all drugs, biologicals, and radiopharmaceuticals into the comprehensive 

APC payment, with the exception of certain drugs that are usually self-administered 
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(SADs) and, therefore, not covered under Medicare Part B. We applied our existing 

policy that defines certain SADs as hospital supplies paid under the OPPS, such that 

these SADs would be included in the comprehensive APC payment bundle 

(78 FR 74868). For CY 2015, we are proposing to retain these aspects of our 

comprehensive APC policy. We are proposing to continue to package all drugs, 

biologicals, and radiopharmaceuticals into the comprehensive APC payment, including 

those SADs defined as hospital supplies, which are packaged in the OPPS (Medicare 

Benefit Policy Manual Chapter 15, Section 50.2.M, available at 

http://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/bp102c15.pdf). Therefore, beginning in 

CY 2015, Angiomax, Cleviprex, Recothrom, Agratroban, and any other drugs, 

biologicals, and radiopharmaceuticals (except for SADs that are not considered hospital 

supplies) would be packaged when administered to a patient receiving a comprehensive 

service. There would be no separate payment for these non-pass-through drugs under the 

OPPS regardless of cost or any other factors. 

 We appreciate the commenters’ concerns regarding ensuring the quality of 

hospital outpatient care. In section XIII. of this proposed rule, we discuss the Hospital 

OQR Program for CY 2015. To the extent that inpatient quality measures would not 

apply to the comprehensive services proposed for CY 2015, stakeholders should suggest 

specific measures that would be relevant in response to the section of the proposed rule 

dealing with hospital outpatient quality measures. 
CMS-1613-P 152 

Automatic Implantable Cardiac Defibrillators and Pacemakers and Related Devices 

(AICDP) 

 Comment: One commenter asked CMS to create a comprehensive APC for 

Cardiac Resynchronization Therapy Pacemaker (CRT-P) in the absence of defibrillation 

(CPT code 33225) because the comprehensive APC packaging policy decreases payment 

relative to the multiple procedure reduction policy. The commenter requested a 

complexity adjustment when CPT code 33225 is reported in combination with CPT code 

33206, 33207, 33208, or 33214 because of their high mean cost relative to all other 

pacemaker insertion procedures assigned to C-APC 0089 (Level III Insertion/replacement 

of Permanent Pacemaker) and C-APC 0655 (Insertion/Replacement/Conversion of a 

Permanent Dual Chamber Pacemaker or Pacing Electrode). 

 Response: CPT code 33225 is an add-on code that was not assigned to status 

indicator “J1” in the CY 2014 OPPS/ASC final rule with comment period. For CY 2015, 

we are proposing to continue packaging this service, but to provide a complexity 

adjustment when the service is furnished in conjunction with CPT code 33207, 33208, or 

33228 from C-APC 0089 to C-APC 0655 because these code combinations meet the 

proposed complexity adjustment criteria. The code combinations of CPT 33206 and 

33225 and 33214 and 33225 meet the proposed cost threshold, but not the proposed 

frequency threshold and, therefore, we do not believe that we should provide complexity 

adjustments for these code combinations. Services that are reported fewer than 25 times 

a year do not comprise significant volume and are not sufficiently frequent service 
CMS-1613-P 153 

combinations in the context of the proposed comprehensive APC policy and proposed 

complexity adjustment criteria and, therefore, do not qualify for a complexity adjustment. 

Neurostimulators 

 Comment: One commenter recommended splitting C-APC 0318 (Level II 

Implantation of Neurostimulator) to achieve a narrower cost range, placing vagal nerve 

and spinal cord stimulation in its own comprehensive APC and creating a separate 

comprehensive APC for other neurostimulator devices. The commenter also 

recommended reassigning CPT code 61886 to C-APC 0039 (Level I Implantation of 

Neurostimulator) to place all single generator procedures in the lower APC. In contrast, 

another commenter supported the complexity adjustments and the final comprehensive 

APC structure proposed for the neurostimulator family. The commenter stated in 

response to the CY 2014 OPPS/ASC final rule with comment period that appropriately 

differentiating payment rates for less-intensive pulse generator replacements from the 

more intensive initial system implants, which include placement of lead array(s), and also 

appropriately distinguishing payment rates between simpler less resource-intensive nerve 

stimulation procedures (for example, sacral nerve stimulation) and more complex 

resource-intensive nerve stimulation procedures (for example, spinal cord stimulation) is 

most appropriate. This commenter supported mapping the spinal cord stimulation system 

implants into C-APC 0318 because these implants have similar procedural complexity 

and resource utilization with the other procedures assigned to C-APC 0318. 

 Response: Some of the procedure codes assigned to the different neurostimulator 

comprehensive APCs illustrated for CY 2014 had similar or overlapping costs, in 
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particular C-APCs 0040 and 0061, which had comprehensive geometric mean costs of 

$4,715 and $6,567 respectively. Having also updated the APCs based on CY 2013 cost 

data, for CY 2015, we are proposing to restructure the neurostimulator comprehensive 

APCs from four comprehensive APCs to three comprehensive APCs within a single 

series of APCs titled “Neurostimulator and Related Procedures.” We are proposing to 

begin this series with the non-comprehensive APC 0688 followed by the three levels of 

comprehensive APCs for neurostimulator procedures as follows: C-APC 0061 (Level II 

Neurostimulator and Related Procedures); C-APC 0039 (Level III Neurostimulator and 

Related Procedures); and C-APC 0318 (Level IV Neurostimulator and Related 

Procedures). This proposed reconfiguration would establish groups of neurostimulator 

device-related services that have different and nonoverlapping cost ranges while applying 

the “2 times” rule, including several complexity adjustments for complex code 

combinations. We believe that the procedures proposed for assignment to C-APC 0318 

for CY 2015 are clinically similar and similar in associated resources and, therefore, 

should be assigned to the same comprehensive APC. We also believe that CPT code 

61886 more appropriately belongs in the higher level C-APC 0318 rather than C-APC 

0039 based on its cost and complexity because it describes implantation of a cranial 

neurostimulator with connection to two or more electrode arrays. We do not believe that 

CPT code 61886 should be assigned to C-APC 0039 with less complex procedures. 
CMS-1613-P 155 

Urogenital 

Comment: Several commenters addressed the urogenital clinical family of 

comprehensive APCs. One commenter recommended that CMS exempt C-APC 0202 

(Level VII Female Reproductive Procedures) from the comprehensive APC policy, due to 

the variability in geometric mean costs between cases with a single “J1” procedure and 

cases with multiple procedures furnished during the same surgical session (not otherwise 

specified). Alternatively, the commenter recommended different complexity criteria that 

would reassign the claims assigned to C-APC 0202 (Level VII Female Reproductive 

Procedures) to C-APC 0385 (Level I Urogenital Procedures) or C-APC 0386 (Level II 

Urogenital Procedures). The commenter suggested that we make a complexity 

adjustment for any claim with a service assigned to status indicator “J1” and at least two 

additional surgical procedures. The commenter also suggested the following possible 

alternative cost criteria: (1) using percent of total device costs reported on a claim 

instead of the presence of a second service assigned status indicator “J1” to assess 

costliness; or (2) using a cost threshold of 1.5 instead of 2 times the cost of single claims 

for the primary service. The commenter also suggested a volume threshold of 50 instead 

of 100 claims. Finally, the commenter asked CMS to clarify how it determined 

uncommon clinical scenarios or extreme resource values for the complexity adjustment, 

and what data or information qualifies code combinations for reassignment. 

 Response: The commenter was not clear regarding which surgical procedures we 

should count or consider in determining complexity adjustments, for example specific 

services assigned status indicator “J1” that do not meet our proposed complexity criteria 
CMS-1613-P 156 

or surgical procedures that are not assigned to a comprehensive APC. It was not clear 

whether the commenters’ recommendations were mutually exclusive, or recommended in 

some combination with one another. Also, it was not clear whether the commenter was 

suggesting that any two surgical procedures, even those not assigned to a comprehensive 

APC, should qualify a claim for complexity adjustment. As discussed above, for 

CY 2015, we are proposing different complexity adjustment criteria than those that were 

discussed in the CY 2014 OPPS/ASC final rule with comment period. As discussed 

above, for CY 2015, we are proposing less stringent complexity adjustment criteria – 

codes combinations, either two “J1” service codes or a “J1” service code and an add-on 

code that is eligible for a complexity adjustment must appear at least 25 times in the 

claims data and violate the 2 times rule. Extremely few claims involve the provision of 

more than two surgical procedures. Therefore, we do not believe that it is necessary or 

appropriate to complicate our proposed methodology by attempting to isolate marginal 

costs associated with other packaged surgical procedures. The complexity adjustment 

(both in the CY 2014 OPPS/ASC final rule with comment period and proposed in this 

CY 2015 OPPS/ASC proposed rule) would reassign all claims reporting a qualifying 

code combination, whether or not additional (third, fourth, or subsequent) services 

assigned to a comprehensive APC appear on the claim. 

Stem Cell Transplant 

 Comment: One commenter recommended that CMS apply the comprehensive 

service concept to outpatient stem cell transplant (SCT) because the procedures occur in 

small volume and, due to their clinical nature, are almost always multiple procedure 
CMS-1613-P 157 

claims that are unusable under the standard ratesetting methodology. Specifically, the 

commenter requested that CMS create three comprehensive APCs for autologous 

outpatient SCT, where donor and recipient are the same; allogeneic-related outpatient 

SCT, where donor and recipient are biologically related; and allogeneic-unrelated 

transplants, where donor and recipient are biologically unrelated. The commenter stated 

that the costs associated with these three types of outpatient SCT vary significantly 

according to the donor search and acquisition costs, which are relatively modest for 

autologous outpatient SCT, $5,000 to $20,000 for allogeneic-related outpatient SCT, and 

$30,000 to $80,000 for allogeneic unrelated outpatient SCT. The commenter discussed 

how the low CCR associated with revenue code 0819 (Blood and Blood Products), which 

must be used to report donor search and acquisition charges, makes providers hesitant to 

report high donor charges and contributes to incorrectly coded claims. 

 Due to inaccuracies in cost reporting and exclusion of certain multiple procedure 

claims from ratesetting, the commenter believed that outpatient SCT payment is based on 

only a handful of incorrectly and incompletely coded single procedure claims. The 

commenter also believed that comprehensive APCs would improve payment adequacy by 

allowing the use of multiple procedure claims, provided CMS also create a separate and 

distinct CCR for donor search and acquisition charges so that they are not diluted by 

lower cost services. Alternatively, the commenter suggested that CMS require transplant 

centers to report their actual costs on outpatient claims for allogeneic SCT, and apply a 

default CCR of 1.0 for claims reporting the outpatient allogeneic procedure CPT code. 
CMS-1613-P 158 

 Response: For CY 2015, we are proposing to continue to pay separately for 

allogeneic transplantation procedures under APC 0111 (Blood Product Exchange) and 

APC 0112 (Apheresis and Stem Cell Procedures), with proposed rule geometric mean 

costs of approximately $1,127 and $3,064, respectively. Allogeneic harvesting 

procedures, which are performed not on the beneficiary but on a donor, cannot be paid 

separately under the OPPS because hospitals may bill and receive payment only for 

services provided to the Medicare beneficiary who is the recipient of the SCT and whose 

illness is being treated with the transplant. We stated in the CY 2010 OPPS/ASC final 

rule with comment period (74 FR 60575) and in section 231.11 of Chapter 4 of the 

Medicare Claims Processing Manual (Pub. 100-04) that payment for allogeneic stem cell 

acquisition services (such as harvesting procedures and donor evaluation) is packaged 

into the payment for the transplant procedure (either the Medicare Severity – Diagnosis 

Related Group (MS-DRG) when the transplant is performed inpatient, or the APC when 

the transplant is performed outpatient). Hospitals should report all allogeneic outpatient 

SCT acquisition charges on the recipient’s outpatient claim as uncoded charges under 

revenue code 0819. 

 While converting the outpatient SCT APCs to comprehensive APCs would reduce 

to small degree the differential between the OPPS payment rate and the costs as 

represented in the public comment we received, it would only provide a relatively modest 

increase in payment, consistent with our previous data studies on this issue. We believe 

that we need to further examine the costs associated with this service and how they could 

best be captured for payment ratesetting purposes in the OPPS. This service remains low 
CMS-1613-P 159 

volume in the HOPD, but we will continue to monitor this issue and the volume of 

outpatient allogeneic transplant services. 

General Comments on Comprehensive APCs 

 We also received several general comments that were not related to specific 

comprehensive APCs, as described below. 

 Comment: Many of the commenters recommended continued refinement of the 

comprehensive APC payment methodology to better identify and recognize the costs 

associated with complex services and patients. Some commenters suggested developing 

a list similar to the IPPS listing of complications and comorbidities (CCs) and major 

complications and comorbidities (MCCs) to identify complications and comorbidities 

associated with higher acuity patients in the outpatient setting. Other commenters 

suggested additional reimbursement when additional services, testing, or drugs are 

needed for patients with certain diagnoses (for example, end stage renal disease), or 

patients needing extended recovery time following a procedure in order to assess or treat 

comorbidities and ensure safe discharge. One commenter asserted that there is a critical 

difference between “complex” patients and “complex” procedures. The commenter 

stated that because the CY 2014 complexity adjustment test is multiple procedure-based 

rather than patient severity-based similar to the MS-DRG system, it is incredibly difficult 

for two procedures to meet the complexity test, particularly the 2 times rule requirement. 

The commenter believed that the cost threshold for the complexity test is not 

commensurate with the marginal payment increase. 
CMS-1613-P 160 

 Response: We believe that some of these commenters misunderstood the 

complexity adjustment criteria described in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74886). The complexity adjustment criteria for the illustrated 

CY 2014 payment rates compared the comprehensive cost of the complex claims to the 

comprehensive cost of the single major claims for the primary service, not the 

comprehensive geometric mean cost of the initial comprehensive APC (78 FR 74886). 

However, for CY 2015, we believe that it would be more appropriate to use the 2 times 

rule, which compares the geometric mean cost of the code combination to the geometric 

mean cost of the lowest cost service assigned to the comprehensive APC with significant 

claims volume (> 1000 single claims or > 99 single and at least 2 percent of the total 

volume of single claims assigned to the APC). For further description of the 2 times rule, 

we refer readers to section III.B of this proposed rule. We agree with the commenter that 

the CY 2014 complexity adjustment cost criterion was too high of a threshold. 

Therefore, we are proposing to change the cost criterion for the complexity adjustment to 

twice the geometric mean cost of the lowest cost service having significant claims 

volume (as described above) in the APC. 

 Section 1833(t)(2) of the Act provides a procedure-based payment methodology 

for the OPPS, which is unlike the IPPS that makes payments based on both diagnoses and 

procedures. Currently OPPS payments are not based on patient severity or diagnosis like 

under the IPPS. The complexity adjustment test is procedure-based because the current 

OPPS payment methodology is procedure-based. 
CMS-1613-P 161 

 Comment: Several commenters recommended alternative complexity adjustment 

criteria, including a cost threshold of 1.5 instead of 2 times; a numeric volume test of 50 

claims instead of 100, or omitting the numeric test; or basing the complexity adjustment 

on the number of surgical procedures on a claim (any claim with a service assigned to 

status indicator “J1” and at least two additional surgical procedures). Some commenters 

asserted generally that there should be tests other than the presence of two or more “J1” 

services on a claim. In addition, most of the commenters requested further information 

regarding how CMS determined complexity reassignments, including treatment of add-on 

codes. The commenters requested that CMS provide an addendum to the OPPS rule 

containing this information. 

 Response: As discussed above, for CY 2015, we are proposing less stringent 

frequency and cost thresholds for complexity adjustments. In addition, in response to 

public comments, we are presenting the proposed complexity adjustment cost 

information in a more detailed format in Addendum J to this proposed rule, rather than in 

long tables within the preamble text. 

 Comment: Several commenters requested that CMS maintain the 

device-dependent edits to ensure accurate cost reporting and attribution. One commenter 

requested in particular that CMS maintain the device-dependent edits for prostate 

cryoablation (CPT code 55873), percutaneous renal cryoablation, and other urogenital 

services to ensure accurate coding and payment. The commenter believed that 

comprehensive groupings will exacerbate reporting error if CMS discontinued the edits. 
CMS-1613-P 162 

 Response: We appreciate the commenters’ concerns regarding accurate coding, 

and we understand that providers sometimes fail to itemize costs for packaged services 

separately on claims for the primary service(s). Our policy for comprehensive APCs 

reduces the need for separate itemization of packaged services by establishing clear 

packaging allocation rules at the hospital claim level. However, as we have observed in 

attempting to assess the marginal cost attributable to add-on codes and other packaged 

services, it is best if CMS can reliably identify and isolate these costs using claims data. 

Therefore, we are continuing to require hospitals to report all charges, including 

packaged charges, on claims to ensure all costs are reported and enable reliable cost 

estimation for packaged items and services. It is important that hospitals report all 

HCPCS codes consistent with their descriptors, CPT and/or CMS instructions, and 

correct coding principles, and that they report all charges for all services they furnish. 

We are proposing to package all device-dependent add-on codes, although we would 

evaluate their additional cost for purposes of applying the proposed complexity 

adjustment criteria. 

 Instead of eliminating all device-dependent edits, beginning in CY 2015, we are 

proposing to continue to require the reporting of a device code for all procedures that are 

currently assigned to a device-dependent APC in CY 2014. However to reduce hospitals’ 

administrative burden, we are proposing that the device claims edit would be satisfied by 

the reporting of any medical device C-code currently listed among the device edits for the 

CY 2014 device-dependent APCs. A particular device C-code or codes would no longer 
CMS-1613-P 163 

be required for a particular procedure. We refer readers to section IV.B. of this proposed 

rule for a detailed discussion of this proposed policy. 

 Comment: Several commenters recommended that CMS conduct a demonstration 

to confirm estimated savings, or delay the comprehensive APC payment policy pending 

further study. 

 Response: The comprehensive APC payment policy was finalized in the 

CY 2014 OPPS/ASC final rule with comment period with delayed implementation until 

CY 2015, and we do not believe that further delay is necessary. We also do not believe 

that a demonstration is necessary. We delayed implementation until CY 2015, and the 

public comments we received on the CY 2014 OPPS/ASC final rule with comment 

period do not reflect a need for fundamental changes to the policy or further delay in 

implementing the policy. The comprehensive APC policy is another step towards 

making the OPPS more of a prospective payment system and less of a fee schedule-type 

payment system with separate payment for each individually coded service. The 

rationale and statutory authority for the comprehensive APC policy was fully explained 

in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861). The public 

comments were largely supportive of the comprehensive APC payment methodology, 

provided we improve the transparency and reproducibility of the methodology and refine 

the complexity adjustments for the most costly, complex cases. These complex cases are 

mostly confined to three clinical families (endovascular, pacemaker/defibrillator, and 

neurostimulator). In response to comments and additional analysis including the new 
CMS-1613-P 164 

CY 2013 claims data, we are proposing to refine the complexity adjustment criteria 

discussed in section II.A.2.e.(3)(a) of this proposed rule. 

(4) Proposed List of CY 2015 Comprehensive APCs and Summary of Proposed Policies 

 In summary, we are proposing to continue to define a comprehensive service as a 

classification for the provision of a primary service and all adjunctive services and 

supplies reported on the hospital Medicare Part B claim, with few exceptions, resulting in 

a single beneficiary copayment per claim. The comprehensive APC payment bundle 

would include all hospital services reported on the claim that are covered under Medicare 

Part B, except for the excluded services or services requiring separate payment by statute 

as noted above. 

 We are proposing to continue to define a clinical family of comprehensive APCs 

as a set of clinically related comprehensive APCs that represent different resource levels 

of clinically comparable services. We are proposing a total of 28 comprehensive APCs 

within 13 clinical families for CY 2015, as described below. 

TABLE 7.—CY 2015 PROPOSED COMPREHENSIVE APCs 

Clinical 

Family 

Proposed 

CY 2015 

C-APC 

APC Title Proposed 

CY 2015 

APC 

Geometric 

Mean Cost 

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

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

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

AICDP 0107 Level I ICD and Similar Procedures $24,167.80

AICDP 0108 Level II ICD and Similar Procedures $32,085.90

BREAS 0648 Level IV Breast and Skin Surgery $7,674.20

CATHX 0427 Level II Tube or Catheter Changes or 

Repositioning $1,522.15

CATHX 0652 Insertion of Intraperitoneal and Pleural 
CMS-1613-P 165 

Clinical 

Family 

Proposed 

CY 2015 

C-APC 

APC Title Proposed 

CY 2015 

APC 

Geometric 

Mean Cost 

Catheters $2,764.85

ENTXX 0259 Level VII ENT Procedures $31,273.34

EPHYS 0084 Level I Electrophysiologic Procedures $922.84

EPHYS 0085 Level II Electrophysiologic Procedures $4,807.69

EPHYS 0086 Level III Electrophysiologic Procedures $14,835.04

EYEXX 0293 Level IV Intraocular Procedures $9,049.66

EYEXX 0351 Level V Intraocular Procedures $21,056.40

GIXXX 0384 GI Procedures with Stents $3,307.90

NSTIM 0061 Level II Neurostimulator & Related 

Procedures $5,582.10

NSTIM 0039 Level III Neurostimulator & Related 

Procedures $17,697.46

NSTIM 0318 Level IV Neurostimulator & Related 

Procedures $27,283.10

ORTHO 0425 Level V Musculoskeletal Procedures Except 

Hand and Foot $10,846.49

PUMPS 0227 Implantation of Drug Infusion Device $16,419.95

RADTX 0067 Single Session Cranial Stereotactic 

Radiosurgery $10,227.12

UROGN 0202 Level V Female Reproductive Procedures $4,571.06

UROGN 0385 Level I Urogenital Procedures $8,019.38

UROGN 0386 Level II Urogenital Procedures $14,549.04

VASCX 0083 Level I Endovascular Procedures $4,537.95

VASCX 0229 Level II Endovascular Procedures $9,997.53

VASCX 0319 Level III Endovascular Procedures $15,452.77

VASCX 0622 Level II Vascular Access Procedures $2,635.35

Clinical Family Descriptor Key: 

AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices 

BREAS = Breast Surgery 

CATHX = Tube/Catheter Changes 

ENTXX = ENT Procedures 

EPHYS = Cardiac Electrophysiology 

EYEXX = Ophthalmic Surgery 

GIXXX = Gastrointestinal Procedures 

NSTIM = Neurostimulators 

ORTHO = Orthopedic Surgery 

PUMPS = Implantable Drug Delivery Systems 

RADTX = Radiation Oncology 

UROGN = Urogenital Procedures 
CMS-1613-P 166 

VASCX = Vascular Procedures 

 We are proposing a comprehensive APC payment methodology that adheres to 

the same basic principles as those finalized in the CY 2014 OPPS/ASC final rule with 

comment period, with the following proposed changes for CY 2015: 

● We are proposing to reorganize and consolidate several of the current devicedependent APCs and CY 2014 comprehensive APCs; 

● We are proposing to expand the comprehensive APC policy to include all 

device-dependent APCs and to create two other new comprehensive APCs (C-APC 0067 

and C-APC 0351); 

● We are proposing new complexity adjustment criteria: 

● Frequency of 25 or more claims reporting the HCPCS code combination (the 

frequency threshold); and 

● Violation of the “2 times” rule; that is, the comprehensive geometric mean cost 

of the complex code combination exceeds the comprehensive geometric mean cost of the 

lowest significant HCPCS code assigned to the comprehensive APC by more than 2 

times (the cost threshold). 

 We are proposing to package all add-on codes, although we would evaluate 

claims reporting a single primary service code reported in combination with an applicable 

add-on code (we refer readers to Table 9 in this proposed rule for the list of applicable 

add-on codes) for complexity adjustments. We believe that the proposed criteria would 

improve transparency, reduce subjectivity in complexity assignments, reduce the 

beneficiary copayment for some cases, and reduce burden on other stakeholders in 

analyzing the comprehensive APC assignments. The proposed policies would result in 
CMS-1613-P 167 

52 complexity adjustments listed in Addendum J to this proposed rule (which is available 

via the Internet on the CMS Web site). 

f. Calculation of Composite APC Criteria-Based Costs 

 As discussed in the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals 

to provide necessary, high quality care as efficiently as possible. For CY 2008, we 

developed composite APCs to provide a single payment for groups of services that are 

typically performed together during a single clinical encounter and that result in the 

provision of a complete service. Combining payment for multiple, independent services 

into a single OPPS payment in this way enables hospitals to manage their resources with 

maximum flexibility by monitoring and adjusting the volume and efficiency of services 

themselves. An additional advantage to the composite APC model is that we can use data 

from correctly coded multiple procedure claims to calculate payment rates for the 

specified combinations of services, rather than relying upon single procedure claims 

which may be low in volume and/or incorrectly coded. Under the OPPS, we currently 

have composite policies for extended assessment and management services, low dose rate 

(LDR) prostate brachytherapy, cardiac electrophysiologic evaluation and ablation 

services, mental health services, multiple imaging services, and cardiac resynchronization 

therapy services. We refer readers to the CY 2008 OPPS/ASC final rule with comment 

period for a full discussion of the development of the composite APC methodology 

(72 FR 66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC 

final rule with comment period (76 FR 74163) for more recent background. 
CMS-1613-P 168 

 For CY 2015, we are proposing to continue our composite APC payment policies 

for LDR prostate brachytherapy services, mental health services, and multiple imaging 

services, as discussed below. In addition, we note that we finalized a policy in the 

CY 2014 OPPS/ASC final rule with comment period to modify our longstanding policy 

to provide payment to hospitals in certain circumstances when extended assessment and 

management of a patient occur (78 FR 74910 through 74912). For CY 2014, we created 

one new composite APC, entitled “Extended Assessment and Management (EAM) 

Composite” (APC 8009), to provide payment for all qualifying extended assessment and 

management encounters rather than recognize two levels of EAM composite APCs 

(78 FR 74910 through 74912). Under this policy, we allow any visits, a Level 4 or 5 

Type A ED visit or a Level 5 Type B ED visit furnished by a hospital in conjunction with 

observation services of substantial duration to qualify for payment through EAM 

composite APC 8009. For CY 2015, we are proposing to pay for qualifying extended 

assessment and management services through composite APC 8009. For CY 2015, we 

also are proposing to discontinue our composite APC payment policies for cardiac 

electrophysiologic evaluation and ablation services (APC 8000), and to pay for these 

services through comprehensive APC 0086 (Level III Electrophysiologic Procedures), as 

presented in a proposal included under section II.A.2.e. of this proposed rule. As such, 

we are proposing to delete APC 8000 for CY 2015. 

 We note that we finalized a policy to discontinue and supersede the cardiac 

resynchronization therapy composite APC with comprehensive APC 0108 (Level II 

Implantation of Cardioverter-Defibrillators (ICDs)), as discussed in section II.A.2.e. of 
CMS-1613-P 169 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 74902). For CY 2014, 

APC 0108 is classified as a composite APC, as discussed in the CY 2014 OPPS/ASC 

final rule with comment period, because comprehensive APCs were not made effective 

until CY 2015 (78 FR 74925). For CY 2015, with the implementation of our new 

comprehensive APC policy, we are proposing to effectuate the policy finalized in the 

CY 2014 OPPS/ASC final rule with comment period, and pay for cardiac 

resynchronization therapy services through comprehensive APC 0108 (proposed to be 

renamed “Level II ICD and Similar Procedures”), which is discussed in section II.A.2.e. 

of this proposed rule. 

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

 Beginning in CY 2008, we included composite APC 8002 (Level I Extended 

Assessment and Management (EAM) Composite) and composite APC 8003 (Level II 

Extended Assessment and Management (EAM) Composite) in the OPPS to provide 

payment to hospitals in certain circumstances when extended assessment and 

management of a patient occur (an extended visit). In most of these circumstances, 

observation services are furnished in conjunction with evaluation and management 

services as an integral part of a patient’s extended encounter of care. From CY 2008 

through CY 2013, in the circumstances when 8 or more hours of observation care was 

provided in conjunction with a high level visit, critical care, or direct referral for 

observation and is an integral part of a patient’s extended encounter of care, and was not 

furnished on the same day as surgery or post-operatively, a single OPPS payment was 

made for the observation and evaluation and management services through one of the two 
CMS-1613-P 170 

composite APCs as appropriate We refer readers to the CY 2012 OPPS/ASC final rule 

with comment period (76 FR 74163 through 74165) for a full discussion of this 

longstanding policy for CY 2013 and prior years. In the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 74910), we created one new composite APC, APC 8009 

(Extended Assessment and Management (EAM) Composite), to provide payment for all 

qualifying extended assessment and management encounters rather than recognizing two 

levels of EAM composite services. Under the CY 2014 finalized policy, we no longer 

recognize composite APC 8002 or APC 8003. Beginning in CY 2014, we allowed 

services identified by the new single clinic visit HCPCS code G0463, a Level 4 or 5 Type 

A ED visit (CPT codes 99284 or 99285), a Level 5 Type B ED visit (HCPCS code 

G0384) or critical care (CPT code 99291) provided by a hospital in conjunction with 

observation services of substantial duration (8 or more hours) (provided the observation 

was not furnished on the same day as surgery or post-operatively) (78 FR 74910 through 

74912) to qualify for payment through EAM composite APC 8009. 

 For CY 2015, we are proposing to continue our CY 2014 finalized policy to 

provide payment for all qualifying extended assessment and management encounters 

through composite APC 8009. As we did for CY 2014, for CY 2015, we are proposing to 

allow a clinic visit and certain high level ED visits furnished by a hospital in conjunction 

with observation services of substantial duration (8 or more hours) to qualify for payment 

through the EAM composite APC 8009 (provided the observation is not furnished on the 

same day as surgery or post-operatively). Specifically, we are proposing to continue to 

allow a clinic visit, a Level 4 or Level 5 Type A ED visit, or a Level 5 Type B ED visit 
CMS-1613-P 171 

furnished by a hospital or a direct referral for observation (identified by HCPCS code 

G0379) performed in conjunction with observation services of substantial duration to 

qualify for payment through composite APC 8009 (provided the observation is not 

furnished on the same day as surgery or post-operatively). We note that, for CY 2015, 

we are proposing to continue our current policy where one service code describes all 

clinic visits. We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74910 through 74912) for a full discussion of the creation of composite APC 

8009. 

 As we noted in the CY 2014 OPPS/ASC final rule with comment period, the 

historical cost data used annually to calculate the geometric mean costs and payment rate 

for composite APC 8009 would not reflect the single clinic visit code that was new for 

CY 2014 (HCPCS code G0463) until our CY 2016 rulemaking cycle. We stated in the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 74910 through 74912) that 

when hospital claims data for the CY 2014 clinic and ED visit codes become available, 

we would calculate the geometric mean cost for the EAM composite APC 8009 using 

CY 2014 single and “pseudo” single procedure claims that meet each of the following 

criteria: 

● The claims do not contain a HCPCS code to which we have assigned status 

indicator “T” that is reported with a date of service 1 day earlier than the date of service 

associated with HCPCS code G0378. (By selecting these claims from single and 

“pseudo” single claims, we ensure that they would not contain a code for a service with 

status indicator “T” on the same date of service.) 
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● The claims contain 8 or more units of HCPCS code G0378 (Observation 

services, per hour.) 

● The claims contain one of the following codes: HCPCS code G0379 (Direct 

referral of patient for hospital observation care) on the same date of service as HCPCS 

code G0378; or CPT code 99291 (Critical care, evaluation and management of the 

critically ill or critically injured patient; first 30–74 minutes); or HCPCS code G0463 

(Hospital outpatient clinic visit for assessment and management of a patient) provided on 

the same date of service or 1 day before the date of service for HCPCS code G0378. 

 Because we have no available cost data for HCPCS code G0463, for CY 2015, we 

are proposing to calculate the geometric mean cost for procedures assigned to APC 8009 

using CY 2013 single and “pseudo” single procedure claims that met each of the 

following criteria: 

● The claim did not contain a HCPCS code to which we have assigned status 

indicator “T” that is reported with a date of service 1 day earlier than the date of service 

associated with HCPCS code G0378. (By selecting these claims from single and 

“pseudo” single claims, we assured that they would not contain a code for a service with 

status indicator “T” on the same date of service.) 

● The claim contained 8 or more units of HCPCS code G0378 (Observation 

services, per hour.) 

● The claim contained one of the following codes: HCPCS code G0379 (Direct 

referral of patient for hospital observation care) on the same date of service as HCPCS 

code G0378; or CPT code 99201 (Office or other outpatient visit for the evaluation and 
CMS-1613-P 173 

management of a new patient (Level 1)); CPT code 99202 (Office or other outpatient 

visit for the evaluation and management of a new patient (Level 2)); CPT code 99203 

(Office or other outpatient visit for the evaluation and management of a new patient 

(Level 3)); CPT code 99204 (Office or other outpatient visit for the evaluation and 

management of a new patient (Level 4)); CPT code 99205 (Office or other outpatient 

visit for the evaluation and management of a new patient (Level 5)); CPT code 99211 

(Office or other outpatient visit for the evaluation and management of an established 

patient (Level 1)); CPT code 99212 (Office or other outpatient visit for the evaluation and 

management of an established patient (Level 2)); CPT code 99213 (Office or other 

outpatient visit for the evaluation and management of an established patient (Level 3)); 

CPT code 99214 (Office or other outpatient visit for the evaluation and management of 

an established patient (Level 4)); CPT code 99215 (Office or other outpatient visit for the 

evaluation and management of an established patient (Level 5)); CPT code 99284 

(Emergency department visit for the evaluation and management of a patient (Level 4)); 

CPT code 99285 (Emergency department visit for the evaluation and management of a 

patient (Level 5)); or HCPCS code G0384 (Type B emergency department visit (Level 

5)); or CPT code 99291 (Critical care, evaluation and management of the critically ill or 

critically injured patient; first 30-74 minutes) provided on the same date of service or 1 

day before the date of service for HCPCS code G0378. 

 The proposed CY 2015 geometric mean cost resulting from this methodology for 

EAM composite APC 8009 is approximately $1,287. 

(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001) 
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 LDR prostate brachytherapy is a treatment for prostate cancer in which hollow 

needles or catheters are inserted into the prostate, followed by permanent implantation of 

radioactive sources into the prostate through the needles/catheters. At least two CPT 

codes are used to report the composite treatment service because there are separate codes 

that describe placement of the needles/catheters and the application of the brachytherapy 

sources: CPT code 55875 (Transperineal placement of needles or catheters into prostate 

for interstitial radioelement application, with or without cystoscopy) and CPT code 77778 

(Interstitial radiation source application; complex), which are generally present together 

on claims for the same date of service in the same operative session. In order to base 

payment on claims for the most common clinical scenario, and to further our goal of 

providing payment under the OPPS for a larger bundle of component services provided in 

a single hospital encounter, beginning in CY 2008, we began providing a single payment 

for LDR prostate brachytherapy when the composite service, reported as CPT codes 

55875 and 77778, is furnished in a single hospital encounter. We base the payment for 

composite APC 8001 (LDR Prostate Brachytherapy Composite) on the geometric mean 

cost derived from claims for the same date of service that contain both CPT codes 55875 

and 77778 and that do not contain other separately paid codes that are not on the bypass 

list. We refer readers to the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66652 through 66655) for a full history of OPPS payment for LDR prostate 

brachytherapy services and a detailed description of how we developed the LDR prostate 

brachytherapy composite APC. 
CMS-1613-P 175 

 For CY 2015, we are proposing to continue to pay for LDR prostate 

brachytherapy services using the composite APC payment methodology proposed and 

implemented for CY 2008 through CY 2014. That is, we are proposing to use CY 2013 

claims reporting charges for both CPT codes 55875 and 77778 on the same date of 

service with no other separately paid procedure codes (other than those on the bypass list) 

to calculate the proposed payment rate for composite APC 8001. Consistent with our 

CY 2008 through CY 2014 practice, we are proposing not to use the claims that meet 

these criteria in the calculation of the geometric mean costs of procedures or services 

assigned to APC 0163 (Level IV Cystourethroscopy and Other Genitourinary Procedures) 

and APC 0651 (Complex Interstitial Radiation Source Application), the APCs to which 

CPT codes 55875 and 77778 are assigned, respectively. We are proposing to continue to 

calculate the geometric mean costs of procedures or services assigned to APCs 0163 and 

0651 using single and “pseudo” single procedure claims. We continue to believe that this 

composite APC contributes to our goal of creating hospital incentives for efficiency and 

cost containment, while providing hospitals with the most flexibility to manage their 

resources. We also continue to believe that data from claims reporting both services 

required for LDR prostate brachytherapy provide the most accurate geometric mean cost 

upon which to base the proposed composite APC payment rate. 

 Using a partial year of CY 2013 claims data available for the CY 2015 

OPPS/ASC proposed rule, we were able to use 379 claims that contained both CPT codes 

55875 and 77778 to calculate the geometric mean cost of these procedures upon which 
CMS-1613-P 176 

the proposed CY 2015 payment rate for composite APC 8001 is based. The proposed 

geometric mean cost for composite APC 8001 for CY 2015 is approximately $3,669. 

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

 For CY 2015, we are proposing to continue our longstanding policy of limiting 

the aggregate payment for specified less resource-intensive mental health services 

furnished on the same date to the payment for a day of partial hospitalization services 

provided by a hospital, which we consider to be the most resource-intensive of all 

outpatient mental health services. We refer readers to the April 7, 2000 OPPS final rule 

with comment period (65 FR 18452 through 18455) for the initial discussion of this 

longstanding policy and the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74168) for more recent background. 

 Specifically, we are proposing that when the aggregate payment for specified 

mental health services provided by one hospital to a single beneficiary on one date of 

service based on the payment rates associated with the APCs for the individual services 

exceeds the maximum per diem payment rate for partial hospitalization services provided 

by a hospital, those specified mental health services would be assigned to APC 0034 

(Mental Health Services Composite). We are proposing to continue to set the payment 

rate for APC 0034 at the same payment rate that we are proposing to establish for APC 

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

which is the maximum partial hospitalization per diem payment rate for a hospital, and 

that the hospital continue to be paid one unit of APC 0034. Under this policy, the I/OCE 

would continue to determine whether to pay for these specified mental health services 
CMS-1613-P 177 

individually, or to make a single payment at the same payment rate established for APC 

0176 for all of the specified mental health services furnished by the hospital on that 

single date of service. We continue to believe that the costs associated with 

administering a partial hospitalization program at a hospital represent the most resourceintensive of all outpatient mental health services. Therefore, we do not believe that we 

should pay more for mental health services under the OPPS than the highest partial 

hospitalization per diem payment rate for hospitals. 

(4) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)

 Effective January 1, 2009, we provide a single payment each time a hospital bills 

more than one imaging procedure within an imaging family on the same date of service, 

in order to reflect and promote the efficiencies hospitals can achieve when performing 

multiple imaging procedures during a single session (73 FR 41448 through 41450). We 

utilize three imaging families based on imaging modality for purposes of this 

methodology: (1) ultrasound; (2) computed tomography (CT) and computed 

tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and 

magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple 

imaging composite policy and their respective families are listed in Table 12 of the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 74920 through 74924). 

 While there are three imaging families, there are five multiple imaging composite 

APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we 

differentiate payment for OPPS imaging services provided with and without contrast. 

While the ultrasound procedures included in the policy do not involve contrast, both 
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CT/CTA and MRI/MRA scans can be provided either with or without contrast. The five 

multiple imaging composite APCs established in CY 2009 are: 

● APC 8004 (Ultrasound Composite); 

● APC 8005 (CT and CTA without Contrast Composite); 

● APC 8006 (CT and CTA with Contrast Composite); 

● APC 8007 (MRI and MRA without Contrast Composite); and 

● APC 8008 (MRI and MRA with Contrast Composite). 

 We define the single imaging session for the “with contrast” composite APCs as 

having at least one or more imaging procedures from the same family performed with 

contrast on the same date of service. For example, if the hospital performs an MRI 

without contrast during the same session as at least one other MRI with contrast, the 

hospital will receive payment for APC 8008, the “with contrast” composite APC. 

 We make a single payment for those imaging procedures that qualify for 

composite APC payment, as well as any packaged services furnished on the same date of 

service. The standard (noncomposite) APC assignments continue to apply for single 

imaging procedures and multiple imaging procedures performed across families. For a 

full discussion of the development of the multiple imaging composite APC methodology, 

we refer readers to the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68559 through 68569). 

 For CY 2015, we are proposing to continue to pay for all multiple imaging 

procedures within an imaging family performed on the same date of service using the 

multiple imaging composite APC payment methodology. We continue to believe that 
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this policy will reflect and promote the efficiencies hospitals can achieve when 

performing multiple imaging procedures during a single session. The proposed CY 2015 

payment rates for the five multiple imaging composite APCs (APC 8004, APC 8005, 

APC 8006, APC 8007, and APC 8008) are based on geometric mean costs calculated 

from a partial year of CY 2013 claims available for the proposed rule that qualified for 

composite payment under the current policy (that is, those claims with more than one 

procedure within the same family on a single date of service). To calculate the proposed 

geometric mean costs, we used the same methodology that we used to calculate the final 

CY 2013 and CY 2014 geometric mean costs for these composite APCs, as described in 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The imaging 

HCPCS codes referred to as “overlap bypass codes” that we removed from the bypass list 

for purposes of calculating the proposed multiple imaging composite APC geometric 

mean costs, pursuant to our established methodology as stated in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 74918), are identified by asterisks in 

Addendum N to this proposed rule (which is available via the Internet on the CMS Web 

site) and are discussed in more detail in section II.A.1.b. of this proposed rule. 

 For this CY 2015 OPPS/ASC proposed rule, we were able to identify 

approximately 636,000 “single session” claims out of an estimated 1.6 million potential 

composite APC cases from our ratesetting claims data, approximately 40 percent of all 

eligible claims, to calculate the proposed CY 2015 geometric mean costs for the multiple 

imaging composite APCs. 
CMS-1613-P 180 

 Table 8 below lists the proposed HCPCS codes that would be subject to the 

multiple imaging composite APC policy and their respective families and approximate 

composite APC geometric mean costs for CY 2015. 
CMS-1613-P 181 

TABLE 8.—PROPOSED OPPS IMAGING FAMILIES AND MULTIPLE 

IMAGING PROCEDURE COMPOSITE APCs 

Family 1 – Ultrasound 

CY 2015 APC 8004 (Ultrasound Composite) CY 2015 Approximate 

 APC Geometric Mean Cost = $299 

76604 Us exam, chest 

76700 Us exam, abdom, complete 

76705 Echo exam of abdomen 

76770 Us exam abdo back wall, comp 

76775 Us exam abdo back wall, lim 

76776 Us exam k transpl w/Doppler 

76831 Echo exam, uterus 

76856 Us exam, pelvic, complete 

76870 Us exam, scrotum 

76857 Us exam, pelvic, limited 

Family 2 - CT and CTA with and without Contrast 

CY 2015 APC 8005 (CT and CTA without 

Contrast Composite)* 

CY 2015 Approximate 

APC Geometric Mean Cost = $335 

70450 Ct head/brain w/o dye 

70480 Ct orbit/ear/fossa w/o dye 

70486 Ct maxillofacial w/o dye 

70490 Ct soft tissue neck w/o dye 

71250 Ct thorax w/o dye 

72125 Ct neck spine w/o dye 

72128 Ct chest spine w/o dye 

72131 Ct lumbar spine w/o dye 

72192 Ct pelvis w/o dye 

73200 Ct upper extremity w/o dye 

73700 Ct lower extremity w/o dye 

74150 Ct abdomen w/o dye 

74261 Ct colonography, w/o dye 

74176 Ct angio abd & pelvis 

CY 2015 APC 8006 (CT and CTA with 

Contrast Composite) 

CY 2015 Approximate 

 APC Geometric Mean Cost = $558 

70487 Ct maxillofacial w/dye 
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70460 Ct head/brain w/dye 

70470 Ct head/brain w/o & w/dye 

70481 Ct orbit/ear/fossa w/dye 

70482 Ct orbit/ear/fossa w/o & w/dye 

70488 Ct maxillofacial w/o & w/dye 

70491 Ct soft tissue neck w/dye 

70492 Ct sft tsue nck w/o & w/dye 

70496 Ct angiography, head 

70498 Ct angiography, neck 

71260 Ct thorax w/dye 

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 
CMS-1613-P 183 

* If a “without contrast” CT or CTA procedure is performed during the same session as a 

“with contrast” CT or CTA procedure, the I/OCE would assign APC 8006 rather than 

APC 8005. 

Family 3 - MRI and MRA with and without Contrast 

CY 2015 APC 8007 (MRI and MRA without 

Contrast Composite)* 

CY 2015 Approximate 

APC Geometric Mean Cost = $640 

70336 Magnetic image, jaw joint 

70540 Mri orbit/face/neck w/o dye 

70544 Mr angiography head w/o dye 

70547 Mr angiography neck w/o dye 

70551 Mri brain w/o dye 

70554 Fmri brain by tech 

71550 Mri chest w/o dye 

72141 Mri neck spine w/o dye 

72146 Mri chest spine w/o dye 

72148 Mri lumbar spine w/o dye 

72195 Mri pelvis w/o dye 

73218 Mri upper extremity w/o dye 

73221 Mri joint upr extrem w/o dye 

73718 Mri lower extremity w/o dye 

73721 Mri jnt of lwr extre w/o dye 

74181 Mri abdomen w/o dye 

75557 Cardiac mri for morph 

75559 Cardiac mri w/stress img 

C8901 MRA w/o cont, abd 

C8904 MRI w/o cont, breast, uni 

C8907 MRI w/o cont, breast, bi 

C8910 MRA w/o cont, chest 

C8913 MRA w/o cont, lwr ext 

C8919 MRA w/o cont, pelvis 

C8932 MRA, w/o dye, spinal canal 

C8935 MRA, w/o dye, upper extr 

CY 2015 APC 8008 (MRI and MRA with 

Contrast Composite) 

CY 2015 Approximate 

APC Geometric Mean Cost = $958 

70549 Mr angiograph neck w/o & w/dye 

70542 Mri orbit/face/neck w/dye 

70543 Mri orbt/fac/nck w/o & w/dye 
CMS-1613-P 184 

70545 Mr angiography head w/dye 

70546 Mr angiograph head w/o & w/dye 

70547 Mr angiography neck w/o dye 

70548 Mr angiography neck w/dye 

70552 Mri brain w/dye 

70553 Mri brain w/o & w/dye 

71551 Mri chest w/dye 

71552 Mri chest w/o & w/dye 

72142 Mri neck spine w/dye 

72147 Mri chest spine w/dye 

72149 Mri lumbar spine w/dye 

72156 Mri neck spine w/o & w/dye 

72157 Mri chest spine w/o & w/dye 

72158 Mri lumbar spine w/o & w/dye 

72196 Mri pelvis w/dye 

72197 Mri pelvis w/o & w/dye 

73219 Mri upper extremity w/dye 

73220 Mri uppr extremity w/o & w/dye 

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 
CMS-1613-P 185 

C8914 MRA w/o fol w/cont, lwr ext 

C8918 MRA w/cont, pelvis 

C8920 MRA w/o fol w/cont, pelvis 

C8931 MRA, w/dye, spinal canal 

C8933 MRA, w/o&w/dye, spinal canal 

C8934 MRA, w/dye, upper extremity 

C8936 MRA, w/o&w/dye, upper extr 

* If a “without contrast” MRI or MRA procedure is performed during the same session as a 

“with contrast” MRI or MRA procedure, the I/OCE would assign APC 8008 rather than 

APC 8007. 

3. Proposed Changes to Packaged Items and Services 

a. Background and Rationale for Packaging in the OPPS 

 Like other prospective payment systems, the OPPS relies on the concept of 

averaging to establish a payment rate for services. The payment may be more or less 

than the estimated cost of providing a specific service or bundle of specific services for a 

particular patient. The OPPS packages payment for multiple interrelated items and 

services into a single payment to create incentives for hospitals to furnish services most 

efficiently and to manage their resources with maximum flexibility. Our packaging 

policies support our strategic goal of using larger payment bundles in the OPPS to 

maximize hospitals’ incentives to provide care in the most efficient manner. For 

example, where there are a variety of devices, drugs, items, and supplies that could be 

used to furnish a service, some of which are more expensive than others, packaging 

encourages hospitals to use the most cost-efficient item that meets the patient’s needs, 

rather than to routinely use a more expensive item, which often results if separate 

payment is provided for the items. 
CMS-1613-P 186 

 Packaging also encourages hospitals to effectively negotiate with manufacturers 

and suppliers to reduce the purchase price of items and services or to explore alternative 

group purchasing arrangements, thereby encouraging the most economical health care 

delivery. Similarly, packaging encourages hospitals to establish protocols that ensure 

that necessary services are furnished, while scrutinizing the services ordered by 

practitioners to maximize the efficient use of hospital resources. Packaging payments 

into larger payment bundles promotes the predictability and accuracy of payment for 

services over time. Finally, packaging may reduce the importance of refining 

service-specific payment because packaged payments include costs associated with 

higher cost cases requiring many ancillary items and services and lower cost cases 

requiring fewer ancillary items and services. Because packaging encourages efficiency 

and is an essential component of a prospective payment system, packaging payment for 

items and services that are typically integral, ancillary, supportive, dependent, or 

adjunctive to a primary service has been a fundamental part of the OPPS since its 

implementation in August 2000. Over the last 15 years, as we have refined our 

understanding of the OPPS as a prospective payment system, we have packaged 

numerous services that we originally paid as primary services. As we continue to 

develop larger payment groups that more broadly reflect services provided in an 

encounter or episode of care, we have expanded the OPPS packaging policies. Most, but 

not necessarily all, items and services currently packaged in the OPPS are listed in 

42 CFR 419.2(b), including the five packaging policies that were added in CY 2014 

(78 FR 74925). Our overarching goal is to make OPPS payments for all services paid 
CMS-1613-P 187 

under the OPPS more consistent with those of a prospective payment system and less like 

those of a per service fee schedule, which pays separately for each coded item. As a part 

of this effort, we have continued to examine the payment for items and services provided 

in the OPPS to determine which OPPS services can be packaged to achieve the objective 

of advancing the OPPS as a prospective payment system. 

 We have examined the items and services currently provided under the OPPS, 

reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and 

services for which we believe payment would be appropriately packaged into payment of 

the primary service they support. Specifically, we examined the HCPCS code definitions 

(including CPT code descriptors) to determine whether there were categories of codes for 

which packaging would be appropriate according to existing OPPS packaging policies or 

a logical expansion of those existing OPPS packaging policies. In general, in this 

CY 2015 OPPS/ASC proposed rule, we are proposing to package the costs of selected 

HCPCS codes into payment for services reported with other HCPCS codes where we 

believe that one code reported an item or service that was integral, ancillary, supportive, 

dependent, or adjunctive to the provision of care that was reported by another HCPCS 

code. Below we discuss categories and classes of items and services that we are 

proposing to package beginning in CY 2015. For an extensive discussion of the history 

and background of the OPPS packaging policy, we refer readers to the CY 2000 OPPS 

final rule (65 FR 18434), the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66580), and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74925). 
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b. Proposed Revisions of a Packaging Policy Established in CY 2014--Procedures 

Described by Add-On Codes 

 In the CY 2014 OPPS/ASC final rule with comment period, we packaged add-on 

codes in the OPPS, with the exception of add-on codes describing drug administration 

services (78 FR 74943; 42 CFR 419.2(b)(18)). With regard to the packaging of add-on 

procedures that use expensive medical devices, we stated in the CY 2014 OPPS/ASC 

final rule with comment period (78 FR 74943) that the most expensive medical devices 

used in procedures to insert or implant devices in the hospital outpatient setting are 

included in procedures that are assigned to comprehensive APCs. Comprehensive APCs 

are discussed in section II.A.2.e. of this proposed rule. In the CY 2014 OPPS/ASC final 

rule with comment period, we discussed the comprehensive APC policy, which we 

adopted, with modification, but delayed the implementation of, until CY 2015 

(78 FR 74864). We stated that for CY 2014, we would continue to pay separately for 

only those add-on codes (except for drug administration add-on codes) that were assigned 

to device-dependent APCs in CY 2014, but that, after CY 2014, these device-dependent 

add-on codes would be paid under the comprehensive APC policy. According to the 

proposed changes to the comprehensive APC policy described in section II.A.2.e. of this 

proposed rule, we are proposing to package all of the procedures described by add-on 

codes that are currently assigned to device-dependent APCs, which will be replaced by 

comprehensive APCs. The device-dependent add-on codes that are separately paid in 

CY 2014 that we are proposing to package in CY 2015 are listed below in Table 9. 
CMS-1613-P 189 

TABLE 9.—ADD-ON CODES ASSIGNED TO DEVICE-DEPENDENT APCS 

FOR CY 2014 THAT ARE PROPOSED TO BE PACKAGED IN CY 2015 

CY 2014 Add-on Code Short Descriptor CY 2014 APC 

19297 Place breast cath for rad 0648 

33225 L ventric pacing lead add-on 0655 

37222 Iliac revasc add-on 0083 

37223 Iliac revasc w/stent add-on 0083 

37232 Tib/per revasc add-on 0083 

37233 Tibper revasc w/ather add-on 0229 

37234 Revsc opn/prq tib/pero stent 0083 

37235 Tib/per revasc stnt & ather 0083 

37237 Open/perq place stent ea add 0083 

37239 Open/perq place stent ea add 0083 

49435 Insert subq exten to ip cath 0427 

92921 Prq cardiac angio addl art 0083 

92925 Prq card angio/athrect addl 0082 

92929 Prq card stent w/angio addl 0104 

92934 Prq card stent/ath/angio 0104 

92938 Prq revasc byp graft addl 0104 

92944 Prq card revasc chronic addl 0104 

92998 Pul art balloon repr precut 0083 

C9601 Perc drug-el cor stent bran 0656 

C9603 Perc d-e cor stent ather br 0656 

C9605 Perc d-e cor revasc t cabg b 0656 

C9608 Perc d-e cor revasc chro add 0656 
CMS-1613-P 190 

c. Proposed Packaging Policies for CY 2015 

(1) Ancillary Services 

 Under the OPPS, we currently pay separately for certain ancillary services. Some 

of these ancillary services are currently assigned to status indicator “X,” which is defined 

as “ancillary services,” but some other ancillary services are currently assigned to status 

indicators other than “X.” This is because the current use of status indicator “X” in the 

OPPS is incomplete and imprecise. Some procedures and services that are ancillary, for 

example, a chest X-ray, are assigned to an APC with services assigned status indicator 

“S.” We reviewed all of the covered HOPD services provided in the HOPD and 

identified those that are commonly performed when provided with other HOPD services, 

and also provided as ancillary to a primary service in the HOPD. These ancillary services 

that we have identified are primarily minor diagnostic tests and procedures that are often 

performed with a primary service, although there are instances where hospitals provide 

such services alone and without another primary service during the same encounter. 

 As discussed in section II.A.3.a. of this proposed rule, our intent is that the OPPS 

be more of a prospective payment system with expanded packaging of items and services 

that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary 

service. Given that the longstanding OPPS policy is to package items and services that 

are integral, ancillary, supportive, dependent, or adjunctive to a primary service, we 

stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74945) that we 

believe that ancillary services should be packaged when they are performed with another 

service, but should continue to be separately paid when performed alone. We indicated 
CMS-1613-P 191 

that this packaging approach is most consistent with a prospective payment system and 

the regulation at 42 CFR 419.2(b) that packages many ancillary services into primary 

services while preserving separate payment for those instances in which one of these 

ancillary services is provided alone (not with any other service paid under the OPPS) to a 

hospital outpatient. We did not finalize the ancillary packaging policy for CY 2014 

because we believed that further evaluation was necessary (78 FR 74946). 

 In this proposed rule, we are proposing to conditionally package certain ancillary 

services for CY 2015. Specifically, we are proposing to limit the initial set of APCs that 

contain conditionally packaged services to those ancillary service APCs with a proposed 

geometric mean cost of less than or equal to $100 (prior to application of the conditional 

packaging status indicator). We are limiting this initial set of packaged ancillary service 

APCs to those with a proposed geometric mean cost of less than or equal to $100 in 

response to public comments on the CY 2014 ancillary service packaging proposal in 

which commenters expressed concern that certain low volume but relatively costly 

ancillary services would have been packaged into high volume but relatively inexpensive 

primary services (for example, a visit) (74 FR 74945). We note that the proposed $100 

geometric mean cost limit for selecting this initial group of conditionally packaged 

ancillary service APCs is less than the geometric mean cost of APC 0634, which contains 

the single clinic visit code G0463, which is a single payment rate for clinic visits 

beginning in CY 2014, and has a CY 2015 OPPS/ASC proposed rule geometric mean 

cost of $102.68. This proposed $100 geometric mean cost limit is part of the 

methodology of selecting the initial set of conditionally packaged ancillary service APCs 
CMS-1613-P 192 

under this proposed packaging policy. It is not meant to represent a threshold above 

which ancillary services will not be packaged, but as a basis for selecting this initial set of 

APCs, which will likely be updated and expanded in future years. In future years, we 

may package ancillary services assigned to APCs with geometric mean costs higher than 

$100. In addition, geometric mean costs can change over time. A change in the 

geometric mean cost of any of the proposed APCs above $100 in future years would not 

change the conditionally packaged status of services assigned to the APCs selected in 

2015 in a future year. We will continue to consider these APCs to be conditionally 

packaged. However, we will review the conditionally packaged status of ancillary 

services annually. 

 We are proposing to exclude certain services from this packaging policy even 

though they are assigned to APCs with a geometric mean cost of ≤ $100. Preventive 

services will continue to be paid separately, and includes the following services listed in 

Table 10 below that would otherwise be packaged under this policy. 

TABLE 10.—PREVENTIVE SERVICES EXEMPTED FROM THE ANCILLARY 

SERVICE PACKAGING POLICY 

HCPCS 

Code Short Descriptor APC 

76977 Us bone density measure 0340 

77078 Ct bone density axial 0260 

77080 Dxa bone density axial 0261 

77081 Dxa bone density/peripheral 0260 

G0117 Glaucoma scrn hgh risk direc 0260 

G0118 Glaucoma scrn hgh risk direc 0230 

G0130 Single energy x-ray study 0230 

G0389 Ultrasound exam aaa screen 0265 

G0404 Ekg tracing for initial prev 0450 

Q0091 Obtaining screen pap smear 0450 
CMS-1613-P 193 

 In addition, we are not proposing to package certain psychiatry and counselingrelated services as we see similarities to a visit and, at this time, do not consider them to 

be ancillary services. We also are not proposing to package certain low cost drug 

administration services as we are examining various alternative payment policies for drug 

administration services, including the associated drug administration add-on codes. 

 Finally, we are proposing to delete status indicator “X” (Ancillary Services) 

because the majority of the services assigned to status indicator “X” are proposed to be 

assigned to status indicator “Q1” (STV-Packaged Codes). For the services that are 

currently assigned status indicator “X” that are not proposed to be conditionally packaged 

under this policy, we will assign those services status indicator “S” (Procedure or 

Service, Not Discounted When Multiple), indicating separate payment and that the 

services are not subject to the multiple procedure reduction. The APCs that we are 

proposing for conditional packaging as ancillary services in CY 2015 are listed below in 

Table 11. 
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TABLE 11.--APCs FOR PROPOSED CONDITIONALLY PACKAGED 

ANCILLARY SERVICES FOR CY 2015 

APC 

Proposed 

CY 2015 OPPS 

Geometric 

Mean Cost 

Proposed 

CY 2015 

OPPS SI 

Group Title 

0012 $76.29 Q1 Level I Debridement & Destruction 

0060 $20.64 Q1 Manipulation Therapy 

0077 $52.08 Q1 Level I Pulmonary Treatment 

0099 $81.27 Q1 Electrocardiograms/Cardiography 

0215 $104.63 Q1 Level I Nerve and Muscle Services 

0230 $55.00 Q1 Level I Eye Tests & Treatments 

0260 $62.43 Q1 

Level I Plain Film Including Bone Density 

Measurement 

0261 $99.85 Q1 

Level II Plain Film Including Bone 

Density Measurement 

0265 

$96.51 

Q1 

Level I Diagnostic and Screening 

Ultrasound 

0340 $64.78 Q1 Level II Minor Procedures 

0342 $56.99 Q1 Level I Pathology 

0345 $78.83 Q1 

Level I Transfusion Laboratory 

Procedures 

0364 $42.69 Q1 Level I Audiometry 

0365 $123.21 Q1 Level II Audiometry 

0367 $166.31 Q1 Level I Pulmonary Tests 

0420 $130.93 Q1 Level III Minor Procedures 

0433 $190.21 Q1 Level II Pathology 

0450 $29.91 Q1 Level I Minor Procedures 

0624 $83.61 Q1 

Phlebotomy and Minor Vascular Access 

Device Procedures 

0690 $37.25 Q1 Level I Electronic Analysis of Devices 

0698 $106.17 Q1 Level II Eye Tests & Treatments 

 The HCPCS codes that we are proposing to conditionally package as ancillary 

services for CY 2015 are displayed in Addendum B to this CY 2015 OPPS/ASC 

proposed rule. The supporting documents for the proposed rule are available at the CMS 

Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 
CMS-1613-P 195 

 We also are proposing to revise the regulations at 42 CFR 419.2(b)(7) to replace 

the phrase “Incidental services such as venipuncture” with “Ancillary services” to more 

accurately reflect the proposed packaging policy discussed above. 

 We are inviting public comments on these proposals. 

(2) Prosthetic Supplies 

 We have a longstanding policy of providing payment under the OPPS for 

implantable DME, implantable prosthetics, and medical and surgical supplies, as 

provided at sections 1833(t)(1)(B)(i) and (t)(1)(B)(iii) of the Act and 42 CFR 419.2(b)(4), 

(b)(10), and (b)(11). In the CY 2014 OPPS/ASC final rule with comment period, we 

clarified that medical and surgical supplies under § 419.2(b)(4) include (but are not 

limited to) all supplies on the DMEPOS Fee Schedule except prosthetic supplies 

(78 FR 74947). Under 42 CFR 419.22(j), prosthetic supplies are currently excluded from 

payment under the OPPS and are paid under the DMEPOS Fee Schedule, even when 

provided in the HOPD. However, under section 1833(t)(1)(B)(i) of the Act, the Secretary 

has the authority to designate prosthetic supplies provided in the hospital outpatient 

setting as covered OPD services payable under the OPPS. 

 As mentioned above, implantable prosthetic devices are packaged in the OPPS 

under 42 CFR 419.2(b)(11). It is common for implantable prosthetic devices to be 

provided as a part of a device system. Such device systems include the implantable part 

or parts of the overall device system and also certain nonimplantable prosthetic supplies 

that are integral to the overall function of the medical device, part of which is implanted 

and part of which is external to the patient. These prosthetic supplies are integral to the 
CMS-1613-P 196 

implantable prosthetic because typically shortly after the surgical procedure to implant 

the implantable prosthetic device in the hospital, the surgeon and/or his or her colleagues 

will have to attach, fit, and program certain prosthetic supplies that are not surgically 

implanted into the patient but are a part of a system and that are essential to the overall 

function of an implanted device. Because these supplies are integral to the overall 

function of the implanted prosthetic, and because, as mentioned above, we package in the 

OPPS items and services that are typically integral, ancillary, supportive, dependent, or 

adjunctive to a primary service, we believe that it is most consistent with a prospective 

payment system to package the payment of prosthetic supplies (along with the 

implantable prosthetic device) into the surgical procedure that implants the prosthetic 

device, as all of the components are typically necessary for the performance of the system 

and the hospital typically purchases the system as a single unit. Patients requiring 

replacement supplies at a time later than the initial surgical procedure and outside of the 

hospital would obtain them as they typically do from a DMEPOS supplier with payment 

for such supplies made under the DMEPOS Fee Schedule. 

 In addition to prosthetic supplies that are components of device systems, part of 

which are implanted, many other prosthetic supplies on the DMEPOS fee schedule are 

typical medical and surgical supplies and of the type that are packaged in the OPPS under 

§ 419.2(b)(4). Consistent with our change from status indicator “A” to “N” for all 

nonprosthetic DMEPOS supplies in the CY 2014 OPPS final rule with comment period 

(78 FR 74947), we are proposing to package and change the status indicator from “A” to 
CMS-1613-P 197 

“N” for all DMEPOS prosthetic supplies. With this proposed change, all medical and 

surgical supplies would be packaged in the OPPS. 

 Therefore, we are proposing to delete “prosthetic supplies” from the regulations at 

§ 419.22(j) because we are proposing that prosthetic supplies be packaged covered OPD 

services in the OPPS for CY 2015. Prosthetic supplies provided in the HOPD would be 

included in “medical and surgical supplies” (as are all other supplies currently provided 

in the HOPD) under § 419.2(b)(4). The HCPCS codes for prosthetic supplies that we are 

proposing to package for CY 2015 are displayed in Addendum B to this CY 2015 

OPPS/ASC proposed rule. The supporting documents for the proposed rule, including 

but not limited to these Addenda, are available at the CMS Web site at: 

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

 We are inviting public comments on these proposals. 

4. Proposed Calculation of OPPS Scaled Payment Weights 

 For CY 2015, we are proposing to calculate the relative payment weights for each 

APC shown in Addenda A and B to this proposed rule (which are available via the 

Internet on the CMS Web site) using the APC costs discussed in sections II.A.1. and 

II.A.2. of this proposed rule. Prior to CY 2007, we standardized all the relative payment 

weights to APC 0601 (Mid-Level Clinic Visit) because mid-level clinic visits were 

among the most frequently performed services in the hospital outpatient setting. We 

assigned APC 0601 a relative payment weight of 1.00 and divided the median cost for 
CMS-1613-P 198 

each APC by the median cost for APC 0601 to derive the relative payment weight for 

each APC. 

 Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all of the 

relative payment weights to APC 0606 (Level 3 Clinic Visits) because we deleted 

APC 0601 as part of the reconfiguration of the clinic visit APCs. We selected APC 0606 

as the base because it was the mid-level clinic visit APC (that is, Level 3 of five levels). 

For the CY 2013 OPPS (77 FR 68283), we established a policy of using geometric 

mean-based APC costs rather than median-based APC costs to calculate relative payment 

weights. For CY 2015, we are proposing to continue this policy. 

 For the CY 2014 OPPS, we standardized all of the relative payment weights to 

clinic visit APC 0634 as discussed in section VII. of this proposed rule. For CY 2015, we 

are proposing to continue this policy to maintain consistency in calculating unscaled 

weights that represent the cost of some of the most frequently provided services. We are 

proposing to assign APC 0634 a relative payment weight of 1.00 and to divide the 

geometric mean cost of each APC by the proposed geometric mean cost for APC 0634 to 

derive the proposed unscaled relative payment weight for each APC. The choice of the 

APC on which to base the proposed relative payment weights does not affect payments 

made under the OPPS because we scale the weights for budget neutrality. 

 Section 1833(t)(9)(B) of the Act requires that APC reclassification and 

recalibration changes, wage index changes, and other adjustments be made in a budget 

neutral manner. Budget neutrality ensures that the estimated aggregate weight under the 

OPPS for CY 2015 is neither greater than nor less than the estimated aggregate weight 
CMS-1613-P 199 

that would have been made without the changes. To comply with this requirement 

concerning the APC changes, we are proposing to compare the estimated aggregate 

weight using the CY 2014 scaled relative payment weights to the estimated aggregate 

weight using the proposed CY 2015 unscaled relative payment weights. 

 For CY 2014, we multiplied the CY 2014 scaled APC relative payment weight 

applicable to a service paid under the OPPS by the volume of that service from CY 2013 

claims to calculate the total relative payment weight for each service. We then added 

together the total relative payment weight for each of these services in order to calculate 

an estimated aggregate weight for the year. For CY 2015, we are proposing to apply the 

same process using the proposed CY 2015 unscaled relative payment weights rather than 

scaled relative payment weights. We are proposing to calculate the weight scaler by 

dividing the CY 2014 estimated aggregate weight by the proposed CY 2015 estimated 

aggregate weight. The service-mix is the same in the current and prospective years 

because we use the same set of claims for service volume in calculating the aggregate 

weight for each year. We note that the CY 2014 OPPS scaled relative weights 

incorporate the estimated payment weight from packaged laboratory tests previously paid 

at CLFS rates. 

 For a detailed discussion of the weight scaler calculation, we refer readers to the 

OPPS claims accounting document available on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. 
CMS-1613-P 200 

 We are proposing to include estimated payments to CMHCs in our comparison of 

the estimated unscaled relative payment weights in CY 2015 to the estimated total 

relative payment weights in CY 2014 using CY 2013 claims data, holding all other 

components of the payment system constant to isolate changes in total weight. Based on 

this comparison, we adjusted the proposed CY 2015 unscaled relative payment weights 

for purposes of budget neutrality. The proposed CY 2015 unscaled relative payment 

weights were adjusted by multiplying them by a weight scaler of 1.3220 to ensure that the 

proposed CY 2015 relative payment weights are budget neutral. 

 Section 1833(t)(14) of the Act provides the payment rates for certain SCODs. 

Section 1833(t)(14)(H) of the Act states that “Additional expenditures resulting from this 

paragraph shall not be taken into account in establishing the conversion factor, weighting, 

and other adjustment factors for 2004 and 2005 under paragraph (9), but shall be taken 

into account for subsequent years.” Therefore, the cost of those SCODs (as discussed in 

section V.B.3. of this proposed rule) is included in the budget neutrality calculations for 

the CY 2015 OPPS. 

 The proposed CY 2015 unscaled relative payment weights listed in Addenda A 

and B to this proposed rule (which are available via the Internet on the CMS Web site) 

incorporate the proposed recalibration adjustments discussed in sections II.A.1. and 

II.A.2. of this proposed rule. 

B. Proposed Conversion Factor Update 

 Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to update the 

conversion factor used to determine the payment rates under the OPPS on an annual basis 
CMS-1613-P 201 

by applying the OPD fee schedule increase factor. For purposes of section 

1833(t)(3)(C)(iv) of the Act, subject to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, 

the OPD fee schedule increase factor is equal to the hospital inpatient market basket 

percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of 

the Act. In the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28087), consistent with 

current law, based on IHS Global Insight, Inc.’s first quarter 2014 forecast of the 

FY 2015 market basket increase, the proposed FY 2015 IPPS market basket update is 2.7 

percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(iv) of the Act, as added by 

section 3401(i) of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 

111-148) and as amended by section 10319(g) of that law and further amended by section 

1105(e) of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), 

provide adjustments to the OPD fee schedule increase factor for CY 2015. 

 Specifically, section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and 

subsequent years, the OPD fee schedule increase factor under subparagraph (C)(iv) be 

reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the 

Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as 

equal to the 10-year moving average of changes in annual economy-wide, private 

nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 

10-year period ending with the applicable fiscal year, year, cost reporting period, or other 

annual period) (the “MFP adjustment”). In the FY 2012 IPPS/LTCH PPS final rule 

(76 FR 51689 through 51692), we finalized our methodology for calculating and 

applying the MFP adjustment. In the FY 2015 IPPS/LTCH PPS proposed rule 
CMS-1613-P 202 

(79 FR 28087), we discussed the calculation of the proposed MFP adjustment for 

FY 2015, which is 0.4 percentage point. 

 We are proposing that if more recent data become subsequently available after the 

publication of this proposed rule (for example, a more recent estimate of the market 

basket increase and the MFP adjustment), we would use such data, if appropriate, to 

determine the CY 2015 market basket update and the MFP adjustment, components in 

calculating the OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and 

1833(t)(3)(F) of the Act, in the CY 2015 OPPS/ASC final rule with comment period. 

 In addition, section 1833(t)(3)(F)(ii) of the Act requires that, for each of years 

2010 through 2019, the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) 

of the Act be reduced by the adjustment described in section 1833(t)(3)(G) of the Act. 

For CY 2015, section 1833(t)(3)(G)(iv) of the Act provides a 0.2 percentage point 

reduction to the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the 

Act. Therefore, in accordance with sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the 

Act, we are proposing to apply a 0.2 percentage point reduction to the OPD fee schedule 

increase factor for CY 2015. 

 We note that section 1833(t)(3)(F) of the Act provides that application of this 

subparagraph may result in the OPD fee schedule increase factor under section 

1833(t)(3)(C)(iv) of the Act being less than 0.0 percent for a year, and may result in 

OPPS payment rates being less than rates for the preceding year. As described in further 

detail below, we are proposing to apply an OPD fee schedule increase factor of 2.1 

percent for the CY 2015 OPPS (which is 2.7 percent, the proposed estimate of the 
CMS-1613-P 203 

hospital inpatient market basket percentage increase, less the proposed 0.4 percentage 

point MFP adjustment, and less the 0.2 percentage point additional adjustment). 

 Hospitals that fail to meet the Hospital OQR Program reporting requirements are 

subject to an additional reduction of 2.0 percentage points from the OPD fee schedule 

increase factor adjustment to the conversion factor that would be used to calculate the 

OPPS payment rates for their services, as required by section 1833(t)(17) of the Act. For 

further discussion of the Hospital OQR Program, we refer readers to section XIII. of this 

proposed rule. 

 In this proposed rule, we are proposing to amend 42 CFR 419.32(b)(1)(iv)(B) by 

adding a new paragraph (6) to reflect the requirement in section 1833(t)(3)(F)(i) of the 

Act that, for CY 2015, we reduce the OPD fee schedule increase factor by the MFP 

adjustment as determined by CMS, and to reflect the requirement in section 

1833(t)(3)(G)(iv) of the Act, as required by section 1833(t)(3)(F)(ii) of the Act, that we 

reduce the OPD fee schedule increase factor by an additional 0.2 percentage point for 

CY 2015. 

 To set the OPPS conversion factor for CY 2015, we are proposing to increase the 

CY 2014 conversion factor of $72.672 by 2.1 percent. In accordance with section 

1833(t)(9)(B) of the Act, we are proposing to further adjust the conversion factor for 

CY 2015 to ensure that any revisions made to the wage index and rural adjustment are 

made on a budget neutral basis. We are proposing to calculate an overall proposed 

budget neutrality factor of 0.9998 for wage index changes by comparing proposed total 

estimated payments from our simulation model using the proposed FY 2015 IPPS wage 
CMS-1613-P 204 

indexes to those payments using the FY 2014 IPPS wage indexes, as adopted on a 

calendar year basis for the OPPS. 

 For CY 2015, we are proposing to maintain the current rural adjustment policy, as 

discussed in section II.E. of this proposed rule. Therefore, the proposed budget neutrality 

factor for the rural adjustment is 1.0000. 

 For CY 2015, we are proposing to continue previously established policies for 

implementing the cancer hospital payment adjustment described in section 1833(t)(18) of 

the Act, as discussed in section II.F. of this proposed rule. We are proposing to calculate 

a CY 2015 budget neutrality adjustment factor for the cancer hospital payment 

adjustment by comparing estimated total CY 2015 payments under section 1833(t) of the 

Act, including the proposed CY 2015 cancer hospital payment adjustment, to estimated 

CY 2015 total payments using the CY 2014 final cancer hospital payment adjustment as 

required under section 1833(t)(18)(B) of the Act. The CY 2015 estimated payments 

applying the proposed CY 2015 cancer hospital payment adjustment are identical to 

estimated payments applying the CY 2014 final cancer hospital payment adjustment. 

Therefore, we are proposing to apply a budget neutrality adjustment factor of 1.0000 to 

the conversion factor for the cancer hospital payment adjustment. 

 For this proposed rule, we estimate that pass-through spending for drugs, 

biologicals, and devices for CY 2015 would equal approximately $15.5 million, which 

represents 0.03 percent of total projected CY 2015 OPPS spending. Therefore, the 

proposed conversion factor would be adjusted by the difference between the 0.02 percent 

estimate of pass-through spending for CY 2014 and the 0.03 percent estimate of 
CMS-1613-P 205 

pass-through spending for CY 2015, resulting in a proposed adjustment for CY 2015 of 

0.01 percent. Finally, estimated payments for outliers would remain at 1.0 percent of 

total OPPS payments for CY 2015. 

 The proposed OPD fee schedule increase factor of 2.1 percent for CY 2015 (that 

is, the estimate of the hospital inpatient market basket percentage increase of 2.7 percent 

less the proposed 0.4 percentage point MFP adjustment and less the 0.2 percentage point 

required under section 1833(t)(3)(F)(ii) of the Act), the required proposed wage index 

budget neutrality adjustment of approximately 0.9998, the proposed cancer hospital 

payment adjustment of 1.0000, and the proposed adjustment of 0.01 percent of projected 

OPPS spending for the difference in the pass-through spending result in a proposed 

conversion factor for CY 2015 of $74.176. 

 Hospitals that fail to meet the reporting requirements of the Hospital OQR 

Program would continue to be subject to a further reduction of 2.0 percentage points to 

the OPD fee schedule increase factor. For hospitals that fail to meet the requirements of 

the Hospital OQR Program, we are proposing to make all other adjustments discussed 

above, but using a reduced OPD fee schedule update factor of 0.1 percent (that is, the 

proposed OPD fee schedule increase factor of 2.1 percent further reduced by 2.0 

percentage points). This results in a proposed reduced conversion factor for CY 2015 of 

$72.692 for hospitals that fail to meet the Hospital OQR requirements (a difference 

of -$1.484 in the conversion factor relative to hospitals that met the requirements). 

 In summary, for CY 2015, we are proposing to use a conversion factor of $74.176 

in the calculation of the national unadjusted payment rates for those items and services 
CMS-1613-P 206 

for which payment rates are calculated using geometric mean costs. We are proposing to 

amend § 419.32(b)(1)(iv)(B) by adding a new paragraph (6) to reflect the reductions to 

the OPD fee schedule increase factor that are required for CY 2015 to satisfy the 

statutory requirements of sections 1833(t)(3)(F) and (t)(3)(G)(iv) of the Act. We are 

proposing to use a reduced conversion factor of $72.692 in the calculation of payments 

for hospitals that fail to meet the Hospital OQR Program requirements. 

C. Proposed Wage Index Changes 

 Section 1833(t)(2)(D) of the Act requires the Secretary to “determine a wage 

adjustment factor to adjust the portion of payment and coinsurance attributable to 

labor-related costs for relative differences in labor and labor-related costs across 

geographic regions in a budget neutral manner” (codified at 42 CFR 419.43(a)). This 

portion of the OPPS payment rate is called the OPPS labor-related share. Budget 

neutrality is discussed in section II.B. of this proposed rule. 

 The OPPS labor-related share is 60 percent of the national OPPS payment. This 

labor-related share is based on a regression analysis that determined that, for all hospitals, 

approximately 60 percent of the costs of services paid under the OPPS were attributable 

to wage costs. We confirmed that this labor-related share for outpatient services is 

appropriate during our regression analysis for the payment adjustment for rural hospitals 

in the CY 2006 OPPS final rule with comment period (70 FR 68553). Therefore, we are 

proposing to continue this policy for the CY 2015 OPPS. We refer readers to 

section II.H. of this proposed rule for a description and example of how the wage index 

for a particular hospital is used to determine payment for the hospital. 
CMS-1613-P 207 

 As discussed in section II.A.2.c. of this proposed rule, for estimating APC costs, 

we standardize 60 percent of estimated claims costs for geographic area wage variation 

using the same proposed FY 2015 pre-reclassified wage index that the IPPS uses to 

standardize costs. This standardization process removes the effects of differences in area 

wage levels from the determination of a national unadjusted OPPS payment rate and 

copayment amount. 

 Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the original OPPS 

April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), the OPPS 

adopted the final fiscal year IPPS wage index as the calendar year wage index for 

adjusting the OPPS standard payment amounts for labor market differences. Thus, the 

wage index that applies to a particular acute care short-stay hospital under the IPPS also 

applies to that hospital under the OPPS. As initially explained in the September 8, 1998 

OPPS proposed rule (63 FR 47576), we believe that using the IPPS wage index as the 

source of an adjustment factor for the OPPS is reasonable and logical, given the 

inseparable, subordinate status of the HOPD within the hospital overall. In accordance 

with section 1886(d)(3)(E) of the Act, the IPPS wage index is updated annually. 

 The Affordable Care Act contained several provisions affecting the wage index. 

These provisions were discussed in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74191). As discussed in that final rule with comment period, section 

10324 of the Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, which 

defines a “frontier State,” and amended section 1833(t) of the Act to add new paragraph 

(19), which requires a “frontier State” wage index floor of 1.00 in certain cases, and 
CMS-1613-P 208 

states that the frontier State floor shall not be applied in a budget neutral manner. We 

codified these requirements in § 419.43(c)(2) and (c)(3) of our regulations. For the 

CY 2015 OPPS, we are proposing to implement this provision in the same manner as we 

have since CY 2011. That is, frontier State hospitals would receive a wage index of 1.00 

if the otherwise applicable wage index (including reclassification, rural and imputed 

floor, and rural floor budget neutrality) is less than 1.00. Similar to our current policy for 

HOPDs that are affiliated with multi-campus hospital systems, the HOPD would receive 

a wage index based on the geographic location of the specific inpatient hospital with 

which it is associated. Therefore, if the associated hospital is located in a frontier State, 

the wage index adjustment applicable for the hospital would also apply for the affiliated 

HOPD. We refer readers to the following sections in the FY 2011 through FY 2014 

IPPS/LTCH PPS final rules for discussions regarding this provision, including our 

methodology for identifying which areas meet the definition of frontier States as provided 

for in section 1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50160 through 

50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 53369 through 

53370; and for FY 2014, 78 FR 50590 through 50591. We also refer readers to the 

FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28069) for discussion regarding this 

provision. 

 In addition to the changes required by the Affordable Care Act, we note that the 

proposed FY 2015 IPPS wage indexes continue to reflect a number of adjustments 

implemented over the past few years, including, but not limited to, reclassification of 

hospitals to different geographic areas, the rural and imputed floor provisions, an 
CMS-1613-P 209 

adjustment for occupational mix, and an adjustment to the wage index based on 

commuting patterns of employees (the out-migration adjustment). We refer readers to 

the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054 through 28084) for a detailed 

discussion of all proposed changes to the FY 2015 IPPS wage indices. In addition, we 

refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65842 through 

65844) and subsequent OPPS rules for a detailed discussion of the history of these wage 

index adjustments as applied under the OPPS. 

 As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054 

through 28055), the Office of Management and Budget (OMB) issued revisions to the 

current labor market area delineations on February 28, 2013, that included a number of 

significant changes such as new Core Based Statistical Areas (CBSAs), urban counties 

that become rural, rural counties that become urban, and existing CBSAs that are split 

apart (OMB Bulletin 13-01). This bulletin can be found at: 

http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. As we 

stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50586), in order to allow for 

sufficient time to assess the new revisions and their ramifications, we intended to propose 

changes to the IPPS wage index based on the newest CBSA delineations in the FY 2015 

IPPS/LTCH PPS proposed rule. Similarly, in the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 74951), we stated that we intended to propose changes in the 

OPPS, which uses the IPPS wage index, based on the new OMB delineations in this 

CY 2015 OPPS/ASC proposed rule, consistent with any proposals in the FY 2015 

IPPS/LTCH PPS proposed rule. We refer readers to proposed changes based on the new 
CMS-1613-P 210 

OMB delineations in the FY 2015 IPPS/LTCH proposed rule at 79 FR 28054 through 

28084. 

 In this proposed rule, we are proposing to use the proposed FY 2015 hospital 

IPPS wage index for urban and rural areas as the wage index for the OPPS hospital to 

determine the wage adjustments for the OPPS payment rate and the copayment 

standardized amount for CY 2015. (We refer readers to the FY 2015 IPPS/LTCH PPS 

proposed rule (79 FR 28054) and the proposed FY 2015 hospital wage index files posted 

on the CMS Web site.) We note that the proposed FY 2015 IPPS wage indexes reflect a 

number of proposed changes as a result of the new OMB delineations as well as a 

proposed 1-year extension of the imputed rural floor. The CY 2015 OPPS wage index 

(for hospitals paid under the IPPS and OPPS) would be the final FY 2015 IPPS wage 

index. Thus, any proposed adjustments, including the adjustments related to the new 

OMB delineations, that are finalized for the IPPS wage index would be reflected in the 

OPPS wage index. As stated earlier in this section, we continue to believe that using the 

IPPS wage index as the source of an adjustment factor for the OPPS is reasonable and 

logical, given the inseparable, subordinate status of the HOPD within the hospital overall. 

Therefore, we are not proposing to change our current regulations, which require that we 

use the FY 2015 IPPS wage indexes for calculating OPPS payments in CY 2015. 

 Hospitals that are paid under the OPPS but not under the IPPS do not have a 

hospital wage index under the IPPS. Therefore, for non-IPPS hospitals paid under the 

OPPS, we assign the wage index that would be applicable if the hospital were paid under 

the IPPS, based on its geographic location and any applicable wage index adjustments. 
CMS-1613-P 211 

We are proposing to adopt the proposed wage index changes from the FY 2015 

IPPS/LTCH PPS proposed rule for these hospitals. The following is a brief summary of 

the major proposed changes in the FY 2015 IPPS wage indexes and any adjustments that 

we are proposing to apply to these hospitals under the OPPS for CY 2015. We refer the 

reader to the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054 through 28084) for a 

detailed discussion of the proposed changes to the wage indexes. 

 For CY 2015, we are proposing to continue our policy of allowing non-IPPS 

hospitals paid under the OPPS to qualify for the out-migration adjustment if they are 

located in a section 505 out-migration county (section 505 of the Medicare Prescription 

Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173)). 

Applying this adjustment is consistent with our proposed policy of adopting IPPS wage 

index policies for hospitals paid under the OPPS. We note that, because non-IPPS 

hospitals cannot reclassify, they are eligible for the out-migration wage adjustment if they 

are located in a section 505 out-migration county. This is the same proposed outmigration adjustment policy that would apply if the hospital were paid under the IPPS. 

Table 4J from the FY 2015 IPPS/LTCH PPS proposed rule (available via the Internet on 

the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/index.html) identifies counties eligible for the out-migration 

adjustment and IPPS hospitals that would receive the adjustment for FY 2015. 

 As we have done in prior years, we are including Table 4J from the FY 2015 

IPPS/LTCH PPS proposed rule as Addendum L to this proposed rule with the addition of 
CMS-1613-P 212 

non-IPPS hospitals that would receive the section 505 out-migration adjustment under the 

CY 2015 OPPS. Addendum L is available via the Internet on the CMS Web site. 

 In the FY 2015 IPPS/LTCH PPS proposed rule, we proposed to adopt the new 

OMB labor market area delineations issued by OMB in OMB Bulletin No. 13-01 on 

February 28, 2013, based on standards published on June 28, 2010 (75 FR 37246 through 

37252) and the 2010 Census data to delineate labor market areas for purposes of the IPPS 

wage index. For IPPS wage index purposes, for hospitals that would be designated as 

rural under the new OMB labor market area delineations that currently are located in 

urban CBSAs, we generally proposed to assign them the urban wage index value of the 

CBSA in which they are physically located for FY 2014 for a period of 3 fiscal years (79 

FR 28060 through 28061). To be consistent, we are proposing to apply the same policy 

to hospitals paid under the OPPS but not under the IPPS so that such hospitals would 

maintain the wage index of the CBSA in which they are physically located for FY 2014 

for the next 3 calendar years. This proposed policy would impact six hospitals for 

purposes of OPPS payment. 

 We believe that adopting the new OMB labor market area delineations would 

create a more accurate wage index system, but we also recognize that implementing the 

new OMB delineations may cause some short-term instability in hospital payments. 

Therefore, similar to the policy we adopted in the FY 2005 IPPS final rule 

(69 FR 49033), in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28062), we 

proposed a 1-year blended wage index for all hospitals that would experience any 

decrease in their actual payment wage index exclusively due to the proposed 
CMS-1613-P 213 

implementation of the new OMB delineations. We proposed that a post-reclassified 

wage index with the rural and imputed floors applied would be computed based on the 

hospital’s FY 2014 CBSA (that is, using all of its FY 2014 constituent county/ies), and 

another post-reclassified wage index with the rural and imputed floors applied would be 

computed based on the hospital’s new FY 2015 CBSA (that is, the FY 2015 constituent 

county/ies). We proposed to compare these two wage indexes. If the proposed FY 2015 

wage index with FY 2015 CBSAs would be lower than the proposed FY 2015 wage 

index with FY 2014 CBSAs, we proposed that a blended wage index would be computed, 

consisting of 50 percent of each of the two wage indexes added together. We proposed 

that this blended wage index would be the hospital’s wage index for FY 2015. For 

purposes of the OPPS, we also are proposing to apply this 50-percent transition blend to 

hospitals paid under the OPPS but not under the IPPS. We believe a 1-year, 50/50 

blended wage index would mitigate the short-term instability and negative payment 

impacts due to the proposed implementation of the new OMB delineations, providing 

hospitals with a transition period during which they may adjust to their new geographic 

CBSA. We believe that a longer transition period would reduce the accuracy of the 

overall labor market area wage index system, and generally would not be warranted for 

hospitals moving from one urban geographic labor market area to another. 

 In addition, for the FY 2015 IPPS, we proposed to continue the extension of the 

imputed floor policy (both the original methodology and alternative methodology) for 

another year, through September 30, 2015 (79 FR 28068 through 28069). For purposes 
CMS-1613-P 214 

of the CY 2015 OPPS, we are also proposing to apply the imputed floor policy to 

hospitals paid under the OPPS but not under the IPPS. 

 For CMHCs, we are proposing to continue to calculate the wage index by using 

the post-reclassification IPPS wage index based on the CBSA where the CMHC is 

located. As with OPPS hospitals and for the same reasons, we are proposing to apply a 

1-year, 50/50 blended wage index to CMHCs that would receive a lower wage index due 

to the new CBSA delineations. In addition, as with OPPS hospitals and for the same 

reasons, for CMHCs currently located in urban CBSAs that would be designated as rural 

under the new OMB labor market area delineations, we are proposing to maintain the 

urban wage index value of the CBSA in which they are physically located for CY 2014 

for the next 3 calendar years. Consistent with our current policy, the wage index that 

applies to CMHCs includes both the imputed floor adjustment and the rural floor 

adjustment, but does not include the out-migration adjustment because that adjustment 

only applies to hospitals. 

 With the exception of the proposed out-migration wage adjustment table 

(Addendum L to this proposed rule, which is available via the Internet on the CMS Web 

site), which includes non-IPPS hospitals paid under the OPPS, we are not reprinting the 

proposed FY 2015 IPPS wage indexes referenced in this discussion of the wage index. 

We refer readers to the CMS Web site for the OPPS at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the 

proposed FY 2015 IPPS wage index tables. 
CMS-1613-P 215 

D. Proposed Statewide Average Default CCRs 

 In addition to using CCRs to estimate costs from charges on claims for ratesetting, 

CMS uses overall hospital-specific CCRs calculated from the hospital’s most recent cost 

report to determine outlier payments, payments for pass-through devices, and monthly 

interim transitional corridor payments under the OPPS during the PPS year. MACs 

cannot calculate a CCR for some hospitals because there is no cost report available. For 

these hospitals, CMS uses the statewide average default CCRs to determine the payments 

mentioned above until a hospital’s MAC is able to calculate the hospital’s actual CCR 

from its most recently submitted Medicare cost report. These hospitals include, but are 

not limited to, hospitals that are new, have not accepted assignment of an existing 

hospital’s provider agreement, and have not yet submitted a cost report. CMS also uses 

the statewide average default CCRs to determine payments for hospitals that appear to 

have a biased CCR (that is, the CCR falls outside the predetermined ceiling threshold for 

a valid CCR) or for hospitals in which the most recent cost report reflects an all-inclusive 

rate status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, 

Section 10.11). In this proposed rule, we are proposing to update the default ratios for 

CY 2015 using the most recent cost report data. We discuss our policy for using default 

CCRs, including setting the ceiling threshold for a valid CCR, in the CY 2009 

OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in the context 

of our adoption of an outlier reconciliation policy for cost reports beginning on or after 

January 1, 2009. 
CMS-1613-P 216 

 For CY 2015, we are proposing to continue to use our standard methodology of 

calculating the statewide average default CCRs using the same hospital overall CCRs that 

we use to adjust charges to costs on claims data for setting the proposed CY 2015 OPPS 

relative payment weights. Table 12 below lists the proposed CY 2015 default urban and 

rural CCRs by State and compares them to last year’s default CCRs. These proposed 

CCRs represent the ratio of total costs to total charges for those cost centers relevant to 

outpatient services from each hospital’s most recently submitted cost report, weighted by 

Medicare Part B charges. We also are proposing to adjust ratios from submitted cost 

reports to reflect the final settled status by applying the differential between settled to 

submitted overall CCRs for the cost centers relevant to outpatient services from the most 

recent pair of final settled and submitted cost reports. We then are proposing to weight 

each hospital’s CCR by the volume of separately paid line-items on hospital claims 

corresponding to the year of the majority of cost reports used to calculate the overall 

CCRs. We refer readers to the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66680 through 66682) and prior OPPS rules for a more detailed discussion of our 

established methodology for calculating the statewide average default CCRs, including 

the hospitals used in our calculations and our trimming criteria. 

 For Maryland, we used an overall weighted average CCR for all hospitals in the 

Nation as a substitute for Maryland CCRs. Few hospitals in Maryland are eligible to 

receive payment under the OPPS, which limits the data available to calculate an accurate 

and representative CCR. The weighted CCR is used for Maryland because it takes into 

account each hospital’s volume, rather than treating each hospital equally. We refer 
CMS-1613-P 217 

readers to the CY 2005 OPPS final rule with comment period (69 FR 65822) for further 

discussion and the rationale for our longstanding policy of using the national average 

CCR for Maryland. In general, observed changes in the statewide average default CCRs 

between CY 2014 and CY 2015 are modest and the few significant changes are 

associated with areas that have a small number of hospitals. 

 Table 12 below lists the proposed statewide average default CCRs for OPPS 

services furnished on or after January 1, 2015. 
CMS-1613-P 218 

TABLE 12.–PROPOSED CY 2015 STATEWIDE AVERAGE CCRs 

State Urban/Rural 

Proposed 

CY 2015 

Default 

CCR 

Previous 

Default CCR 

(CY 2014 

OPPS Final 

Rule) 

ALASKA RURAL 0.463 0.473 

ALASKA URBAN 0.301 0.302 

ALABAMA RURAL 0.246 0.229 

ALABAMA URBAN 0.189 0.188 

ARKANSAS RURAL 0.233 0.244 

ARKANSAS URBAN 0.237 0.220 

ARIZONA RURAL 0.232 0.254 

ARIZONA URBAN 0.186 0.182 

CALIFORNIA RURAL 0.192 0.190 

CALIFORNIA URBAN 0.203 0.206 

COLORADO RURAL 0.426 0.393 

COLORADO URBAN 0.223 0.221 

CONNECTICUT RURAL 0.356 0.343 

CONNECTICUT URBAN 0.277 0.276 

DISTRICT OF COLUMBIA URBAN 0.295 0.279 

DELAWARE URBAN 0.314 0.356 

FLORIDA RURAL 0.185 0.160 

FLORIDA URBAN 0.160 0.160 

GEORGIA RURAL 0.254 0.260 

GEORGIA URBAN 0.211 0.205 

HAWAII RURAL 0.341 0.345 

HAWAII URBAN 0.300 0.298 

IOWA RURAL 0.323 0.308 

IOWA URBAN 0.270 0.266 

IDAHO RURAL 0.361 0.359 

IDAHO URBAN 0.488 0.478 

ILLINOIS RURAL 0.259 0.252 

ILLINOIS URBAN 0.218 0.222 

INDIANA RURAL 0.348 0.326 

INDIANA URBAN 0.284 0.288 

KANSAS RURAL 0.308 0.313 

KANSAS URBAN 0.233 0.239 

KENTUCKY RURAL 0.231 0.221 
CMS-1613-P 219 

State Urban/Rural 

Proposed 

CY 2015 

Default 

CCR 

Previous 

Default CCR 

(CY 2014 

OPPS Final 

Rule) 

KENTUCKY URBAN 0.220 0.225 

LOUISIANA RURAL 0.271 0.257 

LOUISIANA URBAN 0.212 0.222 

MARYLAND RURAL 0.292 0.283 

MARYLAND URBAN 0.249 0.248 

MASSACHUSETTS RURAL 0.300 0.395 

MASSACHUSETTS URBAN 0.330 0.336 

MAINE RURAL 0.434 0.452 

MAINE URBAN 0.426 0.438 

MICHIGAN RURAL 0.339 0.341 

MICHIGAN URBAN 0.322 0.322 

MINNESOTA RURAL 0.469 0.462 

MINNESOTA URBAN 0.357 0.349 

MISSOURI RURAL 0.277 0.263 

MISSOURI URBAN 0.274 0.280 

MISSISSIPPI RURAL 0.237 0.233 

MISSISSIPPI URBAN 0.188 0.200 

MONTANA RURAL 0.520 0.481 

MONTANA URBAN 0.379 0.384 

NORTH CAROLINA RURAL 0.255 0.258 

NORTH CAROLINA URBAN 0.256 0.256 

NORTH DAKOTA RURAL 0.660 0.661 

NORTH DAKOTA URBAN 0.400 0.400 

NEBRASKA RURAL 0.308 0.323 

NEBRASKA URBAN 0.257 0.243 

NEW HAMPSHIRE RURAL 0.272 0.326 

NEW HAMPSHIRE URBAN 0.288 0.287 

NEW JERSEY URBAN 0.207 0.213 

NEW MEXICO RURAL 0.307 0.291 

NEW MEXICO URBAN 0.300 0.304 

NEVADA RURAL 0.244 0.220 

NEVADA URBAN 0.172 0.154 

NEW YORK RURAL 0.332 0.345 

NEW YORK URBAN 0.348 0.351 

OHIO RURAL 0.317 0.327 
CMS-1613-P 220 

State Urban/Rural 

Proposed 

CY 2015 

Default 

CCR 

Previous 

Default CCR 

(CY 2014 

OPPS Final 

Rule) 

OHIO URBAN 0.227 0.232 

OKLAHOMA RURAL 0.281 0.258 

OKLAHOMA URBAN 0.210 0.205 

OREGON RURAL 0.299 0.311 

OREGON URBAN 0.358 0.357 

PENNSYLVANIA RURAL 0.285 0.257 

PENNSYLVANIA URBAN 0.198 0.198 

PUERTO RICO URBAN 0.583 0.614 

RHODE ISLAND URBAN 0.292 0.295 

SOUTH CAROLINA RURAL 0.195 0.190 

SOUTH CAROLINA URBAN 0.199 0.203 

SOUTH DAKOTA RURAL 0.288 0.287 

SOUTH DAKOTA URBAN 0.214 0.219 

TENNESSEE RURAL 0.207 0.207 

TENNESSEE URBAN 0.189 0.190 

TEXAS RURAL 0.247 0.235 

TEXAS URBAN 0.206 0.197 

UTAH RURAL 0.474 0.474 

UTAH URBAN 0.340 0.334 

VIRGINIA RURAL 0.216 0.226 

VIRGINIA URBAN 0.241 0.238 

VERMONT RURAL 0.446 0.456 

VERMONT URBAN 0.401 0.397 

WASHINGTON RURAL 0.300 0.330 

WASHINGTON URBAN 0.365 0.360 

WISCONSIN RURAL 0.335 0.344 

WISCONSIN URBAN 0.298 0.291 

WEST VIRGINIA RURAL 0.320 0.283 

WEST VIRGINIA URBAN 0.319 0.319 

WYOMING RURAL 0.403 0.400 

WYOMING URBAN 0.262 0.269 
CMS-1613-P 221 

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

the Act 

 In the CY 2006 OPPS final rule with comment period (70 FR 68556), we 

finalized a payment increase for rural SCHs of 7.1 percent for all services and procedures 

paid under the OPPS, excluding drugs, biologicals, brachytherapy sources, and devices 

paid under the pass-through payment policy in accordance with section 1833(t)(13)(B) of 

the Act, as added by section 411 of the Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. L. 108-173). Section 1833(t)(13) of the Act 

provided the Secretary the authority to make an adjustment to OPPS payments for rural 

hospitals, effective January 1, 2006, if justified by a study of the difference in costs by 

APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a 

difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a 

payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid 

under the OPPS, excluding separately payable drugs and biologicals, brachytherapy 

sources, and devices paid under the pass-through payment policy, in accordance with 

section 1833(t)(13)(B) of the Act. 

 In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 

68227), for purposes of receiving this rural adjustment, we revised § 419.43(g) of the 

regulations to clarify that EACHs also are eligible to receive the rural SCH adjustment, 

assuming these entities otherwise meet the rural adjustment criteria. Currently, two 

hospitals are classified as EACHs, and as of CY 1998, under section 4201(c) of 

Pub. L. 105-33, a hospital can no longer become newly classified as an EACH. 
CMS-1613-P 222 

 This adjustment for rural SCHs is budget neutral and applied before calculating 

outlier payments and copayments. We stated in the CY 2006 OPPS final rule with 

comment period (70 FR 68560) that we would not reestablish the adjustment amount on 

an annual basis, but we may review the adjustment in the future and, if appropriate, 

would revise the adjustment. We provided the same 7.1 percent adjustment to rural 

SCHs, including EACHs, again in CYs 2008 through 2014. Further, in the CY 2009 

OPPS/ASC final rule with comment period (73 FR 68590), we updated the regulations at 

§ 419.43(g)(4) to specify, in general terms, that items paid at charges adjusted to costs by 

application of a hospital-specific CCR are excluded from the 7.1 percent payment 

adjustment. 

 For the CY 2015 OPPS, we are proposing to continue our policy of a 7.1 percent 

payment adjustment that is done in a budget neutral manner for rural SCHs, including 

EACHs, for all services and procedures paid under the OPPS, excluding separately 

payable drugs and biologicals, devices paid under the pass-through payment policy, and 

items paid at charges reduced to costs. 

F. Proposed OPPS Payment to Certain Cancer Hospitals Described by 

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

1. Background 

 Since the inception of the OPPS, which was authorized by the Balanced Budget 

Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid the 11 hospitals that meet the 

criteria for cancer hospitals identified in section 1886(d)(1)(B)(v) of the Act under the 

OPPS for covered outpatient hospital services. These cancer hospitals are exempted from 
CMS-1613-P 223 

payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget 

Refinement Act of 1999 (Pub. L. 106-113), Congress established section 1833(t)(7) of 

the Act, “Transitional Adjustment to Limit Decline in Payment,” to determine cancer and 

children’s hospitals OPPS payments based on their pre-BBA payment amount (often 

referred to as “held harmless”). 

 As required under section 1833(t)(7)(D)(ii) of the Act, a cancer hospital receives 

the full amount of the difference between payments for covered outpatient services under 

the OPPS and a “pre-BBA amount.” That is, cancer hospitals are permanently held 

harmless to their “pre-BBA amount,” and they receive transitional outpatient payments 

(TOPs) or hold harmless payments to ensure that they do not receive a payment that is 

lower under the OPPS than the payment they would have received before implementation 

of the OPPS, as set forth in section 1833(t)(7)(F) of the Act. The “pre-BBA amount” is 

the product of the hospital’s reasonable costs for covered outpatient services occurring in 

the current year and the base payment-to-cost ratio (PCR) for the hospital defined in 

section 1833(t)(7)(F)(ii) of the Act. The “pre-BBA amount,” including the determination 

of the base PCR, are defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet E, 

Part B, of the Hospital Cost Report or the Hospital Health Care Complex Cost Report 

(Form CMS-2552-96 and Form CMS-2552-10, respectively) as applicable each year. 

Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality calculations. 

 Section 3138 of the Affordable Care Act amended section 1833(t) of the Act by 

adding a new paragraph (18), which instructs the Secretary to conduct a study to 

determine if, under the OPPS, outpatient costs incurred by cancer hospitals described in 
CMS-1613-P 224 

section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed outpatient costs 

incurred by other hospitals furnishing services under section 1833(t) of the Act, as 

determined appropriate by the Secretary. Section 1833(t)(18)(A) of the Act requires the 

Secretary to take into consideration the cost of drugs and biologicals incurred by cancer 

and other hospitals. Section 1833(t)(18)(B) of the Act provides that if the Secretary 

determines that cancer hospitals’ costs are greater than other hospitals’ costs, the 

Secretary shall provide an appropriate adjustment under section 1833(t)(2)(E) of the Act 

to reflect these higher costs. In 2011, after conducting the study required by 

section 1833(t)(18)(A) of the Act, we determined that outpatient costs incurred by the 

11 specified cancer hospitals were greater than the costs incurred by other OPPS 

hospitals. For a complete discussion regarding the cancer hospital cost study, we refer 

readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 through 

74201). 

 Based on these findings, we finalized a policy to provide a payment adjustment to 

the 11 specified cancer hospitals that reflects their higher outpatient costs as discussed in 

the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). 

Specifically, we adopted a policy to provide additional payments to the cancer hospitals 

so that each cancer hospital’s final PCR for services provided in a given calendar year is 

equal to the weighted average PCR (which we refer to as the “target PCR”) for other 

hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and 

is calculated using the most recent submitted or settled cost report data that are available 

at the time of final rulemaking for the calendar year. The amount of the payment 
CMS-1613-P 225 

adjustment is made on an aggregate basis at cost report settlement. We note that the 

changes made by section 1833(t)(18) of the Act do not affect the existing statutory 

provisions that provide for TOPs for cancer hospitals. The TOPs are assessed as usual 

after all payments, including the cancer hospital payment adjustment, have been made for 

a cost reporting period. For CYs 2012 and 2013, the target PCR for purposes of the 

cancer hospital payment adjustment was 0.91. For CY 2014, the target PCR for purposes 

of the cancer hospital payment adjustment was 0.89. 

2. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2015 

 For CY 2015, we are proposing to continue our policy to provide additional 

payments to cancer hospitals so that each cancer hospital’s final PCR is equal to the 

weighted average PCR (or “target PCR”) for the other OPPS hospitals using the most 

recent submitted or settled cost report data that are available at the time of the 

development of this proposed rule. To calculate the proposed CY 2015 target PCR, we 

used the same extract of cost report data from HCRIS, as discussed in section II.A. of this 

proposed rule, used to estimate costs for the CY 2015 OPPS. Using these cost report 

data, we included data from Worksheet E, Part B, for each hospital, using data from each 

hospital’s most recent cost report, whether as submitted or settled. 

 We then limited the dataset to the hospitals with CY 2013 claims data that we 

used to model the impact of the proposed CY 2015 APC relative payment weights (3,881 

hospitals) because it is appropriate to use the same set of hospitals that we are using to 

calibrate the modeled CY 2015 OPPS. The cost report data for the hospitals in this 

dataset were from cost report periods with fiscal year ends ranging from 2012 to 2013. 
CMS-1613-P 226 

We then removed the cost report data of the 47 hospitals located in Puerto Rico from our 

dataset because we do not believe that their cost structure reflects the costs of most 

hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of 

hospital-weighted statistics. We also removed the cost report data of 27 hospitals 

because these hospitals had cost report data that were not complete (missing aggregate 

OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in 

the study would have both the payment and cost data necessary to calculate a PCR for 

each hospital, leading to a proposed analytic file of 3,807 hospitals with cost report data. 

 Using this smaller dataset of cost report data, we estimated that, on average, the 

OPPS payments to other hospitals furnishing services under the OPPS are approximately 

89 percent of reasonable cost (weighted average PCR of 0.89). Therefore, we are 

proposing that the payment amount associated with the cancer hospital payment 

adjustment to be determined at cost report settlement would be the additional payment 

needed to result in a proposed target PCR equal to 0.89 for each cancer hospital. 

 Table 13 below indicates the estimated percentage increase in OPPS payments to 

each cancer hospital for CY 2015 due to the cancer hospital payment adjustment policy. 

The actual amount of the CY 2015 cancer hospital payment adjustment for each cancer 

hospital will be determined at cost report settlement and will depend on each hospital’s 

CY 2015 payments and costs. We note that the changes made by section 1833(t)(18) of 

the Act do not affect the existing statutory provisions that provide for TOPs for cancer 

hospitals. The TOPs will be assessed as usual after all payments, including the cancer 

hospital payment adjustment, have been made for a cost reporting period. 
CMS-1613-P 227 

TABLE 13.—ESTIMATED CY 2015 HOSPITAL-SPECIFIC PAYMENT 

ADJUSTMENT FOR CANCER HOSPITALS TO BE PROVIDED AT COST 

REPORT SETTLEMENT 

Provider 

Number Hospital Name 

Estimated 

Percentage 

Increase in 

OPPS 

Payments 

for CY 

2015 

050146 City of Hope Comprehensive Cancer Center 15.5 

050660 USC Norris Cancer Hospital 22.0 

100079 Sylvester Comprehensive Cancer Center 15.8 

100271 H. Lee Moffitt Cancer Center & Research Institute 19.9 

220162 Dana-Farber Cancer Institute 47.6 

330154 Memorial Sloan-Kettering Cancer Center 45.7 

330354 Roswell Park Cancer Institute 16.6 

360242 James Cancer Hospital & Solove Research Institute 35.1 

390196 Fox Chase Cancer Center 18.5 

450076 M.D. Anderson Cancer Center 60.1 

500138 Seattle Cancer Care Alliance 53.3 

G. Proposed Hospital Outpatient Outlier Payments 

1. Background 

 The OPPS provides outlier payments to hospitals to help mitigate the financial 

risk associated with high-cost and complex procedures, where a very costly service could 

present a hospital with significant financial loss. As explained in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 74958 through 74960), we set our 

projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate 

total payments under the OPPS for the prospective year. Outlier payments are provided 
CMS-1613-P 228 

on a service-by-service basis when the cost of a service exceeds the APC payment 

amount multiplier threshold (the APC payment amount multiplied by a certain amount) 

as well as the APC payment amount plus a fixed-dollar amount threshold (the APC 

payment plus a certain amount of dollars). In CY 2014, the outlier threshold was met 

when the hospital’s cost of furnishing a service exceeded 1.75 times (the multiplier 

threshold) the APC payment amount and exceeded the APC payment amount plus $2,900 

(the fixed-dollar amount threshold). If the cost of a service exceeds both the multiplier 

threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of 

the amount by which the cost of furnishing the service exceeds 1.75 times the APC 

payment amount. Beginning with CY 2009 payments, outlier payments are subject to a 

reconciliation process similar to the IPPS outlier reconciliation process for cost reports, 

as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 

through 68599). 

 It has been our policy to report the actual amount of outlier payments as a percent 

of total spending in the claims being used to model the proposed OPPS. Our current 

estimate of total outlier payments as a percent of total CY 2013 OPPS payment, using 

available CY 2013 claims and the revised OPPS expenditure estimate for the FY 2015 

President’s Budget, is approximately 1.2 percent of the total aggregated OPPS payments. 

Therefore, for CY 2013, we estimate that we paid 0.2 percent above the CY 2013 outlier 

target of 1.0 percent of total aggregated OPPS payments. 

 Using CY 2013 claims data and CY 2014 payment rates, we currently estimate 

that the aggregate outlier payments for CY 2014 will be approximately 0.9 percent of the 
CMS-1613-P 229 

total CY 2014 OPPS payments. The difference between 0.9 percent and the 1.0 percent 

target is reflected in the regulatory impact analysis in section XXII. of this proposed rule. 

We provide estimated CY 2015 outlier payments for hospitals and CMHCs with claims 

included in the claims data that we used to model impacts in the Hospital–Specific 

Impacts - Provider-Specific Data file on the CMS Web site at: 

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

2. Proposed Outlier Calculation 

 For CY 2015, we are proposing to continue our policy of estimating outlier 

payments to be 1.0 percent of the estimated aggregate total payments under the OPPS. 

We are proposing that a portion of that 1.0 percent, an amount equal to 0.47 percent of 

outlier payments (or 0.0047 percent of total OPPS payments) would be allocated to 

CMHCs for PHP outlier payments. This is the amount of estimated outlier payments that 

would result from the proposed CMHC outlier threshold as a proportion of total 

estimated OPPS outlier payments. As discussed in section VIII.D. of this proposed rule, 

for CMHCs, we are proposing to continue our longstanding policy that if a CMHC’s cost 

for partial hospitalization services, paid under either APC 0172 (Level I Partial 

Hospitalization (3 services) for CMHCs) or APC 0173 (Level II Partial Hospitalization (4 

or more services) for CMHCs), exceeds 3.40 times the payment rate for APC 0173, the 

outlier payment would be calculated as 50 percent of the amount by which the cost 

exceeds 3.40 times the APC 0173 payment rate. For further discussion of CMHC outlier 

payments, we refer readers to section VIII.D. of this proposed rule. 
CMS-1613-P 230 

 To ensure that the estimated CY 2015 aggregate outlier payments would equal 

1.0 percent of estimated aggregate total payments under the OPPS, we are proposing that 

the hospital outlier threshold be set so that outlier payments would be triggered when a 

hospital’s cost of furnishing a service exceeds 1.75 times the APC payment amount and 

exceeds the APC payment amount plus $3,100. 

 We calculated the proposed fixed-dollar threshold of $3,100 using the standard 

methodology most recently used for CY 2014 (78 FR 74959 through 74960). For 

purposes of estimating outlier payments for this proposed rule, we used the 

hospital-specific overall ancillary CCRs available in the April 2014 update to the 

Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, 

such as the most current CCRs, which are maintained by the Medicare contractors and 

used by the OPPS Pricer to pay claims. The claims that we use to model each OPPS 

update lag by 2 years. 

 In order to estimate the CY 2015 hospital outlier payments for this proposed rule, 

we inflated the charges on the CY 2013 claims using the same inflation factor of 1.1146 

that we used to estimate the IPPS fixed-dollar outlier threshold for the FY 2015 

IPPS/LTCH PPS proposed rule (79 FR 28321). We used an inflation factor of 1.0557 to 

estimate CY 2014 charges from the CY 2013 charges reported on CY 2013 claims. The 

methodology for determining this charge inflation factor is discussed in the FY 2015 

IPPS/LTCH PPS proposed rule (79 FR 28321). As we stated in the CY 2005 OPPS final 

rule with comment period (69 FR 65845), we believe that the use of these charge 

inflation factors are appropriate for the OPPS because, with the exception of the inpatient 
CMS-1613-P 231 

routine service cost centers, hospitals use the same ancillary and outpatient cost centers to 

capture costs and charges for inpatient and outpatient services. 

 As noted in the CY 2007 OPPS/ASC final rule with comment period 

(71 FR 68011), we are concerned that we could systematically overestimate the OPPS 

hospital outlier threshold if we did not apply a CCR inflation adjustment factor. 

Therefore, we are proposing to apply the same CCR inflation adjustment factor that we 

are proposing to apply for the FY 2015 IPPS outlier calculation to the CCRs used to 

simulate the proposed CY 2015 OPPS outlier payments to determine the fixed-dollar 

threshold. Specifically, for CY 2015, we are proposing to apply an adjustment factor of 

0.9813 to the CCRs that were in the April 2014 OPSF to trend them forward from 

CY 2014 to CY 2015. The methodology for calculating this proposed adjustment was 

discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321). 

 To model hospital outlier payments for this proposed rule, we applied the overall 

CCRs from the April 2014 OPSF file after adjustment (using the proposed CCR inflation 

adjustment factor of 0.9813 to approximate CY 2015 CCRs) to charges on CY 2013 

claims that were adjusted (using the proposed charge inflation factor of 1.1146 to 

approximate CY 2015 charges). We simulated aggregated CY 2015 hospital outlier 

payments using these costs for several different fixed-dollar thresholds, holding the 

1.75 multiple threshold constant and assuming that outlier payments would continue to be 

made at 50 percent of the amount by which the cost of furnishing the service would 

exceed 1.75 times the APC payment amount, until the total outlier payments equaled 

1.0 percent of aggregated estimated total CY 2015 OPPS payments. We estimated that a 
CMS-1613-P 232 

proposed fixed-dollar threshold of $3,100, combined with the proposed multiple 

threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated 

total OPPS payments to outlier payments. For CMHCs, we are proposing that, if a 

CMHC’s cost for partial hospitalization services, paid under either APC 0172 or APC 

0173, exceeds 3.40 times the payment rate for APC 0173, the outlier payment would be 

calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 

0173 payment rate. 

 Section 1833(t)(17)(A) of the Act, which applies to hospitals as defined under 

section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required 

for the quality measures selected by the Secretary, in the form and manner required by 

the Secretary under 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to 

their OPD fee schedule increase factor, that is, the annual payment update factor. The 

application of a reduced OPD fee schedule increase factor results in reduced national 

unadjusted payment rates that will apply to certain outpatient items and services 

furnished by hospitals that are required to report outpatient quality data and that fail to 

meet the Hospital OQR Program requirements. For hospitals that fail to meet the 

Hospital OQR Program requirements, we are proposing to continue the policy that we 

implemented in CY 2010 that the hospitals’ costs will be compared to the reduced 

payments for purposes of outlier eligibility and payment calculation. For more 

information on the Hospital OQR Program, we refer readers to section XIII. of this 

proposed rule.
CMS-1613-P 233 

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

Unadjusted Medicare Payment 

 The basic methodology for determining prospective payment rates for HOPD 

services under the OPPS is set forth in existing regulations at 42 CFR Part 419, Subparts 

C and D. For this CY 2015 OPPS/ASC proposed rule, the payment rate for most services 

and procedures for which payment is made under the OPPS is the product of the 

conversion factor calculated in accordance with section II.B. of this proposed rule and the 

relative payment weight determined under section II.A. of this proposed rule. Therefore, 

the proposed national unadjusted payment rate for most APCs contained in Addendum A 

to this proposed rule (which is available via the Internet on the CMS Web site) and for 

most HCPCS codes to which separate payment under the OPPS has been assigned in 

Addendum B to this proposed rule (which is available via the Internet on the CMS Web 

site) was calculated by multiplying the proposed CY 2015 scaled weight for the APC by 

the proposed CY 2015 conversion factor. 

 We note that section 1833(t)(17) of the Act, which applies to hospitals as defined 

under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to submit data 

required to be submitted on quality measures selected by the Secretary, in the form and 

manner and at a time specified by the Secretary, incur a reduction of 2.0 percentage 

points to their OPD fee schedule increase factor, that is, the annual payment update 

factor. The application of a reduced OPD fee schedule increase factor results in reduced 

national unadjusted payment rates that apply to certain outpatient items and services 

provided by hospitals that are required to report outpatient quality data and that fail to 
CMS-1613-P 234 

meet the Hospital OQR Program (formerly referred to as the Hospital Outpatient Quality 

Data Reporting Program (HOP QDRP)) requirements. For further discussion of the 

payment reduction for hospitals that fail to meet the requirements of the Hospital OQR 

Program, we refer readers to section XIII. of this proposed rule. 

 We demonstrate in the steps below how to determine the APC payments that will 

be made in a calendar year under the OPPS to a hospital that fulfills the Hospital OQR 

Program requirements and to a hospital that fails to meet the Hospital OQR Program 

requirements for a service that has any of the following status indicator assignments: 

“J1,” “P,” “Q1,” “Q2,” “Q3,” “R,” “S,” “T,” “U,” or “V,” (as defined in Addendum D1 to 

this proposed rule), in a circumstance in which the multiple procedure discount does not 

apply, the procedure is not bilateral, and conditionally packaged services (status indicator 

of “Q1” and “Q2”) qualify for separate payment. We note that, although blood and blood 

products with status indicator “R” and brachytherapy sources with status indicator “U” 

are not subject to wage adjustment, they are subject to reduced payments when a hospital 

fails to meet the Hospital OQR Program requirements. We note that we are also 

proposing to create new status indicator “J1” to reflect the proposed comprehensive 

APCs discussed in section II.A.2.e. of this proposed rule. We also note that we are 

proposing to delete status indicator “X” as part of the CY 2015 packaging proposal for 

ancillary services, discussed in section II.A.3. of this proposed rule. 

 Individual providers interested in calculating the payment amount that they would 

receive for a specific service from the national unadjusted payment rates presented in 

Addenda A and B to this proposed rule (which are available via the Internet on the CMS 
CMS-1613-P 235 

Web site) should follow the formulas presented in the following steps. For purposes of 

the payment calculations below, we refer to the proposed national unadjusted payment 

rate for hospitals that meet the requirements of the Hospital OQR Program as the “full” 

national unadjusted payment rate. We refer to the proposed national unadjusted payment 

rate for hospitals that fail to meet the requirements of the Hospital OQR Program as the 

“reduced” national unadjusted payment rate. The reduced national unadjusted payment 

rate is calculated by multiplying the proposed reporting ratio of 0.980 times the “full” 

national unadjusted payment rate. The national unadjusted payment rate used in the 

calculations below is either the full national unadjusted payment rate or the reduced 

national unadjusted payment rate, depending on whether the hospital met its Hospital 

OQR Program requirements in order to receive the proposed full CY 2015 OPPS fee 

schedule increase factor of 2.1 percent. 

 Step 1. Calculate 60 percent (the labor-related portion) of the national unadjusted 

payment rate. Since the initial implementation of the OPPS, we have used 60 percent to 

represent our estimate of that portion of costs attributable, on average, to labor. We refer 

readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 through 

18497) for a detailed discussion of how we derived this percentage. During our 

regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS 

final rule with comment period (70 FR 68553), we confirmed that this labor-related share 

for hospital outpatient services is appropriate. 

 The formula below is a mathematical representation of Step 1 and identifies the 

labor-related portion of a specific payment rate for a specific service. 
CMS-1613-P 236 

X is the labor-related portion of the national unadjusted payment rate. 

X = .60 * (national unadjusted payment rate). 

 Step 2. Determine the wage index area in which the hospital is located and 

identify the wage index level that applies to the specific hospital. We note that under the 

proposed CY 2015 OPPS policy for transitioning wage indexes into the new OMB labor 

market area delineations, a hold harmless policy for the wage index may apply, as 

discussed in section II.C. of this proposed rule. The wage index values assigned to each 

area reflect the geographic statistical areas (which are based upon OMB standards) to 

which hospitals are assigned for FY 2015 under the IPPS, reclassifications through the 

MGCRB, section 1886(d)(8)(B) “Lugar” hospitals, reclassifications under section 

1886(d)(8)(E) of the Act, as defined in § 412.103 of the regulations, and hospitals 

designated as urban under section 601(g) of Pub. L. 98-21. (For further discussion of the 

proposed changes to the FY 2015 IPPS wage indices, as applied to the CY 2015 OPPS, 

we refer readers to section II.C. of this proposed rule.) We are proposing to continue to 

apply a wage index floor of 1.00 to frontier States, in accordance with section 10324 of 

the Affordable Care Act of 2010. 

 Step 3. Adjust the wage index of hospitals located in certain qualifying counties 

that have a relatively high percentage of hospital employees who reside in the county, but 

who work in a different county with a higher wage index, in accordance with section 505 

of Pub. L. 108-173. Addendum L to this proposed rule (which is available via the 

Internet on the CMS Web site) contains the qualifying counties and the proposed 

associated wage index increase developed for the FY 2015 IPPS and listed as Table 4J in 
CMS-1613-P 237 

the FY 2015 IPPS/LTCH PPS proposed rule and available via the Internet on the CMS 

Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/index.html. This step is to be followed only if the hospital is 

not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the 

Act. 

 Step 4. Multiply the applicable wage index determined under Steps 2 and 3 by 

the amount determined under Step 1 that represents the labor-related portion of the 

national unadjusted payment rate. 

 The formula below is a mathematical representation of Step 4 and adjusts the 

labor-related portion of the national unadjusted payment rate for the specific service by 

the wage index. 

Xa

 is the labor-related portion of the national unadjusted payment rate (wage adjusted). 

Xa = .60 * (national unadjusted payment rate) * applicable wage index. 

 Step 5. Calculate 40 percent (the nonlabor-related portion) of the national 

unadjusted payment rate and add that amount to the resulting product of Step 4. The 

result is the wage index adjusted payment rate for the relevant wage index area. 

 The formula below is a mathematical representation of Step 5 and calculates the 

remaining portion of the national payment rate, the amount not attributable to labor, and 

the adjusted payment for the specific service.

Y is the nonlabor-related portion of the national unadjusted payment rate. 

Y = .40 * (national unadjusted payment rate). 

Adjusted Medicare Payment = Y + Xa. 
CMS-1613-P 238 

 Step 6. If a provider is an SCH, set forth in the regulations at § 412.92, or an 

EACH, which is considered to be an SCH under section 1886(d)(5)(D)(iii)(III) of the 

Act, and located in a rural area, as defined in § 412.64(b), or is treated as being located in 

a rural area under § 412.103, multiply the wage index adjusted payment rate by 1.071 to 

calculate the total payment. 

 The formula below is a mathematical representation of Step 6 and applies the 

rural adjustment for rural SCHs. 

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

 We have provided examples below of the calculation of both the proposed full 

and reduced national unadjusted payment rates that would apply to certain outpatient 

items and services performed by hospitals that meet and that fail to meet the Hospital 

OQR Program requirements, using the steps outlined above. For purposes of this 

example, we used a provider that is located in Brooklyn, New York that is assigned to 

CBSA 35614. This provider bills one service that is assigned to APC 0019 (Level I 

Excision/Biopsy). The proposed CY 2015 full national unadjusted payment rate for 

APC 0019 is approximately $380.32. The proposed reduced national unadjusted 

payment rate for APC 0019 for a hospital that fails to meet the Hospital OQR Program 

requirements is approximately $372.71. This proposed reduced rate is calculated by 

multiplying the proposed reporting ratio of 0.980 by the full unadjusted payment rate for 

APC 0019. 

 The proposed FY 2015 wage index for a provider located in CBSA 35614 in New 

York is 1.3014. This is based on the proposed 1-year 50/50 transition blend between the 
CMS-1613-P 239 

wage index under the old CBSA 35644 (1.3147) and the wage index under the new 

CBSA 35614 (1.2881). The labor-related portion of the proposed full national unadjusted 

payment is approximately $296.97 (.60 * $380.32 * 1.3014). The labor-related portion of 

the proposed reduced national unadjusted payment is approximately $291.03 (.60 * 

$372.71 * 1.3014). The nonlabor-related portion of the proposed full national unadjusted 

payment is approximately $152.13 (.40 * $380.32). The nonlabor-related portion of the 

proposed reduced national unadjusted payment is approximately $149.08 (40 * $372.71). 

The sum of the labor-related and nonlabor-related portions of the proposed full national 

adjusted payment is approximately $449.10 ($296.97 + $152.13). The sum of the 

proposed reduced national adjusted payment is approximately $440.11 ($291.03 + 

$149.08). 

I. Proposed Beneficiary Copayments 

1. Background 

 Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining 

the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. 

Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national 

unadjusted copayment amount for a covered OPD service (or group of such services) 

furnished in a year in a manner so that the effective copayment rate (determined on a 

national unadjusted basis) for that service in the year does not exceed a specified 

percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective 

copayment rate for a covered OPD service paid under the OPPS in CY 2006, and in 

calendar years thereafter, shall not exceed 40 percent of the APC payment rate.
CMS-1613-P 240 

 Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or 

group of such services) furnished in a year, the national unadjusted copayment amount 

cannot be less than 20 percent of the OPD fee schedule amount. However, section 

1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be 

collected for a procedure performed in a year to the amount of the inpatient hospital 

deductible for that year. 

 Section 4104 of the Affordable Care Act eliminated the Part B coinsurance for 

preventive services furnished on and after January 1, 2011, that meet certain 

requirements, including flexible sigmoidoscopies and screening colonoscopies, and 

waived the Part B deductible for screening colonoscopies that become diagnostic during 

the procedure. Our discussion of the changes made by the Affordable Care Act with 

regard to copayments for preventive services furnished on and after January 1, 2011, may 

be found in section XII.B. of the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72013). 

2. Proposed OPPS Copayment Policy 

 For CY 2015, we are proposing to determine copayment amounts for new and 

revised APCs using the same methodology that we implemented beginning in CY 2004. 

(We refer readers to the November 7, 2003 OPPS final rule with comment period 

(68 FR 63458).) In addition, we are proposing to use the same standard rounding 

principles that we have historically used in instances where the application of our 

standard copayment methodology would result in a copayment amount that is less than 

20 percent and cannot be rounded, under standard rounding principles, to 20 percent. 
CMS-1613-P 241 

(We refer readers to the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66687) in which we discuss our rationale for applying these rounding principles.) 

The proposed national unadjusted copayment amounts for services payable under the 

OPPS that would be effective January 1, 2015, are shown in Addenda A and B to this 

proposed rule (which are available via the Internet on the CMS Web site). As discussed 

in section XII.G. of this proposed rule, for CY 2015, the proposed Medicare beneficiary’s 

minimum unadjusted copayment and national unadjusted copayment for a service to 

which a reduced national unadjusted payment rate applies will equal the product of the 

reporting ratio and the national unadjusted copayment, or the product of the reporting 

ratio and the minimum unadjusted copayment, respectively, for the service. 

 We note that OPPS copayments may increase or decrease each year based on 

changes in the calculated APC payment rates due to updated cost report and claims data, 

and any changes to the OPPS cost modeling process. However, as described in the 

CY 2004 OPPS/ASC final rule with comment period, the development of the copayment 

methodology generally moves beneficiary copayments closer to 20 percent of OPPS APC 

payments (68 FR 63458 through 63459). 

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

 Individuals interested in calculating the national copayment liability for a 

Medicare beneficiary for a given service provided by a hospital that met or failed to meet 

its Hospital OQR Program requirements should follow the formulas presented in the 

following steps. 
CMS-1613-P 242 

 Step 1. Calculate the beneficiary payment percentage for the APC by dividing the 

APC’s national unadjusted copayment by its payment rate. For example, using 

APC 0019, approximately $76.07 is 20 percent of the proposed full national unadjusted 

payment rate of approximately $380.32. For APCs with only a minimum unadjusted 

copayment in Addenda A and B to this proposed rule (which are available via the Internet 

on the CMS Web site), the beneficiary payment percentage is 20 percent. 

 The formula below is a mathematical representation of Step 1 and calculates the 

national copayment as a percentage of national payment for a given service. 

B is the beneficiary payment percentage. 

B = National unadjusted copayment for APC/national unadjusted payment rate for APC. 

 Step 2. Calculate the appropriate wage-adjusted payment rate for the APC for the 

provider in question, as indicated in Steps 2 through 4 under section II.H. of this 

proposed rule. Calculate the rural adjustment for eligible providers as indicated in Step 6 

under section II.H. of this proposed rule. 

 Step 3. Multiply the percentage calculated in Step 1 by the payment rate 

calculated in Step 2. The result is the wage-adjusted copayment amount for the APC.

 The formula below is a mathematical representation of Step 3 and applies the 

beneficiary payment percentage to the adjusted payment rate for a service calculated 

under section II.H. of this proposed rule, with and without the rural adjustment, to 

calculate the adjusted beneficiary copayment for a given service. 

 Wage-adjusted copayment amount for the APC = Adjusted Medicare 

Payment * B. 
CMS-1613-P 243 

 Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted 

Medicare Payment * 1.071) * B. 

 Step 4. For a hospital that failed to meet its Hospital OQR Program requirements, 

multiply the copayment calculated in Step 3 by the proposed reporting ratio of 0.980. 

 The proposed unadjusted copayments for services payable under the OPPS that 

would be effective January 1, 2015, are shown in Addenda A and B to this proposed rule 

(which are available via the Internet on the CMS Web site). We note that the proposed 

national unadjusted payment rates and copayment rates shown in Addenda A and B to 

this proposed rule reflect the proposed full CY 2015 OPD fee schedule increase factor 

discussed in section II.B. of this proposed rule. 

 In addition, as noted above, section 1833(t)(8)(C)(i) of the Act limits the amount 

of beneficiary copayment that may be collected for a procedure performed in a year to the 

amount of the inpatient hospital deductible for that year. 

III. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies

A. OPPS Treatment of New CPT and Level II HCPCS Codes 

 CPT and Level II HCPCS codes are used to report procedures, services, items, 

and supplies under the hospital OPPS. Specifically, CMS recognizes the following codes 

on OPPS claims: 

● Category I CPT codes, which describe surgical procedures and medical 

services; 

● Category III CPT codes, which describe new and emerging technologies, 

services, and procedures; and 
CMS-1613-P 244 

● Level II HCPCS codes, which are used primarily to identify products, supplies, 

temporary procedures, and services not described by CPT codes. 

 CPT codes are established by the American Medical Association (AMA) and the 

Level II HCPCS codes are established by the CMS HCPCS Workgroup. These codes are 

updated and changed throughout the year. CPT and HCPCS code changes that affect the 

OPPS are published both through the annual rulemaking cycle and through the OPPS 

quarterly update Change Requests (CRs). CMS releases new Level II HCPCS codes to 

the public or recognizes the release of new CPT codes by the AMA and makes these 

codes effective (that is, the codes can be reported on Medicare claims) outside of the 

formal rulemaking process via OPPS quarterly update CRs. Based on our review, we 

assign the new CPT and Level II HCPCS codes to interim status indicator (SI) and APC 

assignments. These interim assignments are finalized in the OPPS/ASC final rules. This 

quarterly process offers hospitals access to codes that may more accurately describe items 

or services furnished and provides payment or more accurate payment for these items or 

services in a timelier manner than if we waited for the annual rulemaking process. We 

solicit public comments on these new codes and finalize our proposals related to these 

codes through our annual rulemaking process. 

 We note that, under the OPPS, the APC assignment determines the payment rate 

for an item, procedure, or service. For those items, procedures, or services not paid 

separately under the hospital OPPS, they are assigned to appropriate status indicators. 

Section XI. of this proposed rule provides a discussion of the various status indicators 
CMS-1613-P 245 

used under the OPPS. Certain payment indicators provide separate payment while others 

do not. 

 In Table 14 below, we summarize our current process for updating codes through 

our OPPS quarterly update CRs, seeking public comments, and finalizing the treatment of 

these new codes under the OPPS. We note that because the payment rates associated 

with codes that are effective July 1 are not available to us in time for incorporation into 

the Addenda of this proposed rule, the Level II HCPCS codes and the Category III CPT 

codes implemented through the July 2014 OPPS quarterly update CR could not be 

included in Addendum B to this proposed rule (which is available via the Internet on the 

CMS Web site). New and revised codes that were implemented through the April 2014 

OPPS quarterly update are included in Addendum B. Nevertheless, we are requesting 

public comments on the codes included in the July 2014 OPPS quarterly update and 

including these codes in the preamble of this proposed rule (we refer readers to Table 16 

for the July 2014 HCPCS codes). 
CMS-1613-P 246 

TABLE 14.—COMMENT TIMEFRAME FOR NEW OR REVISED HCPCS 

CODES 

OPPS 

Quarterly 

Update CR 

Type of Code Effective Date Comments 

Sought When Finalized 

April l, 2014 Level II HCPCS 

Codes April 1, 2014 

CY 2015 

OPPS/ASC 

proposed rule 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

July 1, 2014 

Level II HCPCS 

Codes July 1, 2014 

CY 2015 

OPPS/ASC 

proposed rule 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

Category I 

(certain vaccine 

codes) and III 

CPT codes 

July 1, 2014 

CY 2015 

OPPS/ASC 

proposed rule 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

October 1, 2014 Level II HCPCS 

Codes October 1, 2014

CY 2015 

OPPS/ASC final 

rule with 

comment period 

CY 2016 

OPPS/ASC final 

rule with 

comment period 

January 1, 2015 

Level II HCPCS 

Codes January 1, 2015 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

CY 2016 

OPPS/ASC final 

rule with 

comment period 

Category I and 

III CPT Codes January 1, 2015 

CY 2015 

OPPS/ASC final 

rule with 

comment period 

CY 2016 

OPPS/ASC final 

rule with 

comment period 

 This process is discussed in detail below. We have separated our discussion into 

two sections based on whether we are soliciting public comments in this CY 2015 

OPPS/ASC proposed rule or whether we will be soliciting public comments in the 

CY 2015 OPPS/ASC final rule with comment period. We note that we sought public 
CMS-1613-P 247 

comments in the CY 2014 OPPS/ASC final rule with comment period on the interim 

APC and status assignments for new CPT and Level II HCPCS codes that were effective 

January 1, 2014. We also sought public comments in the CY 2014 OPPS/ASC final rule 

with comment period on the interim APC and status assignments for new Level II 

HCPCS codes that became effective October 1, 2013. These new and revised codes, with 

an effective date of October 1, 2013, or January 1, 2014, were flagged with comment 

indicator “NI” (New code, interim APC assignment; comments will be accepted on the 

interim APC assignment for the new code) in Addendum B to the CY 2014 OPPS/ASC 

final rule with comment period to indicate that we were assigning them an interim 

payment status and an APC and payment rate, if applicable, and were subject to public 

comment following publication of the CY 2014 OPPS/ASC final rule with comment 

period. We will respond to public comments and finalize our interim OPPS treatment of 

these codes in the CY 2015 OPPS/ASC final rule with comment period. 

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

April 1, 2014 and July 1, 2014 for Which We Are Soliciting Public Comments in This 

CY 2015 OPPS/ASC Proposed Rule 

 Through the April 2014 OPPS quarterly update CR (Transmittal 2903, Change 

Request 8653, dated March 11, 2014), and the July 2014 OPPS quarterly update CR 

(Transmittal 2971, Change Request 8776, dated May 23, 2014), we recognized several 

new HCPCS codes for separate payment under the OPPS. 

 Effective April 1, 2014, we made effective four new Level II HCPCS codes and 

also assigned them to appropriate interim OPPS status indicators and APCs. Through the 
CMS-1613-P 248 

April 2014 OPPS quarterly update CR, we allowed separate payment for three of the four 

new Level II HCPCS codes. Specifically, as displayed in Table 15 below, we provided 

separate payment for HCPCS codes C9021, C9739, and C9740. HCPCS code Q2052 

was assigned to status indicator “N” to indicate that this service is packaged under the 

OPPS.

TABLE 15.—NEW LEVEL II HCPCS CODES 

IMPLEMENTED IN APRIL 2014 

CY 2014 

HCPCS 

Code 

CY 2014 Long Descriptor 

Proposed 

CY 2015 

Status 

Indicator 

Proposed 

CY 2015 

APC 

C9021* Injection, obinutuzumab, 10 mg G 1476 

C9739 Cystourethroscopy, with insertion of 

transprostatic implant; 1 to 3 implants T 0162 

C9740 Cystourethroscopy, with insertion of 

transprostatic implant; 4 or more implants T 1564 

Q2052 

Services, supplies and accessories used in the 

home under the Medicare intravenous immune 

globulin (ivig) demonstration 

N N/A 

*The proposed payment rate for HCPCS code C9021 is based on published wholesale acquisition cost 

(PWAC) +6 percent.

 In this CY 2015 OPPS/ASC proposed rule, we are soliciting public comments on 

the proposed APC and status indicator assignments, where applicable, for the Level II 

HCPCS codes listed in Table 15 of this proposed rule. The proposed payment rates for 

these codes, where applicable, can be found in Addendum B to this proposed rule (which 

is available via the Internet on the CMS Web site). 

 Effective July 1, 2014, we made effective several new CPT and Level II HCPCS 

codes and also assigned them to appropriate interim OPPS status indicators and APCs. 
CMS-1613-P 249 

Through the July 2014 OPPS quarterly update CR, we allowed separate payment under 

the OPPS for four new Level II HCPCS codes and 17 new Category III CPT codes 

effective July 1, 2014. Specifically, as displayed in Table 16 below, we allowed separate 

payment for HCPCS codes C2644, C9022, C9134, and Q9970. We note that HCPCS 

code Q9970 replaced HCPCS code C9441 (Injection, ferric carboxymaltose, 1 mg), 

beginning July 1, 2014. HCPCS code C9441 was made effective January 1, 2014, but the 

code was deleted June 30, 2014, because it was replaced with HCPCS code Q9970. 

HCPCS code C9441 was granted pass-through payment status when the code was 

implemented on January 1, 2014. Because HCPCS code Q9970 describes the same drug 

as HCPCS code C9441, we are proposing to continue the pass-through payment status for 

HCPCS code Q9970, and assign the HCPCS Q-code to the same APC and status 

indicator as its predecessor HCPCS C-code, as shown in Table 16. Specifically, we are 

proposing to assign HCPCS code Q9970 to APC 9441 (Inj, Ferric Carboxymaltose) and 

status indicator “G.” 

 In addition, the HCPCS Workgroup established HCPCS code Q9974, effective 

July 1, 2014, to replace HCPCS codes J2271 (Injection, morphine sulfate, 100mg) and 

J2275 (Injection, morphine sulfate (preservative-free sterile solution), per 10 mg). Both 

of these HCPCS J-codes were assigned to status indicator “N” (Packaged Services). As a 

result of the establishment of new HCPCS code Q9974 as a replacement for HCPCS 

codes J2271 and J2275, the payment indicator for HCPCS codes J2271 and J2275 was 

changed to “E” (Not Payable by Medicare), effective July 1, 2014. Also, because 

HCPCS code Q9974 describes the same services that were described by HCPCS codes 
CMS-1613-P 250 

J2271 and J2275, we are proposing to continue to assign HCPCS code Q9974 to the same 

status indicator as its predecessor HCPCS J-codes. Specifically, we are proposing to 

assign HCPCS code Q9974 to status indicator “N,” effective July 1, 2014. 

 We are proposing to assign the Level II HCPCS codes listed in Table 16 to the 

specified proposed APCs and status indicators set forth in Table 16 of this proposed rule. 

This table, presented below, includes a complete list of the Level II HCPCS codes that 

were made effective July 1, 2014. The codes that were made effective July 1, 2014, do 

not appear in Addendum B to this proposed rule, and as a result, the proposed payment 

rates along with the proposed status indicators and proposed APC assignments, where 

applicable, for CY 2015 are provided in Table 16. 

TABLE 16.—NEW LEVEL II HCPCS CODES 

IMPLEMENTED IN JULY 2014 

CY 2014 

HCPCS 

Code CY 2014 Long Descriptor 

Proposed 

CY 2015 

Status 

Indicator

Proposed 

CY 2015 

APC 

Proposed 

CY 2015 

Payment 

Rate 

C2644 Brachytherapy source, cesium-131 

chloride solution, per millicurie U 2644 $18.97 

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

C9134* 

Factor XIII (antihemophilic factor, 

recombinant), Tretten, per 10 i.u. G 1481 $14.10 

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

Q9974*** 

Injection, morphine sulfate, 

preservative-free for epidural or 

intrathecal use, 10 mg 

N N/A N/A 

*The proposed payment rates for HCPCS code C9022 and C9134 are based on ASP+6 percent. 

**HCPCS code C9441 (Injection, ferric carboxymaltose, 1 mg) was deleted June 30, 2014, and replaced 

with HCPCS code Q9970, effective July 1, 2014. 

***HCPCS codes J2271 (Injection, morphine sulfate, 100mg) and J2275 (Injection, morphine sulfate 

(preservative-free sterile solution), per 10 mg) were replaced with HCPCS code Q9974, effective 
CMS-1613-P 251 

July 1, 2014. Consequently, the payment indicator assignment for HCPCS codes J2271 and J2275 was 

changed to” E” (Not Payable by Medicare), effective July 1, 2014. 

 For CY 2015, we are proposing to continue our established policy of recognizing 

Category I CPT vaccine codes for which FDA approval is imminent and Category III 

CPT codes that the AMA releases in January of each year for implementation in July 

through the OPPS quarterly update process. Under the OPPS, Category I CPT vaccine 

codes and Category III CPT codes that are released on the AMA Web site in January are 

made effective in July of the same year through the July quarterly update CR, consistent 

with the AMA’s implementation date for the codes. For the July 2014 update, there were 

no new Category I CPT vaccine codes. 

 Through the July 2014 OPPS quarterly update CR (Transmittal 2971, Change 

Request 8776, dated May 23, 2014), we assigned interim OPPS status indicators and 

APCs for 17 of 27 new Category III CPT codes that were made effective July 1, 2014. 

Specifically, as displayed in Table 17 below, we made interim OPPS status indicators and 

APC assignments for Category III CPT codes 0347T, 0348T, 0349T, 0350T, 0355T, 

0356T, 0358T, 0359T, 0360T, 0362T, 0364T, 0366T, 0368T, 0370T, 0371T, 0372T, and 

0373T. Table 17 below lists the Category III CPT codes that were implemented on 

July 1, 2014, along with the proposed status indicators, proposed APC assignments, and 

proposed payment rates, where applicable, for CY 2015. 
CMS-1613-P 252 

TABLE 17.—NEW CATEGORY III CPT CODES IMPLEMENTED 

IN JULY 2014 

CY 2014 

CPT 

Code

CY 2014 Long Descriptor

Proposed 

CY 2015 

Status 

Indicator

Proposed 

CY 2015 

APC

Proposed 

CY 2015 

Payment 

Rate 

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

radiostereometric analysis (RSA) Q2 0420 $125.05 

0348T 

Radiologic examination, radiostereometric 

analysis (RSA); spine, (includes, cervical, 

thoracic and lumbosacral, when performed) 

S 0261 $95.36 

0349T 

Radiologic examination, radiostereometric 

analysis (RSA); upper extremity(ies), (includes 

shoulder, elbow and wrist, when performed) 

S 0261 $95.36 

0350T 

Radiologic examination, radiostereometric 

analysis (RSA); lower extremity(ies), (includes 

hip, proximal femur, knee and ankle, when 

performed) 

S 0261 $95.36 

0351T 

Optical coherence tomography of breast or 

axillary lymph node, excised tissue, each 

specimen; real time intraoperative 

N N/A N/A 

0352T 

Optical coherence tomography of breast or 

axillary lymph node, excised tissue, each 

specimen; interpretation and report, real time 

or referred 

B N/A N/A 

0353T Optical coherence tomography of breast, 

surgical cavity; real time intraoperative N N/A N/A 

0354T 

Optical coherence tomography of breast, 

surgical cavity; interpretation and report, real 

time or referred 

B N/A N/A 

0355T 

Gastrointestinal tract imaging, intraluminal 

(eg, capsule endoscopy), colon, with 

interpretation and report 

T 0142 $857.73 

0356T 

Insertion of drug-eluting implant (including 

punctal dilation and implant removal when 

performed) into lacrimal canaliculus, each 

Q1 0698 $101.41 
CMS-1613-P 253 

0358T 

Bioelectrical impedance analysis whole body 

composition assessment, supine position, with 

interpretation and report 

Q1 0340 $61.88 

0359T 

Behavior identification assessment, by the 

physician or other qualified health care 

professional, face-to-face with patient and 

caregiver(s), includes administration of 

standardized and non-standardized tests, 

detailed behavioral history, patient observation 

and caregiver interview, interpretation of test 

results, discussion of findings and 

recommendations with the primary 

guardian(s)/caregiver(s), and preparation of 

report 

V 0632 $107.98 

0360T 

Observational behavioral follow-up 

assessment, includes physician or other 

qualified health care professional direction 

with interpretation and report, administered by 

one technician; first 30 minutes of technician 

time, face-to-face with the patient 

V 0632 $107.98 

0361T 

Observational behavioral follow-up 

assessment, includes physician or other 

qualified health care professional direction 

with interpretation and report, administered by 

one technician; each additional 30 minutes of 

technician time, face-to-face with the patient 

(List separately in addition to code for primary 

service) 

N N/A N/A 

0362T 

Exposure behavioral follow-up assessment, 

includes physician or other qualified health 

care professional direction with interpretation 

and report, administered by physician or other 

qualified health care professional with the 

assistance of one or more technicians; first 30 

minutes of technician(s) time, face-to-face with 

the patient 

V 0632 $107.98 
CMS-1613-P 254 

0363T 

Exposure behavioral follow-up assessment, 

includes physician or other qualified health 

care professional direction with interpretation 

and report, administered by physician or other 

qualified health care professional with the 

assistance of one or more technicians; each 

additional 30 minutes of technician(s) time, 

face-to-face with the patient (List separately in 

addition to code for primary procedure) 

N N/A N/A 

0364T 

Adaptive behavior treatment by protocol, 

administered by technician, face-to-face with 

one patient; first 30 minutes of technician time 

S 0322 $92.61 

0365T 

Adaptive behavior treatment by protocol, 

administered by technician, face-to-face with 

one patient; each additional 30 minutes of 

technician time (List separately in addition to 

code for primary procedure) 

N N/A N/A 

0366T 

Group adaptive behavior treatment by 

protocol, administered by technician, face-toface with two or more patients; first 30 minutes 

of technician time 

S 0325 $65.91 

0367T 

Group adaptive behavior treatment by 

protocol, administered by technician, face-toface with two or more patients; each additional 

30 minutes of technician time (List separately 

in addition to code for primary procedure) 

N N/A N/A 

0368T 

Adaptive behavior treatment with protocol 

modification administered by physician or 

other qualified health care professional with 

one patient; first 30 minutes of patient face-toface time 

S 0322 $92.61 

0369T 

Adaptive behavior treatment with protocol 

modification administered by physician or 

other qualified health care professional with 

one patient; each additional 30 minutes of 

patient face-to-face time (List separately in 

addition to code for primary procedure) 

N N/A N/A 
CMS-1613-P 255 

 We are soliciting public comments on the proposed CY 2015 status indicators, 

APC assignments, and payment rates for the Level II HCPCS codes and the Category III 

CPT codes that were made effective April 1, 2014, and July 1, 2014. These codes are 

listed in Tables 15, 16, and 17 of this proposed rule. We also are proposing to finalize 

the status indicator and APC assignments and payment rates for these codes, if 

applicable, in the CY 2015 OPPS/ASC final rule with comment period. Because the new 

Category III CPT and Level II HCPCS codes that become effective for July are not 

available to us in time for incorporation into the Addenda to this proposed rule, our 

0370T 

Family adaptive behavior treatment guidance, 

administered by physician or other qualified 

health care professional (without the patient 

present) 

S 0324 $130.28 

0371T 

Multiple-family group adaptive behavior 

treatment guidance, administered by physician 

or other qualified health care professional 

(without the patient present) 

S 0324 $130.28 

0372T 

Adaptive behavior treatment social skills 

group, administered by physician or other 

qualified health care professional face-to-face 

with multiple patients 

S 0325 $65.91 

0373T 

Exposure adaptive behavior treatment with 

protocol modification requiring two or more 

technicians for severe maladaptive behavior(s); 

first 60 minutes of technicians' time, face-toface with patient 

S 0323 $117.36 

0374T 

Exposure adaptive behavior treatment with 

protocol modification requiring two or more 

technicians for severe maladaptive behavior(s); 

each additional 30 minutes of technicians' time 

face-to-face with patient (List separately in 

addition to code for primary procedure) 

N N/A N/A 
CMS-1613-P 256 

policy is to include the codes, the proposed status indicators, proposed APCs (where 

applicable), and proposed payment rates (where applicable) in the preamble of the 

proposed rule, but not in the Addenda to this proposed rule. These codes are listed in 

Tables 16 and 17, respectively, of this proposed rule. We are proposing to incorporate 

these codes into Addendum B to the CY 2015 OPPS/ASC final rule with comment 

period, which is consistent with our annual OPPS update policy. The Level II HCPCS 

codes implemented or modified through the April 2014 OPPS update CR and displayed 

in Table 15 are included in Addendum B to this proposed rule (which is available via the 

Internet on the CMS Web site), where the proposed CY 2015 payment rates for these 

codes are also shown. 

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

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

January 1, 2015 for Which We Will Be Soliciting Public Comments in the CY 2015 

OPPS/ASC Final Rule with Comment Period 

 As has been our practice in the past, we incorporate those new Category I and III 

CPT codes and new Level II HCPCS codes that are effective January 1 in the final rule 

with comment period updating the OPPS for the following calendar year. These codes 

are released to the public via the CMS HCPCS (for Level II HCPCS codes) and AMA 

Web sites (for CPT codes), and also through the January OPPS quarterly update CRs. In 

the past, we also have released new Level II HCPCS codes that are effective 

October 1 through the October OPPS quarterly update CRs and incorporated these new 

codes in the final rule with comment period updating the OPPS for the following calendar 
CMS-1613-P 257 

year. For CY 2015, these codes will be flagged with comment indicator “NI” in 

Addendum B to the OPPS/ASC final rule with comment period to indicate that we are 

assigning them an interim payment status which is subject to public comment. In 

addition, the CPT and Level II HCPCS codes that will be effective January 1, 2015, will 

be flagged with comment indicator “NI” in Addendum B to the CY 2015 OPPS/ASC 

final rule with comment period. Specifically, the status indicator and the APC 

assignment and payment rate, if applicable, for all such codes flagged with comment 

indicator “NI” are open to public comment in the final rule with comment period, and we 

respond to these public comments in the OPPS/ASC final rule with comment period for 

the next calendar year’s OPPS/ASC update. We are proposing to continue this process 

for CY 2015. Specifically, for CY 2015, we are proposing to include in Addendum B to 

the CY 2015 OPPS/ASC final rule with comment period the following new HCPCS 

codes: 

● New Level II HCPCS codes effective October 1, 2014 that would be 

incorporated in the October 2014 OPPS quarterly update CR; 

● New Category I and III CPT codes effective January 1, 2015 that would be 

incorporated in the January 2015 OPPS quarterly update CR; and 

● New Level II HCPCS codes effective January 1, 2015 that would be 

incorporated in the January 2015 OPPS quarterly update CR. 

 As stated above, the October 1, 2014 and January 1, 2015 codes would be flagged 

with comment indicator “NI” in Addendum B to the CY 2015 OPPS/ASC final rule with 

comment period to indicate that we have assigned the codes an interim OPPS payment 
CMS-1613-P 258 

status for CY 2015. We will be inviting public comments on the proposed status 

indicator and APC assignments and payment rates for these codes, if applicable, that 

would be finalized in the CY 2016 OPPS/ASC final rule with comment period. 

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

That Would Be Released by AMA Before the January 1 Effective Date 

We generally incorporate the new CPT codes that are effective January 1 in the 

OPPS/ASC final rule with comment period. We establish interim APC and status 

indicator assignments for the coming year, and request comments on the interim 

assignments. Similarly, in the OPPS/ASC final rule with comment period, we establish 

interim APC and status indicator assignments for existing CPT codes that have 

substantial revision to their code descriptors, which may include grammatical changes to 

the code descriptors that necessitate a change in the current APC assignments. In both 

cases, we assign these new and revised codes to OPPS comment indicator “NI” (New 

code for the next calendar year or existing code with substantial revision to its code 

descriptor in the next calendar year as compared to current calendar year, interim APC 

assignment; comments will be accepted on the interim APC assignment for the new 

code.) in the OPPS/ASC final rule with comment period. We respond to comments and 

finalize the APC and status indicator assignments for these CPT codes in the following 

year’s OPPS/ASC final rule with comment period. 
CMS-1613-P 259 

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

Effective January 1 

 Currently, under the hospital OPPS, new CPT codes that are effective January 1 

are flagged with comment indicator “NI” in Addendum B to the OPPS/ASC final rule 

with comment period to indicate that the codes are new for the calendar year and have 

been assigned interim APCs and status indicators, and that we are accepting public 

comments on the treatment of these new codes. We address public comments in the next 

year’s OPPS/ASC final rule with comment period and finalize the APC and status 

indicator assignments for the codes. For example, the new CPT codes that were effective 

January 1, 2013, were assigned to comment indicator “NI” in Addendum B to the 

CY 2013 OPPS/ASC final rule with comment period. We responded to public comments 

received on the CY 2013 OPPS/ASC final rule with comment period and finalized the 

APC and status indicator assignments for these codes in the CY 2014 OPPS/ASC final 

rule with comment period; and we included the final APC and status indicator 

assignments in Addendum B to that rule. 

 Similarly, existing CPT codes with substantial revisions to the code descriptors 

are flagged with comment indicator “NI” in Addendum B to the OPPS/ASC final rule 

with comment period to indicate that these codes are assigned interim APC and status 

indicators on which we are accepting public comments. Public comments regarding 

these revised CPT codes are also addressed, and APC and status indicator assignments 

finalized, in the next year’s OPPS/ASC final rule with comment period. 
CMS-1613-P 260 

 Several stakeholders, including consultants, device manufacturers, drug 

manufacturers, as well as specialty societies and hospitals, have expressed concern with 

the process we use to recognize new and revised CPT codes. They believe that CMS 

should publish proposed APCs and status indicators for the new and revised CPT codes 

that will be effective January 1 in the OPPS/ASC proposed rule, and request public 

comments prior to finalizing them for the January 1 implementation date. Further, the 

stakeholders believe that seeking public input on the APC and status indicator 

assignments for these new and revised codes would assist CMS in assigning the CPT 

codes to appropriate APCs. We have been informed of similar concerns regarding our 

process for assigning interim payment values for revalued, and new and revised codes, 

under the Medicare Physician Fee Schedule (MPFS), and include proposed policies to 

address those concerns in the CY 2015 MPFS proposed rule. 

 Like the MPFS, the OPPS and the ASC payment system rely principally upon the 

Current Procedural Terminology (CPT®) coding system maintained by the AMA for 

billing. CPT® is the standard code set adopted under the Health Insurance Portability and 

Accountability Act of 1996 (HIPAA) for outpatient services. The AMA CPT Editorial 

Panel’s coding cycle occurs concurrently with our calendar year rulemaking cycle for the 

OPPS and the ASC payment system. The OPPS/ASC proposed rules are published prior 

to the publication of the CPT codes that are generally made public in the Fall, with a 

January 1 effective date, and we are currently unable to include these codes in the 

OPPS/ASC proposed rules. Consequently, we establish interim APC and status indicator 
CMS-1613-P 261 

assignments for new and revised CPT codes that have an effective date of January 1, and 

we make payment based on those interim designations for one year. 

b. Proposal to Modify the Current Process for Accepting Comments on New and 

Revised CPT Codes That Are Effective January 1 

 In this CY 2015 OPPS/ASC proposed rule, we are proposing to make changes in 

the process we use to establish APC assignments and status indicators for new and 

revised codes. We are proposing to make similar revisions under the MPFS to our 

current process for establishing values (work and malpractice relative value units and 

practice expense inputs) for new and revised CPT codes that take effect each January 1. 

 For instance, we are proposing that, for new and revised CPT codes that we 

receive from the AMA CPT Editorial Panel too late for inclusion in the proposed rule for 

a year, we would delay adoption of the new and revised codes for that year, and instead, 

adopt coding policies and payment rates that conform, to the extent possible, to the 

policies and payment rates in place for the previous year. We are proposing to adopt 

these conforming coding and payment policies on an interim basis pending the result of 

our specific proposals for status indicator and APC assignments for these new and 

revised codes through notice and comment rulemaking in the OPPS/ASC proposed rule 

for the following year. Because the changes in CPT codes are effective on January 1 of 

each year, and CMS would not have established status indicator or APC assignments for 

these new or revised codes, it would not be practicable for Medicare to use those CPT 

codes. In this circumstance, we are proposing to create HCPCS G-codes to describe the 

predecessor codes for any codes that were revised or deleted as part of the annual CPT 
CMS-1613-P 262 

coding changes. However, if certain CPT codes are revised in a manner that would not 

affect the cost of inputs (for example, a grammatical change to CPT code descriptors), we 

would use these revised codes and continue to assign those codes to their current APC. 

For example, under this proposed process, if a single CPT code was separated into two 

codes and we did not receive those codes until May 2015, we would assign each of those 

codes to status indicator “B” in the final rule with comment period, to indicate that an 

alternate code is recognized under the OPPS. Hospitals could not use those two new CPT 

codes to bill Medicare for outpatient services the first year after the effective date of the 

codes. Instead, we would create a HCPCS G-code with the same description as the single 

predecessor CPT code, and continue to use the same APC and status indicator assignment 

for that code during the year. We would propose status indicator and APC assignments 

for the two new CPT codes during rulemaking in CY 2016 for payment beginning in 

CY 2017. 

 For new codes that describe wholly new services, as opposed to new or revised 

codes that describe services for which APC and status indicator assignments are already 

established, we would make every effort to work with the AMA CPT Editorial Panel to 

ensure that we received the codes in time to propose payment rates in the proposed rule. 

However, if we do not receive the code for a wholly new service in time to include 

proposed APC and status indicator assignments in the proposed rule for a year, we would 

need to establish interim APC and status indicator assignments for the initial year. We 

are proposing to establish the initial APC and status indicator assignments for new 

services as interim final assignments, and to follow our current process to solicit and 
CMS-1613-P 263 

respond to public comments and finalize the APC and status indicator assignments in the 

subsequent year. 

 We recognize that the use of HCPCS G-codes may place an administrative burden 

on those providers that bill for services under the OPPS and the ASC payment system. 

We are hopeful that the AMA CPT Editorial Panel ultimately will be able to adjust its 

timelines and processes so that most, if not all, of the annual coding changes can be 

addressed in the proposed rule. We are proposing to implement the revised CMS process 

for establishing APC and status indicator assignments for new and revised codes for 

CY 2016. However, we will consider alternative implementation dates to allow time for 

the AMA CPT Editorial Panel to adjust its schedule in order to avoid the necessity to use 

numerous HCPCS G-codes. 

 In summary, in conjunction with the proposals presented in the CY 2015 MPFS 

proposed rule to revise the process used to address new, revised, and potentially 

misvalued codes under the MPFS, we are proposing to include in the OPPS/ASC 

proposed rule for a year proposed APC and status indicator assignments for the new and 

revised CPT codes that are effective January 1. We would follow this revised process 

except in the case of a code that describes a wholly new service (such as a new 

technology or new surgical procedure) that has not previously been addressed under the 

OPPS. For codes that describe new services, we would establish interim APC and status 

indicator assignments in the OPPS/ASC final rules with comment period, as is our 

current process. The proposed revised process would eliminate our current practice of 

assigning interim APC and status indicators for the new and revised CPT codes that take 
CMS-1613-P 264 

effect on January 1 each year. Instead, when we do not receive new and revised codes 

early enough in our ratesetting process to propose APC and status indicator assignments 

in the OPPS/ASC proposed rule for a year, we would create and use HCPCS G-codes that 

mirror the predecessor CPT codes and retain the current APC and status indicator 

assignments for a year until we could include proposed assignments in the following 

year’s proposed rule. After proposing APC and status indicator assignments for the new 

and revised codes in a proposed rule, we would accept comments on the proposed 

assignments, and respond to the comments and assign the final APC and status indicator 

assignments in the OPPS/ASC final rules with comment period. We are inviting public 

comments on this proposal. We are specifically interested in receiving public comments 

on the following topics: 

● Is this proposal preferable to the present process? Are there other alternatives? 

● If we were to implement this proposal, is it better to move forward with the 

changes or is more time needed to make the transition and, therefore, implementation 

should be delayed beyond CY 2016? 

● Are there alternatives other than the use of HCPCS G-codes that would allow 

us to address the annual CPT code changes through notice and comment rather than 

interim final rulemaking? 

● Is the process we have proposed for wholly new services appropriate? How 

should we define new services? 

● Are there any classes of services, other than new services, that should remain 

on an interim final schedule? 
CMS-1613-P 265 

B. Proposed OPPS Changes--Variations within APCs 

1. Background 

 Section 1833(t)(2)(A) of the Act requires the Secretary to develop a classification 

system for covered hospital outpatient department services. Section 1833(t)(2)(B) of the 

Act provides that the Secretary may establish groups of covered OPD services within this 

classification system, so that services classified within each group are comparable 

clinically and with respect to the use of resources. In accordance with these provisions, 

we developed a grouping classification system, referred to as Ambulatory Payment 

Classifications (APCs), as set forth in § 419.31 of the regulations. We use Level I and 

Level II HCPCS codes to identify and group the services within each APC. The APCs 

are organized such that each group is homogeneous both clinically and in terms of 

resource use. Using this classification system, we have established distinct groups of 

similar services. We also have developed separate APC groups for certain medical 

devices, drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy devices 

that are not packaged into the payment for the procedure. 

 We have packaged into the payment for each procedure or service within an APC 

group the costs associated with those items and services that are typically ancillary and 

supportive to a primary diagnostic or therapeutic modality and, in those cases, are an 

integral part of the primary service they support. Therefore, we do not make separate 

payment for these packaged items or services. In general, packaged items and services 

include, but are not limited to the items and services listed in 419.2(b) of the regulations. 
CMS-1613-P 266 

Further discussion of packaged services is included in section II.A.3. of this proposed 

rule. 

 In CY 2008, we implemented composite APCs to provide a single payment for 

groups of services that are typically performed together during a single clinical encounter 

and that result in the provision of a complete service (72 FR 66650 through 66652). For 

CY 2014, we provided composite APC payments for nine categories of services: 

● Mental Health Services Composite (APC 0034) 

● Cardiac Electrophysiologic Evaluation and Ablation Composite (APC 8000) 

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

● Ultrasound Composite (APC 8004) 

● CT and CTA without Contrast Composite (APC 8005) 

● CT and CTA with Contrast Composite (APC 8006) 

● MRI and MRA without Contrast Composite (APC 8007) 

● MRI and MRA with Contrast Composite (APC 8008) 

● Extended Assessment & Management Composite (APC 8009) 

 A further discussion of composite APCs is included in section II.A.2.f. of this 

proposed rule. 

 Under the OPPS, we generally pay for hospital outpatient services on a 

rate-per-service basis, where the service may be reported with one or more HCPCS 

codes. Payment varies according to the APC group to which the independent service or 

combination of services is assigned. Each APC relative payment weight represents the 

hospital cost of the services included in that APC, relative to the hospital cost of the 
CMS-1613-P 267 

services included in APC 0634 (Hospital Clinic Visits). The APC relative payment 

weights are scaled to APC 0634 because it is the hospital clinic visit APC and clinic visits 

are among the most frequently furnished services in the hospital outpatient setting. 

 Section 1833(t)(9)(A) of the Act requires the Secretary to review, on a recurring 

basis occurring no less than annually, and revise the groups, the relative payment 

weights, and the wage and other adjustments to take into account changes in medical 

practice, changes in technology, the addition of new services, new cost data, and other 

relevant information and factors. Section 1833(t)(9)(A) of the Act also requires the 

Secretary to consult with an expert outside advisory panel composed of an appropriate 

selection of representatives of providers to review (and advise the Secretary concerning) 

the clinical integrity of the APC groups and the relative payment weights (the Panel 

recommendations for specific services for the CY 2015 OPPS and our responses to them 

are discussed in the relevant specific sections throughout this proposed rule). 

 Finally, section 1833(t)(2) of the Act provides that, subject to certain exceptions, 

the items and services within an APC group cannot be considered comparable with 

respect to the use of resources if the highest cost for an item or service in the group is 

more than 2 times greater than the lowest cost for an item or service within the same 

group (referred to as the “2 times rule”). The statute authorizes the Secretary to make 

exceptions to the 2 times rule in unusual cases, such as low-volume items and services 

(but the Secretary may not make such an exception in the case of a drug or biological that 

has been designated as an orphan drug under section 526 of the Federal Food, Drug, and 

Cosmetic Act). 
CMS-1613-P 268 

2. Application of the 2 Times Rule 

 In accordance with section 1833(t)(2) of the Act and § 419.31 of the regulations, 

we annually review the items and services within an APC group to determine, with 

respect to comparability of the use of resources, if the cost of the highest cost item or 

service within an APC group is more than 2 times greater than the cost of the lowest cost 

item or service within that same group. In making this determination, we consider only 

those HCPCS codes that are significant based on the number of claims. We note that, for 

purposes of identifying significant procedure codes for examination under the 2 times 

rule, we consider procedure codes that have more than 1,000 single major claims or 

procedure codes that have both greater than 99 single major claims and contribute at least 

2 percent of the single major claims used to establish the APC cost to be significant 

(75 FR 71832). This longstanding definition of when a procedure code is significant for 

purposes of the 2 times rule was selected because we believe that a subset of 1,000 claims 

(or less than 1,000 claims) is negligible within the set of approximately 100 million 

single procedure or single session claims we use for establishing costs. Similarly, a 

procedure code for which there are fewer than 99 single bills and which comprises less 

than 2 percent of the single major claims within an APC will have a negligible impact on 

the APC cost. In this proposed rule, for CY 2015, we are proposing to make exceptions 

to this limit on the variation of costs within each APC group in unusual cases, such as 

low-volume items and services. 

 We have identified the APCs with 2 times rule violations for CY 2015. 

Therefore, we are proposing changes to the procedure codes assigned to these APCs 
CMS-1613-P 269 

assignments in Addendum B to this proposed rule. We note that Addendum B does not 

appear in the printed version of the Federal Register as part of the CY 2015 OPPS/ASC 

proposed rule. Rather, it is published and made available via the Internet on the CMS 

Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a 2 times rule 

violation or to improve clinical and resource homogeneity, we are proposing to reassign 

these procedure codes to new APCs that contain services that are similar with regard to 

both their clinical and resource characteristics. In many cases, the proposed procedure 

code reassignments and associated APC reconfigurations for CY 2015 included in this 

proposed rule are related to changes in costs of services that were observed in the 

CY 2013 claims data newly available for CY 2015 ratesetting. We also are proposing 

changes to the status indicators for some procedure codes that are not specifically and 

separately discussed in this proposed rule. In these cases, we are proposing to change the 

status indicators for these procedure codes because we believe that another status 

indicator would more accurately describe their payment status from an OPPS perspective 

based on the policies that we are proposing for CY 2015. In addition, we are proposing 

to rename existing APCs or create new clinical APCs to complement the proposed 

procedure code reassignments. Addendum B to this CY 2015 OPPS/ASC proposed rule 

identifies with a comment indicator “CH” those procedure codes for which we are 

proposing a change to the APC assignment or status indicator, or both, that were initially 

assigned in the April 2014 Addendum B Update (available via the Internet on the CMS 
CMS-1613-P 270 

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

3. Proposed Exceptions to the 2 Times Rule 

 As discussed earlier, we may make exceptions to the 2 times rule limit on the 

variation of costs within each APC group in unusual cases such as low-volume items and 

services. Taking into account the APC changes that we are proposing for CY 2015, we 

reviewed all of the APCs to determine which APCs would not meet the requirements of 

the 2 times rule. We used the following criteria to evaluate whether to propose 

exceptions to the 2 times rule for affected APCs: 

● Resource homogeneity; 

● Clinical homogeneity; 

● Hospital outpatient setting utilization; 

● Frequency of service (volume); and 

● Opportunity for upcoding and code fragments. 

 Based on the CY 2013 claims data available for this proposed rule, we found 9 

APCs with 2 times rule violations. We applied the criteria as described above to identify 

the APCs that we are proposing to make exceptions for under the 2 times rule for 

CY 2015, and identified 9 APCs that met the criteria for an exception to the 2 times rule 

based on the CY 2013 claims data available for this proposed rule. We have not included 

in this determination those APCs where a 2 times rule violation was not a relevant 

concept, such as APC 0375 (Ancillary Outpatient Services when Patient Expires), which 

has an APC cost set based on multiple procedure claims. Therefore, we have only 
CMS-1613-P 271 

identified those APCs, including those with criteria-based costs, such as 

device-dependent APCs, with 2 times rule violations. For a detailed discussion of these 

criteria, we refer readers to the April 7, 2000 OPPS final rule with comment period 

(65 FR 18457 and 18458). 

 We note that, for cases in which a recommendation by the Panel appears to result 

in or allow a violation of the 2 times rule, we generally accept the Panel’s 

recommendation because those recommendations are based on explicit consideration 

(that is, a review of the latest OPPS claims data and group discussion of the issue) of 

resource use, clinical homogeneity, site of service, and the quality of the claims data used 

to determine the APC payment rates. 

 Table 18 of this proposed rule lists the 9 APCs that we are proposing to make 

exceptions for under the 2 times rule for CY 2015 based on the criteria cited above and 

claims data processed from January 1, 2013, through December 31, 2013. For the final 

rule with comment period, we intend to use claims data for dates of service between 

January 1, 2013, and December 31, 2013, that were processed on or before 

June 30, 2014, and updated CCRs, if available. 
CMS-1613-P 272 

TABLE 18.—PROPOSED APC EXCEPTIONS TO THE 2 TIMES RULE 

FOR CY 2015 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC Title 

0012 Level I Debridement & Destruction 

0015 Level II Debridement & Destruction 

0057 Bunion Procedures 

0066 Level V Radiation Therapy 

0330 Dental Procedures 

0433 Level II Pathology 

0450 Level I Minor Procedures 

0634 Hospital Clinic Visits 

0661 Level III Pathology 

The proposed costs for hospital outpatient services for these and all other APCs 

that were used in the development of this proposed rule can be found on the CMS Web 

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

C. Proposed OPPS APC-Specific Policies

 Section 1833(t)(9) of the Act requires that we annually review and revise, if 

necessary, the APCs and the procedure code assignments. Therefore, every year we 

evaluate and revise, if necessary, the APC assignments for procedure codes based on 

evaluation of the latest hospital outpatient claims data. Although we do not discuss every 

APC revision and procedure code reassignment in the proposed and final rules with 

comment period, these revisions and/or reassignments are listed in the OPPS Addendum 

B to the proposed and final rules with comment period. Specifically, procedure codes 

proposed for reassignment to new APCs and/or status indicators are assigned to comment 
CMS-1613-P 273 

indicator “CH” (Active HCPCS code in current year and next calendar year, status 

indicator and/or APC assignment has changed) in the OPPS Addendum B to the proposed 

and final rules with comment period. 

 In accordance with section 1833(t)(2) of the Act, we annually review all APC 

assignments to determine if any 2 times rule violations exist. That is, we review the 

items and services within an APC group to determine, with respect to comparability of 

the use of resources, if the cost of the highest cost item or service within an APC group is 

more than 2 times the cost of the lowest cost item or service within that same group. In 

making this determination, we consider only those HCPCS codes that are significant 

based on the number of claims. 

 As stated in section III.B. of this proposed rule, for purposes of identifying 

significant procedure codes for examination of possible 2 times rule violations within an 

APC, we consider procedure codes that have either more than 1,000 single major claims, 

or (if less than 1,000 single major claims) procedure codes that have more than 99 single 

major claims and contribute at least 2 percent of the single major claims. This 

longstanding criterion to determine when a procedure code is significant for purposes of 

evaluation of a possible 2 times rule violation was established because we believe that a 

subset of 1,000 claims is negligible within the set of approximately 100 million single 

procedure or single session claims we use for establishing costs. Similarly, a procedure 

code for which there are fewer than 99 single bills and which comprises less than 2 

percent of the single major claims within an APC will have a negligible impact on the 

APC cost. 
CMS-1613-P 274 

1. Ophthalmic Procedures and Services 

 For the CY 2015 OPPS update, based on our evaluation of the latest hospital 

outpatient claims data available for this proposed rule, we are proposing to restructure all 

of the ophthalmic-related APCs to better reflect the costs and clinical characteristics of 

the procedures within each APC. This proposed restructuring results in the use of 13 

APCs for the ophthalmology-related procedures for the CY 2015 OPPS update, as 

compared to the 24 APCs used for the CY 2014 OPPS update. We believe this major 

restructuring and consolidation of APCs more appropriately categorizes all of the 

ophthalmology-related procedures and services within an APC group, such that the 

services within each newly-configured APC are more comparable clinically and with 

respect to resource use. Tables 19 and 20 below show the current CY 2014 and proposed 

CY 2015 ophthalmology-related APCs. Specifically, Table 19 shows the ophthalmologyrelated APCs and status indicator assignments used for CY 2014, while Table 20 shows 

the proposed ophthalmology-related APCs and their status indicator assignments for 

CY 2015. The proposed payment rates for the ophthalmology-related procedure codes 

can be found in Addendum B to this proposed rule (which is available via the Internet on 

the CMS Web site). 

TABLE 19.—CY 2014 OPHTHALMOLOGY-RELATED APCs 

CY 2014 

APC APC Title Description 

CY 2014 

Status 

Indicator 

0035 Vascular Puncture and Minor Diagnostic Procedures X 

0230 Level I Eye Tests & Treatments S 

0231 Level III Eye Tests & Treatments S 
CMS-1613-P 275 

CY 2014 

APC APC Title Description 

CY 2014 

Status 

Indicator 

0232 Level I Anterior Segment Eye Procedures T 

0233 Level III Anterior Segment Eye Procedures T 

0234 Level IV Anterior Segment Eye Procedures T 

0235 Level I Posterior Segment Eye Procedures T 

0237 Level II Posterior Segment Eye Procedures T 

0238 Level I Repair and Plastic Eye Procedures T 

0239 Level II Repair and Plastic Eye Procedures T 

0240 Level III Repair and Plastic Eye Procedures T 

0241 Level IV Repair and Plastic Eye Procedures T 

0242 Level V Repair and Plastic Eye Procedures T 

0243 Strabismus/Muscle Procedures T 

0244 Corneal and Amniotic Membrane Transplant T 

0246 Cataract Procedures with IOL Insert T 

0247 Laser Eye Procedures T 

0249 Cataract Procedures without IOL Insert T 

0255 Level II Anterior Segment Eye Procedures T 

0293 Level VI Anterior Segment Eye Procedures T 

0672 Level III Posterior Segment Eye Procedures T 

0673 Level V Anterior Segment Eye Procedures T 

0698 Level II Eye Tests & Treatments S 

0699 Level IV Eye Tests & Treatments T 
CMS-1613-P 276 

TABLE 20.—PROPOSED CY 2015 OPHTHALMOLOGY-RELATED APCs 

Proposed 

CY 2015 

APC APC Title Description 

Proposed 

CY 2015 

Status 

Indicator 

0230 Level I Eye Tests & Treatments S 

0231 Level III Eye Tests & Treatments S 

0233 Level II Intraocular Procedures T 

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

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

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

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

0247 Laser Eye Procedures T 

0255 Level I Intraocular Procedures T 

0293 Level IV Intraocular Procedures J1 

0351 Level V Intraocular Procedures J1 

0673 Level III Intraocular Procedures T 

0698 Level II Eye Tests & Treatments S 

 We intend to propose similar major restructures of the APC and procedure code 

assignments for other clinical areas in future rulemakings. We are inviting public 

comments on this proposal. 

2. Female Reproductive Procedures (APCs 0188, 0189, 0192, 0193, and 0202) 

 At the Panel’s March 10, 2014 meeting, a presenter expressed concern regarding 

the reassignment of the female reproductive procedures within existing APCs 0192 

(Level IV Female Reproductive Procedures), 0193 (Level V Female Reproductive 

Procedures), and 0195 (Level VI Female Reproductive Procedures) that were made 

effective for the CY 2014 OPPS update, and stated that the changes would compromise 

beneficiary access to pelvic floor repair procedures. The commenter urged the Panel to 
CMS-1613-P 277 

request that CMS revisit its packaging policy for APCs 0193 and 0195 and allow 

stakeholders the opportunity to work with CMS to appropriately reassign these 

procedures in a manner that better accounts for clinical complexity. In addition, this 

presenter requested that CMS postpone converting existing APC 0202 (Level VII Female 

Reproductive Procedures) into a comprehensive APC to allow for further study of the 

complexity of pelvic floor repair procedures. After review of the information provided 

by the presenter and examination of the latest hospital outpatient claims data available for 

this proposed rule, the Panel made no recommendation for any of the female reproductive 

APCs. 

 For the CY 2014 OPPS update, we made several APC changes, which included 

changes to the female reproductive APCs 0192, 0193, and 0195. These changes were 

listed in Addendum B to the CY 2014 OPPS/ASC proposed rule. Of these three APCs, 

only APC 0193 showed a 2 times rule violation. We note that, under the OPPS, we may 

make exceptions to the 2 times rule based on the variation of costs within each APC 

group in unusual cases such as low-volume items and services. In the case of APC 0193, 

we believed that it was necessary to make an exception to the 2 times rule for APC 0193 

for the CY 2014 OPPS update because this APC sufficiently reflected the clinical and 

resource coherence of the Level V female reproductive procedures. 

 For the CY 2015 OPPS update, based on our review of the latest hospital 

outpatient claims data available for this proposed rule, there are no 2 times rule violations 

for any of the female reproductive APCs. In addition, based on our evaluation of the 

latest hospital outpatient claims data, we are proposing to restructure the female 
CMS-1613-P 278 

reproductive APCs to more appropriately reflect the resource and clinical characteristics 

of the procedures within each APC. This proposed restructuring results in the use of five 

APCs for the CY 2015 OPPS update, as compared to the seven APCs used for the 

CY 2014 OPPS update. We believe that this proposed five-level APC structure will 

provide more accurate payments for the female reproductive procedures furnished to 

Medicare beneficiaries. 

 In summary, we are proposing to restructure the female reproductive APCs based 

on a review of our latest hospital outpatient claims data available for this proposed rule, 

which results in the use of five levels of APCs for CY 2015, as compared to the seven 

APCs used in CY 2014. Tables 21 and 22 below show the current CY 2014 and 

proposed CY 2015 female reproductive APCs. Specifically, Table 21 shows the female 

reproductive APCs, APC titles, and their status indicator assignments for CY 2014, while 

Table 22 shows the proposed female reproductive APCs, APC titles, and their status 

indicator assignments for CY 2015. The proposed payment rates for the female 

reproductive procedure codes can be found in Addendum B to this proposed rule (which 

is available via the Internet on the CMS Web site). We note that one of the five levels of 

the female reproductive APCs, APC 0202, is a comprehensive APC. We refer readers to 

section II.A.2.e. of this proposed rule for further discussion of our comprehensive APC 

policy. 
CMS-1613-P 279 

TABLE 21.—CY 2014 FEMALE REPRODUCTIVE APCs 

CY 2014 

APC APC Title Description 

CY 2014 

Status 

Indicator 

0188 Level II Female Reproductive Proc T 

0189 Level III Female Reproductive Proc T 

0191 Level I Female Reproductive Proc T 

0192 Level IV Female Reproductive Proc T 

0193 Level V Female Reproductive Proc T 

0195 Level VI Female Reproductive Procedures T 

0202 Level VII Female Reproductive Procedures T 

TABLE 22.—PROPOSED CY 2015 FEMALE REPRODUCTIVE APCs 

Proposed 

CY 2015 

APC APC Title Description 

Proposed 

CY 2015 

Status 

Indicator 

0188 Level I Female Reproductive Procedures T 

0189 Level II Female Reproductive Procedures T 

0192 Level III Female Reproductive Procedures T 

0193 Level IV Female Reproductive Procedures T 

0202 Level V Female Reproductive Procedures J1 
CMS-1613-P 280 

3. Image-Guided Breast Biopsy Procedures (APC 0005) 

 For the CY 2014 OPPS update, the AMA CPT Editorial Panel deleted the 

image-guided breast biopsy CPT codes 19102 and 19103 and replaced these specific 

procedure codes with six new CPT codes that “bundled” associated imaging services, 

effective January 1, 2014. As shown in Table 23 below, CPT codes 19102 and 19103 

described percutaneous image-guided breast biopsies using specific devices. 

Specifically, CPT code 19102 described a breast biopsy performed using a core needle, 

and CPT code 19103 described a breast biopsy performed using either a vacuum-assisted 

or rotating device. 

 In CY 2013, to appropriately report the procedure code for an image-guided 

breast biopsy using a core needle, an automated vacuum-assisted device, or a rotating 

biopsy device, multiple procedure codes were required to identify the service performed. 

That is, a procedure code describing the device-related breast biopsy procedure was 

required to be reported in combination with the procedure code describing the 

localization device used during the procedures, as well as the specific image-guidance 

procedure codes describing the imaging service. Table 23 below shows how imageguided breast biopsy procedures were reported prior to CY 2014. Table 23 also shows 

the CY 2013 OPPS status indicators, APC assignments, and payment rates for the breast 

biopsy procedure codes, the localization devices used during the procedures and the 

specific image-guidance procedure codes describing the imaging service. 
CMS-1613-P 281 

TABLE 23.—HOW IMAGE-GUIDED BREAST BIOPSY PROCEDURES 

WERE REPORTED IN CY 2013 

CY 2013 

CPT 

Code Long Descriptor 

CY 2013 

SI 

CY 2013 

APC 

CY 2013 

Payment 

Device-Related Breast Biopsy CPT Codes

19102 Biopsy of breast; percutaneous, needle core, 

using imaging guidance T 0005 $625.24 

19103 

Biopsy of breast; percutaneous, automated 

vacuum assisted or rotating biopsy device, 

using imaging guidance 

T 0037 $1,118.54

Localization Device CPT Codes Reported with CPT Codes 19102 and 19103

19290 Preoperative placement of needle localization 

wire, breast; Q1 0340 $49.64 

19291 

Preoperative placement of needle localization 

wire, breast; each additional lesion 

(List separately in addition to code for 

primary procedure) 

N N/A N/A 

19295 

Image guided placement, metallic 

localization clip, percutaneous, during breast 

biopsy/aspiration 

(List separately in addition to code for 

primary procedure) 

Q1 0340 $49.64 

Image Guidance CPT Codes Reported with CPT Codes 19102 and 19103

76942 

Ultrasonic guidance for needle placement 

(eg, biopsy, aspiration, injection, localization 

device), imaging supervision and 

interpretation 

N N/A N/A 

77021 

Magnetic resonance guidance for needle 

placement (eg, for biopsy, needle aspiration, 

injection, or placement of localization 

device) radiological supervision and 

interpretation 

N N/A N/A 
CMS-1613-P 282 

CY 2013 

CPT 

Code Long Descriptor 

CY 2013 

SI 

CY 2013 

APC 

CY 2013 

Payment 

77031 

Stereotactic localization guidance for breast 

biopsy or needle placement (eg, for wire 

localization or for injection), each lesion, 

radiological supervision and interpretation 

N N/A N/A 

77032 

Mammographic guidance for needle 

placement, breast (eg, for wire localization or 

for injection), each lesion, radiological 

supervision and interpretation 

N N/A N/A 

 For the CY 2014 OPPS update, the AMA CPT Editorial Panel grouped these 

multiple procedures that describe these imaging services into single comprehensive 

service codes; specifically, CPT codes 19081, 19082, 19083, 19084, 19085, and 19086. 

Table 24 below shows the six new CPT codes that replaced obsolete CPT codes 19102 

and 19103. These comprehensive breast biopsy procedure codes are differentiated based 

on the use of specific imaging-guidance devices-- specifically imaging services 

performed using stereotactic guidance, ultrasound guidance, or magnetic-resonance 

guidance. 

 As has been our practice since the implementation of the OPPS in 2000, we 

review all new procedure codes before assigning the codes to an APC. Based on our 

understanding of the resources required to furnish the service as defined in the code 

descriptor, as well as input from our medical advisors, we assigned replacement CPT 

codes 19081, 19083, and 19085 to APC 0005 (Level II Needle Biopsy/Aspiration Except 

Bone Marrow) for the CY 2014 OPPS update. We note that, for the CY 2014 OPPS 

update, we finalized our policy to package all add-on codes (except those for drug 
CMS-1613-P 283 

administration), effective January 1, 2014. Consequently, payment for replacement CPT 

codes 19082, 19084, and 19086, which describe add-on procedures, were packaged for 

CY 2014. 

 In addition, consistent with our longstanding policy for the treatment of new 

codes, we assigned these new replacement CPT codes to interim APCs for CY 2014. 

Specifically, we assigned new CPT codes 19081, 19083, and 19085 to comment indicator 

“NI” in Addendum B to the CY 2014 OPPS/ASC final rule with comment period (which 

is available via the CMS Web site) to indicate that the codes were new with an interim 

APC assignment that was subject to public comment. 

 At the Panel’s March 10, 2014 meeting, a presenter requested the reassignment of 

comprehensive CPT codes 19081, 19083, and 19085 from APC 0005 (Level II Needle 

Biopsy/Aspiration Except Bone Marrow), which has a CY 2014 OPPS payment rate of 

$702.08, to APC 0037 (Level IV Needle Biopsy/Aspiration Except Bone Marrow), which 

has a CY 2014 OPPS payment rate of $1,223.25. The presenter indicated that it is 

inappropriate to combine all of the new replacement CPT codes into one APC without 

regard for the imaging modality or device used to perform the procedure. This same 

presenter also requested that CMS maintain the historic assignment of the predecessor 

CPT codes cost data. 

 The Panel recommended that CMS reassign the APC assignments for the new 

replacement CPT codes. Specifically, the Panel recommended the reassignment of CPT 

codes 19081, 19083, and 19085 from APC 0005 to APC 0037. 
CMS-1613-P 284 

 In light of the public presentation and the Panel’s recommendation, and our 

longstanding policy of reviewing, on an annual basis, the APC assignments for all 

services and items paid under the OPPS, we evaluated the geometric mean costs 

associated with all of the procedures assigned to the existing four needle biopsy APCs, 

specifically, APCs 0004 (Level I Needle Biopsy/Aspiration Except Bone Marrow), 0005, 

0685 (Level III Needle Biopsy/Aspiration Except Bone Marrow), and 0037. For this 

CY 2015 OPPS/ASC proposed rule, based on our review of the latest hospital outpatient 

claims data available for the proposed rule, we are proposing to reassign all of the 

procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 0005 based on 

clinical and resource homogeneity. With this proposed revision, there would be no 

procedures assigned to APCs 0685 or 0037. Therefore, we are proposing to delete APCs 

0685 and 0037 for CY 2015. Consequently, for the CY 2015 OPPS update, we are 

proposing to use only two needle biopsy APCs, specifically, APCs 0004 and 0005. The 

proposed reassignment of the procedures assigned to APCs 0685 and 0037 would result 

in increased payment rates for both APCs 0004 and 0005. For CY 2015, the proposed 

payment rate for APC 0004 is approximately $494, which is 20 percent higher than the 

CY 2014 OPPS payment rate of approximately $411. Similarly, the proposed payment 

rate for APC 0005 is approximately $ 1,062, which is 51 percent higher than the CY 2014 

OPPS payment rate of approximately $702. With this proposed reassignment, CPT codes 

19081, 19083, and 19085 will continue to be assigned to APC 0005. 

 In summary, we are proposing to continue to assign CPT codes 19081, 19083, and 

19085 to APC 0005, which has a proposed payment rate of approximately $1,062. In 
CMS-1613-P 285 

addition, we are proposing to continue to package payment for add-on CPT codes 19082, 

19084, and 19086 under the OPPS for CY 2015, consistent with our packaging policy for 

add-on codes that was implemented on January 1, 2014. Because we are proposing to 

delete APC 0037 as obsolete for CY 2015, we believe that the proposed increased 

payment rate for APC 0005 is consistent with the Panel’s recommendation to reassign 

CPT codes 19081, 19083, and 19085 to an appropriate APC based on resource utilization 

and clinical coherence. Table 24 below shows the proposed status indicators, APC 

assignments, and payment rates for the image-guided breast biopsy CPT codes 19081 

through 19086 for the CY 2015 OPPS update. 
CMS-1613-P 286 

TABLE 24.—PROPOSED APCs TO WHICH IMAGE-GUIDED BREAST BIOPSY 

PROCEDURE CODES WOULD BE ASSIGNED FOR CY 2015 

CY 

2014 

CPT 

Code 

Long Descriptor CY 

2014 

SI 

CY 

2014 

APC 

CY 

2014 

Paymen

t Rate 

Propose

d CY 

2015 SI 

Propose

d CY 

2015 

APC 

Propose

d CY 

2015 

Payment 

Rate 

19081 

Biopsy, breast, with 

placement of breast 

localization device(s) 

(eg, clip, metallic 

pellet), when performed, 

and imaging of the 

biopsy specimen, when 

performed, 

percutaneous; first 

lesion, including 

stereotactic guidance 

T 0005 $702.08 T 0005 $1,062.2

8 

19082 

Biopsy, breast, with 

placement of breast 

localization device(s) 

(eg, clip, metallic 

pellet), when performed, 

and imaging of the 

biopsy specimen, when 

performed, 

percutaneous; each 

additional lesion, 

including stereotactic 

guidance (List 

separately in addition to 

code for primary 

procedure) 

N N/A N/A N N/A N/A 
CMS-1613-P 287 

CY 

2014 

CPT 

Code 

Long Descriptor CY 

2014 

SI 

CY 

2014 

APC 

CY 

2014 

Paymen

t Rate 

Propose

d CY 

2015 SI 

Propose

d CY 

2015 

APC 

Propose

d CY 

2015 

Payment 

Rate 

19083 

Biopsy, breast, with 

placement of breast 

localization device(s) 

(eg, clip, metallic 

pellet), when performed, 

and imaging of the 

biopsy specimen, when 

performed, 

percutaneous; first 

lesion, including 

ultrasound guidance 

T 0005 $702.08 T 0005 $1,062.2

8 

19084 

Biopsy, breast, with 

placement of breast 

localization device(s) 

(eg, clip, metallic 

pellet), when performed, 

and imaging of the 

biopsy specimen, when 

performed, 

percutaneous; each 

additional lesion, 

including ultrasound 

guidance (List 

separately in addition to 

code for primary 

procedure) 

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

19085 

Biopsy, breast, with 

placement of breast 

localization device(s) 

(eg, clip, metallic 

pellet), when performed, 

and imaging of the 

biopsy specimen, when 

performed, 

percutaneous; first 

lesion, including 

magnetic resonance 

guidance 

T 0005 $702.08 T 0005 $ 

1,062.28 
CMS-1613-P 288 

CY 

2014 

CPT 

Code 

Long Descriptor CY 

2014 

SI 

CY 

2014 

APC 

CY 

2014 

Paymen

t Rate 

Propose

d CY 

2015 SI 

Propose

d CY 

2015 

APC 

Propose

d CY 

2015 

Payment 

Rate 

19086 

Biopsy, breast, with 

placement of breast 

localization device(s) 

(eg, clip, metallic 

pellet), when performed, 

and imaging of the 

biopsy specimen, when 

performed, 

percutaneous; each 

additional lesion, 

including magnetic 

resonance guidance (List 

separately in addition to 

code for primary 

procedure) 

N N/A N/A N N/A N/A 
CMS-1613-P 289 

4. Image-Guided Abscess Drainage Procedures (APCs 0005 and 0007) 

 For the CY 2014 OPPS update, the AMA CPT Editorial Panel established CPT 

code 10030 to report the bundled service of image-guided fluid collection drainage by 

catheter for percutaneous soft tissue, and CPT code 49407 to report the bundled service 

of image-guided fluid collection drainage by catheter for peritoneal, retroperitoneal, 

transvaginal or transrectal collections, effective January 1, 2014. As shown in Table 25, 

which shows the long descriptors for CPT codes 10030 and 49407, and as listed in 

Addendum B to the CY 2014 OPPS/ASC final rule with comment period, we assigned 

CPT code 10030 to APC 0006 (Level I Incision & Drainage), with a payment rate of 

$159.66, and assigned CPT code 49407 to APC 0685 (Level III Needle 

Biopsy/Aspiration Except Bone Marrow), with a payment rate of $757.76. In addition, as 

listed in Addendum B to the CY 2014 OPPS/ASC final rule with comment period, both 

procedure codes were assigned to comment indicator “NI” to indicate that the codes were 

new codes and assigned interim APC and status indicator assignments that were subject 

to comment. 

 At the Panel’s March 10, 2014 meeting, a presenter requested the reassignment of 

both CPT codes 10030 and 49407 to APC 0037 (Level IV Needle Biopsy/Aspiration 

Except Bone Marrow), which has a CY 2014 OPPS payment rate of $1,223.25 and where 

similar procedures are assigned. Specifically, the presenter indicated that all the 

image-guided fluid collection drainage procedures should be treated as one clinically 

cohesive group and should be assigned to APC 0037. 
CMS-1613-P 290 

 Based on the request, the Panel agreed with the presenter and recommended that 

CMS reassign CPT code 49407 to APC 0037. However, the Panel did not agree with the 

reassignment of CPT code 10030 to APC 0037. Rather, the Panel believed that CPT 

code 10030 would be more appropriately assigned to APC 0007 (Level II Incision and 

Drainage). 

 We agree with the Panel’s recommendation to reassign CPT code 10030 to 

APC 0007. Therefore, we are proposing to reassign CPT code 10030 from APC 0006 to 

APC 0007 for the CY 2015 OPPS update. In light of the Panel’s recommendation to 

reassign CPT code 49407 and the image-guided breast biopsy procedures to APC 0037, 

and our longstanding policy of reviewing, on an annual basis, the APC assignments for 

all services and items paid under the OPPS, we evaluated the geometric mean costs 

associated with the procedures assigned to the existing four needle biopsy APCs, 

specifically, APCs 0004 (Level I Needle Biopsy/ Aspiration Except Bone Marrow), 0005, 

0685 (Level III Needle Biopsy/Aspiration Except Bone Marrow), and 0037. Based on 

our review of the latest hospital outpatient claims data available for the proposed rule, we 

are proposing to reassign the procedures assigned to APCs 0685 and 0037 to either 

APC 0004 or APC 0005 based on clinical and resource homogeneity. With this proposed 

revision, there would be no procedures assigned to APCs 0685 or 0037. Therefore, we 

are proposing to delete APCs 0685 and 0037 for CY 2015. Consequently, for the 

CY 2015 OPPS update, we are proposing to use only two levels of needle biopsy APCs, 

specifically, APCs 0004 and 0005. Based on the proposal to reassign all of the 

procedures assigned to APCs 0685 and 0037 to either APC 0004 or APC 0005, we are 
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proposing to reassign CPT code 49407 from APC 0685 to APC 0005 for CY 2015. Table 

25 below shows the long descriptors for CPT codes 10030 and 49407, and their proposed 

status indicator and APC assignments for the CY 2015 OPPS update. The proposed 

CY 2015 payment rate for CPT codes 10030 and 49407 can be found in Addendum B to 

this CY 2015 OPPS/ASC proposed rule (which is available via the Internet on the CMS 

Web site). 

TABLE 25.—PROPOSED CY 2015 APC ASSIGNMENTS FOR CPT 

CODES 10030 and 49407 

CPT 

Code Long Descriptor 

CY 2014

OPPS 

SI 

CY 2014

OPPS 

APC 

Proposed 

CY 2015 

OPPS 

SI 

Proposed 

CY 2015 

OPPS 

APC 

10030 

Image-guided fluid collection 

drainage by catheter (eg, abscess, 

hematoma, seroma, lymphocele, 

cyst), soft tissue (eg, extremity, 

abdominal wall, neck), percutaneous 

T 0006 T 0007 

49407 

Image-guided fluid collection 

drainage by catheter (eg, abscess, 

hematoma, seroma, lymphocele, 

cyst); peritoneal or retroperitoneal, 

transvaginal or transrectal 

T 0685 T 0005 

5. Cystourethroscopy and Other Genitourinary Procedures (APCs 0160, 0161, 0162, and 

0163) 

 Every year we revise, if necessary, the APC assignments for procedure codes 

based on our analysis of the latest hospital outpatient claims data. Although we do not 

discuss every APC change in the proposed and final rules with comment period, these 

changes are listed in Addendum B to the proposed and final rules with comment period. 
CMS-1613-P 292 

Specifically, procedure codes with proposed revisions to the APC and/or status indicator 

assignments are assigned to comment indicator “CH” (Active HCPCS code in current 

year and next calendar year, status indicator and/or APC assignment has changed) in 

Addendum B to this proposed rule. 

 For the CY 2014 OPPS update, there are five levels of APCs that contain 

cystourethroscopy and genitourinary procedures. These APCs are listed in Table 26, 

along with their status indicator assignments for CY 2014. 

TABLE 26.—CY 2014 APCs CONTAINING 

CYSTOURETHROSCOPY AND GENITOURINARY PROCEDURES 

CY 2014 

APC APC Title Description 

CY 2014 

Status 

Indicator 

0160 Level I Cystourethroscopy and other Genitourinary Procedures T 

0161 Level II Cystourethroscopy and other Genitourinary Procedures T 

0162 Level III Cystourethroscopy and other Genitourinary Procedures T 

0163 Level IV Cystourethroscopy and other Genitourinary Procedures T 

0429 Level V Cystourethroscopy and other Genitourinary Procedures T 

 For the CY 2015 OPPS update, based on our review of the latest hospital 

outpatient claims data available for this proposed rule, we are proposing to restructure the 

APCs containing cystourethroscopy and other genitourinary procedures to better reflect 

the resource costs and clinical characteristics of the procedures within each APC. This 

proposed restructuring results in the use of four APCs for the CY 2015 OPPS update, as 

compared to the five APCs used for the CY 2014 OPPS update. Specifically, based on 

our review and evaluation of the procedures assigned to these APCs and the latest 

hospital outpatient claims data, we are proposing to delete APC 0429 (Level V 
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Cystourethroscopy and Other Genitourinary Procedures). We are proposing to reassign 

the procedures that were previously assigned to APC 0429 to either APC 0161 (Level I 

Cystourethroscopy and Other Genitourinary Procedures) or APC 0163 (Level IV 

Cystourethroscopy and other Genitourinary Procedures) for the CY 2015 OPPS update 

because we believe that these procedures would be more appropriately assigned to either 

APC based on their geometric mean costs. Further, we believe this proposed 

restructuring appropriately categorizes all of the cystourethroscopy and other 

genitourinary procedures that are comparable clinically and with respect to resource use 

within an APC group. In addition, we are proposing to delete APC 0169 (Lithotripsy) 

because the one procedure, specifically the procedure described by CPT code 50590 

(Lithotripsy, extracorporeal shock wave) that was assigned to this APC is proposed for 

reassignment to APC 0163. 

 In summary, we are proposing to restructure the APCs containing 

cystourethroscopy and other genitourinary procedures, and to use a four-level APC 

grouping to classify the procedures based on our analysis of the latest hospital outpatient 

claims data available for this proposed rule. In addition, we are proposing to delete 

APC 0169 and reassign CPT code 50590 to APC 0163 where it is more appropriately 

assigned based on resource costs and the similarity to the other procedures assigned to 

APC 0163. Table 27 shows the proposed APCs that contain cystourethroscopy and other 

genitourinary procedures, the APC titles, and the status indicator assignments for 

CY 2015. The proposed payment rates for the specific APCs listed in Table 27 can be 

found in Addendum A to this proposed rule, while the proposed payment rates for the 
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specific cystourethroscopy and other genitourinary procedure codes can be found in 

Addendum B to this proposed rule (which are available via the Internet on the CMS Web 

site). 

TABLE 27.—PROPOSED CY 2015 APCs CONTAINING 

CYSTOURETHROSCOPY AND GENITOURINARY PROCEDURES 

Proposed 

CY 2015 

APC APC Title Description 

Proposed 

CY 2015 

Status 

Indicator 

0160 

Level I Cystourethroscopy and other Genitourinary 

Procedures T 

0161 

Level II Cystourethroscopy and other Genitourinary 

Procedures T 

0162 

Level III Cystourethroscopy and other Genitourinary 

Procedures T 

0163 

Level IV Cystourethroscopy and other Genitourinary 

Procedures T 

6. Wound Treatments and Services (APCs 0015 and 0327) 

a. Epidermal Autograft (APC 0327) 

 In the CY 2014 OPPS/ASC final rule with comment period, we assigned CPT 

code 15110 to APC 0329 (Level IV Skin Repair), with a payment rate of approximately 

$2,260. This payment rate was derived from the latest hospital outpatient claims data 

used for CY 2014 ratesetting, which showed a geometric mean cost of approximately 

$2,174 based on 10 single claims (out of 29 total claims) for CPT code 15110. 

 As stated in section III.B. of this proposed rule, we review, on an annual basis, the 

APC assignments for all services and items paid under the OPPS. Analysis of the latest 

hospital outpatient claims data available for this CY 2015 proposed rule showed a 
CMS-1613-P 295 

geometric mean cost of approximately $774 based on 90 single claims (out of 122 total 

claims) for CPT code 15110. Based on these recent data, we are proposing to reassign 

CPT code 15110 from APC 0329 to APC 0327 (Level II Skin Procedures), which has a 

geometric mean cost of approximately $451. We believe that APC 0327 is the most 

appropriate assignment for CPT code 15110 when considering its similarity to the other 

procedures in this APC. 

 In addition, we are proposing to revise the APC titles for the four skin repair 

APCs. Specifically, we are proposing to rename APC 0326 from “Level I Skin Repair” 

to “Level I Skin Procedures,” APC 0327 from “Level II Skin Repair” to “Level II Skin 

Procedures,” APC 0328 from “Level III Skin Repair” to “Level III Skin Procedures,” and 

APC 0329 from “Level IV Skin Repair” to “Level IV Skin Procedures.” 

 Table 28 below shows the long descriptor, as well as the proposed CY 2015 APC 

and status indicator assignment, for CPT code 15110. The proposed CY 2015 payment 

rate for CPT code 15110 can be found in Addendum B to this proposed rule (which is 

available via the Internet on the CMS Web site). 

TABLE 28.–PROPOSED CY 2015 APC AND STATUS INDICATOR 

FOR CPT CODE 15110 

Procedure 

Code Long Descriptor 

CY 

2014 

SI 

CY 

2014 

APC 

Proposed 

CY 2015 

SI 

Proposed 

CY 2015 

APC 

15110 

Epidermal autograft, trunk, arms, legs; 

first 100 sq cm or less, or 1% of body 

area of infants and children 

T 0329 T 0327 
CMS-1613-P 296 

b. Negative Pressure Wound Therapy (NPWT) (APC 0015) 

 We stated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75001) that some commenters requested the reassignment of HCPCS codes 

G0456 and G0457 to a higher paying APC, specifically within the range of $450 to $500 

because this range in amounts would adequately pay for the cost of providing negative 

pressure wound therapy (NPWT). We further stated in that same final rule with comment 

period that because HCPCS codes G0456 and G0457 were new codes for the CY 2013 

OPPS update, we expected to have claims data available for these codes during the 

CY 2015 rulemaking cycle, and at which time we would reevaluate the APC assignments 

for these services in preparation for the CY 2015 rulemaking cycle. 

 We established HCPCS code G0456 and HCPCS code G0457 effective 

January 1, 2013, to provide a payment mechanism for NPWT services furnished through 

a disposable device. For the CY 2013 OPPS update, we assigned these services to 

APC 0016 (Level IV Debridement & Destruction), which had a CY 2013 payment rate of 

approximately $210. For the CY 2014 OPPS update, we continued to assign HCPCS 

codes G0456 and G0457 to APC 0016, which has a payment rate of approximately $275. 

 For the CY 2015 OPPS update, our analysis of the latest hospital outpatient 

claims data available for this proposed rule, which is based on claims submitted from 

January 1, 2013 through December 31, 2013, indicates that the geometric mean cost of 

APC 0013 is close to the geometric mean cost of APC 0015. Therefore, we are 

proposing to combine these APCs by deleting APC 0013 and reassigning all of the 

procedures from APC 0013 to APC 0015, thereby retaining APC 0015. We are 
CMS-1613-P 297 

proposing to retitle the Debridement and Destruction APC series (excluding the title of 

APC 0012) as follows: APC 0015 (Level II Debridement and Destruction), APC 0016 

(Level III Debridement and Destruction), and APC 0017 (Level IV Debridement and 

Destruction). The CY 2013 claims data available for this proposed rule also indicate that 

the resource costs for the services described by HCPCS codes G0456 and G0457 range 

between $152 and $193. Specifically, the geometric mean cost for HCPCS code G0456 

is approximately $152 based on 4,509 single claims (out of 5,772 total claims), and 

approximately $193 for HCPCS code G0457 based on 386 single claims (out of 591 total 

claims). Based on our most recent claims data, we believe that a reassignment of HCPCS 

codes G0456 and G0457 from APC 0016 to APC 0015 (Level III Debridement & 

Destruction), which has a geometric mean cost of approximately $148, is most 

appropriate. Therefore, we are proposing to reassign HCPCS codes G0456 and G0457 

from APC 0016 to APC 0015 for the CY 2015 OPPS update. Table 29 below shows the 

long descriptors as well as the proposed CY 2015 APC and status indicator assignments 

for HCPCS codes G0456 and G0457. The proposed CY 2015 payment rates for HCPCS 

codes G0456 and G0457 can be found in Addendum B to this proposed rule (which is 

available via the Internet on the CMS Web site). 
CMS-1613-P 298 

TABLE 29.--PROPOSED CY 2015 APCs AND STATUS INDICATOR 

FOR HCPCS CODES G0456 AND G0457 

HCPCS 

Code Long Descriptor 

CY 

2014 

SI 

CY 

2014 

APC 

Proposed 

CY 2015 

SI 

Proposed 

CY 2015 

APC 

G0456 

Negative pressure wound therapy, (eg, 

vacuum assisted drainage collection) 

using a mechanically-powered device, 

not durable medical equipment, 

including provision of cartridge and 

dressing(s), topical application(s), 

wound assessment, and instructions for 

ongoing care, per session; total 

wounds(s) surface area less than or 

equal to 50 square centimeters 

T 0016 T 0015 

G0457 

Negative pressure wound therapy, (eg, 

vacuum assisted drainage collection) 

using a mechanically-powered device, 

not durable medical equipment, 

including provision of cartridge and 

dressing(s), topical application(s), 

wound assessment, and instructions for 

ongoing care, per session; total 

wounds(s) surface area greater than 50 

square centimeters 

T 0016 T 0015 

7. Endoscopic Retrograde Cholangiopancreatography (ERCP) with Stent (APC 0384) 

 For the CY 2014 OPPS update, the AMA CPT Editorial Panel deleted CPT codes 

43268 and 43269 describing an endoscopic retrograde cholangiopancreatography (ERCP) 

with stent placement into the biliary or pancreatic duct. New CPT codes 43274 and 

43276 replaced deleted CPT codes 43268 and 43269, effective January 1, 2014. New 

CPT codes 43274 and 43276 describe an ERCP with stent placement into the biliary or 

pancreatic duct including dilation, guide wire passage, and sphincterotomy, when 

performed. As shown in Table 30, and as listed in Addendum B to the CY 2014 
CMS-1613-P 299 

OPPS/ASC final rule with comment period, we assigned CPT codes 43274 and 43276 to 

APC 0151 (Endoscopic Retrograde Cholangio-Pancreatography (ERCP)), with a 

payment rate of $1,933.69 for CY 2014. In addition, as listed in Addendum B, both 

procedure codes were assigned to comment indicator “NI” to indicate that these codes 

were assigned interim APC and status indicator assignments that were subject to 

comment. 

 At the Panel’s March 10, 2014 meeting, the Panel recommended that CMS 

reassign CPT codes 43274 and 43276 to APC 0384 (GI Procedures with Stents) at the 

earliest opportunity. We agree with the Panel’s recommendation that CPT codes 43274 

and 43276 should be reassigned to APC 0384. Therefore, we are proposing to reassign 

CPT codes 43274 and 43276 from APC 0151 to APC 0384 for the CY 2015 OPPS 

update. Table 30 below shows the long descriptors for CPT codes 43274 and 43276, and 

their proposed APC and status indicator assignments for the CY 2015 OPPS update. We 

note that APC 0384 is proposed as a comprehensive APC for CY 2015. We refer readers 

to section II.A.2.e. of this proposed rule for additional information on our comprehensive 

APC policy. The proposed CY 2015 payment rate for CPT codes 43274 and 43276 can 

be found in Addendum B to this CY 2015 OPPS/ASC proposed rule (which is available 

via the Internet on the CMS Web site). 
CMS-1613-P 300 

TABLE 30.—PROPOSED CY 2015 APC AND STATUS INDICATOR 

ASSIGNMENTS FOR CPT CODES 43274 AND 43276 

CPT 

Code Long Descriptor 

CY 

2014 

OPPS 

SI 

CY 

2014 

OPPS 

APC 

Proposed 

CY 2015 

OPPS 

SI 

Proposed 

CY 2015 

OPPS 

APC 

43274 

Endoscopic retrograde 

cholangiopancreatography (ERCP); 

with placement of endoscopic stent into 

biliary or pancreatic duct, including preand post-dilation and guide wire 

passage, when performed, including 

sphincterotomy, when performed, each 

stent 

T 0151 J1 0384 

43276 

Endoscopic retrograde 

cholangiopancreatography (ERCP); 

with removal and exchange of stent(s), 

biliary or pancreatic duct, including preand post-dilation and guide wire 

passage, when performed, including 

sphincterotomy, when performed, each 

stent exchanged 

T 0151 J1 0384 

8. Radiation Therapy (APCs 0066, 0067, 0412, 0446, 0648, and 0667) 

 We are proposing several changes to the radiation therapy APCs for CY 2015. To 

correct a violation of the 2 times rule within APC 0664 (Level I Proton Beam Radiation 

Therapy), we are proposing to reassign CPT code 77520 from APC 0664 to APC 0412 

(Level III Radiation Therapy). We believe that CPT code 77520 is both clinically similar 

and comparable in geometric mean cost to the other services assigned to APC 0412. We 

also are proposing to reassign CPT code 77522 from APC 0664 to proposed newly 

renamed APC 0667 (Level IV Radiation Therapy) because we believe that the procedure 

described by CPT code 77522 is both clinically similar and comparable in geometric 
CMS-1613-P 301 

mean cost to the other services assigned to APC 0667. Because there would be no other 

codes assigned to APC 0664 if these proposed reassignments are finalized, we also are 

proposing to delete APC 0664 for CY 2015. In addition, we are proposing to rename 

existing APC 0667 to “Level IV Radiation Therapy” (instead of using the existing title of 

“Level II Proton Beam Radiation Therapy”), to make the title consistent with other APCs 

in the radiation therapy series. In conjunction with this proposed change, we are 

proposing to reassign the following three services to proposed newly renamed APC 0667 

for CY 2015: CPT codes 77522, 77523, and 77525. 

 We also are proposing to delete APC 0065 (IORT, MRgFUS, and MEG) because 

we are proposing to reassign the services assigned to this APC to more appropriate APCs 

based on clinical similarities and comparable geometric mean cost. Specifically, we are 

proposing to reassign the Magnetoencephalography (MEG) CPT codes 95965 and 95966 

from APC 0065 to APC 0446 (Level IV Nerve and Muscle Services), which would only 

contain MEG services. We are proposing to reassign Intraoperative Radiation Therapy 

(IORT) CPT codes 77424 and 77425 to comprehensive APC 0648 (Level IV Breast and 

Skin Surgery). We refer readers to section II.A.2.e. of this proposed rule for a discussion 

of comprehensive APCs and the APC assignment of IORT services. In addition, we are 

proposing to reassign the Magnetic Resonance-Guided Focused Ultrasound Surgery 

(MRgFUS) HCPCS codes C9734, 0071T, and 0072T, and CPT code 0301T from APC 

0065 to APC 0066, which we are proposing to rename “Level V Radiation Therapy.” 

We understand that the MRgFUS services are not the same as radiation therapy, but 

assigning these services to APC 0066 aligns with the assignment of certain stereotactic 
CMS-1613-P 302 

radiosurgery services (namely the procedure described by HCPCS code G0339 and 

successor CPT code 77373) that were grouped with MRgFUS services prior to CY 2014. 

Finally, we are proposing to rename APC 0067 from “Level II Stereotactic 

Radiosurgery” to “Single Session Cranial Stereotactic Radiosurgery”, which we are 

proposing as a comprehensive APC. For a further discussion regarding the services 

assigned to APC 0067, we refer readers to section II.A.2.e. of this proposed rule.

IV. Proposed OPPS Payment for Devices 

A. Proposed Pass-Through Payments for Devices 

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

a. Background 

 Section 1833(t)(6)(B)(iii) of the Act requires that, under the OPPS, a category of 

devices be eligible for transitional pass-through payments for at least 2, but not more than 

3 years. This pass-through payment eligibility period begins with the first date on which 

transitional pass-through payments may be made for any medical device that is described 

by the category. We may establish a new device category for pass-through payment in 

any quarter. Under our established policy, we base the pass-through status expiration 

date for a device category on the date on which pass-through payment is effective for the 

category, which is the first date on which pass-through payment may be made for any 

medical device that is described by such category. We propose and finalize the dates for 

expiration of pass-through status for device categories as part of the OPPS annual update. 

 We also have an established policy to package the costs of the devices that are no 

longer eligible for pass-through payments into the costs of the procedures with which the 
CMS-1613-P 303 

devices are reported in the claims data used to set the payment rates (67 FR 66763). 

Brachytherapy sources, which are now separately paid in accordance with section 

1833(t)(2)(H) of the Act, are an exception to this established policy. 

 There currently is one device category eligible for pass-through payment. This 

device category is described by HCPCS code C1841 (Retinal prosthesis, includes all 

internal and external components), which we made effective for pass-through payment as 

of October 1, 2013. 

b. Proposed CY 2015 Policy 

 As indicated earlier, a category of devices may be eligible for transitional 

pass-through payments for at least 2 years, but not more than 3 years. There is one 

device category eligible for pass-through payment at this time, described by HCPCS code 

C1841, which we made effective for pass-through payment as of October 1, 2013. At the 

end of CY 2015, the device category described by HCPCS code C1841 will have been 

eligible for pass-through payment for more than 2 years. Therefore, we are proposing an 

expiration date for pass-through payment for HCPCS code C1841 of December 31, 2015. 

We are proposing that, effective January 1, 2016, HCPCS code C1841 will no longer be 

eligible for pass-through payment status. In accordance with our established policy, we 

are proposing to package the cost of HCPCS code C1841 after December 31, 2015, into 

the costs related to the procedures with which it is reported in our claims data. 

 If we create new device categories for pass-through payment status during the 

remainder of CY 2014 or during CY 2015, we will propose future expiration dates in 

accordance with the statutory requirement that they be eligible for pass-through payments 
CMS-1613-P 304 

for at least 2 years, but not more than 3 years, from the date on which pass-through 

payment for any medical device described by the category may first be made. 
CMS-1613-P 305 

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

Costs Packaged into APC Groups 

a. Background 

 Section 1833(t)(6)(D)(ii) of the Act sets the amount of additional pass-through 

payment for an eligible device as the amount by which the hospital’s charges for a 

device, adjusted to cost (the cost of the device) exceeds the portion of the otherwise 

applicable Medicare outpatient department fee schedule amount (the APC payment 

amount) associated with the device. We have an established policy to estimate the 

portion of each APC payment rate that could reasonably be attributed to the cost of the 

associated devices that are eligible for pass-through payments (66 FR 59904) for 

purposes of estimating the portion of the otherwise applicable APC payment amount 

associated with pass-through devices. For eligible device categories, we deduct an 

amount that reflects the portion of the APC payment amount that we determine is 

associated with the cost of the device, defined as the device APC offset amount, from the 

charges adjusted to cost for the device, as provided by section 1833(t)(6)(D)(ii) of the 

Act, to determine the eligible device’s pass-through payment amount. We have 

consistently used an established methodology to estimate the portion of each APC 

payment rate that could reasonably be attributed to the cost of an associated device 

eligible for pass-through payment, using claims data from the period used for the most 

recent recalibration of the APC rates (72 FR 66751 through 66752). We establish and 

update the applicable device APC offset amounts for newly eligible pass-through device 

categories through the transmittals that implement the quarterly OPPS updates. 
CMS-1613-P 306 

 Currently, we have published a list of all procedural APCs with the CY 2014 

portions (both percentages and dollar amounts) of the APC payment amounts that we 

determine are associated with the cost of devices on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The dollar amounts are used as the device 

APC offset amounts. In addition, in accordance with our established practice, the device 

APC offset amounts in related APCs are used in order to evaluate whether the cost of a 

device in an application for a new device category for pass-through payment is not 

insignificant in relation to the APC payment amount for the service related to the 

category of devices, as specified in our regulations at § 419.66(d). 

 Beginning in CY 2010, we include packaged costs related to implantable 

biologicals in the device offset calculations in accordance with our policy that the 

pass-through evaluation process and payment methodology for implantable biologicals 

that are surgically inserted or implanted (through a surgical incision or a natural orifice) 

and that are newly approved for pass-through status beginning on or after 

January 1, 2010, be the device pass-through process and payment methodology only 

(74 FR 60476). 

b. Proposed CY 2015 Policy 

 We are proposing to continue, for CY 2015, our established methodology to 

estimate the portion of each APC payment rate that could reasonably be attributed to (that 

is, reflect) the cost of an associated device eligible for pass-through payment, using 

claims data from the period used for the most recent recalibration of the APC payment 
CMS-1613-P 307 

rates. We are proposing to continue our policy, for CY 2015, that the pass-through 

evaluation process and pass-through payment methodology for implantable biologicals 

that are surgically inserted or implanted (through a surgical incision or a natural orifice) 

and that are newly approved for pass-through status beginning on or after 

January 1, 2010, be the device pass-through process and payment methodology only. 

The rationale for this policy is provided in the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60471 through 60477). We also are proposing to continue our 

established policies for calculating and setting the device APC offset amounts for each 

device category eligible for pass-through payment. In addition, we are proposing to 

continue our established policy to review each new device category on a case-by-case 

basis to determine whether device costs associated with the new category are already 

packaged into the existing APC structure. If device costs packaged into the existing APC 

structure are associated with the new category, we are proposing to deduct the device 

APC offset amount from the pass-through payment for the device category. As stated 

earlier, these device APC offset amounts also would be used in order to evaluate whether 

the cost of a device in an application for a new device category for pass-through payment 

is not insignificant in relation to the APC payment amount for the service related to the 

category of devices (§ 419.66(d)). 

 For CY 2015, we also are proposing to continue our policy established in 

CY 2010 to include implantable biologicals in our calculation of the device APC offset 

amounts. In addition, we are proposing to continue to calculate and set any device APC 

offset amount for any new device pass-through category that includes a newly eligible 
CMS-1613-P 308 

implantable biological beginning in CY 2015 using the same methodology we have 

historically used to calculate and set device APC offset amounts for device categories 

eligible for pass-through payment, and to include the costs of implantable biologicals in 

the calculation of the device APC offset amounts (78 FR 43596). 

 In addition, we are proposing to update the list of all procedural APCs with the 

final CY 2015 portions of the APC payment amounts that we determine are associated 

with the cost of devices on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html so that this information is available for use 

by the public in developing potential CY 2015 device pass-through payment applications 

and by CMS in reviewing those applications. 

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

Devices 

1. Background 

 To ensure equitable payment when the hospital receives a device without cost or 

with full credit, in CY 2007, we implemented a policy to reduce the payment for 

specified device-dependent APCs by the estimated portion of the APC payment 

attributable to device costs (that is, the device offset) when the hospital receives a 

specified device at no cost or with full credit (71 FR 68071 through 68077). Hospitals 

are instructed to report no cost/full credit cases using the “FB” modifier on the line with 

the procedure code in which the no cost/full credit device is used. In cases in which the 

device is furnished without cost or with full credit, the hospital is instructed to report a 
CMS-1613-P 309 

token device charge of less than $1.01. In cases in which the device being inserted is an 

upgrade (either of the same type of device or to a different type of device) with a full 

credit for the device being replaced, the hospital is instructed to report as the device 

charge the difference between its usual charge for the device being implanted and its 

usual charge for the device for which it received full credit. In CY 2008, we expanded 

this payment adjustment policy to include cases in which hospitals receive partial credit 

of 50 percent or more of the cost of a specified device. Hospitals are instructed to append 

the “FC” modifier to the procedure code that reports the service provided to furnish the 

device when they receive a partial credit of 50 percent or more of the cost of the new 

device. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for 

more background information on the “FB” and “FC” payment adjustment policies 

(72 FR 66743 through 66749). 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 

75007), beginning in CY 2014, we modified our policy of reducing OPPS payment for 

specified APCs when a hospital furnishes a specified device without cost or with a full or 

partial credit. For CY 2013 and prior years, our policy had been to reduce OPPS 

payment by 100 percent of the device offset amount when a hospital furnishes a specified 

device without cost or with a full credit and by 50 percent of the device offset amount 

when the hospital receives partial credit in the amount of 50 percent or more of the cost 

for the specified device. For CY 2014, we reduce OPPS payment, for the applicable 

APCs, by the full or partial credit a hospital receives for a replaced device. Specifically, 

under this modified policy, hospitals are required to report the amount of the credit in the 
CMS-1613-P 310 

amount portion for value code “FD” (Credit Received from the Manufacturer for a 

Replaced Medical Device) when the hospital receives a credit for a replaced device that is 

50 percent or greater than the cost of the device. For CY 2014, we also limit the OPPS 

payment deduction for the applicable APCs to the total amount of the device offset when 

the “FD” value code appears on a claim. 

2. Proposed Policy for CY 2015 

 For CY 2015, we are proposing to continue our existing policy of reducing OPPS 

payment for specified APCs when a hospital furnishes a specified device without cost or 

with a full or partial credit. Specifically, for CY 2015, we are proposing to continue to 

reduce the OPPS payment, for the applicable APCs listed below in Table 31, by the full 

or partial credit a provider receives for a replaced device. Under this proposed policy, 

hospitals would continue to be required to report the amount of the credit in the amount 

portion for “FD” when the hospital receives a credit for a replaced device listed in 

Table 32 that is 50 percent or greater than the cost of the device. 

 For CY 2015, we also are proposing to continue using the three criteria 

established in the CY 2007 OPPS/ASC final rule with comment period for determining 

the APCs to which our proposed CY 2015 policy would apply (71 FR 68072 through 

68077). Specifically: (1) all procedures assigned to the selected APCs must involve 

implantable devices that would be reported if device insertion procedures were 

performed; (2) the required devices must be surgically inserted or implanted devices that 

remain in the patient’s body after the conclusion of the procedure (at least temporarily); 

and (3) the device offset amount must be significant, which, for purposes of this policy, is 
CMS-1613-P 311 

defined as exceeding 40 percent of the APC cost. We also are proposing to continue to 

restrict the devices to which the APC payment adjustment would apply to a specific set of 

costly devices to ensure that the adjustment would not be triggered by the implantation of 

an inexpensive device whose cost would not constitute a significant proportion of the 

total payment rate for an APC. We continue to believe these criteria are appropriate 

because no cost devices and device credits are likely to be associated with particular 

cases only when the device must be reported on the claim and is of a type that is 

implanted and remains in the body when the beneficiary leaves the hospital. We believe 

that the reduction in payment is appropriate only when the cost of the device is a 

significant part of the total cost of the APC into which the device cost is packaged, and 

that the 40-percent threshold is a reasonable definition of a significant cost. 

 We examined the offset amounts calculated from the CY 2015 proposed rule data 

and the clinical characteristics of the proposed CY 2015 APCs to determine which APCs 

meet the criteria for CY 2015. Table 31 below lists the proposed APCs to which the 

proposed payment adjustment policy for no cost/full credit and partial credit devices 

would apply in CY 2015. Table 32 below lists the proposed devices to which the 

proposed payment adjustment policy for no cost/full credit and partial credit devices 

would apply in CY 2015. 

 We are proposing to update the lists of APCs and devices to which the proposed 

no cost/full credit and partial credit device adjustment policy would apply for CY 2015, 

consistent with the three criteria discussed earlier in this section, based on the final 
CMS-1613-P 312 

CY 2013 claims data available for the CY 2015 OPPS/ASC final rule with comment 

period. 

TABLE 31.—PROPOSED APCs TO WHICH THE PROPOSED NO COST/FULL 

CREDIT AND PARTIAL CREDIT DEVICE PAYMENT ADJUSTMENT POLICY 

WOULD APPLY IN CY 2015 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC Title 

0039 Level III Neurostimulator & Related Procedures 

0061 Level II Neurostimulator & Related Procedures 

0064 Level III Treatment Fracture/Dislocation 

0089 Level III Pacemaker and Similar Procedures 

0090 Level II Pacemaker and Similar Procedures 

0107 Level I ICD and Similar Procedures 

0108 Level II ICD and Similar Procedures 

0227 Implantation of Drug Infusion Device 

0229 Level II Endovascular Procedures 

0259 Level VII ENT Procedures 

0293 Level IV Intraocular Procedures 

0318 Level IV Neurostimulator & Related Procedures 

0319 Level III Endovascular Procedures 

0351 Level V Intraocular Procedures 

0385 Level I Urogenital Procedures 

0386 Level II Urogenital Procedures 

0425 Level V Musculoskeletal Procedures Except Hand and Foot 

0434 Cardiac Defect Repair 

0655 Level IV Pacemaker and Similar Procedures 
CMS-1613-P 313 

TABLE 32.—PROPOSED DEVICES TO WHICH THE PROPOSED NO 

COST/FULL CREDIT AND PARTIAL CREDIT DEVICE PAYMENT 

ADJUSTMENT POLICY WOULD APPLY IN CY 2015 

Proposed 

CY 2015 Device 

HCPCS Code 

Proposed CY 2015 Short 

Descriptor 

C1721 AICD, dual chamber 

C1722 AICD, single chamber 

C1728 Cath, brachytx seed adm 

C1764 Event recorder, cardiac 

C1767 Generator, neurostim, imp 

C1771 Rep dev, urinary, w/sling 

C1772 Infusion pump, programmable 

C1776 Joint device (implantable) 

C1777 Lead, AICD, endo single coil 

C1778 Lead, neurostimulator 

C1779 Lead, pmkr, transvenous VDD 

C1785 Pmkr, dual, rate-resp 

C1786 Pmkr, single, rate-resp 

C1789 Prosthesis, breast, imp 

C1813 Prosthesis, penile, inflatab 

C1815 Pros, urinary sph, imp 

C1818 Integrated keratoprosthesis 

C1820 Generator, neuro rechg bat sys 

C1840 Lens, intraocular (telescopic) 

C1881 Dialysis access system 

C1882 AICD, other than sing/dual 

C1891 Infusion pump, non-prog, perm 

C1895 Lead, AICD, endo dual coil 

C1896 Lead, AICD, non sing/dual 

C1897 Lead, neurostim, test kit 

C1898 Lead, pmkr, other than trans 

C1899 Lead, pmkr/AICD combination 

C1900 Lead coronary venous 

C2619 Pmkr, dual, non rate-resp 

C2620 Pmkr, single, non rate-resp 

C2621 Pmkr, other than sing/dual 
CMS-1613-P 314 

Proposed 

CY 2015 Device 

HCPCS Code 

Proposed CY 2015 Short 

Descriptor 

C2622 Prosthesis, penile, non-inf 

C2626 Infusion pump, non-prog, temp 

C2631 Rep dev, urinary, w/o sling 

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

Radiopharmaceuticals 

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

Biologicals, and Radiopharmaceuticals 

1. Background 

 Section 1833(t)(6) of the Act provides for temporary additional payments or 

“transitional pass-through payments” for certain drugs and biologicals. Throughout this 

proposed rule, the term “biological” is used because this is the term that appears in 

section 1861(t) of the Act. “Biological” as used in this proposed rule includes 

“biological product” or “biologic” as defined in the Public Health Service Act. As 

enacted by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 

1999 (BBRA) (Pub. L. 106-113), this provision requires the Secretary to make additional 

payments to hospitals for: current orphan drugs, as designated under section 526 of the 

Federal Food, Drug, and Cosmetic Act; current drugs and biologicals and brachytherapy 

sources used in cancer therapy; and current radiopharmaceutical drugs and biologicals. 

“Current” refers to drugs or biologicals that are outpatient hospital services under Part B 

for which payment was made on the first date the hospital OPPS was implemented. 
CMS-1613-P 315 

 Transitional pass-through payments also are provided for certain “new” drugs and 

biologicals that were not being paid for as an HOPD service as of December 31, 1996 

and whose cost is “not insignificant” in relation to the OPPS payments for the procedures 

or services associated with the new drug or biological. For pass-through payment 

purposes, radiopharmaceuticals are included as “drugs.” As required by statute, 

transitional pass-through payments for a drug or biological described in 

section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not 

more than 3 years, after the payment was first made for the product as a hospital 

outpatient service under Medicare Part B. Proposed CY 2015 pass-through drugs and 

biologicals and their designated APCs are assigned status indicator “G” in Addenda A 

and B to this proposed rule, which are available via the Internet on the CMS Web site. 

 Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through payment 

amount, in the case of a drug or biological, is the amount by which the amount 

determined under section 1842(o) of the Act for the drug or biological exceeds the 

portion of the otherwise applicable Medicare OPD fee schedule that the Secretary 

determines is associated with the drug or biological. If the drug or biological is covered 

under a competitive acquisition contract under section 1847B of the Act, the pass-through 

payment amount is determined by the Secretary to be equal to the average price for the 

drug or biological for all competitive acquisition areas and the year established under 

such section as calculated and adjusted by the Secretary. However, we note that the 

Part B drug competitive acquisition program (CAP) has been postponed since CY 2009, 

and such a program has not been reinstated for CY 2015. 
CMS-1613-P 316 

 This methodology for determining the pass-through payment amount is set forth 

in regulations at 42 CFR 419.64. These regulations specify that the pass-through 

payment equals the amount determined under section 1842(o) of the Act minus the 

portion of the APC payment that CMS determines is associated with the drug or 

biological. Section 1847A of the Act establishes the average sales price (ASP) 

methodology, which is used for payment for drugs and biologicals described in 

section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP 

methodology, as applied under the OPPS, uses several sources of data as a basis for 

payment, including the ASP, the wholesale acquisition cost (WAC), and the average 

wholesale price (AWP). In this proposed rule, the term “ASP methodology” and 

“ASP-based” are inclusive of all data sources and methodologies described therein. 

Additional information on the ASP methodology can be found on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-BDrugs/McrPartBDrugAvgSalesPrice/index.html. 

 The pass-through application and review process for drugs and biologicals is 

explained on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HospitalOutpatientPPS/passthrough_payment.html. 

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

We are proposing that the pass-through status of 9 drugs and biologicals would 

expire on December 31, 2014, as listed in Table 33 below. All of these drugs and 

biologicals will have received OPPS pass-through payment for at least 2 years and no 

more than 3 years by December 31, 2014. These drugs and biologicals were approved 
CMS-1613-P 317 

for pass-through status on or before January 1, 2013. With the exception of those groups 

of drugs and biologicals that are always packaged when they do not have pass-through 

status (specifically, diagnostic radiopharmaceuticals; contrast agents; anesthesia drugs; 

drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a 

diagnostic test or procedure; and drugs and biologicals that function as supplies when 

used in a surgical procedure), our standard methodology for providing payment for drugs 

and biologicals with expiring pass-through status in an upcoming calendar year is to 

determine the product’s estimated per day cost and compare it with the OPPS drug 

packaging threshold for that calendar year (which is proposed at $90 for CY 2015), as 

discussed further in section V.B.2. of this proposed rule. If the estimated per day cost for 

the drug or biological is less than or equal to the applicable OPPS drug packaging 

threshold, we would package payment for the drug or biological into the payment for the 

associated procedure in the upcoming calendar year. If the estimated per day cost of the 

drug or biological is greater than the OPPS drug packaging threshold, we would provide 

separate payment at the applicable relative ASP-based payment amount (which is 

proposed at ASP+6 percent for CY 2015, as discussed further in section V.B.3. of this 

proposed rule). 
CMS-1613-P 318 

TABLE 33.—PROPOSED DRUGS AND BIOLOGICALS FOR WHICH 

PASS-THROUGH STATUS WILL EXPIRE DECEMBER 31, 2014 

Proposed 

CY 2015 

HCPCS 

Code Proposed CY 2015 Long Descriptor 

Proposed 

CY 2015 

SI 

Proposed 

CY 2015 

APC 

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

C9293 Injection, glucarpidase, 10 units K 9293 

J0178 Injection, aflibercept, 1 mg vial K 1420 

J0716 Injection, centruroides (scorpion) immune 

f(ab)2, up to 120 milligrams K 1431 

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

J9306 Injection, pertuzumab, 1 mg K 1471 

Q4131 EpiFix, per square centimeter N N/A 

Q4132 Grafix core, per square centimeter N N/A 

Q4133 Grafix prime, per square centimeter N N/A 

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

Pass-Through Status in CY 2015 

 We are proposing to continue pass-through status in CY 2015 for 22 drugs and 

biologicals. None of these drugs and biologicals will have received OPPS pass-through 

payment for at least 2 years and no more than 3 years by December 31, 2014. These 

drugs and biologicals, which were approved for pass-through status between 

January 1, 2013 and July 1, 2014, are listed in Table 34 below. The APCs and HCPCS 

codes for these drugs and biologicals approved for pass-through status through 

April 1, 2014 are assigned status indicator “G” in Addenda A and B to this proposed rule. 

Addenda A and B to this proposed rule are available via the Internet on the CMS Web 

site. 
CMS-1613-P 319 

 Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for 

pass-through drugs and biologicals (the pass-through payment amount) as the difference 

between the amount authorized under section 1842(o) of the Act and the portion of the 

otherwise applicable OPD fee schedule that the Secretary determines is associated with 

the drug or biological. Payment for drugs and biologicals with pass-through status under 

the OPPS is currently made at the physician’s office payment rate of ASP+6 percent. We 

believe it is consistent with the statute to propose to continue to provide payment for 

drugs and biologicals with pass-through status at a rate of ASP+6 percent in CY 2015, 

which is the amount that drugs and biologicals receive under section 1842(o) of the Act. 

 Therefore, for CY 2015, we are proposing to pay for pass-through drugs and 

biologicals at ASP+6 percent, equivalent to the rate these drugs and biologicals would 

receive in the physician’s office setting in CY 2015. We are proposing that a $0.00 

pass-through payment amount would be paid for most pass-through drugs and biologicals 

under the CY 2015 OPPS because the difference between the amount authorized under 

section 1842(o) of the Act, which is ASP+6 percent, and the portion of the otherwise 

applicable OPD fee schedule that the Secretary determines is appropriate, proposed at 

ASP+6 percent, is $0. 

 In the case of policy-packaged drugs (which include the following: contrast 

agents; diagnostic radiopharmaceuticals; anesthesia drugs; drugs, biologicals, and 

radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure and drugs; and biologicals that function as supplies when used in a surgical 

procedure), we are proposing that their pass-through payment amount would be equal to 
CMS-1613-P 320 

ASP+6 percent for CY 2015 because, if not on pass-through status, payment for these 

products would be packaged into the associated procedure. 

 In addition, we are proposing to continue to update pass-through payment rates on 

a quarterly basis on the CMS Web site during CY 2015 if later quarter ASP submissions 

(or more recent WAC or AWP information, as applicable) indicate that adjustments to the 

payment rates for these pass-through drugs or biologicals are necessary. For a full 

description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with 

comment period (70 FR 68632 through 68635). 

 In CY 2015, as is consistent with our CY 2014 policy for diagnostic and 

therapeutic radiopharmaceuticals, we are proposing to provide payment for both 

diagnostic and therapeutic radiopharmaceuticals that are granted pass-through status 

based on the ASP methodology. As stated above, for purposes of pass-through payment, 

we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic 

or therapeutic radiopharmaceutical receives pass-through status during CY 2015, we are 

proposing to follow the standard ASP methodology to determine the pass-through 

payment rate that drugs receive under section 1842(o) of the Act, which is ASP+6 

percent. If ASP data are not available for a radiopharmaceutical, we are proposing to 

provide pass-through payment at WAC+6 percent, the equivalent payment provided to 

pass-through drugs and biologicals without ASP information. If WAC information is 

also not available, we are proposing to provide payment for the pass-through 

radiopharmaceutical at 95 percent of its most recent AWP. 
CMS-1613-P 321 

 As discussed in more detail in section II.A.3. of this proposed rule, we 

implemented a policy whereby payment for the following nonpass-through items is 

packaged into payment for the associated procedure: diagnostic radiopharmaceuticals; 

contrast agents; anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that 

function as supplies when used in a diagnostic test or procedure; and drugs and 

biologicals that function as supplies when used in a surgical procedure. We are 

proposing to continue the packaging of these items, regardless of their per day cost, in 

CY 2015. As stated earlier, pass-through payment is the difference between the amount 

authorized under section 1842(o) of the Act and the portion of the otherwise applicable 

OPD fee schedule that the Secretary determines is associated with the drug or biological. 

Because payment for a drug that is policy-packaged would otherwise be packaged if the 

product did not have pass-through status, we believe the otherwise applicable OPPS 

payment amount would be equal to the policy-packaged drug APC offset amount for the 

associated clinical APC in which the drug or biological is utilized. The proposed 

calculation of the policy-packaged drug APC offset amounts is described in more detail 

in section V.A.4. of this proposed rule. It follows that the copayment for the 

nonpass-through payment portion (the otherwise applicable fee schedule amount that we 

would also offset from payment for the drug or biological if a payment offset applies) of 

the total OPPS payment for those drugs and biologicals would, therefore, be accounted 

for in the copayment for the associated clinical APC in which the drug or biological is 

used. 
CMS-1613-P 322 

 According to section 1833(t)(8)(E) of the Act, the amount of copayment 

associated with pass-through items is equal to the amount of copayment that would be 

applicable if the pass-through adjustment was not applied. Therefore, as we did in 

CY 2014, we are proposing to continue to set the associated copayment amount to zero 

for CY 2015 for pass-through drugs and biologicals that would otherwise be packaged if 

the item did not have pass-through status. 

 The 22 drugs and biologicals that we are proposing to continue to have 

pass-through status for CY 2015 or have been granted pass-through status as of July 2014 

are shown in Table 34 below. 
CMS-1613-P 323 

TABLE 34.—PROPOSED DRUGS AND BIOLOGICALS WITH 

PASS-THROUGH STATUS IN CY 2015 

Proposed 

CY 2015 

HCPCS 

Code 

CY 2015 Long Descriptor 

Proposed 

CY 2015 

SI 

Proposed 

CY 2015 

APC 

A9520 Technetium Tc 99m tilmanocept, diagnostic, up to 

0.5 millicuries G 1463 

C9021 Injection, obinutuzumab, 10 mg G 1476 

C9022 Injection, elosulfase alfa, 1mg G 1480 

C9132 Prothrombin complex concentrate (human), Kcentra, 

per i.u. of Factor IX activity G 9132 

C9133 Factor ix (antihemophilic factor, recombinant), 

Rixubus, per i.u. G 1467 

C9134 Injection, Factor XIII A-subunit, (recombinant), per 

10 i.u. G 1481 

C9441 Injection, ferric carboxymaltose, 1 mg G 9441 

C9497 Loxapine, inhalation powder, 10 mg G 9497 

J1446 Injection, tbo-filgrastim, 5 micrograms G 1447 

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

J3060 Injection, taliglucerase alfa, 10 units G 9294 

J7315 Mitomycin, ophthalmic, 0.2 mg G 1448 

J7316 Injection, Ocriplasmin, 0.125mg G 9298 

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

J9047 Injection, carfilzomib, 1 mg G 9295 

J9262 Injection, omacetaxine mepesuccinate, 0.01 mg G 9297 

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

J9371 Injection, Vincristine Sulfate Liposome, 1 mg G 1466 

J9400 Injection, Ziv-Aflibercept, 1 mg G 9296 

Q4121 Theraskin, per square centimeter G 1479 

Q4122 Dermacell, per square centimeter G 1419 

Q4127 Talymed, per square centimeter G 1449 

Note: Because the payment rates associated with these codes effective July 1, 2014, are not available to us 

in time for incorporation into the Addenda to this proposed rule, the Level II HCPCS codes and the 

Category III CPT codes implemented through the July 2014 OPPS quarterly update CR could not be 

included in Addendum B to this proposed rule. 
CMS-1613-P 324 

4. Proposed Provisions for Reducing Transitional Pass-Through Payments for 

Policy-Packaged Drugs and Biologicals to Offset Costs Packaged into APC Groups 

a. Background 

 Prior to CY 2008, diagnostic radiopharmaceuticals and contrast agents were paid 

separately under the OPPS if their mean per day costs were greater than the applicable 

year’s drug packaging threshold. In CY 2008 (72 FR 66768), we began a policy of 

packaging payment for all nonpass-through diagnostic radiopharmaceuticals and contrast 

agents as ancillary and supportive items and services into their associated nuclear 

medicine procedures. Therefore, beginning in CY 2008, nonpass-through diagnostic 

radiopharmaceuticals and contrast agents were not subject to the annual OPPS drug 

packaging threshold to determine their packaged or separately payable payment status, 

and instead all nonpass-through diagnostic radiopharmaceuticals and contrast agents were 

packaged as a matter of policy. 

 For CY 2014, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74925), we continued to package payment for all nonpass-through diagnostic 

radiopharmaceuticals, contrast agents, and anesthesia drugs and we began packaging all 

nonpass-through drugs, biologicals, and radiopharmaceuticals that function as supplies 

when used in a diagnostic test or procedure and drugs and biologicals that function as 

supplies when used in a surgical procedure. These packaging policies were codified at 

42 CFR 419.2(b) in CY 2014. 
CMS-1613-P 325 

b. Proposed Payment Offset Policy for Diagnostic Radiopharmaceuticals 

 As previously noted, radiopharmaceuticals are considered to be drugs for OPPS 

pass-through payment purposes. As described above, section 1833(t)(6)(D)(i) of the Act 

specifies that the transitional pass-through payment amount for pass-through drugs and 

biologicals is the difference between the amount paid under section 1842(o) of the Act 

and the otherwise applicable OPD fee schedule amount. Because a payment offset is 

necessary in order to provide an appropriate transitional pass-through payment, we 

deduct from the pass-through payment for diagnostic radiopharmaceuticals an amount 

reflecting the portion of the APC payment associated with predecessor 

radiopharmaceuticals in order to ensure no duplicate radiopharmaceutical payment is 

made. 

 In CY 2009, we established a policy to estimate the portion of each APC payment 

rate that could reasonably be attributed to the cost of predecessor diagnostic 

radiopharmaceuticals when considering a new diagnostic radiopharmaceutical for 

pass-through payment (73 FR 68638 through 68641). Specifically, we use the 

policy-packaged drug offset fraction for APCs containing nuclear medicine procedures, 

calculated as 1 minus the following: the cost from single procedure claims in the APC 

after removing the cost for policy-packaged drugs divided by the cost from single 

procedure claims in the APC. To determine the actual APC offset amount for 

pass-through diagnostic radiopharmaceuticals that takes into consideration the otherwise 

applicable OPPS payment amount, we multiply the policy-packaged drug offset fraction 

by the APC payment amount for the nuclear medicine procedure with which the 
CMS-1613-P 326 

pass-through diagnostic radiopharmaceutical is used and, accordingly, reduce the 

separate OPPS payment for the pass-through diagnostic radiopharmaceutical by this 

amount. For CY 2015, as we did in CY 2014, we are proposing to continue to apply the 

diagnostic radiopharmaceutical offset policy to payment for pass-through diagnostic 

radiopharmaceuticals. 

 There is currently one diagnostic radiopharmaceutical with pass-through status 

under the OPPS. HCPCS code A9520 (Technetium Tc 99m tilmanocept, diagnostic, up 

to 0.5 millicuries) was granted pass-through status beginning October 1, 2013. We 

currently apply the established radiopharmaceutical payment offset policy to 

pass-through payment for this product. 

 Table 35 below displays the proposed APCs to which nuclear medicine 

procedures would be assigned in CY 2015 and for which we expect that an APC offset 

could be applicable in the case of diagnostic radiopharmaceuticals with pass-through 

status. 

TABLE 35.—PROPOSED APCs TO WHICH A DIAGNOSTIC 

RADIOPHARMACEUTICAL OFFSET MAY BE APPLICABLE IN CY 2015 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC Title 

0308 Positron Emission Tomography (PET) Imaging 

0377 Level II Cardiac Imaging 

0378 Level II Pulmonary Imaging 

0389 Level I Non-imaging Nuclear Medicine 

0390 Level I Endocrine Imaging 

0391 Level II Endocrine Imaging 

0392 Level II Non-imaging Nuclear Medicine 

0393 Hematologic Processing & Studies 

0394 Hepatobiliary Imaging 

0395 GI Tract Imaging 
CMS-1613-P 327 

Proposed 

CY 2015 

APC 

Proposed CY 2015 APC Title 

0396 Bone Imaging 

0398 Level I Cardiac Imaging 

0400 Hematopoietic Imaging 

0401 Level I Pulmonary Imaging 

0402 Level II Nervous System Imaging 

0403 Level I Nervous System Imaging 

0404 Renal and Genitourinary Studies 

0406 Level I Tumor/Infection Imaging 

0408 Level III Tumor/Infection Imaging 

0414 Level II Tumor/Infection Imaging 

c. Proposed Payment Offset Policy for Contrast Agents 

 Section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through 

payment amount for pass-through drugs and biologicals is the difference between the 

amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee 

schedule amount. Because a payment offset is necessary in order to provide an 

appropriate transitional pass-through payment, we deduct from the pass-through payment 

for contrast agents an amount reflecting the portion of the APC payment associated with 

predecessor contrast agents in order to ensure no duplicate contrast agent payment is 

made. 

 In CY 2010, we established a policy to estimate the portion of each APC payment 

rate that could reasonably be attributed to the cost of predecessor contrast agents when 

considering new contrast agents for pass-through payment (74 FR 60482 through 60484). 

Specifically, we use the policy-packaged drug offset fraction for procedural APCs, 

calculated as 1 minus the following: the cost from single procedure claims in the APC 

after removing the cost for policy packaged drugs divided by the cost from single 
CMS-1613-P 328 

procedure claims in the APC. To determine the actual APC offset amount for 

pass-through contrast agents that takes into consideration the otherwise applicable OPPS 

payment amount, we are proposing to multiply the policy packaged drug offset fraction 

by the APC payment amount for the procedure with which the pass-through contrast 

agent is used and, accordingly, reduce the separate OPPS payment for the pass-through 

contrast agent by this amount. For CY 2015, as we did in CY 2014, we are proposing to 

continue to apply our standard contrast agents offset policy to payment for pass-through 

contrast agents (78 FR 75017). 

 Although there are currently no contrast agents with pass-through status under the 

OPPS, we believe that a payment offset is necessary in the event that a new contrast 

agent is approved for pass-through status during CY 2015 in order to provide an 

appropriate transitional pass-through payment for new contrast agents. We are proposing 

to identify procedural APCs for which we expect a contrast offset could be applicable in 

the case of a pass-through contrast agent as any procedural APC with a policy-packaged 

drug amount greater than $20 that is not a nuclear medicine APC identified in Table 35 

above, and these APCs are displayed in Table 36 below. The methodology used to 

determine a proposed threshold cost for application of a contrast agent offset policy is 

described in detail in the CY 2010 OPPS/ASC final rule with comment period 

(74 FR 60483 through 60484). For CY 2015, we are proposing to continue to recognize 

that when a contrast agent with pass-through status is billed with any procedural APC 

listed in Table 36 of this proposed rule, a specific offset based on the procedural APC 
CMS-1613-P 329 

would be applied to payment for the contrast agent to ensure that duplicate payment is 

not made for the contrast agent. 

TABLE 36.—PROPOSED APCs TO WHICH A CONTRAST AGENT OFFSET 

MAY BE APPLICABLE FOR CY 2015 

Proposed 

CY 2015 

APC Proposed CY 2015 APC Title 

0080 Diagnostic Cardiac Catheterization 

0082 Coronary or Non-Coronary Atherectomy 

0083 Coronary Angioplasty, Valvuloplasty, and Level I Endovascular 

Revascularization 

0093 Vascular Reconstruction/Fistula Repair 

0104 Transcatheter Placement of Intracoronary Stents 

0152 Level I Percutaneous Abdominal and Biliary Procedures 

0177 Level I Echocardiogram With Contrast 

0178 Level II Echocardiogram With Contrast 

0229 Level II Endovascular Revascularization of the Lower Extremity 

0278 Diagnostic Urography 

0279 Level II Angiography and Venography 

0280 Level III Angiography and Venography 

0283 Computed Tomography with Contrast 

0284 Magnetic Resonance Imaging and Magnetic Resonance 

Angiography with Contrast 

0333 Computed Tomography without Contrast followed by Contrast 

0334 Combined Abdomen and Pelvis CT with Contrast 

0337 Magnetic Resonance Imaging and Magnetic Resonance 

Angiography without Contrast followed by Contrast 

0375 Ancillary Outpatient Services When Patient Expires 

0383 Cardiac Computed Tomographic Imaging 

0388 Discography 

0442 Dosimetric Drug Administration 

0653 Vascular Reconstruction/Fistula Repair with Device 

0656 Transcatheter Placement of Intracoronary Drug-Eluting Stents 

0662 CT Angiography 

0668 Level I Angiography and Venography 

8006 CT and CTA with Contrast Composite 

8008 MRI and MRA with Contrast Composite 
CMS-1613-P 330 

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

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

Biologicals That Function as Supplies When Used in a Surgical Procedure 

 Section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through 

payment amount for pass-through drugs and biologicals is the difference between the 

amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee 

schedule amount. In the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74925), we finalized our policy to package drugs, biologicals, and 

radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure and drugs and biologicals that function as supplies when used in a surgical 

procedure. As a part of this policy, we specifically finalized that skin substitutes and 

stress agents used in myocardial perfusion imaging (MPI) be policy packaged in 

CY 2014, in addition to diagnostic radiopharmaceuticals, contrast agents, and anesthesia 

drugs (78 FR 75019). Because a payment offset is necessary in order to provide an 

appropriate transitional pass-through payment, we finalized a policy for CY 2014 to 

deduct from the pass-through payment for skin substitutes and stress agents an amount 

reflecting the portion of the APC payment associated with predecessor skin substitutes 

and stress agents in order to ensure no duplicate skin substitute or stress agent payment is 

made (78 FR 75019). 

 In CY 2014, we established a policy to estimate the portion of each APC payment 

rate that could reasonably be attributed to the cost of predecessor skin substitutes or stress 
CMS-1613-P 331 

agents when considering a new skin substitute or stress agent for pass-through payment 

(78 FR 75019). Specifically, in the case of pass-through skin substitutes, we use the 

policy-packaged drug offset fraction for skin substitute procedural APCs, calculated as 

1 minus the following: the cost from single procedure claims in the APC after removing 

the cost for policy-packaged drugs divided by the cost from single procedure claims in 

the APC. Because policy packaged radiopharmaceuticals also would be included in the 

drug offset fraction for the APC to which MPI procedures are assigned, in the case of 

pass-through stress agents, we use the policy-packaged drug offset fraction for the 

procedural APC, calculated as 1 minus the following: the cost from single procedure 

claims in the APC after removing the cost for policy-packaged drugs excluding 

policy-packaged diagnostic radiopharmaceuticals divided by the cost from single 

procedure claims in the APC. To determine the actual APC offset amount for passthrough skin substitutes and pass-through stress agents that takes into consideration the 

otherwise applicable OPPS payment amount, we multiply the policy-packaged drug 

offset fraction by the APC payment amount for the procedure with which the 

pass-through skin substitute or pass-through stress agent is used and, accordingly, reduce 

the separate OPPS payment for the pass-through skin substitute or pass-through stress 

agent by this amount (78 FR 75019). For CY 2015, as we did in CY 2014, we are 

proposing to continue to apply the skin substitute and stress agent offset policy to 

payment for pass-through skin substitutes and stress agents. 

 There are currently six skin substitutes (HCPCS codes Q4121, Q4122, Q4127, 

Q4131, Q4132, and Q4133) with pass-through status under the OPPS. We currently 
CMS-1613-P 332 

apply the established skin substitute payment offset policy to pass-through payment for 

these products. Table 37 below displays the proposed APCs to which skin substitute 

procedures would be assigned in CY 2015 and for which we expect that an APC offset 

could be applicable in the case of skin substitutes with pass-through status. 

 Although there are currently no stress agents with pass-through status under the 

OPPS, we believe that a payment offset is necessary in the event that a new stress agent is 

approved for pass-through status during CY 2015 in order to provide an appropriate 

transitional pass through payment for new stress agents. Table 38 below displays the 

proposed APCs to which MPI procedures would be assigned in CY 2015 and for which 

we expect that an APC offset could be applicable in the case of a stress agent with 

pass-through status. 

 We are proposing to continue to post annually on the CMS Web site at 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html a file that contains the APC offset amounts 

that will be used for that year for purposes of both evaluating cost significance for 

candidate pass-through device categories and drugs and biologicals and establishing any 

appropriate APC offset amounts. Specifically, the file will continue to provide the 

amounts and percentages of APC payment associated with packaged implantable devices, 

policy-packaged drugs, and threshold packaged drugs and biologicals for every OPPS 

clinical APC. 
CMS-1613-P 333 

TABLE 37.—PROPOSED APCs TO WHICH A SKIN SUBSTITUTE OFFSET 

MAY BE APPLICABLE FOR CY 2015 

Proposed 

CY 2015 

APC Proposed CY 2015 APC Title 

0328 Level III Skin Repair 

0329 Level IV Skin Repair 

TABLE 38.—PROPOSED APCs TO WHICH A STRESS AGENT OFFSET MAY 

BE APPLICABLE FOR CY 2015 

Proposed 

CY 2015 

APC Proposed CY 2015 APC Title 

0100 Cardiac Stress Tests 

0377 Level II Cardiac Imaging 

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

Pass-Through Status 

1. Background 

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

radiopharmaceuticals that do not have pass-through status in one of two ways: as a 

packaged payment included in the payment for the associated service, or as a separate 

payment (individual APCs). We explained in the April 7, 2000 OPPS final rule with 

comment period (65 FR 18450) that we generally package the cost of drugs and 

radiopharmaceuticals into the APC payment rate for the procedure or treatment with 

which the products are usually furnished. Hospitals do not receive separate payment for 

packaged items and supplies, and hospitals may not bill beneficiaries separately for any 
CMS-1613-P 334 

packaged items and supplies whose costs are recognized and paid within the national 

OPPS payment rate for the associated procedure or service. 

 Packaging costs into a single aggregate payment for a service, procedure, or 

episode-of-care is a fundamental principle that distinguishes a prospective payment 

system from a fee schedule. In general, packaging the costs of items and services into the 

payment for the primary procedure or service with which they are associated encourages 

hospital efficiencies and also enables hospitals to manage their resources with maximum 

flexibility. 

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

Radiopharmaceuticals 

a. Background 

 As indicated in section V.B.1. of this proposed rule, in accordance with 

section 1833(t)(16)(B) of the Act, the threshold for establishing separate APCs for 

payment of drugs and biologicals was set to $50 per administration during CYs 2005 and 

2006. In CY 2007, we used the four quarter moving average Producer Price Index (PPI) 

levels for Pharmaceutical Preparations (Prescription) to trend the $50 threshold forward 

from the third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold became 

effective) to the third quarter of CY 2007. We then rounded the resulting dollar amount 

to the nearest $5 increment in order to determine the CY 2007 threshold amount of $55. 

Using the same methodology as that used in CY 2007 (which is discussed in more detail 

in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 through 
CMS-1613-P 335 

68086)), we set the packaging threshold for establishing separate APCs for drugs and 

biologicals at $90 for CY 2014. 

 Following the CY 2007 methodology, for this CY 2015 OPPS/ASC proposed 

rule, we used the most recently available four quarter moving average PPI levels to trend 

the $50 threshold forward from the third quarter of CY 2005 to the third quarter of 

CY 2015 and rounded the resulting dollar amount ($91.46) to the nearest $5 increment, 

which yielded a figure of $90. In performing this calculation, we used the most recent 

forecast of the quarterly index levels for the PPI for Pharmaceuticals for Human Use 

(Prescription) (Bureau of Labor Statistics (BLS) series code WPUSI07003) from CMS’ 

Office of the Actuary (OACT). We refer below to this series generally as the PPI for 

Prescription Drugs. 

 Based on the calculations described above, we are proposing a packaging 

threshold for CY 2015 of $90. (For a more detailed discussion of the OPPS drug 

packaging threshold and the use of the PPI for Prescription Drugs, we refer readers to the 

CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 through 68086).) 

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

Certain Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals 

(“Threshold-Packaged Drugs”) 

 To determine the proposed CY 2015 packaging status for all nonpass-through 

drugs and biologicals that are not policy packaged, we calculated, on a HCPCS 

code-specific basis, the per day cost of all drugs, biologicals, and therapeutic 

radiopharmaceuticals (collectively called “threshold-packaged” drugs) that had a HCPCS 
CMS-1613-P 336 

code in CY 2013 and were paid (via packaged or separate payment) under the OPPS. We 

used data from CY 2013 claims processed before January 1, 2014 for this calculation. 

However, we did not perform this calculation for those drugs and biologicals with 

multiple HCPCS codes that include different dosages, as described in section V.B.2.c. of 

this proposed rule, or for the following policy-packaged items that we are proposing to 

continue to package in CY 2015: diagnostic radiopharmaceuticals; contrast agents; 

anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies 

when used in a diagnostic test or procedure; and drugs and biologicals that function as 

supplies when used in a surgical procedure. 

 In order to calculate the per day costs for drugs, biologicals, and therapeutic 

radiopharmaceuticals to determine their proposed packaging status in CY 2015, we used 

the methodology that was described in detail in the CY 2006 OPPS proposed rule 

(70 FR 42723 through 42724) and finalized in the CY 2006 OPPS final rule with 

comment period (70 FR 68636 through 70 FR 68638). For each drug and biological 

HCPCS code, we used an estimated payment rate of ASP+6 percent (which is the 

payment rate we are proposing for separately payable drugs and biologicals for CY 2015, 

as discussed in more detail in section V.B.3.b. of this proposed rule) to calculate the 

CY 2015 proposed rule per day costs. We used the manufacturer submitted ASP data 

from the fourth quarter of CY 2013 (data that were used for payment purposes in the 

physician’s office setting, effective April 1, 2014) to determine the proposed rule per day 

cost. 
CMS-1613-P 337 

 As is our standard methodology, for CY 2015, we are proposing to use payment 

rates based on the ASP data from the fourth quarter of CY 2013 for budget neutrality 

estimates, packaging determinations, impact analyses, and completion of Addenda A and 

B to this proposed rule (which are available via the Internet on the CMS Web site) 

because these are the most recent data available for use at the time of development of this 

proposed rule. These data also were the basis for drug payments in the physician’s office 

setting, effective April 1, 2014. For items that did not have an ASP-based payment rate, 

such as some therapeutic radiopharmaceuticals, we used their mean unit cost derived 

from the CY 2013 hospital claims data to determine their per day cost. 

 We are proposing to package items with a per day cost less than or equal to $90, 

and identify items with a per day cost greater than $90 as separately payable. Consistent 

with our past practice, we crosswalked historical OPPS claims data from the CY 2013 

HCPCS codes that were reported to the CY 2014 HCPCS codes that we display in 

Addendum B to this proposed rule (which is available via the Internet on the CMS Web 

site) for payment in CY 2015. 

 Our policy during previous cycles of the OPPS has been to use updated ASP and 

claims data to make final determinations of the packaging status of HCPCS codes for 

drugs, biologicals, and therapeutic radiopharmaceuticals for the OPPS/ASC final rule 

with comment period. We note that it is also our policy to make an annual packaging 

determination for a HCPCS code only when we develop the OPPS/ASC final rule with 

comment period for the update year. Only HCPCS codes that are identified as separately 

payable in the final rule with comment period are subject to quarterly updates. For our 
CMS-1613-P 338 

calculation of per day costs of HCPCS codes for drugs and biologicals in the CY 2015 

OPPS/ASC final rule with comment period, we are proposing to use ASP data from the 

first quarter of CY 2014, which is the basis for calculating payment rates for drugs and 

biologicals in the physician’s office setting using the ASP methodology, effective 

July 1, 2014, along with updated hospital claims data from CY 2013. We note that we 

also are proposing to use these data for budget neutrality estimates and impact analyses 

for the CY 2015 OPPS/ASC final rule with comment period. 

 Payment rates for HCPCS codes for separately payable drugs and biologicals 

included in Addenda A and B to the final rule with comment period will be based on ASP 

data from the second quarter of CY 2014. These data will be the basis for calculating 

payment rates for drugs and biologicals in the physician’s office setting using the ASP 

methodology, effective October 1, 2014. These payment rates would then be updated in 

the January 2015 OPPS update, based on the most recent ASP data to be used for 

physician’s office and OPPS payment as of January 1, 2015. For items that do not 

currently have an ASP-based payment rate, we are proposing to recalculate their mean 

unit cost from all of the CY 2013 claims data and updated cost report information 

available for the CY 2015 final rule with comment period to determine their final per day 

cost. 

 Consequently, the packaging status of some HCPCS codes for drugs, biologicals, 

and therapeutic radiopharmaceuticals in this CY 2015 OPPS/ASC proposed rule may be 

different from the same drug HCPCS code’s packaging status determined based on the 

data used for the CY 2015 OPPS/ASC final rule with comment period. Under such 
CMS-1613-P 339 

circumstances, we are proposing to continue to follow the established policies initially 

adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably pay for those 

drugs whose cost fluctuates relative to the proposed CY 2015 OPPS drug packaging 

threshold and the drug’s payment status (packaged or separately payable) in CY 2014. 

Specifically, for CY 2015, consistent with our historical practice, we are proposing to 

apply the following policies to these HCPCS codes for drugs, biologicals, and therapeutic 

radiopharmaceuticals whose relationship to the drug packaging threshold changes based 

on the updated drug packaging threshold and on the final updated data: 

● HCPCS codes for drugs and biologicals that were paid separately in CY 2014 

and that are proposed for separate payment in CY 2015, and that then have per day costs 

equal to or less than the CY 2015 final rule drug packaging threshold, based on the 

updated ASPs and hospital claims data used for the CY 2015 final rule, would continue to 

receive separate payment in CY 2015. 

● HCPCS codes for drugs and biologicals that were packaged in CY 2014 and 

that are proposed for separate payment in CY 2015, and that then have per day costs 

equal to or less than the CY 2015 final rule drug packaging threshold, based on the 

updated ASPs and hospital claims data used for the CY 2015 final rule, would remain 

packaged in CY 2015. 

● HCPCS codes for drugs and biologicals for which we are proposing packaged 

payment in CY 2015 but then have per day costs greater than the CY 2015 final rule drug 

packaging threshold, based on the updated ASPs and hospital claims data used for the 

CY 2015 final rule, would receive separate payment in CY 2015. 
CMS-1613-P 340 

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

 In the CY 2014 OPPS/ASC final rule, we unconditionally packaged skin 

substitute products into their associated surgical procedures as part of a broader policy to 

package drugs and biologicals that function as supplies when used in a surgical procedure 

(78 FR 74938). We also finalized a methodology that divides the skin substitutes into a 

high cost group and a low cost group, for packaging purposes, in order to ensure adequate 

resource homogeneity among APC assignments for the skin substitute application 

procedures (78 FR 74933). For CY 2014, assignment to the high cost or low cost skin 

substitute group depended upon a comparison of the July 2013 ASP + 6 percent payment 

amount for each skin substitute to the weighted average payment per unit for all skin 

substitutes (weighted average was calculated using the skin substitute utilization from the 

CY 2012 claims data and the July 2013 ASP + 6 percent payment amounts, which are 

also the payment amounts in Addendum B to the CY 2014 OPPS/ASC final rule with 

comment period). The high/low cost skin substitute threshold for CY 2014 is $32 per 

cm2. Skin substitutes that had a July 2013 ASP + 6 percent amount above $32 per cm2

were classified in the high cost group and those with a July 2013 ASP + 6 percent amount 

at or below $32 per cm2

 were classified in the low cost group. Any new skin substitutes 

without pricing information are assigned to the low cost category until pricing 

information is available to compare to the $32 per cm2

 threshold for CY 2014. Skin 

substitutes with pass-through status are assigned to the high cost category, with an offset 

applied as described in section II.C.6. of this proposed rule. 
CMS-1613-P 341 

 After the effective date of the CY 2014 packaging policy, some skin substitute 

manufacturers brought the following issues to our attention regarding the current 

methodology for determining the high cost/low cost threshold: 

● Using ASP to determine a product’s placement in the high or low cost category 

may unfairly disadvantage the limited number of skin substitute products that are sold in 

large sizes (that is, above 150 cm2

). Large size skin substitute products are primarily 

used for burns that are treated on an inpatient basis. These manufacturers contend that 

non-linear pricing for skin substitute products sold in both large and small sizes results in 

lower per cm2

 prices for large sizes. Therefore, the use of ASP data to categorize 

products into high and low cost categories can result in placement of products that have 

significant inpatient use of the large, lower-priced (per cm2

) sizes into the low cost 

category, even though these large size products are not often used in the hospital 

outpatient department. 

● Using a weighted average ASP to establish the high/low cost categories, 

combined with the drug pass-through policy, will lead to unstable high/low cost skin 

substitute categories in the future. According to one manufacturer, under our current 

policy manufacturers with products on pass-through have an incentive to set a very high 

price because hospitals are price-insensitive to products paid with pass-through 

payments. As these new high priced pass-through skin substitutes capture more market 

share, the weighted average ASP high/low cost threshold could escalate rapidly resulting 

in a shift in the assignment of many skin substitutes from the high cost category to the 

low cost category. 
CMS-1613-P 342 

 We agree with stakeholder concerns regarding the potential instability of the 

high/low cost categories associated with the drug pass-through policy, as well as 

stakeholder concerns about the inclusion of large-sized products that are primarily used 

for inpatients in the ASP calculation, when ASP is used to establish the high/low cost 

categories. As an alternative to using ASP data, we believe that establishing the high/low 

cost threshold using the weighted average mean unit cost (MUC) for all skin substitute 

products from claims data may provide more stable high/low cost categories and will 

resolve the issue associated with large sized products because the MUC will be derived 

from outpatient claims only. The threshold would be based on costs from outpatient 

claims data instead of manufacturer reported sales prices that would not include larger 

sizes primarily used for inpatient burn cases. 

 Therefore, we are proposing to maintain the high/low cost APC structure for skin 

substitute procedures in CY 2015 but we are proposing to revise the current methodology 

used to establish the high/low cost threshold. For CY 2015, we are proposing to establish 

the high/low cost threshold based on the weighted average MUC for all skin substitutes 

using CY 2013 claims (which is proposed to be $27 per cm2

). Skin substitutes with a 

MUC above $27 per cm2

 using CY 2013 claims are proposed to be classified in the high 

cost group and those with a MUC at or below $27 per cm2

 are proposed to be classified in 

the low cost group. Table 39 below shows the current high/low cost status for each skin 

substitute product and the proposed 2015 high/low cost status based on the weighted 

average MUC threshold of $27. We are proposing to continue the current policy that skin 

substitutes with pass-through status will be assigned to the high cost category for 
CMS-1613-P 343 

CY 2015. Skin substitutes with pricing information but without claims data to calculate a 

MUC will be assigned to either the high or low cost category based on the product’s 

ASP + 6 percent payment rate. If ASP is not available then we will use WAC + 6 percent 

or 95 percent of AWP to assign a product to either the high or low cost category. We are 

also proposing that any new skin substitute without pricing information be assigned to the 

low cost category until pricing information is available to compare to the proposed $27 

per cm2

 threshold for CY 2015. 
CMS-1613-P 344 

TABLE 39.—PROPOSED SKIN SUBSTITUTE ASSIGNMENTS TO HIGH COST 

AND LOW COST GROUPS 

CY 

2014 

HCPCS 

Code CY 2014 Short Descriptor 

Proposed 

CY 2015 

SI 

CY 2014 

High/Low 

Status 

Based on 

Weighted 

ASP 

Proposed 

CY 2015 

High/Low 

Status 

Based on 

Weighted 

MUC 

C9358 SurgiMend, fetal N Low Low 

C9360 SurgiMend, neonatal N Low Low 

C9363 Integra Meshed Bil Wound Mat N Low High 

Q4101 Apligraf N High High 

Q4102 Oasis wound matrix N Low Low 

Q4103 Oasis burn matrix N Low Low 

Q4104 Integra BMWD N Low High 

Q4105 Integra DRT N Low High 

Q4106 Dermagraft N High High 

Q4107 Graftjacket N High High 

Q4108 Integra matrix N Low High 

Q4110 Primatrix N High High 

Q4111 Gammagraft N Low Low 

Q4115 Alloskin N Low Low 

Q4116 Alloderm N High High 

Q4117 Hyalomatrix N Low Low 

Q4119 Matristem wound matrix N Low Low 

Q4120 Matristem burn matrix N Low Low 

Q4121 Theraskin G High High 

Q4122 Dermacell G High High 

Q4123 Alloskin N Low Low 

Q4124 Oasis tri-layer wound matrix N Low Low 

Q4125 Arthroflex N High High 

Q4126 Memoderm/derma/tranz/integup N High High 

Q4127 Talymed G High High 

Q4128 Flexhd/Allopatchhd/matrixhd N Low High 

Q4129 Unite biomatrix N Low Low 

Q4131 Epifix N High High 

Q4132 Grafix core N High High 
CMS-1613-P 345 

CY 

2014 

HCPCS 

Code CY 2014 Short Descriptor 

Proposed 

CY 2015 

SI 

CY 2014 

High/Low 

Status 

Based on 

Weighted 

ASP 

Proposed 

CY 2015 

High/Low 

Status 

Based on 

Weighted 

MUC 

Q4133 Grafix prime N High High 

Q4134 hMatrix N High High 

Q4135 Mediskin N Low High 

Q4136 EZderm N Low Low 

Q4137 Amnioexcel or biodexcel, 1cm N Low Low 

Q4138 BioDfence DryFlex, 1cm N Low Low 

Q4140 Biodfence 1cm N Low Low 

Q4141 Alloskin ac, 1 cm N Low Low 

Q4142 Xcm biologic tiss matrix 1cm N Low Low 

Q4143 Repriza, 1cm N Low Low 

Q4146 Tensix, 1cm N Low Low 

Q4147 Architect ecm, 1cm N High High 

Q4148 Neox 1k, 1cm N High High 

d. Proposed Pass-Through Evaluation Process for Skin Substitutes 

 At the beginning of the OPPS, skin substitutes were originally evaluated for 

pass-through status using the medical device pass-through process. Since 2001, skin 

substitutes have been evaluated for pass-through status through the drug, biological, and 

radiopharmaceutical pass-through process. There are currently 50 distinct HCPCS codes 

describing skin substitutes, and of these 50 products 17 products that are listed in Table 

40 have had or currently have pass-through status. 
CMS-1613-P 346 

TABLE 40.—SKIN SUBSTITUTES THAT HAVE HAD OR CURRENTLY HAVE 

PASS-THROUGH STATUS 

CY 

2014 

HCPCS CY 2014 Short Descriptor 

PassThrough 

Expiration 

Date 

C9358 SurgiMend, fetal 12/31/2010 

C9360 SurgiMend, neonatal 12/31/2011 

C9363 Integra Meshed Bil Wound Mat 12/31/2011 

Q4101 Apligraf 12/31/2002 

Q4104 Integra BMWD 12/31/2006 

Q4105 Integra DRT 12/31/2006 

Q4106 Dermagraft 03/31/2005 

Q4107 Graftjacket 12/31/2006 

Q4108 Integra matrix 12/31/2010 

Q4110 Primatrix 12/31/2008 

Q4121 Theraskin 12/31/2016 

Q4122 Dermacell 12/31/2015 

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

Q4127 Talymed 12/31/2015 

Q4131 Epifix 12/31/2014 

Q4132 Grafix core 12/31/2014 

Q4133 Grafix prime 12/31/2014 

 As discussed above, in CY 2014 we packaged all skin substitutes under the policy 

that packages all drugs and biologicals that function as supplies when used in a surgical 

procedure (78 FR 74938). Therefore, we consider skin substitutes to be a type of surgical 

supply in the HOPD. This packaging policy was partly based on a comparison to 

implantable biologicals, which are similar in composition and clinical use to skin 

substitutes (78 FR 74931). In CY 2009, we finalized a policy to package payment for 

implantable biologicals into the payment for the associated surgical procedure 

(73 FR 68635). In CY 2010, we finalized a policy to evaluate implantable biologicals 
CMS-1613-P 347 

that are surgically inserted or implanted (through a surgical incision or a natural orifice) 

for pass-through payment through the medical device pass-through evaluation process, as 

implantable biologicals function as implantable devices (74 FR 60473). Implantable 

devices are considered supplies in the OPPS (65 FR 18443), and as noted above, we 

finalized a packaging policy in the CY 2014 OPPS/ASC final rule with comment period 

that considers skin substitutes a type of surgical supply. Many skin substitutes are 

FDA-approved or cleared as devices. The similarities between implantable biologicals 

and skin substitutes were a key factor in packaging (like we did beginning in 2009 with 

implantable biologicals) skin substitutes into the associated surgical procedure 

(78 FR 74932). These similarities between these classes of products also support similar 

treatment under the OPPS device pass-through process, which has been the evaluation 

methodology for implantable biologicals since 2010. 

 In view of these considerations, we are proposing that applications for 

pass-through payment for skin substitutes be evaluated using the medical device 

pass-through process and payment methodology. As a result of this proposal, we are 

proposing that the last skin substitute pass-through applications evaluated using the drug 

and biological pass-through evaluation process would be those with an application 

deadline of September 1, 2014, and an earliest effective date of January 1, 2015. 

Therefore, in light of this proposal, we would change the December 1, 2014 pass-through 

application deadline (for an earliest effective date of April 1, 2015) for both drugs and 

biologicals and devices to January 15, 2015, in order to provide sufficient time for 

applicants to adjust to the new policies and procedures in effect as of January 1, 2015. 
CMS-1613-P 348 

We believe that this approach is more appropriate because, although skin substitutes have 

characteristics of both surgical supplies and biologicals, we believe that, for pass-through 

purposes, skin substitutes are best characterized as surgical supplies or devices because of 

their required surgical application and because they share significant clinical similarity 

with other surgical supplies, including implantable biologicals. Thus, if this proposal is 

finalized, beginning on and after January 1, 2015, new skin substitutes would no longer 

be eligible to submit biological pass-through applications; rather, such applications for 

pass-through payment would be evaluated using the medical device pass-through 

evaluation process, for which payment is based on charges reduced to cost from claims. 

We refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/HospitalOutpatientPPS/ to view the device pass-through application 

requirements and review criteria that would apply to the evaluation of all skin substitute 

product applications for pass-through status beginning on or after January 1, 2015. Those 

skin substitutes that are approved for pass-through status as biologicals effective on or 

before January 1, 2015, would continue to be considered pass-through biologicals for the 

duration of their period of pass-through payment. 

 We also are proposing to revise our regulations at §§ 419.64 and 419.66 to reflect 

this proposed new policy. Specifically, we are proposing to revise § 419.64 by deleting 

the existing paragraph (a)(4)(iv) text because it is currently outdated and adding new text 

at paragraph (a)(4)(iv) to exclude skin substitutes from consideration for drug and 

biological pass-through payment unless pass-through payment for a product as a 

biological is made on or before January 1, 2015, to allow these products to complete their 
CMS-1613-P 349 

period of pass-through payment as biologicals. We are proposing to modify the 

regulation at § 419.66(b)(3) to add that a pass-through device may be applied in or on a 

wound or other skin lesion, and we are simplifying the language that “whether or not it 

remains with the patient when the patient is released from the hospital” to read “either 

permanently or temporarily.” We also are proposing to delete the current example in 

§ 419.66(b)(4)(iii) of the regulations regarding the exclusion of materials, for example, 

biological or synthetic materials, that may be used to replace human skin from device 

pass-through payment eligibility. 

 We invite public comment on these proposals. 

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

or Biological But Different Dosages 

 In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66776), we 

began recognizing, for OPPS payment purposes, multiple HCPCS codes reporting 

different dosages for the same covered Part B drugs or biologicals in order to reduce 

hospitals’ administrative burden by permitting them to report all HCPCS codes for drugs 

and biologicals. In general, prior to CY 2008, the OPPS recognized for payment only the 

HCPCS code that described the lowest dosage of a drug or biological. During CYs 2008 

and 2009, we applied a policy that assigned the status indicator of the previously 

recognized HCPCS code to the associated newly recognized code(s), reflecting the 

packaged or separately payable status of the new code(s). 

 In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 through 

60491), we finalized a policy to make a single packaging determination for a drug, rather 
CMS-1613-P 350 

than an individual HCPCS code, when a drug has multiple HCPCS codes describing 

different dosages because we believed that adopting the standard HCPCS code-specific 

packaging determinations for these codes could lead to inappropriate payment incentives 

for hospitals to report certain HCPCS codes instead of others. We continue to believe 

that making packaging determinations on a drug-specific basis eliminates payment 

incentives for hospitals to report certain HCPCS codes for drugs and allows hospitals 

flexibility in choosing to report all HCPCS codes for different dosages of the same drug 

or only the lowest dosage HCPCS code. Therefore, we are proposing to continue our 

policy to make packaging determinations on a drug-specific basis, rather than a HCPCS 

code-specific basis, for those HCPCS codes that describe the same drug or biological but 

different dosages in CY 2015. 

 For CY 2015, in order to propose a packaging determination that is consistent 

across all HCPCS codes that describe different dosages of the same drug or biological, 

we aggregated both our CY 2013 claims data and our pricing information at ASP+6 

percent across all of the HCPCS codes that describe each distinct drug or biological in 

order to determine the mean units per day of the drug or biological in terms of the 

HCPCS code with the lowest dosage descriptor. The following drugs did not have 

pricing information available for the ASP methodology for this CY 2015 OPPS/ASC 

proposed rule and, as is our current policy for determining the packaging status of other 

drugs, we used the mean unit cost available from the CY 2013 claims data to make the 

packaging determinations for these drugs: HCPCS code J3471 (Injection, hyaluronidase, 
CMS-1613-P 351 

ovine, preservative free, per 1 usp unit (up to 999 usp units)) and HCPCS code J3472 

(Injection, hyaluronidase, ovine, preservative free, per 1000 usp units). 

 For all other drugs and biologicals that have HCPCS codes describing different 

doses, we then multiplied the weighted average ASP+6 percent per unit payment amount 

across all dosage levels of a specific drug or biological by the estimated units per day for 

all HCPCS codes that describe each drug or biological from our claims data to determine 

the estimated per day cost of each drug or biological at less than or equal to $90 (so that 

all HCPCS codes for the same drug or biological would be packaged) or greater than $90 

(so that all HCPCS codes for the same drug or biological would be separately payable). 

 The proposed packaging status of each drug and biological HCPCS code to which 

this methodology would apply is displayed in Table 41 below. 

TABLE 41.—PROPOSED HCPCS CODES TO WHICH THE CY 2015 

DRUG-SPECIFIC PACKAGING DETERMINATION METHODOLOGY 

WOULD APPLY 

Proposed 

CY 2015 

HCPCS 

Code Proposed CY 2015 Long Descriptor 

Proposed 

CY 2015 

SI 

C9257 Injection, bevacizumab, 0.25 mg K 

J9035 Injection, bevacizumab, 10 mg K 

J1020 Injection, methylprednisolone acetate, 20 mg N 

J1030 Injection, methylprednisolone acetate, 40 mg N 

J1040 Injection, methylprednisolone acetate, 80 mg N 

J1070 Injection, testosterone cypionate, up to 100 mg N 

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

J1460 Injection, gamma globulin, intramuscular, 1 cc N 

J1560 Injection, gamma globulin, intramuscular over 10 cc N 

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

J1644 Injection, heparin sodium, per 1000 units N 

J1850 Injection, kanamycin sulfate, up to 75 mg N 

J1840 Injection, kanamycin sulfate, up to 500 mg N 
CMS-1613-P 352 

Proposed 

CY 2015 

HCPCS 

Code Proposed CY 2015 Long Descriptor 

Proposed 

CY 2015 

SI 

J2270 Injection, morphine sulfate, up to 10 mg N 

J2271 Injection, morphine sulfate, 100mg N 

J2788 Injection, rho d immune globulin, human, minidose, 50 

micrograms (250 i.u.) N 

J2790 Injection, rho d immune globulin, human, full dose, 300 

micrograms (1500 i.u.) N 

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

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

J3120 Injection, testosterone enanthate, up to 100 mg N 

J3130 Injection, testosterone enanthate, up to 200 mg N 

J3471 Injection, hyaluronidase, ovine, preservative free, per 1 usp 

unit (up to 999 usp units) N 

J3472 Injection, hyaluronidase, ovine, preservative free, per 1000 usp 

units N 

J7050 Infusion, normal saline solution , 250 cc N 

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

J7030 Infusion, normal saline solution , 1000 cc N 

J7515 Cyclosporine, oral, 25 mg N 

J7502 Cyclosporine, oral, 100 mg N 

J8520 Capecitabine, oral, 150 mg K 

J8521 Capecitabine, oral, 500 mg K 

J9250 Methotrexate sodium, 5 mg N 

J9260 Methotrexate sodium, 50 mg N 

3. 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” 
CMS-1613-P 353 

(known as a SCOD) is defined as a covered outpatient drug, as defined in 

section 1927(k)(2) of the Act, for which a separate APC has been established and that 

either is a radiopharmaceutical agent or is a drug or biological for which payment was 

made on a pass-through basis on or before December 31, 2002. 

 Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and biologicals are 

designated as exceptions and are not included in the definition of SCODs. These 

exceptions are— 

● A drug or biological for which payment is first made on or after 

January 1, 2003, under the transitional pass-through payment provision in 

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

● A drug or biological for which a temporary HCPCS code has not been 

assigned. 

● During CYs 2004 and 2005, an orphan drug (as designated by the Secretary). 

 Section 1833(t)(14)(A)(iii) of the Act requires that payment for SCODs in 

CY 2006 and subsequent years be equal to the average acquisition cost for the drug for 

that year as determined by the Secretary, subject to any adjustment for overhead costs 

and taking into account the hospital acquisition cost survey data collected by the 

Government Accountability Office (GAO) in CYs 2004 and 2005, and later periodic 

surveys conducted by the Secretary as set forth in the statute. If hospital acquisition cost 

data are not available, the law requires that payment be equal to payment rates 

established under the methodology described in section 1842(o), section 1847A, or 

section 1847B of the Act, as calculated and adjusted by the Secretary as necessary. Most 
CMS-1613-P 354 

physician Part B drugs are paid at ASP+6 percent pursuant to section 1842(o) and 

section 1847A of the Act. 

 Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in OPPS payment 

rates for SCODs to take into account overhead and related expenses, such as pharmacy 

services and handling costs. Section 1833(t)(14)(E)(i) of the Act required MedPAC to 

study pharmacy overhead and related expenses and to make recommendations to the 

Secretary regarding whether, and if so how, a payment adjustment should be made to 

compensate hospitals for overhead and related expenses. Section 1833(t)(14)(E)(ii) of 

the Act authorizes the Secretary to adjust the weights for ambulatory procedure 

classifications for SCODs to take into account the findings of the MedPAC study. 

 It has been our longstanding policy to apply the same treatment to all separately 

payable drugs and biologicals, which include SCODs, and drugs and biologicals that are 

not SCODs. Therefore, we apply the payment methodology in section 1833(t)(14)(A)(iii) 

of the Act to SCODs, as required by statute, but we also apply it to separately payable 

drugs and biologicals that are not SCODs, which is a policy determination rather than a 

statutory requirement. In this CY 2015 OPPS/ASC proposed rule, we are proposing to 

apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and 

biologicals, including SCODs. Although we do not distinguish SCODs in this 

discussion, we note that we are required to apply section 1833(t)(14)(A)(iii)(II) of the Act 

to SCODs, but we also are applying this provision to other separately payable drugs and 

biologicals, consistent with our history of using the same payment methodology for all 

separately payable drugs and biologicals. 
CMS-1613-P 355 

 Since CY 2006, we have attempted to establish a drug payment methodology that 

reflects hospitals’ acquisition costs for drugs and biologicals while taking into account 

relevant pharmacy overhead and related handling expenses. We have attempted to 

collect more data on hospital overhead charges for drugs and biologicals by making 

several proposals that would require hospitals to change the way they report the cost and 

charges for drugs. None of these proposals were adopted due to significant stakeholder 

concern, including that hospitals stated that it would be administratively burdensome to 

report hospital overhead charges. We established a payment policy for separately 

payable drugs and biologicals, authorized by section 1833(t)(14)(A)(iii)(I) of the Act, 

based on an ASP+X amount that is calculated by comparing the estimated aggregate cost 

of separately payable drugs and biologicals in our claims data to the estimated aggregate 

ASP dollars for separately payable drugs and biologicals, using the ASP as a proxy for 

average acquisition cost (70 FR 68642 through 68643). We referred to this methodology 

as our standard drug payment methodology. Taking into consideration comments made 

by the pharmacy stakeholders and acknowledging the limitations of the reported data due 

to charge compression and hospitals’ reporting practices, we added an “overhead 

adjustment” in CY 2010 (an internal adjustment of the data) by redistributing cost from 

coded and uncoded packaged drugs and biologicals to separately payable drugs in order 

to provide more appropriate payments for drugs and biologicals in the HOPD. We 

continued this methodology, and we further refined it in CY 2012 by finalizing a policy 

to update the redistribution amount for inflation and to keep the redistribution ration 

constant between the proposed rule and the final rule. For a detailed discussion of our 
CMS-1613-P 356 

OPPS drug payment policies from CY 2006 to CY 2012, we refer readers to the CY 2013 

OPPS/ASC final rule with comment period (77 FR 68383 through 68385). 

 Because of continuing uncertainty about the full cost of pharmacy overhead and 

acquisition cost, based in large part on the limitations of the submitted hospital charge 

and claims data for drugs, in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68386) we indicated our concern that the continued use of the standard drug 

payment methodology (including the overhead adjustment) still may not appropriately 

account for average acquisition and pharmacy overhead cost and, therefore, may result in 

payment rates that are not as predictable, accurate, or appropriate as they could be. 

Section 1833(t)(14)(A)(iii)(II) of the Act requires an alternative methodology for 

determining payment rates for SCODS wherein, if hospital acquisition cost data are not 

available, payment shall be equal (subject to any adjustment for overhead costs) to 

payment rates established under the methodology described in section 1842(o), 1847A, or 

1847B of the Act. We refer to this alternative methodology as the “statutory default.” In 

the CY 2013 OPPS/ASC final rule with comment period (77 FR 68386), we noted that 

section 1833(t)(14)(A)(iii)(II) of the Act authorizes the Secretary to calculate and adjust, 

as necessary, the average price for a drug in the year established under section 1842(o), 

1847A, or 1847B of the Act, as the case may be, in determining payment for SCODs. 

Pursuant to sections 1842(o) and 1847A of the Act, Part B drugs are paid at ASP+6 

percent when furnished in physicians’ offices. We indicated that we believe that 

establishing the payment rates based on the statutory default of ASP+6 percent is 

appropriate as it yields increased predictability in payment for separately payable drugs 
CMS-1613-P 357 

and biologicals under the OPPS and, therefore, we finalized our proposal for CY 2013 to 

pay for separately payable drugs and biologicals at ASP+6 percent based on 

section 1833(t)(14)(A)(iii)(II) of the Act, referred to as the statutory default. We also 

finalized our proposal that the ASP+6 percent payment amount for separately payable 

drugs and biologicals requires no further adjustment and represents the combined 

acquisition and pharmacy overhead payment for drugs and biologicals, that payments for 

separately payable drugs and biologicals are included in the budget neutrality adjustments 

under the requirements in section 1833(t)(9)(B) of the Act, and that the budget neutral 

weight scaler is not applied in determining payments for these separately paid drugs and 

biologicals for CY 2013 (77 FR 68389). 

b. Proposed CY 2015 Payment Policy 

 For CY 2015, we are proposing to continue our CY 2014 policy and pay for 

separately payable drugs and biologicals at ASP+6 percent pursuant to 

section 1833(t)(14)(A)(iii)(II) of the Act, referred to as the “statutory default.” We are 

proposing that the ASP+6 percent payment amount for separately payable drugs and 

biologicals requires no further adjustment and represents the combined acquisition and 

pharmacy overhead payment for drugs and biologicals. We also are proposing that 

payments for separately payable drugs and biologicals are included in the budget 

neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act, and 

that the budget neutral weight scaler is not applied in determining payments for these 

separately paid drugs and biologicals. 
CMS-1613-P 358 

4. Proposed Payment Policy for Therapeutic Radiopharmaceuticals 

 Beginning in CY 2010 and continuing for CY 2014, we established a policy to 

pay for separately paid therapeutic radiopharmaceuticals under the ASP methodology 

adopted for separately payable drugs and biologicals. If ASP information is unavailable 

for a therapeutic radiopharmaceutical, we base therapeutic radiopharmaceutical payment 

on mean unit cost data derived from hospital claims. We believe that the rationale 

outlined in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 

through 60525) for applying the principles of separately payable drug pricing to 

therapeutic radiopharmaceuticals continues to be appropriate for nonpass-through 

separately payable therapeutic radiopharmaceuticals in CY 2015. Therefore, we are 

proposing for CY 2015 to pay all nonpass-through, separately payable therapeutic 

radiopharmaceuticals at ASP+6 percent, based on the statutory default described in 

section 1833(t)(14)(A)(iii)(II) of the Act. For a full discussion of ASP-based payment for 

therapeutic radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final rule 

with comment period (74 FR 60520 through 60521). We also are proposing to rely on 

CY 2013 mean unit cost data derived from hospital claims data for payment rates for 

therapeutic radiopharmaceuticals for which ASP data are unavailable and to update the 

payment rates for separately payable therapeutic radiopharmaceuticals, according to our 

usual process for updating the payment rates for separately payable drugs and biologicals, 

on a quarterly basis if updated ASP information is available. For a complete history of 

the OPPS payment policy for therapeutic radiopharmaceuticals, we refer readers to the 

CY 2005 OPPS final rule with comment period (69 FR 65811), the CY 2006 OPPS final 
CMS-1613-P 359 

rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with 

comment period (74 FR 60524). 

 The proposed CY 2015 payment rates for nonpass-through separately payable 

therapeutic radiopharmaceuticals are included in Addenda A and B to this proposed rule 

(which are available via the Internet on the CMS Web site). 

5. Proposed Payment for Blood Clotting Factors 

 For CY 2014, we provided payment for blood clotting factors under the same 

methodology as other nonpass-through separately payable drugs and biologicals under 

the OPPS and continued paying an updated furnishing fee. That is, for CY 2014, we 

provided payment for blood clotting factors under the OPPS at ASP+6 percent, plus an 

additional payment for the furnishing fee. We note that when blood clotting factors are 

provided in physicians’ offices under Medicare Part B and in other Medicare settings, a 

furnishing fee is also applied to the payment. The CY 2014 updated furnishing fee was 

$0.192 per unit. 

 For CY 2015, we are proposing to pay for blood clotting factors at 

ASP+6 percent, consistent with our proposed payment policy for other nonpass-through 

separately payable drugs and biologicals, and to continue our policy for payment of the 

furnishing fee using an updated amount. Our policy to pay for a furnishing fee for blood 

clotting factors under the OPPS is consistent with the methodology applied in the 

physician office and inpatient hospital setting, and first articulated in the CY 2006 OPPS 

final rule with comment period (70 FR 68661) and later discussed in the CY 2008 

OPPS/ASC final rule with comment period (72 FR 66765). The proposed furnishing fee 
CMS-1613-P 360 

update is based on the percentage increase in the Consumer Price Index (CPI) for medical 

care for the 12-month period ending with June of the previous year. Because the Bureau 

of Labor Statistics releases the applicable CPI data after the MPFS and OPPS/ASC 

proposed rules are published, we are not able to include the actual updated furnishing fee 

in the proposed rules. Therefore, in accordance with our policy, as finalized in the 

CY 2008 OPPS/ASC final rule with comment period (72 FR 66765), we are proposing to 

announce the actual figure for the percent change in the applicable CPI and the updated 

furnishing fee calculated based on that figure through applicable program instructions 

and posting on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html. 

6. Proposed Payment for Nonpass-Through Drugs, Biologicals, and 

Radiopharmaceuticals with HCPCS Codes but without OPPS Hospital Claims Data 

 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 

(Pub. L. 108-173) did not address the OPPS payment in CY 2005 and subsequent years 

for drugs, biologicals, and radiopharmaceuticals that have assigned HCPCS codes, but 

that do not have a reference AWP or approval for payment as pass-through drugs or 

biologicals. Because there was no statutory provision that dictated payment for such 

drugs, biologicals, and radiopharmaceuticals in CY 2005, and because we had no hospital 

claims data to use in establishing a payment rate for them, we investigated several 

payment options for CY 2005 and discussed them in detail in the CY 2005 OPPS final 

rule with comment period (69 FR 65797 through 65799). 
CMS-1613-P 361 

 For CYs 2005 to 2007, we implemented a policy to provide separate payment for 

new drugs, biologicals, and radiopharmaceuticals with HCPCS codes (specifically those 

new drug, biological, and radiopharmaceutical HCPCS codes in each of those calendar 

years that did not crosswalk to predecessor HCPCS codes) but which did not have 

pass-through status, at a rate that was equivalent to the payment they received in the 

physician’s office setting, established in accordance with the ASP methodology for drugs 

and biologicals, and based on charges adjusted to cost for radiopharmaceuticals. 

Beginning in CY 2008 and continuing through CY 2014, we implemented a policy to 

provide payment for new drugs and biologicals with HCPCS codes (except those that are 

policy-packaged), but which did not have pass-through status and were without OPPS 

hospital claims data, at an amount consistent with the final OPPS payment methodology 

for other separately payable nonpass-through drugs and biologicals for the given year. 

 For CY 2015, we are proposing to continue this policy and provide payment for 

new drugs, biologicals, and therapeutic radiopharmaceuticals that do not have 

pass-through status at ASP+6 percent, consistent with the proposed CY 2015 payment 

methodology for other separately payable nonpass-through drugs, biologicals, and 

therapeutic radiopharmaceuticals, which is proposed to be ASP+6 percent. We believe 

this proposed policy would ensure that new nonpass-through drugs, biologicals, and 

therapeutic radiopharmaceuticals would be treated like other drugs, biologicals, and 

therapeutic radiopharmaceuticals under the OPPS. 

 For CY 2015, we also are proposing to package payment for all new 

nonpass-through policy-packaged products (diagnostic radiopharmaceuticals, contrast 
CMS-1613-P 362 

agents, anesthesia drugs, drugs, biologicals, and radiopharmaceuticals that function as 

supplies when used in a diagnostic test or procedure, and drugs and biologicals that 

function as supplies when used in a surgical procedure) with HCPCS codes but without 

claims data (those new CY 2015 HCPCS codes that do not crosswalk to predecessor 

HCPCS codes). This is consistent with the proposed policy packaging of all existing 

nonpass-through diagnostic radiopharmaceuticals, contrast agents, anesthesia drugs, 

drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a 

diagnostic test or procedure, and drugs and biologicals that function as supplies when 

used in a surgical procedure, as discussed in more detail in section II.A.3. of this 

proposed rule. 

 In accordance with the OPPS ASP methodology, in the absence of ASP data, for 

CY 2015, we are proposing to continue our policy of using the WAC for the product to 

establish the initial payment rate for new nonpass-through drugs and biologicals with 

HCPCS codes, but which are without OPPS claims data. However, we note that if the 

WAC is also unavailable, we would make payment at 95 percent of the product’s most 

recent AWP. We also are proposing to assign status indicator “K” (Separately paid 

nonpass-through drugs and biologicals, including therapeutic radiopharmaceuticals) to 

HCPCS codes for new drugs and biologicals without OPPS claims data and for which we 

have not granted pass-through status. With respect to new nonpass-through drugs and 

biologicals for which we do not have ASP data, we are proposing that once their ASP 

data become available in later quarterly submissions, their payment rates under the OPPS 

would be adjusted so that the rates would be based on the ASP methodology and set to 
CMS-1613-P 363 

the proposed ASP-based amount (proposed for CY 2015 at ASP+6 percent) for items that 

have not been granted pass-through status. This proposed policy, which utilizes the ASP 

methodology for new nonpass-through drugs and biologicals with an ASP, is consistent 

with prior years’ policies for these items and would ensure that new nonpass-through 

drugs and biologicals would be treated like other drugs and biologicals under the OPPS, 

unless they are granted pass-through status. 

 Similarly, we are proposing to continue to base the initial payment for new 

therapeutic radiopharmaceuticals with HCPCS codes, but which do not have 

pass-through status and are without claims data, on the WACs for these products if ASP 

data for these therapeutic radiopharmaceuticals are not available. If the WACs are also 

unavailable, we are proposing to make payment for new therapeutic radiopharmaceuticals 

at 95 percent of the products’ most recent AWP because we would not have mean costs 

from hospital claims data upon which to base payment. As we are proposing with new 

drugs and biologicals, we are proposing to continue our policy of assigning status 

indicator “K” to HCPCS codes for new therapeutic radiopharmaceuticals without OPPS 

claims data for which we have not granted pass-through status. 

 Consistent with other ASP-based payment, for CY 2015, we are proposing to 

announce any changes to the payment amounts for new drugs and biologicals in the 

CY 2015 OPPS/ASC final rule with comment period and also on a quarterly basis on the 

CMS Web site during CY 2015 if later quarter ASP submissions (or more recent WACs 

or AWPs) indicate that changes to the payment rates for these drugs and biologicals are 

necessary. The payment rates for new therapeutic radiopharmaceuticals also would be 
CMS-1613-P 364 

changed accordingly based on later quarter ASP submissions. We note that the new 

CY 2015 HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals were 

not available at the time of development of this proposed rule. However, these agents 

will be included in Addendum B to the CY 2015 OPPS/ASC final rule with comment 

period (which will be available via the Internet on the CMS Web site), where they will be 

assigned comment indicator “NI.” This comment indicator reflects that their interim final 

OPPS treatment will be open to public comment in the CY 2015 OPPS/ASC final rule 

with comment period. 

 There are several nonpass-through drugs and biologicals that were payable in 

CY 2013 and/or CY 2014 for which we did not have CY 2013 hospital claims data 

available for this proposed rule and for which there are no other HCPCS codes that 

describe different doses of the same drug, but which have pricing information available 

for the ASP methodology. In order to determine the packaging status of these products 

for CY 2015, we are proposing to continue our policy to calculate an estimate of the per 

day cost of each of these items by multiplying the payment rate of each product based on 

ASP+6 percent, similar to other nonpass-through drugs and biologicals paid separately 

under the OPPS, by an estimated average number of units of each product that would 

typically be furnished to a patient during one day in the hospital outpatient setting. This 

rationale was first adopted in the CY 2006 OPPS/ASC final rule with comment period 

(70 FR 68666 through 68667). 

 We are proposing to package items for which we estimated the per day 

administration cost to be less than or equal to $90 and to pay separately for items for 
CMS-1613-P 365 

which we estimated the per day administration cost to be greater than $90 (with the 

exception of diagnostic radiopharmaceuticals, contrast agents, anesthesia drugs, drugs, 

biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic 

test or procedure, and drugs and biologicals that function as supplies when used in a 

surgical procedure, which we are proposing to continue to package regardless of cost) in 

CY 2015. We also are proposing that the CY 2015 payment for separately payable items 

without CY 2013 claims data would be ASP+6 percent, similar to payment for other 

separately payable nonpass-through drugs and biologicals under the OPPS. In 

accordance with the ASP methodology paid in the physician’s office setting, in the 

absence of ASP data, we are proposing to use the WAC for the product to establish the 

initial payment rate and, if the WAC is also unavailable, we would make payment at 95 

percent of the most recent AWP available. The proposed estimated units per day and 

status indicators for these items are displayed in Table 42 of this proposed rule. 

 Finally, there are 35 drugs and biologicals, shown in Table 43 of this proposed 

rule that were payable in CY 2013 but for which we lacked CY 2013 claims data and any 

other pricing information for the ASP methodology for this proposed rule. For CY 2010, 

we finalized a policy to assign status indicator “E” (Not paid by Medicare when 

submitted on outpatient claims (any outpatient bill type)) whenever we lacked claims data 

and pricing information and were unable to determine the per day cost of a drug or 

biological. In addition, we noted that we would provide separate payment for these drugs 

and biologicals if pricing information reflecting recent sales became available mid-year 

for the ASP methodology. 
CMS-1613-P 366 

 For CY 2015, as we finalized in CY 2014 (78 FR 75031), we are proposing to 

continue to assign status indicator “E” to drugs and biologicals that lack CY 2013 claims 

data and pricing information for the ASP methodology. All drugs and biologicals 

without CY 2013 hospital claims data or data based on the ASP methodology that are 

assigned status indicator “E” on this basis at the time of this proposed rule for CY 2015 

are displayed in Table 43 of this proposed rule. We also are proposing to continue our 

policy to assign the products status indicator “K” and pay for them separately for the 

remainder of CY 2015 if pricing information becomes available. 
CMS-1613-P 367 

TABLE 42.—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

Estimated 

Average 

Number 

of Units 

Per Day 

Proposed 

CY 2015 

SI 

Proposed 

CY 2015 

APC 

90581 Anthrax vaccine, for subcutaneous or 

intramuscular use 1 K 1422 

J0215 Injection, alefacept, 0. 5 mg 29 K 1633 

J0364 Injection, apomorphine hydrochloride, 1 

mg 

1 N N/A 

J0630 Injection, calcitonin salmon, up to 400 

units 2 K 1433 

J0638 Injection, canakinumab, 1mg 180 K 1311 

J3355 Injection, urofollitropin, 75 iu 2 K 1741 

J7196 Injection, antithrombin recombinant, 50 

i. U. 268 K 1332 

J8650 Nabilone, oral, 1 mg 4 K 1424 

J9151 Injection, daunorubicin citrate, 

liposomal formulation, 10 mg 10 K 0821 

J9215 Injection, interferon, alfa-n3, (human 

leukocyte derived), 250,000 iu 1 N N/A 

J9300 Injection, gemtuzumab ozogamicin, 5 

mg 

1 K 9004 

 

 
CMS-1613-P 368 

TABLE 43.—DRUGS AND BIOLOGICALS WITHOUT CY 2013 CLAIMS DATA 

AND WITHOUT PRICING INFORMATION FOR THE ASP METHODOLOGY 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

Proposed 

CY 2015 

SI 

90296 Diphtheria antitoxin, equine, any route E 

90393 Vaccina immune globulin, human, for intramuscular use E 

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

90644 

Meningococcal conjugate vaccine, serogroups c & y and 

hemophilus influenza b vaccine (hib-mency), 4 dose 

schedule, when administered to children 2-15 months of 

age, for intramuscular use 

E 

90681 Rotavirus vaccine, human, attenuated, 2 dose schedule, 

live, for oral use E 

90727 Plague vaccine, for intramuscular use E 

J0190 Injection, biperiden lactate, per 5 mg E 

J0205 Injection, alglucerase, per 10 units E 

J0350 Injection, anistreplase, per 30 units E 

J0365 Injection, aprotonin, 10,000 kiu E 

J0395 Injection, arbutamine hcl, 1 mg E 

J0710 Injection, cephapirin sodium, up to 1 gm E 

J1180 Injection, dyphylline, up to 500 mg E 

J1435 Injection estrone per 1 MG E

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

J1620 Injection, gonadorelin hydrochloride, per 100 mcg E

J1655 Injection, tinzaparin sodium, 1000 iu E 

J1730 Injection, diazoxide, up to 300 mg E

J1835 Injection, itraconazole, 50 mg E

J2460 Injection, oxytetracycline hcl, up to 50 mg E 

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

J2670 Injection, tolazoline hcl, up to 25 mg E 

J2725 Injection, protirelin, per 250 mcg E 

J2940 Injection, somatrem, 1 mg E 

J3305 Injection, trimetrexate glucuronate, per 25 mg E 

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

J3400 Injection, triflupromazine hcl, up to 20 mg E 

J7505 Muromonab-cd3, parenteral, 5 mg E 

J7513 Daclizumab, parenteral, 25 mg E 

J8562 Fludarabine phosphate, oral, 10 mg E 
CMS-1613-P 369 

CY 2015 

HCPCS 

Code CY 2015 Long Descriptor 

Proposed 

CY 2015 

SI 

J9165 Injection, diethylstilbestrol diphosphate, 250 mg E 

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

J9219 Leuprolide acetate implant, 65 mg E 

Q0174 

Thiethylperazine maleate, 10 mg, oral, fda approved 

prescription anti-emetic, for use as a complete therapeutic 

substitute for an iv anti-emetic at the time of chemotherapy 

treatment, not to exceed a 48 hour dosage regimen 

E 

Q0515 Injection, sermorelin acetate, 1 microgram E 

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

Biologicals, Radiopharmaceuticals, and Devices 

A. Background 

 Section 1833(t)(6)(E) of the Act limits the total projected amount of transitional 

pass-through payments for drugs, biologicals, radiopharmaceuticals, and categories of 

devices for a given year to an “applicable percentage,” currently not to exceed 2.0 percent 

of total program payments estimated to be made for all covered services under the OPPS 

furnished for that year. If we estimate before the beginning of the calendar year that the 

total amount of pass-through payments in that year would exceed the applicable 

percentage, section 1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction 

in the amount of each of the transitional pass-through payments made in that year to 

ensure that the limit is not exceeded. We estimate the pass-through spending to 

determine whether payments exceed the applicable percentage and the appropriate 

prorata reduction to the conversion factor for the projected level of pass-through spending 

in the following year to ensure that total estimated pass-through spending for the 
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prospective payment year is budget neutral, as required by section 1833(t)(6)(E) of the 

Act. 

 For devices, developing an estimate of pass-through spending in CY 2015 entails 

estimating spending for two groups of items. The first group of items consists of device 

categories that were recently made eligible for pass-through payment and that will 

continue to be eligible for pass-through payment in CY 2015. The CY 2008 OPPS/ASC 

final rule with comment period (72 FR 66778) describes the methodology we have used 

in previous years to develop the pass-through spending estimate for known device 

categories continuing into the applicable update year. The second group of items consists 

of items that we know are newly eligible, or project may be newly eligible, for device 

pass-through payment in the remaining quarters of CY 2014 or beginning in CY 2015. 

The sum of the CY 2015 pass-through estimates for these two groups of device categories 

equals the total CY 2015 pass-through spending estimate for device categories with 

pass-through status. We base the device pass-through estimated payments for each 

device category on the amount of payment as established in section 1833(t)(6)(D)(ii) of 

the Act, and as outlined in previous rules, including the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75034 through 75036). We note that, beginning in 

CY 2010, the pass-through evaluation process and pass-through payment for implantable 

biologicals newly approved for pass-through payment beginning on or after 

January 1, 2010, that are surgically inserted or implanted (through a surgical incision or a 

natural orifice) is the device pass-through process and payment methodology 

(74 FR 60476). As has been our past practice (76 FR 74335), for CY 2015, we are 
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proposing to include an estimate of any implantable biologicals eligible for pass-through 

payment in our estimate of pass-through spending for devices. We also are proposing 

that, beginning in CY 2015, applications for pass-through payment for skin substitutes 

and similar products be evaluated using the medical device pass-through process and 

payment methodology. As a result of this proposal, we are proposing that the last skin 

substitute pass-through applications evaluated using the drugs and biologicals 

pass-through evaluation process would be those with an application deadline of 

September 1, 2014, and an earliest effective date of January 1, 2015. Therefore, in light 

of this proposal, we would change the December 1, 2014, pass-through application 

deadline (for an earliest effective date of April 1, 2015) for both drugs and biologicals 

and devices to January 15, 2015 in order to provide sufficient time for applicants to adjust 

to the new policies and procedures in effect as of January 1, 2015. We refer readers to 

section V.B.2.d of this proposed rule for further discussion of our proposal to change the 

pass-through evaluation process for skin substitutes. If we finalize this proposal, 

beginning in CY 2015 and in future years we would include an estimate of any skin 

substitutes eligible for pass-through payment in our estimate of pass-through spending for 

devices. We refer readers to section V.B.2.d of this proposed rule for details of the 

proposal to apply the device pass-through evaluation process and payment methodology 

to skin substitutes and similar products for applications submitted on or after January 1. 

 For drugs and biologicals eligible for pass-through payment, section 

1833(t)(6)(D)(i) of the Act establishes the pass-through payment amount as the amount 

by which the amount authorized under section 1842(o) of the Act (or, if the drug or 
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biological is covered under a competitive acquisition contract under section 1847B of the 

Act, an amount determined by the Secretary equal to the average price for the drug or 

biological for all competitive acquisition areas and year established under such section as 

calculated and adjusted by the Secretary) exceeds the portion of the otherwise applicable 

fee schedule amount that the Secretary determines is associated with the drug or 

biological. We note that the Part B drug CAP program has been postponed since 

CY 2009, and such a program has not been proposed to be reinstated for CY 2015. 

Because we are proposing to pay for most nonpass-through separately payable drugs and 

biologicals under the CY 2015 OPPS at ASP+6 percent, as we discussed in section 

V.B.3. of this proposed rule, which represents the otherwise applicable fee schedule 

amount associated with most pass-through drugs and biologicals, and because we are 

proposing to pay for CY 2015 pass-through drugs and biologicals at ASP+6 percent, as 

we discussed in section V.A. of this proposed rule, our estimate of drug and biological 

pass-through payment for CY 2015 for this group of items is $0, as discussed below. 

 Furthermore, payment for certain drugs, specifically diagnostic 

radiopharmaceuticals and contrast agents, without pass-through status will always be 

packaged into payment for the associated procedures and these products will not be 

separately paid. In addition, we policy-package all nonpass-through drugs, biologicals, 

and radiopharmaceuticals that function as supplies when used in a diagnostic test or 

procedure and drugs and biologicals that function as supplies when used in a surgical 

procedure, as discussed in section II.A.3. of this proposed rule. We are proposing that all 

of these policy-packaged drugs and biologicals with pass-through status would be paid at 
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ASP+6 percent, like other pass-through drugs and biologicals, for CY 2015. Therefore, 

our estimate of pass-through payment for policy-packaged drugs and biologicals with 

pass-through status approved prior to CY 2015 is not $0. In section V.A.4. of this 

proposed rule, we discuss our policy to determine if the costs of certain policy-packaged 

drugs or biologicals are already packaged into the existing APC structure. If we 

determine that a policy-packaged drug or biological approved for pass-through payment 

resembles predecessor drugs or biologicals already included in the costs of the APCs that 

are associated with the drug receiving pass-through payment, we are proposing to offset 

the amount of pass-through payment for the policy-packaged drug or biological. For 

these drugs or biologicals, the APC offset amount is the portion of the APC payment for 

the specific procedure performed with the pass-through drug or biological, which we 

refer to as the policy-packaged drug APC offset amount. If we determine that an offset is 

appropriate for a specific policy-packaged drug or biological receiving pass-through 

payment, we are proposing to reduce our estimate of pass-through payments for these 

drugs or biologicals by this amount. 

 Similar to pass-through estimates for devices, the first group of drugs and 

biologicals requiring a pass-through payment estimate consists of those products that 

were recently made eligible for pass-through payment and that will continue to be 

eligible for pass-through payment in CY 2015. The second group contains drugs and 

biologicals that we know are newly eligible, or project will be newly eligible, in the 

remaining quarters of CY 2014 or beginning in CY 2015. The sum of the CY 2015 

pass-through estimates for these two groups of drugs and biologicals equals the total 
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CY 2015 pass-through spending estimate for drugs and biologicals with pass-through 

status. 

B. Proposed Estimate of Pass-Through Spending 

 We are proposing to set the applicable pass-through payment percentage limit at 

2.0 percent of the total projected OPPS payments for CY 2015, consistent with section 

1833(t)(6)(E)(ii)(II) of the Act, and our OPPS policy from CY 2004 through CY 2014 

(78 FR 75034 through 75036). 

 For the first group of devices for pass-through payment estimation purposes, there 

is one device category, HCPCS code C1841 (Retinal prosthesis, includes all internal and 

external components), eligible for pass-through payment as of October 1, 2013, 

continuing to be eligible for CY 2014, and that will continue to be eligible for 

pass-through payment for CY 2015. We estimate that CY 2015 pass-through 

expenditures for the first group of pass-through device categories to be $0.5 million. In 

estimating our CY 2015 pass-through spending for device categories in the second group, 

we include: device categories that we knew at the time of the development of this 

proposed rule will be newly eligible for pass-through payment in CY 2015 (of which 

there are none); additional device categories that we estimate could be approved for 

pass-through status subsequent to the development of the proposed rule and before 

January 1, 2015; and contingent projections for new device categories established in the 

second through fourth quarters of CY 2015. We are proposing to use the general 

methodology described in the CY 2008 OPPS/ASC final rule with comment period 

(72 FR 66778), while also taking into account recent OPPS experience in approving new 
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pass-through device categories. For this proposed rule, the estimate of CY 2015 

pass-through spending for this second group of device categories is $10.0 million. 

 To estimate CY 2015 pass-through spending for drugs and biologicals in the first 

group, specifically those drugs and biologicals recently made eligible for pass-through 

payment and continuing on pass-through status for CY 2015, we are proposing to utilize 

the most recent Medicare physician’s office data regarding their utilization, information 

provided in the respective pass-through applications, historical hospital claims data, 

pharmaceutical industry information, and clinical information regarding those drugs or 

biologicals to project the CY 2015 OPPS utilization of the products. 

 For the known drugs and biologicals (excluding policy-packaged diagnostic 

radiopharmaceuticals, contrast agents, drugs, biologicals, and radiopharmaceuticals that 

function as supplies when used in a diagnostic test or procedure, and drugs and 

biologicals that function as supplies when used in a surgical procedure) that will be 

continuing on pass-through status in CY 2015, we estimate the pass-through payment 

amount as the difference between ASP+6 percent and the payment rate for 

nonpass-through drugs and biologicals that will be separately paid at ASP+6 percent, 

which is zero for this group of drugs. Because payment for policy-packaged drugs and 

biologicals is packaged if the product was not paid separately due to its pass-through 

status, we are proposing to include in the CY 2015 pass-through estimate the difference 

between payment for the policy-packaged drug or biological at ASP+6 percent (or 

WAC+6 percent, or 95 percent of AWP, if ASP or WAC information is not available) 

and the policy-packaged drug APC offset amount, if we determine that the 
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policy-packaged drug or biological approved for pass-through payment resembles a 

predecessor drug or biological already included in the costs of the APCs that are 

associated with the drug receiving pass-through payment. For this proposed rule, using 

the proposed methodology described above, we calculated a CY 2015 proposed spending 

estimate for this first group of drugs and biologicals of approximately $2.8 million. 

 To estimate proposed CY 2015 pass-through spending for drugs and biologicals 

in the second group (that is, drugs and biologicals that we knew at the time of 

development of this proposed rule are newly eligible for pass-through payment in 

CY 2015, additional drugs and biologicals that we estimate could be approved for 

pass-through status subsequent to the development of the proposed rule and before 

January 1, 2015, and projections for new drugs and biologicals that could be initially 

eligible for pass-through payment in the second through fourth quarters of CY 2015), we 

are proposing to use utilization estimates from pass-through applicants, pharmaceutical 

industry data, clinical information, recent trends in the per unit ASPs of hospital 

outpatient drugs, and projected annual changes in service volume and intensity as our 

basis for making the CY 2015 pass-through payment estimate. We also are proposing to 

consider the most recent OPPS experience in approving new pass-through drugs and 

biologicals. Using our proposed methodology for estimating CY 2015 pass-through 

payments for this second group of drugs, we calculated a proposed spending estimate for 

this second group of drugs and biologicals of approximately $2.2 million. 

 As discussed in section V.A. of this proposed rule, radiopharmaceuticals are 

considered drugs for pass-through payment purposes. Therefore, we include 
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radiopharmaceuticals in our proposed CY 2015 pass-through spending estimate for drugs 

and biologicals. Our proposed CY 2015 estimate for total pass-through spending for 

drugs and biologicals (spending for the first group of drugs and biologicals ($2.8 million) 

plus spending for the second group of drugs and biologicals ($2.2 million)) equals $5.0 

million. 

 In summary, in accordance with the methodology described above in this section, 

for this proposed rule, we estimate that total pass-through spending for the device 

categories and the drugs and biologicals that are continuing to receive pass-through 

payment in CY 2015 and those device categories, drugs, and biologicals that first become 

eligible for pass-through payment during CY 2015 would be approximately $15.5 million 

(approximately $10.5 million for device categories and approximately $5.0 million for 

drugs and biologicals), which represents 0.03 percent of total projected OPPS payments 

for CY 2015. Therefore, we estimate that pass-through spending in CY 2015 would not 

amount to 2.0 percent of total projected OPPS CY 2015 program spending. 

VII. Proposed OPPS Payment for Hospital Outpatient Visits 

A. Proposed Payment for Hospital Outpatient Clinic and Emergency Department Visits 

 Since April 7, 2000, we have instructed hospitals to report facility resources for 

clinic and ED hospital outpatient visits using the CPT E/M codes and to develop internal 

hospital guidelines for reporting the appropriate visit level (65 FR 18451). Because a 

national set of hospital-specific codes and guidelines do not currently exist, we have 

advised hospitals that each hospital’s internal guidelines that determine the levels of 

clinic and ED visits to be reported should follow the intent of the CPT code descriptors, 
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in that the guidelines should be designed to reasonably relate the intensity of hospital 

resources to the different levels of effort represented by the codes. 

 While many hospitals have advocated for hospital-specific national guidelines for 

visit billing since the OPPS started in 2000, and we have signaled in past rulemaking our 

intent to develop guidelines, this complex undertaking has proven challenging. Our work 

with interested stakeholders, such as hospital associations, along with a contractor, has 

confirmed that no single approach could consistently and accurately capture hospitals’ 

relative costs. Public comments received on this issue, as well as our own knowledge of 

how clinics operate, have led us to conclude that it is not feasible to adopt a set of 

national guidelines for reporting hospital clinic visits that can accommodate the 

enormous variety of patient populations and service-mix provided by hospitals of all 

types and sizes throughout the country. Moreover, no single approach has been broadly 

endorsed by the stakeholder community. 

 After consideration of public comments we received on the CY 2014 OPPS/ASC 

proposed rule, in the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 

through 75045), we finalized a new policy which created an alphanumeric HCPCS code, 

G0463 (Hospital outpatient clinic visit for assessment and management of a patient), for 

hospital use only representing any and all clinic visits under the OPPS and assigned 

HCPCS code G0463 to new APC 0634. We also finalized a policy to use CY 2012 

claims data to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based 

on the total geometric mean cost of the levels one through five CPT E/M codes for clinic 

visits previously recognized under the OPPS (CPT codes 99201 through 99205 and 
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99211 through 99215). In addition, we finalized a policy to no longer recognize a 

distinction between new and established patient clinic visits. 

 In the CY 2014 OPPS/ASC final rule with comment period, we also stated our 

policy that we would continue to use our existing methodology to recognize the existing 

CPT codes for Type A ED visits as well as the five HCPCS codes that apply to Type B 

ED visits, and to establish the OPPS payment under our established standard process 

(78 FR 75036 through 75043). We refer readers to the CY 2014 OPPS/ASC final rule 

with comment period for a detailed discussion of the public comments and our rationale 

for the CY 2014 policies. 

 For CY 2015, we are proposing to continue the current policy, adopted in 

CY 2014, for clinic and ED visits. HCPCS code G0463 for hospital use only will 

represent any and all clinic visits under the OPPS. We are proposing to continue to 

assign HCPCS code G0463 to APC 0634. We are proposing to use CY 2013 claims data 

to develop the proposed CY 2015 OPPS payment rates for HCPCS code G0463 based on 

the total geometric mean cost of the levels one through five CPT E/M codes for clinic 

visits currently recognized under the OPPS (CPT codes 99201 through 99205 and 99211 

through 99215). Finally, as we established in the CY 2014 OPPS/ASC final rule with 

comment period, there is no longer a policy to recognize a distinction between new and 

established patient clinic visits. 

 At the time of publication of the CY 2014 OPPS/ASC final rule with comment 

period, we stated that additional study was needed to fully assess the most suitable 

payment structure for ED visits, including the particular number of visit levels that would 
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not underrepresent resources required to treat the most complex patients, such as trauma 

patients and that we believed it was best to delay any change in ED visit coding while we 

reevaluate the most appropriate payment structure for Type A and Type B ED visits 

(78 FR 75040). At this time, we continue to believe that additional study is needed to 

assess the most suitable payment structure for ED visits. We are not proposing any 

change in ED visit coding, but rather, for CY 2015, we are proposing to continue to use 

our existing methodology to recognize the existing CPT codes for Type A ED visits as 

well as the five HCPCS codes that apply to Type B ED visits, and to establish the 

CY 2015 proposed OPPS payment rates using our established standard process. We 

intend to further explore the issues described above related to ED visits, including 

concerns about excessively costly patients, such as trauma patients. We may propose 

changes to the coding and APC assignments for ED visits in future rulemaking. 
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B. Proposed Payment for Critical Care Services 

 For the history of the payment policy for critical care services, we refer readers to 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75043). In the CY 2014 

OPPS/ASC final rule with comment period, we continued to use the methodology 

established in the CY 2011 OPPS/ASC final rule with comment period for calculating a 

payment rate for critical care services that includes packaged payment of ancillary 

services, for example electrocardiograms, chest X-rays, and pulse oximetry. Critical care 

services are described by CPT codes 99291 (Critical care, evaluation and management of 

the critically ill or critically injured patient; first 30-74 minutes) and 99292 (Critical care, 

evaluation and management of the critically ill or critically injured patient; each 

additional 30 minutes (List separately in addition to code for primary service)). 

 Compared to the CY 2012 hospital claims data used for the CY 2014 OPPS 

ratesetting, the CY 2013 hospital claims data used for the CY 2015 OPPS ratesetting 

again show increases in the geometric mean line item costs as well as the geometric mean 

line item charges for CPT code 99291, which continue to suggest that hospitals’ billing 

practices for CPT code 99291 have remained the same. Because the CY 2013 claims 

data do not support any significant change in hospital billing practices for critical care 

services, we continue to believe that it would be inappropriate to pay separately the 

ancillary services that hospitals typically report in addition to CPT codes for critical care 

services. Therefore, for CY 2015, we are proposing to continue our policy (that has been 

in place since CY 2011) to recognize the existing CPT codes for critical care services and 

establish a payment rate based on historical claims data. We also are proposing to 
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continue to implement claims processing edits that conditionally package payment for the 

ancillary services that are reported on the same date of service as critical care services in 

order to avoid overpayment. We will continue to monitor the hospital claims data for 

CPT code 99291 in order to determine whether revisions to this policy are warranted 

based on changes in hospitals’ billing practices.

VIII. Proposed Payment for Partial Hospitalization Services 

A. Background 

 Partial hospitalization is an intensive outpatient program of psychiatric services 

provided to patients as an alternative to inpatient psychiatric care for individuals who 

have an acute mental illness. Section 1861(ff)(1) of the Act defines partial 

hospitalization services as “the items and services described in paragraph (2) prescribed 

by a physician and provided under a program described in paragraph (3) under the 

supervision of a physician pursuant to an individualized, written plan of treatment 

established and periodically reviewed by a physician (in consultation with appropriate 

staff participating in such program), which sets forth the physician’s diagnosis, the type, 

amount, frequency, and duration of the items and services provided under the plan, and 

the goals for treatment under the plan.” Section 1861(ff)(2) of the Act describes the 

items and services included in partial hospitalization services. Section 1861(ff)(3)(A) of 

the Act specifies that a partial hospitalization program (PHP) is a program furnished by a 

hospital to its outpatients or by a community mental health center (CMHC) (as defined in 

subparagraph (B)), and “which is a distinct and organized intensive ambulatory treatment 

service offering less than 24-hour-daily care other than in an individual’s home or in an 
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inpatient or residential setting.” Section 1861(ff)(3)(B) of the Act defines a community 

mental health center for purposes of this benefit. 

 Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the authority to 

designate the OPD services to be covered under the OPPS. The Medicare regulations 

that implement this provision specify, under 42 CFR 419.21, that payments under the 

OPPS will be made for partial hospitalization services furnished by CMHCs as well as 

Medicare Part B services furnished to hospital outpatients designated by the Secretary, 

which include partial hospitalization services (65 FR 18444 through 18445). 

 Section 1833(t)(2)(C) of the Act, in pertinent part, requires the Secretary to 

“establish relative payment weights for covered OPD services (and any groups of such 

services described in subparagraph (B)) based on median (or, at the election of the 

Secretary, mean) hospital costs” using data on claims from 1996 and data from the most 

recent available cost reports. In pertinent part, subparagraph (B) provides that the 

Secretary may establish groups of covered OPD services, within a classification system 

developed by the Secretary for covered OPD services, so that services classified within 

each group are comparable clinically and with respect to the use of resources. In 

accordance with these provisions, we have developed the PHP APCs. Section 

1833(t)(9)(A) of the Act requires the Secretary to “review not less often than annually 

and revise the groups, the relative payment weights, and the wage and other adjustments 

described in paragraph (2) to take into account changes in medical practice, changes in 

technology, the addition of new services, new cost data, and other relevant information 

and factors.” 
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 Because a day of care is the unit that defines the structure and scheduling of 

partial hospitalization services, we established a per diem payment methodology for the 

PHP APCs, effective for services furnished on or after July 1, 2000 (65 FR 18452 

through 18455). Under this methodology, the median per diem costs have been used to 

calculate the relative payment weights for PHP APCs. 

 From CY 2003 through CY 2006, the median per diem costs for CMHCs 

fluctuated significantly from year to year, while the median per diem costs for 

hospital-based PHPs remained relatively constant. We were concerned that CMHCs may 

have increased and decreased their charges in response to Medicare payment policies. 

Therefore, we began efforts to strengthen the PHP benefit through extensive data analysis 

and policy and payment changes finalized in the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66670 through 66676). We made two refinements to the 

methodology for computing the PHP median: the first remapped 10 revenue codes that 

are common among hospital-based PHP claims to the most appropriate cost centers; and 

the second refined our methodology for computing the PHP median per diem cost by 

computing a separate per diem cost for each day rather than for each bill. We refer 

readers to a complete discussion of these refinements in the CY 2008 OPPS/ASC final 

rule with comment period (72 FR 66670 through 66676). 

 In CY 2009, we implemented several regulatory, policy, and payment changes, 

including a two-tiered payment approach for PHP services under which we paid one 

amount for days with 3 services (APC 0172 Level I Partial Hospitalization) and a higher 

amount for days with 4 or more services (APC 0173 Level II Partial Hospitalization). 
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We refer readers to section X.B. of the CY 2009 OPPS/ASC final rule with comment 

period (73 FR 68688 through 68693) for a full discussion of the two-tiered payment 

system. In addition, for CY 2009, we finalized our policy to deny payment for any PHP 

claims submitted for days when fewer than 3 units of therapeutic services are provided 

(73 FR 68694). 

 Furthermore, for CY 2009, we revised the regulations at 42 CFR 410.43 to codify 

existing basic PHP patient eligibility criteria and to add a reference to current physician 

certification requirements under 42 CFR 424.24 to conform our regulations to our 

longstanding policy (73 FR 68694 through 68695). These changes have helped to 

strengthen the PHP benefit. We also revised the partial hospitalization benefit to include 

several coding updates. We refer readers to section X.C.3. of the CY 2009 OPPS/ASC 

final rule with comment period (73 FR 68695 through 68697) for a full discussion of 

these requirements. 

 For CY 2010, we retained the two-tiered payment approach for PHP services and 

used only hospital-based PHP data in computing the APC per diem payment rates. We 

used only hospital-based PHP data because we were concerned about further reducing 

both PHP APC per diem payment rates without knowing the impact of the policy and 

payment changes we made in CY 2009. Because of the 2-year lag between data 

collection and rulemaking, the changes we made in CY 2009 were reflected for the first 

time in the claims data that we used to determine payment rates for the CY 2011 

rulemaking (74 FR 60556 through 60559). 
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 In CY 2011, in accordance with section 1301(b) of the Health Care and Education 

Reconciliation Act of 2010 (HCERA 2010), we amended the description of a PHP in our 

regulations to specify that a PHP must be a distinct and organized intensive ambulatory 

treatment program offering less than 24-hour daily care “other than in an individual’s 

home or in an inpatient or residential setting.” In addition, in accordance with section 

1301(a) of HCERA 2010, we revised the definition of a CMHC in the regulations to 

conform to the revised definition now set forth under section 1861(ff)(3)(B) of the Act. 

We discussed our finalized policies for these two provisions of HCERA 2010 in section 

X.C. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 71990). 

 In the CY 2011 OPPS/ASC final rule with comment period (75 FR 71994), we 

also established four separate PHP APC per diem payment rates, two for CMHCs (for 

Level I and Level II services) and two for hospital-based PHPs (for Level I and Level II 

services), based on each provider’s own unique data. As stated in the CY 2011 

OPPS/ASC proposed rule (75 FR 46300) and the final rule with comment period 

(75 FR 71991), for CY 2011, using CY 2009 claims data, CMHC costs had significantly 

decreased again. We attributed the decrease to the lower cost structure of CMHCs 

compared to hospital-based PHP providers, and not the impact of the CY 2009 policies. 

CMHCs have a lower cost structure than hospital-based PHP providers, in part, because 

the data showed that CMHCs generally provide fewer PHP services in a day and use less 

costly staff than hospital-based PHPs. Therefore, it was inappropriate to continue to treat 

CMHCs and hospital-based providers in the same manner regarding payment, 

particularly in light of such disparate differences in costs. We also were concerned that 
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paying hospital-based PHPs at a lower rate than their cost structure reflects could lead to 

hospital-based PHP closures and possible access problems for Medicare beneficiaries 

because hospital-based PHPs are located throughout the country and, therefore, offer the 

widest access to PHP services. Creating the four payment rates (two for CMHCs and two 

for hospital-based PHPs) based on each provider’s data supported continued access to the 

PHP benefit, while also providing appropriate payment based on the unique cost 

structures of CMHCs and hospital-based PHPs. In addition, separation of data by 

provider type was supported by several hospital-based PHP commenters who responded 

to the CY 2011 OPPS/ASC proposed rule (75 FR 71992). 

 For CY 2011, we instituted a 2-year transition period for CMHCs to the CMHC 

APC per diem payment rates based solely on CMHC data. For CY 2011, under the 

transition methodology, CMHC PHP APCs Level I and Level II per diem costs were 

calculated by taking 50 percent of the difference between the CY 2010 final 

hospital-based PHP median costs and the CY 2011 final CMHC median and then adding 

that number to the CY 2011 final CMHC median. A 2-year transition under this 

methodology moved us in the direction of our goal, which is to pay appropriately for PHP 

services based on each provider type’s data, while at the same time allowing providers 

time to adjust their business operations and protect access to care for beneficiaries. We 

also stated that we would review and analyze the data during the CY 2012 rulemaking 

cycle and, based on these analyses, we might further refine the payment mechanism. We 

refer readers to section X.B. of the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 71991 through 71994) for a full discussion. 
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 After publication of the CY 2011 OPPS/ASC final rule with comment period, a 

CMHC and one of its patients filed an application for a preliminary injunction, 

challenging the OPPS payment rates for PHP services provided by CMHCs in CY 2011 

as adopted in the CY 2011 OPPS/ASC final rule with comment period (75 FR 71995). 

We refer readers to the court case, Paladin Cmty. Mental Health Ctr. v. Sebelius, 2011 

WL 3102049 (W.D.Tex. 2011), aff’d, 684 F.3d 527 (5th Cir. 2012) (Paladin). The 

plaintiffs in the Paladin case challenged the agency’s use of cost data derived from both 

hospitals and CMHCs in determining the relative payment weights for the OPPS payment 

rates for PHP services furnished by CMHCs, alleging that section 1833(t)(2)(C) of the 

Act requires that such relative payment weights be based on cost data derived solely from 

hospitals. As discussed above, section 1833(t)(2)(C) of the Act requires CMS to 

“establish relative payment weights for covered OPD services (and any groups of such 

services . . .) . . . based on . . . hospital costs.” Numerous courts have held that “based 

on” does not mean “based exclusively on.” On July 25, 2011, the District Court 

dismissed the plaintiffs’ complaint and application for a preliminary injunction for lack of 

subject-matter jurisdiction, which the plaintiffs appealed to the United States Court of 

Appeals for the Fifth Circuit. On June 15, 2012, the Court of Appeals affirmed the 

District Court’s dismissal for lack of subject-matter jurisdiction and found that the 

Secretary’s payment rate determinations for PHP services are not a facial violation of a 

clear statutory mandate (Paladin, 684 F.3d at 533). 

 For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74348 through 74352), we determined the relative payment weights for 
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PHP services provided by CMHCs based on data derived solely from CMHCs and the 

relative payment weights for hospital-based PHP services based exclusively on hospital 

data. The statute is reasonably interpreted to allow the relative payment weights for the 

OPPS payment rates for PHP services provided by CMHCs to be based solely on CMHC 

data and relative payment weights for hospital-based PHP services to be based 

exclusively on hospital data. Section 1833(t)(2)(C) of the Act requires the Secretary to 

“establish relative payment weights for covered OPD services (and any groups of such 

services described in subparagraph (B)) based on . . . hospital costs.” In pertinent part, 

subparagraph (B) provides that “the Secretary may establish groups of covered OPD 

services . . . so that services classified within each group are comparable clinically and 

with respect to the use of resources.” In accordance with subparagraph (B), we 

developed the PHP APCs, as set forth in § 419.31 of the regulations (65 FR 18446 and 

18447; 63 FR 47559 through 47562 and 47567 through 47569). As discussed above, 

PHP services are grouped into APCs. 

 Based on section 1833(t)(2)(C) of the Act, we believe that the word “establish” 

can be interpreted as applying to APCs at the inception of the OPPS in 2000 or whenever 

a new APC is added to the OPPS. In creating the original APC for PHP services 

(APC 0033), we did “establish” the initial relative payment weight for PHP services, 

provided in both hospital-based and CMHC-based settings, only on the basis of hospital 

data. Subsequently, from CY 2003 through CY 2008, the relative payment weights for 

PHP services were based on a combination of hospital and CMHC data. For CY 2009, 

we established new APCs for PHP services based exclusively on hospital data. 
CMS-1613-P 390 

Specifically, we adopted a two-tiered APC methodology (in lieu of the original APC 

0033) under which CMS paid one rate for days with 3 services (APC 0172) and a 

different payment rate for days with 4 or more services (APC 0173). These two new 

APCs were established using only hospital data. For CY 2011, we added two new APCs 

(APCs 0175 and 0176) for PHP services provided by hospitals and based the relative 

payment weights for these APCs solely on hospital data. APCs 0172 and 0173 were 

designated for PHP services provided by CMHCs and were based on a mixture of 

hospital and CMHC data. As the Secretary argued in the Paladin case, the courts have 

consistently held that the phrase “based on” does not mean “based exclusively on.” Thus, 

the relative payment weights for the two APCs for PHP services provided by CMHCs in 

CY 2011 were “based on” hospital data, no less than the relative payment weights for the 

two APCs for hospital-based PHP services. 

 Although we used hospital data to establish the relative payment weights for 

APCs 0033, 0172, 0173, 0175, and 0176 for PHP services, we believe that we have the 

authority to discontinue the use of hospital data in determining the OPPS relative 

payment weights for PHP services provided by CMHCs. Other parts of section 

1833(t)(2)(C) of the Act make plain that the data source for the relative payment weights 

is subject to change from one period to another. Section 1833(t)(2)(C) of the Act 

provides that, in establishing the relative payment weights, “the Secretary shall [ ] us[e] 

data on claims from 1996 and us[e] data from the most recent available cost reports.” We 

used 1996 data (in addition to 1997 data) in determining only the original relative 
CMS-1613-P 391 

payment weights for 2000. In the ensuing calendar year updates, we continually used 

more recent cost report data. 

 Moreover, section 1833(t)(9)(A) of the Act requires the Secretary to “review not 

less often than annually and revise the groups, the relative payment weights, and the 

wage and other adjustments described in paragraph (2) to take into account changes in 

medical practice, changes in technology, the addition of new services, new cost data, and 

other relevant information and factors.” For purposes of the CY 2012 update, we 

exercised our authority under section 1833(t)(9)(A) of the Act to change the data source 

for the relative payment weights for PHP services provided by CMHCs based on “new 

cost data, and other relevant information and factors.” 

 In the CY 2014 OPPS/ASC final rule with comment period, we finalized our 

proposal to base the relative payment weights that underpin the OPPS APCs, including 

the four PHP APCs, on geometric means rather than on the medians. For CY 2014, we 

established the four PHP APC per diem payment rates based on geometric mean cost 

levels calculated using the most recent claims data for each provider type. We refer 

readers to the CY 2014 OPPS/ASC final rule with comment period for a more detailed 

discussion (78 FR 75047 through 75050). 

B. Proposed PHP APC Update for CY 2015 

 For CY 2015, we are proposing to apply our established policies to calculate the 

four PHP APC per diem payment rates based on geometric mean per diem costs using the 

most recent claims data for each provider type. We computed proposed CMHC PHP 

APC geometric mean per diem costs for Level I (3 services per day) and Level II (4 or 
CMS-1613-P 392 

more services per day) PHP services using only CY 2013 CMHC claims data, and 

proposed hospital-based PHP APC geometric mean per diem costs for Level I and Level 

II PHP services using only CY 2013 hospital-based PHP claims data. These proposed 

geometric mean per diem costs are shown in Table 44 below. 
CMS-1613-P 393 

TABLE 44.—PROPOSED CY 2015 GEOMETRIC MEAN PER DIEM COSTS 

FOR CMHC AND HOSPITAL-BASED PHP SERVICES, BASED ON CY 2013 

CLAIMS DATA 

APC Group Title 

Proposed 

Geometric 

Mean Per Diem 

Costs 

0172 Level I Partial Hospitalization (3 services) for 

CMHCs 

$97.43

0173 Level II Partial Hospitalization (4 or more 

services) for CMHCs 

$114.93

0175 Level I Partial Hospitalization (3 services) for 

hospital-based PHPs 

$177.32

0176 Level II Partial Hospitalization (4 or more 

services) for hospital-based PHPs 

$190.21

 For CY 2015, the proposed geometric mean per diem costs for days with 

3 services (Level I) is approximately $97 for CMHCs and approximately $177 for 

hospital-based PHPs. The proposed geometric mean per diem costs for days with 4 or 

more services (Level II) is approximately $115 for CMHCs and approximately $190 for 

hospital-based PHPs. 

 The CY 2015 proposed geometric mean per diem costs for CMHCs calculated 

under the proposed CY 2015 methodology using CY 2013 claims data have remained 

relatively constant when compared to the CY 2014 final geometric mean per diem costs 

for CMHCs established in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75050), with geometric mean per diem costs for Level I CMHC PHP services 

decreasing from approximately $99 to approximately $97 for CY 2015, and geometric 

mean per diem costs for Level II CMHC PHP services increasing from approximately 

$112 to approximately $115 for CY 2015. 
CMS-1613-P 394 

 The CY 2015 proposed geometric mean per diem costs for hospital-based PHPs 

calculated under the proposed CY 2015 methodology using CY 2013 claims data show 

more variation when compared to the CY 2014 final geometric mean per diem costs for 

hospital-based PHPs, with geometric mean per diem costs for Level I hospital-based PHP 

services decreasing from approximately $191 to approximately $177 for CY 2015, and 

geometric mean per diem costs for Level II hospital-based PHP services decreasing from 

approximately $214 to approximately $190 for CY 2015. 

 We understand that having little variation in the PHP per diem payment amounts 

from one year to the next allows providers to more easily plan their fiscal needs. 

However, we believe that it is important to base the PHP payment rates on the claims and 

cost reports submitted by each provider type so these rates accurately reflect the cost 

information for these providers. We recognize that several factors may cause a 

fluctuation in the per diem payment amounts, including direct changes to the PHP APC 

per diem payment rate (for example, establishing separate APCs and associated per diem 

payment rates for CMHCs and hospital-based providers based on the provider type’s 

costs), changes to the OPPS (for example, basing the relative payment weights on 

geometric mean costs), and provider-driven changes (for example, a provider’s decision 

to change its mix of services or to change its charges and clinical practice for some 

services). We refer readers to a more complete discussion of this issue in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 75049). We are inviting public 

comments on what causes PHP costs to fluctuate from year to year. 
CMS-1613-P 395 

 The proposed CY 2015 geometric mean per diem costs for the CMHC and 

hospital-based PHP APCs are shown in Table 44 of this proposed rule. We are inviting 

public comments on these proposals. 

C. Proposed Separate Threshold for Outlier Payments to CMHCs 

 As discussed in the CY 2004 OPPS final rule with comment period (68 FR 63469 

through 63470), after examining the costs, charges, and outlier payments for CMHCs, we 

believed that establishing a separate OPPS outlier policy for CMHCs would be 

appropriate. A CMHC-specific outlier policy would direct OPPS outlier payments 

towards genuine cost of outlier cases, and address situations where charges were being 

artificially increased to enhance outlier payments. We created a separate outlier policy 

that would be specific to the estimated costs and OPPS payments provided to CMHCs. 

We note that, in the CY 2009 OPPS/ASC final rule with comment period, we established 

an outlier reconciliation policy to comprehensively address charging aberrations related 

to OPPS outlier payments (73 FR 68594 through 68599). Therefore, beginning in 

CY 2004, we designated a portion of the estimated OPPS outlier target amount 

specifically for CMHCs, consistent with the percentage of projected payments to CMHCs 

under the OPPS each year, excluding outlier payments, and established a separate outlier 

threshold for CMHCs. 

 The separate outlier threshold for CMHCs resulted in $1.8 million in outlier 

payments to CMHCs in CY 2004, and $0.5 million in outlier payments to CMHCs in 

CY 2005. In contrast, in CY 2003, more than $30 million was paid to CMHCs in outlier 

payments. We believe that this difference in outlier payments indicates that the separate 
CMS-1613-P 396 

outlier threshold for CMHCs has been successful in keeping outlier payments to CMHCs 

in line with the percentage of OPPS payments made to CMHCs. 

 We are proposing to continue designating a portion of the estimated 1.0 percent 

outlier target amount specifically for CMHCs, consistent with the percentage of projected 

payments to CMHCs under the OPPS in CY 2015, excluding outlier payments. CMHCs 

are projected to receive 0.03 percent of total OPPS payments in CY 2015, excluding 

outlier payments. Therefore, we are proposing to designate 0.47 percent of the estimated 

1.0 percent outlier target amount for CMHCs, and establish a threshold to achieve that 

level of outlier payments. Based on our simulations of CMHC payments for CY 2015, 

we are proposing to continue to set the threshold for CY 2015 at 3.40 times the highest 

CMHC PHP APC payment rate (that is, APC 0173 (Level II Partial Hospitalization)). 

We continue to believe that this approach would neutralize the impact of inflated CMHC 

charges on outlier payments and better target outlier payments to those truly 

exceptionally high-cost cases that might otherwise limit beneficiary access. In addition, 

we are proposing to continue to apply the same outlier payment percentage that applies to 

hospitals. Therefore, for CY 2015, we are proposing to continue to pay 50 percent of 

CMHC per diem costs over the threshold. In section II.G. of this proposed rule, for the 

hospital outpatient outlier payment policy, we are proposing to set a dollar threshold in 

addition to an APC multiplier threshold. Because the PHP APCs are the only APCs for 

which CMHCs may receive payment under the OPPS, we would not expect to redirect 

outlier payments by imposing a dollar threshold. Therefore, we are not proposing to set a 

dollar threshold for CMHC outlier payments. 
CMS-1613-P 397 

 In summary, we are proposing to establish that if a CMHC’s cost for partial 

hospitalization services, paid under either APC 0172 or APC 0173, exceeds 3.40 times 

the payment rate for APC 0173, the outlier payment would be calculated as 50 percent of 

the amount by which the cost exceeds 3.40 times the APC 0173 payment rate. We are 

inviting public comments on these proposals. 

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

A. Background 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74352 through 74353) for a full historical discussion of our longstanding policies 

on how we identify procedures that are typically provided only in an inpatient setting 

(referred to as the inpatient list) and, therefore, will not be paid by Medicare under the 

OPPS; and on the criteria that we use to review the inpatient list each year to determine 

whether or not any procedures should be removed from the list. 

B. Proposed Changes to the Inpatient List 

 For the CY 2015 OPPS, we are proposing to use the same methodology 

(described in the November 15, 2004 final rule with comment period (69 FR 65835)) of 

reviewing the current list of procedures on the inpatient list to identify any procedures 

that may be removed from the list. The established criteria upon which we make such a 

determination are as follows: 

 1. Most outpatient departments are equipped to provide the services to the 

Medicare population. 
CMS-1613-P 398 

 2. The simplest procedure described by the code may be performed in most 

outpatient departments. 

 3. The procedure is related to codes that we have already removed from the 

inpatient list. 

 4. A determination is made that the procedure is being performed in numerous 

hospitals on an outpatient basis. 

 5. A determination is made that the procedure can be appropriately and safely 

performed in an ASC, and is on the list of approved ASC procedures or has been 

proposed by us for addition to the ASC list. 

 Using this methodology, we did not identify any procedures that potentially could 

be removed from the inpatient list for CY 2015. Therefore, we are proposing to not 

remove any procedures from the inpatient list for CY 2015. 

 After our annual review of APCs and code assignments as required by section 

1833(t)(9) of the Act and further clinical review performed by CMS medical officers, we 

are proposing to add CPT code 22222 (Osteotomy of spine, including discectomy, 

anterior approach, single vertebral segment; thoracic) to the CY 2015 inpatient list. 

 The complete list of codes that we are proposing to be paid by Medicare in 

CY 2015 only as inpatient procedures is included as Addendum E to this proposed rule 

(which is available via the Internet on the CMS Web site). 

X. Proposed Nonrecurring Policy Changes: Collecting Data on Services Furnished 

in Off-Campus Provider-Based Departments 
CMS-1613-P 399 

 As we discussed in the CY 2014 OPPS/ASC proposed rule and final rule with 

comment period (78 FR 43626 and 78 FR 75061, respectively) and in the CY 2014 

Medicare Physician Fee Schedule (MPFS) proposed rule (78 FR 43301 and 

78 FR 74427), in recent years, the research literature and popular press have documented 

the increased trend toward hospital acquisition of physician practices, integration of those 

practices as a department of the hospital, and the resultant increase in the delivery of 

physicians’ services in a hospital setting. When a Medicare beneficiary receives 

outpatient services in a hospital, the total payment amount for outpatient services made 

by Medicare is generally higher than the total payment amount made by Medicare when a 

physician furnishes those same services in a freestanding clinic or in a physician’s office. 

 We continue to seek a better understanding of how the growing trend toward 

hospital acquisition of physician offices and subsequent treatment of those locations as 

off-campus provider-based outpatient departments affects payments under the MPFS and 

OPPS, as well as beneficiary cost-sharing obligations. MedPAC continues to question 

the appropriateness of increased Medicare payment and beneficiary cost-sharing when 

physician offices become hospital outpatient departments and to recommend that 

Medicare pay selected hospital outpatient services at MPFS rates (MedPAC March 2012 

and June 2013 Report to Congress). In order to understand how this trend is affecting 

Medicare, we need information on the extent to which this shift is occurring. To that end, 

during the CY 2014 OPPS/ASC rulemaking cycle, we sought public comment regarding 

the best method for collecting information and data that would allow us to analyze the 

frequency, type, and payment for physicians’ and outpatient hospital services furnished in 
CMS-1613-P 400 

off-campus provider-based hospital outpatient departments (78 FR 75061 through 75062 

and 78 FR 74427 through 74428). In response to our solicitation, we received many 

detailed public comments. However, the commenters did not present a consensus 

opinion regarding the options we presented in last year’s proposed rule. Based on our 

analysis of the public comments we received, we believe the most efficient and equitable 

means of gathering this important information across two different payment systems 

would be to create a HCPCS modifier to be reported with every code for physicians’ 

services and outpatient hospital services furnished in an off-campus provider-based 

department of a hospital on both the CMS-1500 claim form for physicians’ services and 

the UB-04 form (CMS Form 1450) for hospital outpatient services. We note that a main 

provider may treat an off-campus facility as provider-based if certain requirements in 

42 CFR 413.65 are satisfied, and we define a “campus” at 42 CFR 413.65(a)(2) to be the 

physical area immediately adjacent to the provider’s main buildings, other areas and 

structures that are not strictly contiguous to the main buildings but are located within 250 

yards of the main buildings, and any other areas determined on an individual case basis, 

by the CMS regional office, to be part of the provider’s campus. 

 Section 220(a) of the Protecting Access to Medicare Act of 2014 (Pub. L. 113-93) 

added a new subparagraph (M) under section 1848(c)(2) of the Act that granted CMS the 

authority to engage in data collection to support valuation of services paid under the 

MPFS. We are seeking more information on the frequency and type of services furnished 

in provider-based departments under this authority to improve the accuracy of MPFS 

practice expense payments for services furnished in off-campus provider-based 
CMS-1613-P 401 

departments. We discuss this issue in more detail in the CY 2015 MPFS proposed rule 

(CMS-1612-P). In that discussion, we note our concerns that our current MPFS practice 

expense methodology primarily distinguishes between the resources involved in 

furnishing services in two sites of service: the nonfacility setting and the facility setting. 

As more physician practices become hospital-based and are treated as off-campus 

provider-based departments, we believe it is important to develop an understanding of 

which practice expense costs typically are incurred by the physicians and practitioners in 

the setting, which are incurred by the hospital, and whether the facility and nonfacility 

site of service differentials adequately account for the typical resource costs given these 

new ownership arrangements. 

 To understand how this trend is affecting Medicare, including the accuracy of 

payments made through the MPFS, we need to develop data to assess the extent to which 

this shift toward hospital-based physician practices is occurring. Therefore, we are 

proposing to collect information on the type and frequency of physicians’ services and 

outpatient hospital services furnished in off-campus provider-based departments 

beginning January 1, 2015, in accordance with our authority under section 1834(c)(2)(M) 

of the Act (as added by section 220(a) of Pub. L. 113-93). As noted above, we would 

create a HCPCS modifier that is to be reported with every code for physicians’ services 

and outpatient hospital services furnished in an off-campus provider-based department of 

a hospital. The modifier would be reported on both the CMS-1500 claim form for 

physicians’ services and the UB-04 form (CMS Form 1450) for hospital outpatient 

services. We are seeking additional public comment on whether or not the use of a 
CMS-1613-P 402 

modifier code is the best mechanism for collecting this service-level data in the hospital 

outpatient department. 

XI. Proposed CY 2015 OPPS Payment Status and Comment Indicators 

A. Proposed CY 2015 OPPS Payment Status Indicator Definitions 

 Payment status indicators (SIs) that we assign to HCPCS codes and APCs serve 

an important role in determining payment for services under the OPPS. They indicate 

whether a service represented by a HCPCS code is payable under the OPPS or another 

payment system and also whether particular OPPS policies apply to the code. The 

complete list of the proposed CY 2015 payment status indicators and their definitions is 

displayed in Addendum D1 on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The proposed CY 2015 payment status 

indicator assignments for APCs and HCPCS codes are shown in Addendum A and 

Addendum B, respectively, on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/HospitalOutpatientPPS/index.html. The proposed changes to CY 2015 payment 

status indicators and their definitions are discussed in detail below. 

 We note that in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74869 through 74888), for CY 2014, we created a new status indicator “J1” to 

identify HCPCS codes that are paid under a comprehensive APC. However, because we 

delayed implementation of the new comprehensive APC policy until CY 2015, we also 

delayed the effective date of payment status indicator “J1” to CY 2015. A claim with 
CMS-1613-P 403 

payment status indicator “J1” will trigger a comprehensive APC payment for the claim. 

We refer readers to section II.A.2.e. of this proposed rule for a discussion of 

implementation of the new comprehensive APC policy. 

 For CY 2015, we are proposing to delete payment status indicator “X,” and assign 

ancillary services that are currently assigned payment status indicator “X” to either 

payment status indicator “Q1” or “S.” We also are proposing to revise the definition 

payment status indicator “Q1” by removing payment status indicator “X” from the 

packaging criteria, so that codes assigned payment status indicator “Q1” would be 

designated as STV-packaged, rather than STVX-packaged because payment status 

indicator “X” is proposed for deletion. These proposed changes are discussed in greater 

detail in section II.A.3.c.(1) of this proposed rule. 

 In addition, for CY 2015, we are proposing to clarify the definition of payment 

status indicator “E” to state that status indicator “E” applies to items, codes, and 

services-- 

● For which pricing is not available; 

● Not covered by any Medicare outpatient benefit category; 

● Statutorily excluded by Medicare; and 

● Not reasonable and necessary. 

 Regarding items “for which pricing is not available,” this applies to drugs and 

biologicals assigned a HCPCS code but with no available pricing information, for 

example, WAC. 
CMS-1613-P 404 

 In reviewing the OPPS status indicators and Addendum D1 for CY 2015, we 

noticed that there are a few drugs or biologicals that are currently assigned payment 

status indicator “A” indicating payment under a non-OPPS fee schedule. These drugs are 

administered infrequently in conjunction with emergency dialysis for patients with 

ESRD, but when administered in the HOPD, they would be paid under the standard 

OPPS drug payment methodology for drugs and biologicals, that is, at ASP+6 percent 

unless they are packaged. We refer readers to section V. of this proposed rule for 

additional discussion of these drugs and their status indicators. Based on this proposed 

change to the status indicators for these drugs, for CY 2015, we are proposing to remove 

the phrase “EPO for ESRD Patients” from the list of examples for status indicator “A.” 

In addition, we are proposing to clarify the definition of payment status indicator “A” by 

adding the phrase “separately payable” to nonimplantable prosthetic and orthotic devices. 

B. Proposed CY 2015 Comment Indicator Definitions 

 For the CY 2015 OPPS, we are proposing to use the same two comment 

indicators that are in effect for the CY 2014 OPPS. 

● “CH”—Active HCPCS codes in current and next calendar year; status indicator 

and/or APC assignment have changed or active HCPCS code that will be discontinued at 

the end of the current calendar year. 

● “NI”—New code for the next calendar year or existing code with substantial 

revision to its code descriptor in the next calendar year as compared to current calendar 

year, interim APC assignment; comments will be accepted on the interim APC 

assignment for the new code. 
CMS-1613-P 405 

 We are proposing to use the “CH” comment indicator in this CY 2015 

OPPS/ASC proposed rule to indicate HCPCS codes for which the status indicator or APC 

assignment, or both, are proposed for change in CY 2015 compared to their assignment 

as of June 30, 2014. We believe that using the “CH” indicator in this proposed rule will 

facilitate the public’s review of the changes that we are proposing for CY 2015. Use of 

the comment indicator “CH” in association with a composite APC indicates that the 

configuration of the composite APC is proposed to be changed in the CY 2015 

OPPS/ASC final rule with comment period. 

 We are proposing to use the “CH” comment indicator in the CY 2015 OPPS/ASC 

final rule with comment period to indicate HCPCS codes for which the status indicator or 

APC assignment, or both, would change in CY 2015 compared to their assignment as of 

December 31, 2014. 

 In addition, we are proposing that any existing HCPCS codes with substantial 

revisions to the code descriptors for CY 2015 compared to the CY 2014 descriptors 

would be labeled with comment indicator “NI” in Addendum B to the CY 2015 

OPPS/ASC final rule with comment period. However, in order to receive the comment 

indicator “NI,” the CY 2015 revision to the code descriptor (compared to the CY 2014 

descriptor) must be significant such that the new code descriptor describes a new service 

or procedure for which the OPPS treatment may change. We use comment indicator 

“NI” to indicate that these HCPCS codes will be open for comment as part of this 

CY 2015 OPPS/ASC final rule with comment period. Like all codes labeled with 
CMS-1613-P 406 

comment indicator “NI,” we will respond to public comments and finalize their OPPS 

treatment in the CY 2016 OPPS/ASC final rule with comment period. 

 In accordance with our usual practice, we are proposing that CPT and Level II 

HCPCS codes that are new for CY 2015 also would be labeled with comment indicator 

“NI” in Addendum B to the CY 2015 OPPS/ASC final rule with comment period. 

 Only HCPCS codes with comment indicator “NI” in the CY 2015 OPPS/ASC 

final rule with comment period are subject to comment. HCPCS codes that do not appear 

with comment indicator “NI” in the CY 2015 OPPS/ASC final rule with comment period 

will not be open to public comment, unless we specifically request additional comments 

elsewhere in the final rule with comment period. 

 We believe that the CY 2014 definitions of the OPPS comment indicators 

continue to be appropriate for CY 2015. Therefore, we are proposing to continue to use 

those definitions without modification for CY 2015. The proposed definitions of the 

OPPS comment indicators are listed in Addendum D2 on the CMS Web site at: 

http://www.cms.gov/Medicare/Medicare-Fee-for-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 ASCs, we refer readers to the CY 2012 OPPS/ASC final rule with comment period 
CMS-1613-P 407 

(76 FR 74377 through 74378) and the June 12, 1998 proposed rule (63 FR 32291 through 

32292). For a discussion of prior rulemaking on the ASC payment system, we refer 

readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74378 through 

74379), the CY 2013 OPPS/ASC final rule with comment period (77 FR 68434 through 

68467), and the CY 2014 OPPS/ASC final rule with comment period (78 FR 75064 

through 75090). 

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

Covered Surgical Procedures and Covered Ancillary Services 

 Under § 416.2 and § 416.166 of the regulations, subject to certain exclusions, 

covered surgical procedures in an ASC are surgical procedures that are separately paid 

under the OPPS, that would not be expected to pose a significant risk to beneficiary 

safety when performed in an ASC, and that would not be expected to require active 

medical monitoring and care at midnight following the procedure (“overnight stay”). We 

adopted this standard for defining which surgical procedures are covered under the ASC 

payment system as an indicator of the complexity of the procedure and its 

appropriateness for Medicare payment in ASCs. We use this standard only for purposes 

of evaluating procedures to determine whether or not they are appropriate to be furnished 

to Medicare beneficiaries in ASCs. We define surgical procedures as those described by 

Category I CPT codes in the surgical range from 10000 through 69999, as well as those 

Category III CPT codes and Level II HCPCS codes that directly crosswalk or are 

clinically similar to ASC covered surgical procedures (72 FR 42478). 
CMS-1613-P 408 

 In the August 2, 2007 final rule, we also established our policy to make separate 

ASC payments for the following ancillary items and services when they are provided 

integral to ASC covered surgical procedures: (1) brachytherapy sources; (2) certain 

implantable items that have pass-through status under the OPPS; (3) certain items and 

services that we designate as contractor-priced, including, but not limited to, procurement 

of corneal tissue; (4) certain drugs and biologicals for which separate payment is allowed 

under the OPPS; and (5) certain radiology services for which separate payment is allowed 

under the OPPS. These covered ancillary services are specified in § 416.164(b) and, as 

stated previously, are eligible for separate ASC payment (72 FR 42495). Payment for 

ancillary items and services that are not paid separately under the ASC payment system is 

packaged into the ASC payment for the covered surgical procedure. 

 We update the lists of, and payment rates for, covered surgical procedures and 

covered ancillary services in ASCs in conjunction with the annual proposed and final 

rulemaking process to update the OPPS and the ASC payment system (§ 416.173; 

72 FR 42535). In addition, as discussed in detail in section XII.B. of this proposed rule, 

because we base ASC payment policies for covered surgical procedures, drugs, 

biologicals, and certain other covered ancillary services on the OPPS payment policies, 

we also provide quarterly update change requests (CRs) for ASC covered surgical 

procedures and covered ancillary services throughout the year (January, April, July, and 

October). CMS releases new Level II codes to the public or recognizes the release of 

new CPT codes by the AMA and makes these codes effective (that is, the codes are 

recognized on Medicare claims) via these ASC quarterly update CRs. Thus, these 
CMS-1613-P 409 

quarterly updates are to implement newly created Level II HCPCS and Category III CPT 

codes for ASC payment and to update the payment rates for separately paid drugs and 

biologicals based on the most recently submitted ASP data. New Category I CPT codes, 

except vaccine codes, are released only once a year and, therefore, are implemented only 

through the January quarterly update. New Category I CPT vaccine codes are released 

twice a year and, therefore, are implemented through the January and July quarterly 

updates. We refer readers to Table 41 in the CY 2012 OPPS/ASC proposed rule for the 

process used to update the HCPCS and CPT codes (76 FR 42291). 

 In our annual updates to the ASC list of, and payment rates for, covered surgical 

procedures and covered ancillary services, we undertake a review of excluded surgical 

procedures (including all procedures newly proposed for removal from the OPPS 

inpatient list), new procedures, and procedures for which there is revised coding, to 

identify any that we believe meet the criteria for designation as ASC covered surgical 

procedures or covered ancillary services. Updating the lists of ASC covered surgical 

procedures and covered ancillary services, as well as their payment rates, in association 

with the annual OPPS rulemaking cycle is particularly important because the OPPS 

relative payment weights and, in some cases, payment rates, are used as the basis for the 

payment of covered surgical procedures and covered ancillary services under the revised 

ASC payment system. This joint update process ensures that the ASC updates occur in a 

regular, predictable, and timely manner. 
CMS-1613-P 410 

B. Proposed Treatment of New Codes 

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

Level II HCPCS Codes 

 Category I CPT, Category III CPT, and Level II HCPCS codes are used to report 

procedures, services, items, and supplies under the ASC payment system. Specifically, 

we recognize the following codes on ASC claims: (1) Category I CPT codes, which 

describe surgical procedures and vaccine codes; (2) Category III CPT codes, which 

describe new and emerging technologies, services, and procedures; and (3) Level II 

HCPCS codes, which are used primarily to identify products, supplies, temporary 

procedures, and services not described by CPT codes. 

 We finalized a policy in the August 2, 2007 final rule to evaluate each year all 

new Category I and Category III CPT codes and Level II HCPCS codes that describe 

surgical procedures, and to make preliminary determinations during the annual 

OPPS/ASC rulemaking process regarding whether or not they meet the criteria for 

payment in the ASC setting as covered surgical procedures and, if so, whether or not they 

are office-based procedures (72 FR 42533 through 42535). In addition, we identify new 

codes as ASC covered ancillary services based upon the final payment policies of the 

revised ASC payment system. 

 We have separated our discussion below into two sections based on whether we 

are proposing to solicit public comments in this CY 2015 OPPS/ASC proposed rule (and 

respond to those comments in the CY 2015 OPPS/ASC final rule with comment period) 

or whether we will be soliciting public comments in the CY 2015 OPPS/ASC final rule 
CMS-1613-P 411 

with comment period (and responding to those comments in the CY 2016 OPPS/ASC 

final rule with comment period). 

 We note that we sought public comment in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75067) on the new Category I and Category III CPT and 

Level II HCPCS codes that were effective January 1, 2014. We also sought public 

comment in the CY 2014 OPPS/ASC final rule with comment period on the new Level II 

HCPCS codes effective October 1, 2013. These new codes, with an effective date of 

October 1, 2013, or January 1, 2014, were flagged with comment indicator “NI” in 

Addenda AA and BB to the CY 2014 OPPS/ASC final rule with comment period to 

indicate that we were assigning them an interim payment status and payment rate, if 

applicable, which were subject to public comment following publication of the CY 2014 

OPPS/ASC final rule with comment period. We will respond to public comments and 

finalize the treatment of these codes under the ASC payment system in the CY 2015 

OPPS/ASC final rule with comment period. 

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

Implemented in April 2014 and July 2014 for Which We Are Soliciting Public 

Comments in This Proposed Rule 

 In the April 2014 and July 2014 CRs, we made effective for April 1, 2014 and 

July 1, 2014, respectively, a total of seven new Level II HCPCS codes and four new 

Category III CPT codes that describe ASC covered surgical procedures and covered 

ancillary services that were not addressed in the CY 2014 OPPS/ASC final rule with 

comment period. 
CMS-1613-P 412 

 In the April 2014 ASC quarterly update (Transmittal 2927, CR 8675, dated 

April 10, 2014), we added two new surgical Level II HCPCS codes and one new drug 

and biological Level II HCPCS code to the list of covered surgical procedures and 

covered ancillary services, respectively. Table 45 below lists the new Level II HCPCS 

codes that were implemented April 1, 2014, along with their proposed payment indicators 

for CY 2015. 

 In the July 2014 quarterly update (Transmittal 2970, CR 8786, dated 

May 23, 2014), we added one new brachytherapy Level II HCPCS code and three new 

drug and biological Level II HCPCS codes to the list of covered ancillary services. 

Table 46 below lists the new Level II HCPCS codes that were implemented July 1, 2014 

along with their proposed payment indicators and proposed ASC payment rates for 

CY 2015. 

 Through the July 2014 quarterly update CR, we also implemented ASC payment 

for four new Category III CPT codes as one ASC covered surgical procedure and three 

covered ancillary services, effective July 1, 2014. These codes are listed in Table 47 

below, along with their proposed payment indicators and proposed payment rates for 

CY 2015. 

 The HCPCS codes listed in Table 45 are included in Addenda AA or BB to this 

proposed rule (which are available via the Internet on the CMS Web site). Because the 

payment rates associated with the new Level II HCPCS codes and Category III CPT 

codes that became effective July 1, 2014 (listed in Table 46 and Table 47 of this proposed 

rule) are not available to us in time for incorporation into the Addenda to this OPPS/ASC 
CMS-1613-P 413 

proposed rule, our policy is to include these HCPCS codes and their proposed payment 

indicators and payment rates in the preamble to the proposed rule but not in the Addenda 

to the proposed rule. These codes and their final payment indicators and rates will be 

included in the appropriate Addendum to the CY 2015 OPPS/ASC final rule with 

comment period. Thus, the codes implemented by the July 2014 ASC quarterly update 

CR and their proposed CY 2015 payment indicators and rates that are displayed in 

Table 46 and Table 47 are not included in Addenda AA or BB to this proposed rule 

(which are available via the Internet on the CMS Web site). The final list of ASC 

covered surgical procedures and covered ancillary services and the associated payment 

weights and payment indicators will be included in Addenda AA or BB to the CY 2015 

OPPS/ASC final rule with comment period, consistent with our annual update policy. 

 We invite public comment on these proposed payment indicators and the 

proposed payment rates for the new Category III CPT code and Level II HCPCS codes 

that were newly recognized as ASC covered surgical procedures or covered ancillary 

services in April 2014 and July 2014 through the quarterly update CRs, as listed in 

Tables 45, 46, and 47 below. We are proposing to finalize their payment indicators and 

their payment rates in the CY 2015 OPPS/ASC final rule with comment period. 

TABLE 45.—NEW LEVEL II HCPCS CODES FOR COVERED SURGICAL 

PROCEDURES OR COVERED ANCILLARY SERVICES IMPLEMENTED IN 

APRIL 2014

CY 2014 

HCPCS 

Code CY 2014 Long Descriptor 

Proposed 

CY 2015 

Payment 

Indicator 
CMS-1613-P 414 

CY 2014 

HCPCS 

Code CY 2014 Long Descriptor 

Proposed 

CY 2015 

Payment 

Indicator 

C9739 Cystourethroscopy, with insertion of transprostatic implant; 

1 to 3 implants G2 

C9740 Cystourethroscopy, with insertion of transprostatic implant; 

4 or more implants G2 

C9021 Injection, obinutuzumab, 10 mg K2 

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

payment weight. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS rate. 

TABLE 46.—NEW LEVEL II HCPCS CODES FOR COVERED ANCILLARY 

SERVICES IMPLEMENTED IN JULY 2014

CY 2014 

HCPCS 

Code CY 2014 Long Descriptor 

Proposed 

CY 2015 

Payment 

Indicator 

Proposed 

CY 2015 

Payment 

Rate 

C2644 Brachytherapy source, cesium-131 chloride 

solution, per millicurie H2 $18.97

C9022 Injection, elosulfase alfa, 1mg K2 $226.42

C9134 Factor XIII (antihemophilic factor, 

recombinant), Tretten, per 10 i.u. K2 $14.10

Q9970* Injection, ferric carboxymaltose, 1 mg K2 $1.06

*HCPCS code Q9970 replaces HCPCS code C9441 effective July 1, 2014. 

H2 = Brachytherapy source paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS rate. 

K2 = Drugs and biologicals paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS rate. 
CMS-1613-P 415 

TABLE 47.—NEW CATEGORY III CPT CODES FOR COVERED SURGICAL 

PROCEDURES OR COVERED ANCILLARY SERVICES IMPLEMENTED IN 

JULY 2014

CY 2014 

CPT 

Code CY 2014 Long Descriptor

Proposed 

CY 2015 

Payment 

Indicator

Proposed 

CY 2015 

Payment 

Rate 

0348T 

Radiologic examination, radiostereometric 

analysis (RSA); spine, (includes, cervical, 

thoracic and lumbosacral, when performed) 

Z2 $50.21

0349T 

Radiologic examination, radiostereometric 

analysis (RSA); upper extremity(ies), 

(includes shoulder, elbow and wrist, when 

performed) 

Z2 $50.21

0350T 

Radiologic examination, radiostereometric 

analysis (RSA); lower extremity(ies), 

(includes hip, proximal femur, knee and 

ankle, when performed) 

Z2 $50.21

0356T 

Insertion of drug-eluting implant (including 

punctal dilation and implant removal when 

performed) into lacrimal canaliculus, each 

R2 $42.81

R2 = Office-based surgical procedure added to ASC list in CY 2008 or later without MPFS nonfacility PE 

RVUs; payment based on OPPS relative payment weight. 

Z2 = Radiology service paid separately when provided integral to a surgical procedure on ASC list; 

payment based on MPFS nonfacility PE RVUs. 

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

CPT Codes for Which We Will Be Soliciting Public Comments in the CY 2015 

OPPS/ASC Final Rule With Comment Period 

 As has been our practice in the past, we incorporate those new Category I and 

Category III CPT codes and new Level II HCPCS codes that are effective January 1 in 

the final rule with comment period updating the ASC payment system for the following 

calendar year. These codes are released to the public via the CMS HCPCS (for Level II 

HCPCS codes) and AMA Web sites (for CPT codes), and also through the January ASC 

quarterly update CRs. In the past, we also have released new Level II HCPCS codes that 
CMS-1613-P 416 

are effective October 1 through the October ASC quarterly update CRs and incorporated 

these new codes in the final rule with comment period updating the ASC payment system 

for the following calendar year. All of these codes are flagged with comment indicator 

“NI” in Addenda AA and BB to the OPPS/ASC final rule with comment period to 

indicate that we are assigning them an interim payment status which is subject to public 

comment. The payment indicator and payment rate, if applicable, for all such codes 

flagged with comment indicator “NI” are open to public comment in the OPPS/ASC final 

rule with comment period, and we respond to these comments in the final rule with 

comment period for the next calendar year’s OPPS/ASC update. 

 We are proposing to continue this process for CY 2015. Specifically, for 

CY 2015, we are proposing to include in Addenda AA and BB to the CY 2015 

OPPS/ASC final rule with comment period the new Category I and III CPT codes 

effective January 1, 2015, that would be incorporated in the January 2015 ASC quarterly 

update CR and the new Level II HCPCS codes, effective October 1, 2014 or 

January 1, 2015, that would be released by CMS in its October 2014 and January 2015 

ASC quarterly update CRs. These codes would be flagged with comment indicator “NI” 

in Addenda AA and BB to the CY 2015 OPPS/ASC final rule with comment period to 

indicate that we have assigned them an interim payment status. Their payment indicators 

and payment rates, if applicable, would be open to public comment in the CY 2015 

OPPS/ASC final rule with comment period and would be finalized in the CY 2016 

OPPS/ASC final rule with comment period. 
CMS-1613-P 417 

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

Ancillary Services 

1. Covered Surgical Procedures 

a. Additions to the List of ASC Covered Surgical Procedures 

 We are proposing to update the list of ASC covered surgical procedures by adding 

10 procedures to the list for CY 2015. These 10 procedures were among those excluded 

from the ASC list for CY 2014 because we believed they did not meet the definition of a 

covered surgical procedure based on our expectation that they would pose a significant 

safety risk to Medicare beneficiaries or would require an overnight stay if performed in 

ASCs. We conducted a review of all HCPCS codes that currently are paid under the 

OPPS, but not included on the ASC list of covered surgical procedures, to determine if 

changes in technology and/or medical practice affected the clinical appropriateness of 

these procedures for the ASC setting. We determined that these 10 procedures could be 

safely performed in the ASC setting and would not require an overnight stay if performed 

in an ASC and, therefore, we are proposing to include them on the list of ASC covered 

surgical procedures for CY 2015. 

 The 10 procedures that we are proposing to add to the ASC list of covered 

surgical procedures, including their HCPCS code long descriptors and proposed CY 2015 

payment indicators, are displayed in Table 48 below. 
CMS-1613-P 418 

TABLE 48.—PROPOSED ADDITIONS TO THE LIST OF ASC COVERED 

SURGICAL PROCEDURES FOR CY 2015 

CY 2014 

HCPCS 

Code CY 2014 Long Descriptor 

Proposed 

CY 2015 

ASC 

Payment 

Indicator

22551 

Arthrodesis, anterior interbody, including disc space preparation, 

discectomy, osteophytectomy and decompression of spinal cord 

and/or nerve roots; cervical below c2 

G2 

22554 

Arthrodesis, anterior interbody technique, including minimal 

discectomy to prepare interspace (other than for decompression); 

cervical below c2 

G2 

22612 Arthrodesis, posterior or posterolateral technique, single level; 

lumbar (with lateral transverse technique, when performed) G2 

22614 

Arthrodesis, posterior or posterolateral technique, single level; 

each additional vertebral segment (list separately in addition to 

code for primary procedure) 

N1 

63020 

Laminotomy (hemilaminectomy), with decompression of nerve 

root(s), including partial facetectomy, foraminotomy and/or 

excision of herniated intervertebral disc; 1 interspace, cervical 

G2 

63030 

Laminotomy (hemilaminectomy), with decompression of nerve 

root(s), including partial facetectomy, foraminotomy and/or 

excision of herniated intervertebral disc; 1 interspace, lumbar 

G2 

63042 

Laminotomy (hemilaminectomy), with decompression of nerve 

root(s), including partial facetectomy, foraminotomy and/or 

excision of herniated intervertebral disc, reexploration, single 

interspace; lumbar 

G2 

63045 

Laminectomy, facetectomy and foraminotomy (unilateral or 

bilateral with decompression of spinal cord, cauda equina and/or 

nerve root[s], [eg, spinal or lateral recess stenosis]), single 

vertebral segment; cervical 

G2 

63047 

Laminectomy, facetectomy and foraminotomy (unilateral or 

bilateral with decompression of spinal cord, cauda equina and/or 

nerve root[s], [eg, spinal or lateral recess stenosis]), single 

vertebral segment; lumbar 

G2 

63056 

Transpedicular approach with decompression of spinal cord, 

equina and/or nerve root(s) (eg, herniated intervertebral disc), 

single segment; lumbar (including transfacet, or lateral 

extraforaminal approach) (eg, far lateral herniated intervertebral 

disc) 

G2 
CMS-1613-P 419 

b. Proposed Covered Surgical Procedures Designated as Office-Based 

(1) Background 

 In the August 2, 2007 ASC final rule, we finalized our policy to designate as 

“office-based” those procedures that are added to the ASC list of covered surgical 

procedures in CY 2008 or later years that we determine are performed predominantly 

(more than 50 percent of the time) in physicians’ offices based on consideration of the 

most recent available volume and utilization data for each individual procedure code 

and/or, if appropriate, the clinical characteristics, utilization, and volume of related codes. 

In that rule, we also finalized our policy to exempt all procedures on the CY 2007 ASC 

list from application of the office-based classification (72 FR 42512). The procedures 

that were added to the ASC list of covered surgical procedures beginning in CY 2008 that 

we determined were office-based were identified in Addendum AA to that rule by 

payment indicator “P2” (Office-based surgical procedure added to ASC list in CY 2008 

or later with MPFS nonfacility PE RVUs; payment based on OPPS relative payment 

weight); “P3” (Office-based surgical procedures added to ASC list in CY 2008 or later 

with MPFS nonfacility PE RVUs; payment based on MPFS nonfacility PE RVUs); or 

“R2” (Office-based surgical procedure added to ASC list in CY 2008 or later without 

MPFS nonfacility PE RVUs; payment based on OPPS relative payment weight), 

depending on whether we estimated it would be paid according to the standard ASC 

payment methodology based on its OPPS relative payment weight or at the MPFS 

nonfacility PE RVU-based amount. 
CMS-1613-P 420 

 Consistent with our final policy to annually review and update the list of surgical 

procedures eligible for payment in ASCs, each year we identify surgical procedures as 

either temporarily office-based (these are new procedure codes without utilization data 

which our Medical Officers have determined are clinically similar to other procedures 

that are permanently office-based), permanently office-based, or non-office-based, after 

taking into account updated volume and utilization data. 

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

Office-Based 

 In developing this proposed rule, we followed our policy to annually review and 

update the surgical procedures for which ASC payment is made and to identify new 

procedures that may be appropriate for ASC payment, including their potential 

designation as office-based. We reviewed CY 2013 volume and utilization data and the 

clinical characteristics for all surgical procedures that are assigned payment indicator 

“G2” (Non-office-based surgical procedure added in CY 2008 or later; payment based on 

OPPS relative payment weight) in CY 2014, as well as for those procedures assigned one 

of the temporary office-based payment indicators, specifically “P2*,” “P3*,” or “R2*” in 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75071 through 75075). 

 Our review of the CY 2013 volume and utilization data resulted in our 

identification of two covered surgical procedures that we believe meet the criteria for 

designation as office-based. The data indicate that these procedures are performed more 

than 50 percent of the time in physicians’ offices and that our medical advisors believe 

the services are of a level of complexity consistent with other procedures performed 
CMS-1613-P 421 

routinely in physicians’ offices. The two CPT codes we are proposing to permanently 

designate as office-based are listed in Table 49 below. 

TABLE 49.—ASC COVERED SURGICAL PROCEDURES NEWLY PROPOSED 

FOR PERMANENT OFFICE-BASED DESIGNATION FOR CY 2015 

* Proposed payment indicators are based on a comparison of the proposed rates according to the ASC 

standard ratesetting methodology and the MPFS proposed rates. According to the statutory formula, 

current law requires a negative update to the MPFS payment rates for CY 2015. For a discussion of those 

rates, we refer readers to the CY 2015 MPFS proposed rule.

 We invite public comment on this proposal. 

 We also reviewed CY 2013 volume and utilization data and other information for 

the 8 procedures finalized for temporary office-based status in Table 52 and Table 53 in 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75074 through 75075). 

Among these 8 procedures, there were very few claims data or no claims data for six 

procedures: CPT code 0099T (Implantation of intrastromal corneal ring segments); CPT 

code 0299T (Extracorporeal shock wave for integumentary wound healing, high energy, 

including topical application and dressing care; initial wound); CPT code C9800 (Dermal 

CY 2014 

CPT 

Code CY 2014 Long Descriptor 

CY 2014 

ASC 

Payment 

Indicator 

Proposed 

CY 2015 

ASC 

Payment 

Indicator* 

10022 Fine needle aspiration; with imaging 

guidance G2 P3 

19296 

Placement of radiotherapy afterloading 

expandable catheter (single or 

multichannel) into the breast for 

interstitial radioelement application 

following partial mastectomy, includes 

imaging guidance; on date separate from 

partial mastectomy 

G2 P2 
CMS-1613-P 422 

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

Radiesse or Sculptra dermal filler, including all items and supplies); CPT code 10030 

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

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

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

spasmodic dysphonia), includes guidance by needle electromyography, when performed); 

and CPT code 67229 (Treatment of extensive or progressive retinopathy, one or more 

sessions; preterm infant (less than 37 weeks gestation at birth), performed from birth up 

to 1 year of age (eg, retinopathy of prematurity), photocoagulation or cryotherapy). 

Consequently, we are proposing to maintain their temporary office-based designations for 

CY 2015. 

 We are proposing that one procedure that has a temporary office-based 

designation for CY 2014, CPT code 0226T (Anoscopy, high resolution (HRA) (with 

magnification and chemical agent enhancement); diagnostic, including collection of 

specimen(s) by brushing or washing when performed), be packaged under the OPPS for 

CY 2015. Our policy is to package covered surgical procedures under the ASC payment 

system if these procedures are packaged under the OPPS. Consequently, we are 

proposing to package, and assign payment indicator “N1” to, this covered surgical 

procedure code in CY 2015. 

 HCPCS code 0124T (Conjunctival incision with posterior extrascleral placement 

of pharmacological agent (does not include supply of medication)) was finalized for 
CMS-1613-P 423 

temporary office-based status in the CY 2014 OPPS/ASC final rule with comment 

period; however, this code was deleted effective December 31, 2013. 

 The proposed CY 2015 payment indicator designations for the 7 remaining 

procedures that were temporarily designated as office-based in CY 2014 are displayed in 

Table 50 below. The procedures for which the proposed office-based designations for 

CY 2015 are temporary also are indicated by asterisks in Addendum AA to this proposed 

rule (which is available via the Internet on the CMS Web site). 

TABLE 50.—PROPOSED CY 2015 PAYMENT INDICATORS FOR ASC 

COVERED SURGICAL PROCEDURES DESIGNATED AS TEMPORARILY 

OFFICE-BASED IN THE CY 2014 OPPS/ASC FINAL RULE WITH COMMENT 

PERIOD 

CY 2014 

CPT 

Code CY 2014 Long Descriptor 

CY 2014 

ASC 

Payment 

Indicator 

Proposed 

CY 2015 

ASC 

Payment 

Indicator**

0099T Implantation of intrastromal corneal ring 

segments 

R2* R2* 

0226T 

Anoscopy, high resolution (HRA) (with 

magnification and chemical agent enhancement); 

diagnostic, including collection of specimen(s) 

by brushing or washing when performed 

R2* N1 

0299T 

Extracorporeal shock wave for integumentary 

wound healing, high energy, including topical 

application and dressing care; initial wound 

R2* R2* 

C9800 

Dermal injection procedure(s) for facial 

lipodystrophy syndrome (LDS) and provision of 

Radiesse or Sculptra dermal filler, including all 

items and supplies 

R2* R2* 

10030 

Image-guided fluid collection drainage by 

catheter (eg, abscess, hematoma, seroma, 

lymphocele, cyst), soft tissue (eg, extremity 

abdominal wall, neck), percutaneous 

P2* P2* 
CMS-1613-P 424 

CY 2014 

CPT 

Code CY 2014 Long Descriptor 

CY 2014 

ASC 

Payment 

Indicator 

Proposed 

CY 2015 

ASC 

Payment 

Indicator**

64617 

Chemodenervation of muscle(s); larynx, 

unilateral, percutaneous (eg, for spasmodic 

dysphonia), includes guidance by needle 

electromyography, when performed 

P3* P3* 

67229 

Treatment of extensive or progressive 

retinopathy, one or more sessions; preterm infant 

(less than 37 weeks gestation at birth), 

performed from birth up to 1 year of age (eg, 

retinopathy of prematurity), photocoagulation or 

cryotherapy 

R2* R2* 

* If designation is temporary. 

** Proposed payment indicators are based on a comparison of the proposed rates according to the ASC 

standard ratesetting methodology and the MPFS proposed rates. According to the statutory formula, 

current law requires a negative update to the MPFS payment rates for CY 2015. For a discussion of those 

rates, we refer readers to the CY 2015 MPFS proposed rule. 

 We invite public comment on these proposals. 

c. Proposed ASC Covered Surgical Procedures to be Designated as Device-Intensive 

(1) Background 

 As discussed in the August 2, 2007 final rule (72 FR 42503 through 42508), we 

adopted a modified payment methodology for calculating the ASC payment rates for 

covered surgical procedures that are assigned to the subset of OPPS device-dependent 

APCs with a device offset percentage greater than 50 percent of the APC cost under the 

OPPS, in order to ensure that payment for the procedure is adequate to provide packaged 

payment for the high-cost implantable devices used in those procedures. 
CMS-1613-P 425 

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

Device-Intensive for CY 2015 

 As discussed in section II.A.2.e of this proposed rule, for CY 2015, we are 

proposing to create 28 comprehensive APCs to replace the current device dependent 

APCs and a few non-device dependent APCs under the OPPS; thus, there would be no 

device dependent APCs. We are proposing to define a comprehensive APC as a 

classification for the provision of a primary service and all adjunctive services provided 

to support the delivery of the primary service. Because a comprehensive APC would 

treat all individually reported codes as representing components of the comprehensive 

service, our OPPS proposal is to make a single prospective payment based on the cost of 

all individually reported codes that represent the provision of a primary service and all 

adjunctive services provided to support the delivery of the primary service. 

 Unlike the OPPS claims processing system that can be configured to make a 

single payment for the encounter-based comprehensive service whenever a HCPCS code 

that is assigned to a comprehensive APC appears on the claim, the ASC 

claims-processing system does not allow for this type of conditional packaging. 

Therefore, we are proposing that all separately paid covered ancillary services that are 

provided integral to covered surgical procedures that would map to comprehensive APCs 

would continue to be separately paid under the ASC payment system instead of being 

packaged into the payment for the comprehensive APC as under the OPPS. The OPPS 

relative payment weights for the comprehensive APCs would include costs for ancillary 

services so we could duplicate payment if we based the ASC payment rate on the OPPS 
CMS-1613-P 426 

relative payment weights for the comprehensive APCs. Therefore, to avoid this issue, we 

are proposing that the ASC payment rates for these comprehensive APCs would be based 

on the CY 2015 OPPS relative payments weights that have been calculated using the 

standard APC ratesetting methodology for the primary service instead of the relative 

payment weights that are based on the comprehensive bundled service. For the same 

reason, under the ASC payment system, we also are proposing to use the standard OPPS 

APC ratesetting methodology instead of the comprehensive methodology to calculate the 

device offset percentage for comprehensive APCs for purposes of identifying deviceintensive procedures and to calculate payment rates for device-intensive procedures 

assigned to comprehensive APCs. 

 Payment rates for ASC device-intensive procedures are based on a modified 

payment methodology to ensure that payment for the procedure is adequate to provide 

packaged payment for the high-cost implantable devices used in those procedures. 

Device-intensive procedures are currently defined as those procedures that are assigned 

to device-dependent APCs with a device offset percentage greater than 50 percent of the 

APC cost under the OPPS. Because we are proposing to implement the comprehensive 

APC policy and, therefore, eliminate device-dependent APCs under the OPPS in 

CY 2015, we need to define ASC device-intensive procedures for CY 2015. We are 

proposing to define ASC device-intensive procedures as those procedures that are 

assigned to any APC (not only an APC formerly designated device-dependent) with a 

device offset percentage greater than 40 percent based on the standard OPPS APC 

ratesetting methodology. We believe that our proposal to lower the offset threshold from 
CMS-1613-P 427 

greater than 50 percent to greater than 40 percent better aligns with the OPPS device 

credit policy finalized for CY 2014 (78 FR 75006 and 75007) that applies to procedures 

with a significant device offset amount, which is defined as exceeding 40 percent of the 

APC cost. Because the ASC device-intensive methodology is applied to procedures with 

significant device costs, we believe that the definition of “significant” with regard to 

device-intensive procedures should match that used under the OPPS to determine 

“significant” device costs for the device credit policy. We are proposing changes to 

§ 416.171(b)(2) to reflect this proposal. 

 We also are proposing to update the ASC list of covered surgical procedures that 

are eligible for payment according to our device-intensive procedure payment 

methodology, consistent with our proposed modified definition of device-intensive 

procedures, reflecting the proposed APC assignments of procedures and APC device 

offset percentages based on the CY 2013 OPPS claims and cost report data available for 

the proposed rule. 

 The ASC covered surgical procedures that we are proposing to designate as 

device-intensive and that would be subject to the device-intensive procedure payment 

methodology for CY 2015 are listed in Table 51 below. The CPT code, the CPT code 

short descriptor, the proposed CY 2015 ASC payment indicator (PI), the proposed 

CY 2015 OPPS APC assignment, the proposed CY 2015 OPPS APC device offset 

percentage, and an indication if the full credit/partial credit (FB/FC) device adjustment 

policy would apply are also listed in Table 51 below. All of these procedures are 
CMS-1613-P 428 

included in Addendum AA to this proposed rule (which is available via the Internet on 

the CMS Web site). 

 We invite public comment on these proposals. 

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

Devices 

 Our ASC policy with regard to payment for costly devices implanted in ASCs at 

no cost/full credit or partial credit as set forth in § 416.179 is consistent with the OPPS 

policy that was in effect until CY 2014. The established ASC policy reduces payment to 

ASCs when a specified device is furnished without cost or with full credit or partial credit 

for the cost of the device for those ASC covered surgical procedures that are assigned to 

APCs under the OPPS to which this policy applies. We refer readers to the CY 2009 

OPPS/ASC final rule with comment period for a full discussion of the ASC payment 

adjustment policy for no cost/full credit and partial credit devices (73 FR 68742 through 

68744). 

 As discussed in section IV.B. of the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75005 through 75006), we finalized our proposal to modify our former 

policy of reducing OPPS payment for specified APCs when a hospital furnishes a 

specified device without cost or with a full or partial credit. Formerly, under the OPPS, 

our policy was to reduce OPPS payment by 100 percent of the device offset amount when 

a hospital furnishes a specified device without cost or with a full credit and by 50 percent 

of the device offset amount when the hospital receives partial credit in the amount of 50 

percent or more of the cost for the specified device. For CY 2014, we finalized our 
CMS-1613-P 429 

proposal to reduce OPPS payment for applicable APCs by the full or partial credit a 

provider receives for a replaced device, capped at the device offset amount. 

 Although we finalized our proposal to modify the policy of reducing payments 

when a hospital furnishes a specified device without cost or with full or partial credit 

under the OPPS, in that final rule with comment period (78 FR 75076 through 75080), 

we finalized our proposal to maintain our ASC policy for reducing payments to ASCs for 

specified device-intensive procedures when the ASC furnishes a device without cost or 

with full or partial credit. Unlike the OPPS, there is currently no mechanism within the 

ASC claims processing system for ASCs to submit to CMS the actual amount received 

when furnishing a specified device at full or partial credit. Therefore, under the ASC 

payment system, we finalized our proposal to continue to reduce ASC payments by 

100 percent or 50 percent of the device offset amount when an ASC furnishes a device 

without cost or with full or partial credit, respectively. 

 We are proposing to update the list of ASC covered device-intensive procedures, 

based on the revised device-intensive definition proposed above, that would be subject to 

the no cost/full credit and partial credit device adjustment policy for CY 2015. Table 51 

below displays the ASC covered device-intensive procedures that we are proposing 

would be subject to the no cost/full credit or partial credit device adjustment policy for 

CY 2015. Specifically, when a procedure that is listed in Table 51 is subject to the no 

cost/full credit or partial credit device adjustment policy and is performed to implant a 

device that is furnished at no cost or with full credit from the manufacturer, the ASC 

would append the HCPCS “FB” modifier on the line with the procedure to implant the 
CMS-1613-P 430 

device. The contractor would reduce payment to the ASC by the device offset amount 

that we estimate represents the cost of the device when the necessary device is furnished 

without cost to the ASC or with full credit. We continue to believe that the reduction of 

ASC payment in these circumstances is necessary to pay appropriately for the covered 

surgical procedure being furnished by the ASC. 

 For partial credit, we are proposing to reduce the payment for implantation 

procedures listed in Table 51 that are subject to the no cost/full credit or partial credit 

device adjustment policy by one-half of the device offset amount that would be applied if 

a device was provided at no cost or with full credit, if the credit to the ASC is 50 percent 

or more of the cost of the new device. The ASC would append the HCPCS “FC” 

modifier to the HCPCS code for a surgical procedure listed in Table 51 that is subject to 

the no cost/full credit or partial credit device adjustment policy, when the facility receives 

a partial credit of 50 percent or more of the cost of a device. In order to report that they 

received a partial credit of 50 percent or more of the cost of a new device, ASCs would 

have the option of either: (1) submitting the claim for the device replacement procedure 

to their Medicare contractor after the procedure’s performance but prior to manufacturer 

acknowledgment of credit for the device, and subsequently contacting the contractor 

regarding a claim adjustment once the credit determination is made; or (2) holding the 

claim for the device implantation procedure until a determination is made by the 

manufacturer on the partial credit and submitting the claim with the “FC” modifier 

appended to the implantation procedure HCPCS code if the partial credit is 50 percent or 
CMS-1613-P 431 

more of the cost of the replacement device. Beneficiary coinsurance would continue to 

be based on the reduced payment amount. 

We currently apply the FB/FC policy to device-intensive procedures that involve 

devices that would be amenable to removal and replacement in a device recall or 

warranty situation. We are proposing to apply the FB/FC policy to all device-intensive 

procedures beginning in CY 2015 because, in addition to receiving devices at no cost/full 

credit or partial credit due to a device recall or warranty situation, ASCs also may receive 

devices at no cost/full credit or partial credit due to being part of an investigational device 

trial. In order to ensure that our policy covers any situation involving a device-intensive 

procedure where an ASC may receive a device at no cost/full credit or partial credit, we 

are proposing to apply our FB/FC policy to all device-intensive procedures.

TABLE 51.—ASC COVERED SURGICAL PROCEDURES PROPOSED FOR 

DEVICE-INTENSIVE DESIGNATION FOR CY 2015, INCLUDING ASC 

COVERED SURGICAL PROCEDURES FOR WHICH WE ARE PROPOSING 

THAT THE NO COST/FULL CREDIT OR PARTIAL CREDIT DEVICE 

ADJUSTMENT POLICY WOULD APPLY

HCPCS 

Code Short Descriptor 

Proposed 

CY 2015 

ASC PI 

Proposed 

CY 2015 

OPPS 

APC 

Proposed 

CY 2015 

Device 

Offset 

Percent 

Proposed 

FB/FC 

Policy 

Would 

Apply 

19298 Place breast rad tube/caths J8 0648 0.4415 Yes 

19325 Enlarge breast with implant J8 0648 0.4415 Yes 

19342 Delayed breast prosthesis J8 0648 0.4415 Yes 

19357 Breast reconstruction J8 0648 0.4415 Yes 

23515 Treat clavicle fracture J8 0064 0.4308 Yes 

23585 Treat scapula fracture J8 0064 0.4308 Yes 

23615 Treat humerus fracture J8 0064 0.4308 Yes 

23616 Treat humerus fracture J8 0064 0.4308 Yes 

23630 Treat humerus fracture J8 0064 0.4308 Yes 

23670 Treat dislocation/fracture J8 0064 0.4308 Yes 
CMS-1613-P 432 

HCPCS 

Code Short Descriptor 

Proposed 

CY 2015 

ASC PI 

Proposed 

CY 2015 

OPPS 

APC 

Proposed 

CY 2015 

Device 

Offset 

Percent 

Proposed 

FB/FC 

Policy 

Would 

Apply 

24361 Reconstruct elbow joint J8 0425 0.5661 Yes 

24363 Replace elbow joint J8 0425 0.5661 Yes 

24365 Reconstruct head of radius J8 0425 0.5661 Yes 

24366 Reconstruct head of radius J8 0425 0.5661 Yes 

24370 Revise reconst elbow joint J8 0425 0.5661 Yes 

24371 Revise reconst elbow joint J8 0425 0.5661 Yes 

24435 Repair humerus with graft J8 0425 0.5661 Yes 

24498 Reinforce humerus J8 0425 0.5661 Yes 

24515 Treat humerus fracture J8 0064 0.4308 Yes 

24516 Treat humerus fracture J8 0064 0.4308 Yes 

24545 Treat humerus fracture J8 0064 0.4308 Yes 

24546 Treat humerus fracture J8 0064 0.4308 Yes 

24575 Treat humerus fracture J8 0064 0.4308 Yes 

24579 Treat humerus fracture J8 0064 0.4308 Yes 

24586 Treat elbow fracture J8 0064 0.4308 Yes 

24587 Treat elbow fracture J8 0064 0.4308 Yes 

24615 Treat elbow dislocation J8 0064 0.4308 Yes 

24635 Treat elbow fracture J8 0064 0.4308 Yes 

24666 Treat radius fracture J8 0064 0.4308 Yes 

25441 Reconstruct wrist joint J8 0425 0.5661 Yes 

25442 Reconstruct wrist joint J8 0425 0.5661 Yes 

25444 Reconstruct wrist joint J8 0425 0.5661 Yes 

25446 Wrist replacement J8 0425 0.5661 Yes 

25574 Treat fracture radius & ulna J8 0064 0.4308 Yes 

25575 Treat fracture radius/ulna J8 0064 0.4308 Yes 

25607 Treat fx rad extra-articul J8 0064 0.4308 Yes 

25608 Treat fx rad intra-articul J8 0064 0.4308 Yes 

25609 Treat fx radial 3+ frag J8 0064 0.4308 Yes 

26686 Treat hand dislocation J8 0064 0.4308 Yes 

27415 

Osteochondral knee 

allograft J8 0425 0.5661 Yes 

27428 Reconstruction knee J8 0425 0.5661 Yes 

27438 

Revise kneecap with 

implant J8 0425 0.5661 Yes 

27440 Revision of knee joint J8 0425 0.5661 Yes 
CMS-1613-P 433 

HCPCS 

Code Short Descriptor 

Proposed 

CY 2015 

ASC PI 

Proposed 

CY 2015 

OPPS 

APC 

Proposed 

CY 2015 

Device 

Offset 

Percent 

Proposed 

FB/FC 

Policy 

Would 

Apply 

27442 Revision of knee joint J8 0425 0.5661 Yes 

27443 Revision of knee joint J8 0425 0.5661 Yes 

27446 Revision of knee joint J8 0425 0.5661 Yes 

27745 Reinforce tibia J8 0425 0.5661 Yes 

27759 Treatment of tibia fracture J8 0064 0.4308 Yes 

27823 Treatment of ankle fracture J8 0064 0.4308 Yes 

27827 Treat lower leg fracture J8 0064 0.4308 Yes 

27828 Treat lower leg fracture J8 0064 0.4308 Yes 

28415 Treat heel fracture J8 0064 0.4308 Yes 

28715 Fusion of foot bones J8 0425 0.5661 Yes 

33206 Insert heart pm atrial J8 0089 0.6940 Yes 

33207 Insert heart pm ventricular J8 0089 0.6940 Yes 

33208 Insrt heart pm atrial & vent J8 0089 0.6940 Yes 

33210 Insert electrd/pm cath sngl J8 0090 0.6828 Yes 

33211 Insert card electrodes dual J8 0090 0.6828 Yes 

33212 Insert pulse gen sngl lead J8 0090 0.6828 Yes 

33213 Insert pulse gen dual leads J8 0089 0.6940 Yes 

33214 

Upgrade of pacemaker 

system J8 0089 0.6940 Yes 

33216 Insert 1 electrode pm-defib J8 0090 0.6828 Yes 

33217 Insert 2 electrode pm-defib J8 0090 0.6828 Yes 

33221 Insert pulse gen mult leads J8 0655 0.7504 Yes 

33224 

Insert pacing lead & 

connect J8 0089 0.6940 Yes 

33227 

Remove&replace pm gen 

singl J8 0090 0.6828 Yes 

33228 

Remv&replc pm gen dual 

lead J8 0089 0.6940 Yes 

33229 

Remv&replc pm gen mult 

leads J8 0655 0.7504 Yes 

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

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

33233 Removal of pm generator J8 0090 0.6828 Yes 

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

33249 Nsert pace-defib w/lead J8 0108 0.8095 Yes 
CMS-1613-P 434 

HCPCS 

Code Short Descriptor 

Proposed 

CY 2015 

ASC PI 

Proposed 

CY 2015 

OPPS 

APC 

Proposed 

CY 2015 

Device 

Offset 

Percent 

Proposed 

FB/FC 

Policy 

Would 

Apply 

33262 

Remv&replc cvd gen sing 

lead J8 0107 0.7807 Yes 

33263 

Remv&replc cvd gen dual 

lead J8 0107 0.7807 Yes 

33264 

Remv&replc cvd gen mult 

lead J8 0108 0.8095 Yes 

33282 Implant pat-active ht record J8 0090 0.6828 Yes 

37221 Iliac revasc w/stent J8 0229 0.4981 Yes 

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

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

37227 

Fem/popl revasc stnt & 

ather J8 0319 0.5796 Yes 

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

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

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

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

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

37238 Open/perq place stent same J8 0229 0.4981 Yes 

53440 Male sling procedure J8 0385 0.5944 Yes 

53444 Insert tandem cuff J8 0385 0.5944 Yes 

53445 Insert uro/ves nck sphincter J8 0386 0.6919 Yes 

53447 

Remove/replace ur 

sphincter J8 0386 0.6919 Yes 

54400 Insert semi-rigid prosthesis J8 0385 0.5944 Yes 

54401 Insert self-contd prosthesis J8 0386 0.6919 Yes 

54405 

Insert multi-comp penis 

pros J8 0386 0.6919 Yes 

54410 

Remove/replace penis 

prosth J8 0386 0.6919 Yes 

54416 

Remv/repl penis contain 

pros J8 0386 0.6919 Yes 

55873 Cryoablate prostate J8 0385 0.5944 Yes 

61885 Insrt/redo neurostim 1 array J8 0039 0.8612 Yes 

61886 Implant neurostim arrays J8 0318 0.8658 Yes 

61888 

Revise/remove 

neuroreceiver J8 0061 0.5642 Yes 
CMS-1613-P 435 

HCPCS 

Code Short Descriptor 

Proposed 

CY 2015 

ASC PI 

Proposed 

CY 2015 

OPPS 

APC 

Proposed 

CY 2015 

Device 

Offset 

Percent 

Proposed 

FB/FC 

Policy 

Would 

Apply 

62361 

Implant spine infusion 

pump J8 0227 0.8060 Yes 

62362 

Implant spine infusion 

pump J8 0227 0.8060 Yes 

63650 Implant neuroelectrodes J8 0061 0.5642 Yes 

63655 Implant neuroelectrodes J8 0039 0.8612 Yes 

63663 Revise spine eltrd perq aray J8 0061 0.5642 Yes 

63664 Revise spine eltrd plate J8 0061 0.5642 Yes 

63685 Insrt/redo spine n generator J8 0318 0.8658 Yes 

64553 Implant neuroelectrodes J8 0061 0.5642 Yes 

64555 Implant neuroelectrodes J8 0061 0.5642 Yes 

64561 Implant neuroelectrodes J8 0061 0.5642 Yes 

64565 Implant neuroelectrodes J8 0061 0.5642 Yes 

64568 Inc for vagus n elect impl J8 0318 0.8658 Yes 

64569 Revise/repl vagus n eltrd J8 0061 0.5642 Yes 

64575 Implant neuroelectrodes J8 0061 0.5642 Yes 

64580 Implant neuroelectrodes J8 0039 0.8612 Yes 

64581 Implant neuroelectrodes J8 0061 0.5642 Yes 

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

65770 Revise cornea with implant J8 0293 0.6588 Yes 

69714 

Implant temple bone 

w/stimul J8 0425 0.5661 Yes 

69715 

Temple bne implnt 

w/stimulat J8 0425 0.5661 Yes 

69718 Revise temple bone implant J8 0425 0.5661 Yes 

69930 Implant cochlear device J8 0259 0.8316 Yes 

0238T Trluml perip athrc iliac art J8 0319 0.5796 Yes 

0282T Periph field stimul trial J8 0061 0.5642 Yes 

0283T Periph field stimul perm J8 0318 0.8658 Yes 

0302T 

Icar ischm mntrng sys 

compl J8 0089 0.6940 Yes 

0303T Icar ischm mntrng sys eltrd J8 0090 0.6828 Yes 

0304T 

Icar ischm mntrng sys 

device J8 0090 0.6828 Yes 

0308T Insj ocular telescope prosth J8 0351 0.9004 Yes 

0316T Replc vagus nerve pls gen J8 0039 0.8612 Yes 
CMS-1613-P 436 

HCPCS 

Code Short Descriptor 

Proposed 

CY 2015 

ASC PI 

Proposed 

CY 2015 

OPPS 

APC 

Proposed 

CY 2015 

Device 

Offset 

Percent 

Proposed 

FB/FC 

Policy 

Would 

Apply 

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

0320T Insert subq defib electrode J8 0090 0.6828 Yes 

0321T Insert subq defib pls gen J8 0107 0.7807 Yes 

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

0334T Perq stablj sacroiliac joint J8 0425 0.5661 Yes 

 We invite public comment on these proposals. 

e. ASC Treatment of Surgical Procedures Proposed for Removal from the OPPS 

Inpatient Only List for CY 2015 

 As we discussed in the CY 2009 OPPS/ASC final rule with comment period 

(73 FR 68724), we adopted a policy to include in our annual evaluation of the ASC list of 

covered surgical procedures, a review of the procedures that are being proposed for 

removal from the OPPS inpatient only list for possible inclusion on the ASC list of 

covered surgical procedures. There are no procedures proposed for removal from the 

OPPS inpatient only list for CY 2015, so we are not proposing any procedures for 

possible inclusion on the ASC list of covered surgical procedures under this section. 

2. Covered Ancillary Services 

 Consistent with the established ASC payment system policy, we are proposing to 

update the ASC list of covered ancillary services to reflect the proposed payment status 

for the services under the CY 2015 OPPS. Maintaining consistency with the OPPS may 

result in proposed changes to ASC payment indicators for some covered ancillary 

services because of changes that are being proposed under the OPPS for CY 2015. For 
CMS-1613-P 437 

example, a covered ancillary service that was separately paid under the revised ASC 

payment system in CY 2014 may be proposed for packaged status under the CY 2015 

OPPS and, therefore, also under the ASC payment system for CY 2015. 

 To maintain consistency with the OPPS, we are proposing that these services also 

would be packaged under the ASC payment system for CY 2015. Comment indicator 

“CH,” discussed in section XII.F. of this proposed rule, is used in Addendum BB to this 

proposed rule (which is available via the Internet on the CMS Web site) to indicate 

covered ancillary services for which we are proposing a change in the ASC payment 

indicator to reflect a proposed change in the OPPS treatment of the service for CY 2015. 

 Except for the Level II HCPCS codes and Level III CPT codes listed in Table 46 

and Table 47 of this proposed rule, all ASC covered ancillary services and their proposed 

payment indicators for CY 2015 are included in Addendum BB to this proposed rule. 

 We invite public comment on this proposal. 

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

Services 

1. Proposed ASC Payment for Covered Surgical Procedures 

a. Background 

 Our ASC payment policies for covered surgical procedures under the revised 

ASC payment system are fully described in the CY 2008 OPPS/ASC final rule with 

comment period (72 FR 66828 through 66831). Under our established policy for the 

revised ASC payment system, the ASC standard ratesetting methodology of multiplying 

the ASC relative payment weight for the procedure by the ASC conversion factor for that 
CMS-1613-P 438 

same year is used to calculate the national unadjusted payment rates for procedures with 

payment indicators “G2” and “A2.” Payment indicator “A2” was developed to identify 

procedures that were included on the list of ASC covered surgical procedures in CY 2007 

and were, therefore, subject to transitional payment prior to CY 2011. Although the 

4-year transitional period has ended and payment indicator “A2” is no longer required to 

identify surgical procedures subject to transitional payment, we retained payment 

indicator “A2” because it is used to identify procedures that are exempted from 

application of the office-based designation. 

 The rate calculation established for device-intensive procedures (payment 

indicator “J8”) is structured so that the packaged device payment amount is the same as 

under the OPPS, and only the service portion of the rate is subject to the ASC standard 

ratesetting methodology. In the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75064 through 75090), we updated the CY 2013 ASC payment rates for ASC 

covered surgical procedures with payment indicators of “A2,” “G2,” and “J8” using 

CY 2012 data, consistent with the CY 2014 OPPS update. We also updated payment 

rates for device-intensive procedures to incorporate the CY 2014 OPPS device offset 

percentages. 

 Payment rates for office-based procedures (payment indicators “P2,” “P3,” and 

“R2”) are the lower of the MPFS nonfacility PE RVU-based amount (we refer readers to 

the CY 2015 MPFS proposed rule) or the amount calculated using the ASC standard 

ratesetting methodology for the procedure. In the CY 2014 OPPS/ASC final rule with 

comment period, we updated the payment amounts for office-based procedures (payment 
CMS-1613-P 439 

indicators “P2,” “P3,” and “R2”) using the most recent available MPFS and OPPS data. 

We compared the estimated CY 2014 rate for each of the office-based procedures, 

calculated according to the ASC standard ratesetting methodology, to the MPFS 

nonfacility PE RVU-based amount to determine which was lower and, therefore, would 

be the CY 2014 payment rate for the procedure according to the final policy of the 

revised ASC payment system (§ 416.171(d)). 

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

 We are proposing to update ASC payment rates for CY 2015 using the established 

rate calculation methodologies under § 416.171 and using our proposed modified 

definition of device-intensive procedures, as discussed above. Because the proposed 

OPPS relative payment weights are based on geometric mean costs for CY 2015, the 

ASC system will use geometric means to determine proposed relative payment weights 

under the ASC standard methodology. We are proposing to continue to use the amount 

calculated under the ASC standard ratesetting methodology for procedures assigned 

payment indicators “A2” and “G2.” 

 We are proposing that payment rates for office-based procedures (payment 

indicators “P2,” “P3,” and “R2”) and device-intensive procedures (payment indicator 

“J8”) be calculated according to our established policies and, for device-intensive 

procedures, using our proposed modified definition of device-intensive procedures, as 

discussed above. Thus, we are proposing to update the payment amount for the service 

portion of the device-intensive procedures using the ASC standard ratesetting 

methodology and the payment amount for the device portion based on the proposed 
CMS-1613-P 440 

CY 2015 OPPS device offset percentages that have been calculated using the standard 

OPPS APC ratesetting methodology. Payment for office-based procedures is at the lesser 

of the proposed CY 2015 MPFS nonfacility PE RVU-based amount or the proposed 

CY 2015 ASC payment amount calculated according to the ASC standard ratesetting 

methodology. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75081), we 

finalized our proposal to calculate the CY 2014 payment rates for ASC covered surgical 

procedures according to our established methodologies, with the exception of device 

removal procedures. For CY 2014, we finalized a policy to conditionally package device 

removal codes under the OPPS. Under the OPPS, a conditionally packaged code (status 

indicators “Q1” and “Q2”) describes a HCPCS code where the payment is packaged 

when it is provided with a significant procedure but is separately paid when the service 

appears on the claim without a significant procedure. Because ASC services always 

include a covered surgical procedure, HCPCS codes that are conditionally packaged 

under the OPPS are always packaged (payment indicator “N1”) under the ASC payment 

system. Thus, no Medicare payment would be made when a device removal procedures 

is performed in an ASC without another surgical procedure included on the claim so no 

Medicare payment would be made if a device was removed but not replaced. To address 

this concern, for the 71 device removal procedures that are conditionally packaged in the 

OPPS (status indicator “Q2”), we assigned the current ASC payment indicators 

associated with these procedures and continued to provide separate payment in CY 2014. 
CMS-1613-P 441 

For CY 2015, we are proposing to continue this policy for the 71 device removal 

procedures for these same reasons. 

 We invite public comment on these proposals. 

c. Waiver of Coinsurance and Deductible for Certain Preventive Services 

 Section 1833(a)(1) and section 1833(b)(1) of the Act waive the coinsurance and 

the Part B deductible for those preventive services under section 1861(ddd)(3)(A) of the 

Act as described in section 1861(ww)(2) of the Act (excluding electrocardiograms) that 

are recommended by the United States Preventive Services Task Force (USPSTF) with a 

grade of A or B for any indication or population and that are appropriate for the 

individual. Section 1833(b) of the Act also waives the Part B deductible for colorectal 

cancer screening tests that become diagnostic. In the CY 2011 OPPS/ASC final rule with 

comment period, we finalized our policies with respect to these provisions and identified 

categories of services and the ASC covered surgical procedures and covered ancillary 

services that are preventive services that are recommended by the USPSTF with a grade 

of A or B for which the coinsurance and the deductible are waived. For a complete 

discussion of our policies and categories of services, we refer readers to the CY 2011 

OPPS/ASC final rule with comment period (75 FR 72047 through 72049). We are not 

proposing any changes to our policies or the categories of services for CY 2015. We 

identify the specific services with a double asterisk in Addenda AA and BB to this 

proposed rule. 
CMS-1613-P 442 

d. Proposed Payment for Cardiac Resynchronization Therapy Services 

 Cardiac resynchronization therapy (CRT) uses electronic devices to sequentially 

pace both sides of the heart to improve its output. CRT utilizes a pacing electrode 

implanted in combination with either a pacemaker or an implantable cardioverter 

defibrillator (ICD). CRT performed by the implantation of an ICD along with a pacing 

electrode is referred to as “CRT–D.” In the CY 2012 OPPS/ASC final rule with 

comment period, we finalized our proposal to establish the CY 2012 ASC payment rate 

for CRT-D services based on the OPPS payment rate applicable to APC 0108 when 

procedures described by CPT codes 33225 (Insertion of pacing electrode, cardiac venous 

system, for left ventricular pacing, at time of insertion of pacing cardioverter-defibrillator 

or pacemaker pulse generator (eg, for upgrade to dual chamber system) (list separately in 

addition to code for primary procedure)) and 33249 (Insertion or replacement of 

permanent pacing cardioverter-defibrillator system with transvenous lead(s), single or 

dual chamber) are performed on the same date of service in an ASC. ASCs use the 

corresponding HCPCS Level II G-code (G0448) for proper reporting when the 

procedures described by CPT codes 33225 and 33249 are performed on the same date of 

service. When not performed on the same day as the service described by CPT code 

33225, ASC payment for the service described by CPT code 33249 is based on 

APC 0108 using the device-intensive methodology. When not performed on the same 

day as the service described by CPT code 33249, ASC payment for the service described 

by CPT code 33225 is based on APC 0655 using the device-intensive methodology. For 

a complete discussion of our policy regarding payment for CRT-D services in ASCs, we 
CMS-1613-P 443 

refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74427 

through 74428). 

 For CY 2015, we are proposing that CPT code 33249, the primary code for 

CRT-D services, continue to be assigned to APC 0108, and that payment for CPT code 

33225 be packaged under the OPPS. Consequently, we also are proposing that CPT code 

33249 would continue to be assigned to APC 0108 and payment for CPT code 33225 

would be packaged into the payment for the primary covered surgical procedure (for 

example, CPT code 33249) under the ASC payment system for CY 2015. Because we 

are proposing to package CPT code 33225 packaged under the ASC payment system and, 

therefore, it would not receive separate payment, it would no longer be necessary that 

ASCs use the HCPCS Level II G-code (G0448) for proper reporting when the procedures 

described by CPT codes 33225 and 33249 are performed on the same date of service. 

 We invite public comment on these proposals. 

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

 LDR prostate brachytherapy is a treatment for prostate cancer in which hollow 

needles or catheters are inserted into the prostate, followed by permanent implantation of 

radioactive sources into the prostate through the needles/catheters. At least two CPT 

codes are used to report the treatment service because there are separate codes that 

describe placement of the needles/catheters and the application of the brachytherapy 

sources: CPT code 55875 (Transperineal placement of needles or catheters into prostate 

for interstitial radioelement application, with or without cystoscopy); and CPT code 

77778 (Interstitial radiation source application; complex). Generally, the component 
CMS-1613-P 444 

services represented by both codes are provided in the same operative session on the 

same date of service to the Medicare beneficiary being treated with LDR brachytherapy 

for prostate cancer. 

 In the CY 2013 OPPS/ASC final rule with comment period, we finalized our 

proposal to establish the CY 2013 ASC payment rate for LDR prostate brachytherapy 

services based on the OPPS relative payment weight applicable to APC 8001 when CPT 

codes 55875 and 77778 are performed on the same date of service in an ASC. ASCs use 

the corresponding HCPCS Level II G-code (G0458) for proper reporting when the 

procedures described by CPT codes 55875 and 77778 are performed on the same date of 

service, and therefore receive the appropriate LDR prostate brachytherapy composite 

payment. When not performed on the same day as the service described by CPT code 

55875, the service described by CPT code 77778 will be assigned to APC 0651. When 

not performed on the same day as the service described by CPT code 77778, the service 

described by CPT code 55875 will be assigned to APC 0162. For a complete discussion 

of our policy regarding payment for LDR prostate brachytherapy services in ASCs, we 

refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68457). 

We are not proposing any changes to our current policy regarding ASC payment for LDR 

prostate brachytherapy services for CY 2015. 

2. Proposed Payment for Covered Ancillary Services 

a. Background 

 Our final payment policies under the revised ASC payment system for covered 

ancillary services vary according to the particular type of service and its payment policy 
CMS-1613-P 445 

under the OPPS. Our overall policy provides separate ASC payment for certain ancillary 

items and services integrally related to the provision of ASC covered surgical procedures 

that are paid separately under the OPPS and provides packaged ASC payment for other 

ancillary items and services that are packaged or conditionally packaged (status 

indicators “N,” “Q1,” and “Q2”) under the OPPS. In the CY 2013 OPPS/ASC 

rulemaking (77 FR 45169; 77 FR 68457 through 68458), we further clarified our policy 

regarding the payment indicator assignment of codes that are conditionally packaged in 

the OPPS (status indicators “Q1” and “Q2”). Under the OPPS, a conditionally packaged 

code describes a HCPCS code where the payment is packaged when it is provided with a 

significant procedure but is separately paid when the service appears on the claim without 

a significant procedure. Because ASC services always include a surgical procedure, 

HCPCS codes that are conditionally packaged under the OPPS are always packaged 

(payment indictor “N1”) under the ASC payment system. Thus, our final policy 

generally aligns ASC payment bundles with those under the OPPS (72 FR 42495). In all 

cases, in order for those ancillary services also to be paid, ancillary items and services 

must be provided integral to the performance of ASC covered surgical procedures for 

which the ASC bills Medicare. 

 Our ASC payment policies provide separate payment for drugs and biologicals 

that are separately paid under the OPPS at the OPPS rates. We generally pay for 

separately payable radiology services at the lower of the MPFS nonfacility 

PE RVU-based (or technical component) amount or the rate calculated according to the 

ASC standard ratesetting methodology (72 FR 42497). However, as finalized in the 
CMS-1613-P 446 

CY 2011 OPPS/ASC final rule with comment period (75 FR 72050), payment indicators 

for all nuclear medicine procedures (defined as CPT codes in the range of 78000 through 

78999) that are designated as radiology services that are paid separately when provided 

integral to a surgical procedure on the ASC list are set to “Z2” so that payment is made 

based on the ASC standard ratesetting methodology rather than the MPFS nonfacility 

PE RVU amount, regardless of which is lower. This modification to the ASC payment 

methodology for ancillary services was finalized in response to a comment on the 

CY 2011 OPPS/ASC proposed rule that suggested it is inappropriate to use the 

MPFS-based payment methodology for nuclear medicine procedures because the 

associated diagnostic radiopharmaceutical, although packaged under the ASC payment 

system, is separately paid under the MPFS (42 CFR 416.171(d)(1)). We set the payment 

indicator to “Z2” for these nuclear medicine procedures in the ASC setting so that 

payment for these procedures would be based on the OPPS relative payment weight 

rather than the MPFS nonfacility PE RVU-based amount to ensure that the ASC will be 

compensated for the cost associated with the diagnostic radiopharmaceuticals. 

 In addition, because the same issue exists for radiology procedures that use 

contrast agents (the contrast agent is packaged under the ASC payment system but is 

separately paid under the MPFS), we finalized in the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74429 through 74430) to set the payment indicator to “Z2” for 

radiology services that use contrast agents so that payment for these procedures will be 

based on the OPPS relative payment weight and will, therefore, include the cost for the 

contrast agent (42 CFR 416.171(d)(2)). 
CMS-1613-P 447 

 ASC payment policy for brachytherapy sources mirrors the payment policy under 

the OPPS. ASCs are paid for brachytherapy sources provided integral to ASC covered 

surgical procedures at prospective rates adopted under the OPPS or, if OPPS rates are 

unavailable, at contractor-priced rates (72 FR 42499). Since December 31, 2009, ASCs 

have been paid for brachytherapy sources provided integral to ASC covered surgical 

procedures at prospective rates adopted under the OPPS. 

 Our ASC policies also provide separate payment for: (1) certain items and 

services that CMS designates as contractor-priced, including, but not limited to, the 

procurement of corneal tissue; and (2) certain implantable items that have pass-through 

status under the OPPS. These categories do not have prospectively established ASC 

payment rates according to the final policies for the revised ASC payment system 

(72 FR 42502 and 42508 through 42509; 42 CFR 416.164(b)). Under the revised ASC 

payment system, we have designated corneal tissue acquisition and hepatitis B vaccines 

as contractor-priced. Corneal tissue acquisition is contractor-priced based on the 

invoiced costs for acquiring the corneal tissue for transplantation. Hepatitis B vaccines 

are contractor-priced based on invoiced costs for the vaccine. 

 Devices that are eligible for pass-through payment under the OPPS are separately 

paid under the ASC payment system and are contractor-priced. Currently, the one device 

that is eligible for pass-through payment in the OPPS is described by HCPCS code 

C1841 (Retinal prosthesis, includes all internal and external components). The payment 

amount for HCPCS code C1841 under the ASC payment system is contractor-priced. 

Under the revised ASC payment system (72 FR 42502), payment for the surgical 
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procedure associated with the pass-through device is made according to our standard 

methodology for the ASC payment system, based on only the service (non-device) 

portion of the procedure’s OPPS relative payment weight if the APC weight for the 

procedure includes other packaged device costs. (We note that the cost for the new 

pass-through device would not be included in the APC weight since historical claims are 

used to establish the OPPS relative weights). We also refer to this methodology as 

applying a “device offset” to the ASC payment for the associated surgical procedure. 

This ensures that duplicate payment is not provided for any portion of an implanted 

device with OPPS pass-through status. There are no other device costs included in the 

APC for the surgical procedure associated with HCPCS code C1841. Therefore, payment 

for the associated surgical procedure is made according to the standard methodology and 

no device offset is applied. HCPCS code C1841 was approved for pass-through payment 

effective October 1, 2013, and will continue to be eligible for pass-through payment in 

CY 2015. 

b. Proposed Payment for Covered Ancillary Services for CY 2015 

 For CY 2015, we are proposing to update the ASC payment rates and to make 

changes to ASC payment indicators as necessary to maintain consistency between the 

OPPS and ASC payment system regarding the packaged or separately payable status of 

services and the proposed CY 2015 OPPS and ASC payment rates. We also are 

proposing to continue to set the CY 2015 ASC payment rates for brachytherapy sources 

and separately payable drugs and biologicals equal to the proposed OPPS payment rates 

for CY 2015. 
CMS-1613-P 449 

 Consistent with established ASC payment policy (72 FR 42497), we are 

proposing that the proposed CY 2015 payment for separately payable covered radiology 

services be based on a comparison of the proposed CY 2015 MPFS nonfacility PE 

RVU-based amounts (we refer readers to the CY 2015 MPFS proposed rule) and the 

proposed CY 2015 ASC payment rates calculated according to the ASC standard 

ratesetting methodology and then set at the lower of the two amounts (except as discussed 

below for nuclear medicine procedures and radiology services that use contrast agents). 

We are proposing that payment for a radiology service would be packaged into the 

payment for the ASC covered surgical procedure if the radiology service is packaged or 

conditionally packaged under the OPPS. The payment indicators in Addendum BB to 

this proposed rule indicate whether the proposed payment rates for radiology services are 

based on the MPFS nonfacility PE RVU-based amount or the ASC standard ratesetting 

methodology, or whether payment for a radiology service is packaged into the payment 

for the covered surgical procedure (payment indicator “N1”). Radiology services that we 

are proposing to pay based on the ASC standard ratesetting methodology are assigned 

payment indicator “Z2” (proposed revised definition, as discussed below: Radiology or 

diagnostic service paid separately when provided integral to a surgical procedure on ASC 

list; payment based on OPPS relative payment weight), and those for which the proposed 

payment is based on the MPFS nonfacility PE RVU-based amount be assigned payment 

indicator “Z3” (proposed revised definition, as discussed below: Radiology or diagnostic

service paid separately when provided integral to a surgical procedure on ASC list; 

payment based on MPFS nonfacility PE RVUs). 
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 As finalized in the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72050), payment indicators for all nuclear medicine procedures (defined as CPT 

codes in the range of 78000 through 78999) that are designated as radiology services that 

are paid separately when provided integral to a surgical procedure on the ASC list are set 

to “Z2” so that payment for these procedures will be based on the OPPS relative payment 

weight (rather than the MPFS nonfacility PE RVU-based amount, regardless of which is 

lower) and, therefore, will include the cost for the diagnostic radiopharmaceutical. We 

are proposing to continue this modification to the payment methodology in CY 2015 and, 

therefore, set the payment indicator to “Z2” for nuclear medicine procedures. 

 As finalized in the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74429 through 74430), payment indicators for radiology services that use contrast 

agents are set to “Z2” so that payment for these procedures will be based on the OPPS 

relative payment weight and, therefore, will include the cost for the contrast agent. We 

are proposing to continue this modification to the payment methodology in CY 2015 and, 

therefore, are proposing to assign the payment indicator “Z2” to radiology services that 

use contrast agents. 

 Covered ancillary services are items and services that are integral to a covered 

surgical procedure performed in an ASC for which separate payment may be made under 

the ASC payment system (see 42 CFR 416.2). Covered ancillary services include, among 

other categories of items and services, certain radiology services, including diagnostic 

imaging services, for which separate payment is allowed under the OPPS when these 

services are necessary for the successful completion of a surgical procedure and are 
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performed in the ASC immediately preceding, during, or immediately following the 

covered surgical procedure, as evidenced by the service being provided on the same day 

as a covered surgical procedure (see 42 CFR 416.164(b)(5)). Currently, there are certain 

non-imaging diagnostic tests for which payment is not made under Medicare Part B when 

provided in an ASC setting although these tests are paid under the OPPS. Therefore, we 

believe that certain non-imaging diagnostic tests for which separate payment is allowed 

under the OPPS should be considered covered ancillary services and separately paid 

when these tests are required for the successful performance of the surgery and are 

performed in the ASC on the same day as a covered surgical procedure. 

 Therefore, we are proposing that, beginning in CY 2015, certain diagnostic tests 

within the medicine range of CPT codes for which separate payment is allowed under the 

OPPS be covered ancillary services when the they are integral to an ASC covered 

surgical procedure. We believe that adopting such a payment policy is reasonable and 

appropriate to ensure access to these tests in ASCs and is consistent with the OPPS. We 

are proposing that diagnostic tests within the medicine range of CPT codes include all 

Category I CPT codes in the medicine range established by CPT, from 90000 to 99999, 

and Category III CPT codes and Level II HCPCS codes that describe diagnostic tests that 

crosswalk or are clinically similar to procedures in the medicine range established by 

CPT. 

 We are proposing to pay for these tests at the lower of the MPFS nonfacility PE 

RVU-based (or technical component) amount or the rate calculated according to the ASC 

standard ratesetting methodology, because this would ensure appropriate and equitable 
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payment for these diagnostic tests provided integral to covered surgical procedures and 

not provide a payment incentive for migration of the tests from physician offices to 

ASCs. Further, we believe these diagnostic tests are similar to the covered ancillary 

services that are radiology services and this is the payment methodology we use for those 

services. We are proposing that the diagnostic tests for which the proposed payment is 

based on the ASC standard ratesetting methodology be assigned to payment indicator 

“Z2” (proposed revised definition: Radiology or diagnostic service paid separately when 

provided integral to a surgical procedure on ASC list; payment based on OPPS relative 

payment weight), and those for which the proposed payment is based on the MPFS 

nonfacility PE RVU-based amount be assigned payment indicator “Z3” (proposed revised 

definition: Radiology or diagnostic service paid separately when provided integral to a 

surgical procedure on ASC list; payment based on MPFS nonfacility PE RVUs). We are 

proposing changes to the definitions for payment indicators “Z2” and “Z3,” as detailed in 

section XII.F.2 of this preamble below, and are proposing changes to §§ 416.164(a)(11) 

and (b)(5) as well as § 416.171(b)(1) to reflect these proposals. 

 We have identified one diagnostic test that is within the medicine range of CPT 

codes and for which separate payment is allowed under the OPPS: CPT code 91035 

(Esophagus, gastroesophageal reflux test; with mucosal attached telemetry pH electrode 

placement, recording, analysis and interpretation). We are proposing to add this code to 

the list of ASC covered ancillary services and are proposing separate ASC payment as a 

covered ancillary service for this code beginning in CY 2015 when the test is integral to 

an ASC covered surgical procedure. We would expect the procedure described by CPT 
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code 91035 to be integral to the endoscopic attachment of the electrode to the esophageal 

mucosa. 

 Most covered ancillary services and their proposed payment indicators are listed 

in Addendum BB to this proposed rule (which is available via the Internet on the CMS 

Web site). 

 We invite public comment on these proposals. 

E. New Technology Intraocular Lenses (NTIOLs) 

1. NTIOL Application Cycle 

 Our process for reviewing applications to establish new classes of new technology 

intraocular lenses (NTIOLs) is as follows: 

● Applicants submit their NTIOL requests for review to CMS by the annual 

deadline. For a request to be considered complete, we require submission of the 

information that is found in the guidance document entitled “Application Process and 

Information Requirements for Requests for a New Class of New Technology Intraocular 

Lenses (NTIOLs) or Inclusion of an IOL in an existing NTIOL Class” posted on the 

CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/NTIOLs.html.

● We announce annually in the proposed rule updating the ASC and OPPS 

payment rates for the following calendar year, a list of all requests to establish new 

NTIOL classes accepted for review during the calendar year in which the proposal is 

published. In accordance with section 141(b)(3) of Pub. L. 103-432 and our regulations 
CMS-1613-P 454 

at § 416.185(b), the deadline for receipt of public comments is 30 days following 

publication of the list of requests in the proposed rule. 

● In the final rule updating the ASC and OPPS payment rates for the following 

calendar year, we — 

○ Provide a list of determinations made as a result of our review of all new 

NTIOL class requests and public comments; 

○ When a new NTIOL class is created, we identify the predominant characteristic 

of NTIOLs in that class that sets them apart from other IOLs (including those previously 

approved as members of other expired or active NTIOL classes) and that is associated 

with an improved clinical outcome. 

○ The date of implementation of a payment adjustment in the case of approval of 

an IOL as a member of a new NTIOL class would be set prospectively as of 30 days after 

publication of the ASC payment update final rule, consistent with the statutory 

requirement. 

○ Announce the deadline for submitting requests for review of an application for 

a new NTIOL class for the following calendar year. 

2. Requests to Establish New NTIOL Classes for CY 2015 

 We did not receive any requests for review to establish a new NTIOL class for 

CY 2015 by March 3, 2014, the due date published in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75085). 
CMS-1613-P 455 

3. Payment Adjustment 

 The current payment adjustment for a 5-year period from the implementation date 

of a new NTIOL class is $50 per lens. Since implementation of the process for 

adjustment of payment amounts for NTIOLs in 1999, we have not revised the payment 

adjustment amount, and we are not proposing to revise the payment adjustment amount 

for CY 2015. 

F. Proposed ASC Payment and Comment Indicators 

1. Background 

 In addition to the payment indicators that we introduced in the August 2, 2007 

final rule, we also created final comment indicators for the ASC payment system in the 

CY 2008 OPPS/ASC final rule with comment period (72 FR 66855). We created 

Addendum DD1 to define ASC payment indicators that we use in Addenda AA and BB 

to provide payment information regarding covered surgical procedures and covered 

ancillary services, respectively, under the revised ASC payment system. The ASC 

payment indicators in Addendum DD1 are intended to capture policy relevant 

characteristics of HCPCS codes that may receive packaged or separate payment in ASCs, 

such as whether they were on the ASC list of covered services prior to CY 2008; payment 

designation, such as device-intensive or office-based, and the corresponding ASC 

payment methodology; and their classification as separately payable ancillary services 

including radiology services, brachytherapy sources, OPPS pass-through devices, corneal 

tissue acquisition services, drugs or biologicals, or NTIOLs. 
CMS-1613-P 456 

 We also created Addendum DD2 that lists the ASC comment indicators. The 

ASC comment indicators used in Addenda AA and BB to the proposed rules and final 

rules with comment period serve to identify, for the revised ASC payment system, the 

status of a specific HCPCS code and its payment indicator with respect to the timeframe 

when comments will be accepted. The comment indicator “NI” is used in the OPPS/ASC 

final rule with comment period to indicate new codes for the next calendar year for which 

the interim payment indicator assigned is subject to comment. The comment indicator 

“NI” is also assigned to existing codes with substantial revisions to their descriptors such 

that we consider them to be describing new services, as discussed in the CY 2010 

OPPS/ASC final rule with comment period (74 FR 60622). In the CY 2015 OPPS/ASC 

final rule with comment period, we will respond to public comments and finalize the 

ASC treatment of all codes that are labeled with comment indicator “NI” in Addenda AA 

and BB to the CY 2014 OPPS/ASC final rule with comment period. 

 The “CH” comment indicator is used in Addenda AA and BB to this proposed 

rule (which are available via the Internet on the CMS Web site) to indicate that the 

payment indicator assignment has changed for an active HCPCS code in the current year 

and next calendar year; an active HCPCS code is newly recognized as payable in ASCs; 

or an active HCPCS code is discontinued at the end of the current calendar year. The 

“CH” comment indicators that are published in the final rule with comment period are 

provided to alert readers that a change has been made from one calendar year to the next, 

but do not indicate that the change is subject to comment. 
CMS-1613-P 457 

2. Proposed ASC Payment and Comment Indicators 

 We are not proposing any changes to the definitions of the ASC comment 

indicators for CY 2015. In order to incorporate changes associated with our proposal for 

CY 2015, as detailed above in section XII.D.2.b. of this proposed rule, that certain 

diagnostic tests qualify as covered ancillary services when provided integral to an ASC 

covered surgical procedure, we are proposing to revise the definitions for payment 

indicators “Z2” and “Z3” to add the words “or diagnostic” after “Radiology” so that the 

proposed definition for payment indicator “Z2” would be “Radiology or diagnostic

service paid separately when provided integral to a surgical procedure on ASC list; 

payment based on OPPS relative payment weight,” and the proposed definition for 

payment indicator “Z3” would be “Radiology or diagnostic service paid separately when 

provided integral to a surgical procedure on ASC list; payment based on MPFS 

nonfacility PE RVUs.” We refer readers to Addenda DD1 and DD2 to this proposed rule 

(which are available via the Internet on the CMS Web site) for the complete list of ASC 

payment and comment indicators proposed for the CY 2015 update. 

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

Rates 

1. Background 

 In the August 2, 2007 final rule (72 FR 42493), we established our policy to base 

ASC relative payment weights and payment rates under the revised ASC payment system 

on APC groups and the OPPS relative payment weights. Consistent with that policy and 

the requirement at section 1833(i)(2)(D)(ii) of the Act that the revised payment system be 
CMS-1613-P 458 

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 always 20 percent for 

ASC services, this interpretation of expenditures has minimal impact for subsequent 

budget neutrality adjustments calculated within the revised ASC payment system. 

 In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66857 through 

66858), we set out a step-by-step illustration of the final budget neutrality adjustment 
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calculation based on the methodology finalized in the August 2, 2007 final rule 

(72 FR 42521 through 42531) and as applied to updated data available for the CY 2008 

OPPS/ASC final rule with comment period. The application of that methodology to the 

data available for the CY 2008 OPPS/ASC final rule with comment period resulted in a 

budget neutrality adjustment of 0.65. 

 For CY 2008, we adopted the OPPS relative payment weights as the ASC relative 

payment weights for most services and, consistent with the final policy, we calculated the 

CY 2008 ASC payment rates by multiplying the ASC relative payment weights by the 

final CY 2008 ASC conversion factor of $41.401. For covered office-based surgical 

procedures and covered ancillary radiology services (excluding covered ancillary 

radiology services involving certain nuclear medicine procedures or involving the use of 

contrast agents, as discussed in section XII.D.2.b. of this proposed rule), the established 

policy is to set the payment rate at the lower of the MPFS unadjusted nonfacility 

PE RVU-based amount or the amount calculated using the ASC standard ratesetting 

methodology. Further, as discussed in the CY 2008 OPPS/ASC final rule with comment 

period (72 FR 66841 through 66843), we also adopted alternative ratesetting 

methodologies for specific types of services (for example, device-intensive procedures). 

 As discussed in the August 2, 2007 final rule (72 FR 42517 through 42518) and as 

codified at § 416.172(c) of the regulations, the revised ASC payment system accounts for 

geographic wage variation when calculating individual ASC payments by applying the 

pre-floor and pre-reclassified hospital wage indexes to the labor-related share, which is 

50 percent of the ASC payment amount based on a GAO report of ASC costs using 2004 
CMS-1613-P 460 

survey data. Beginning in CY 2008, CMS accounted for geographic wage variation in 

labor cost when calculating individual ASC payments by applying the pre-floor and 

pre-reclassified hospital wage index values that CMS calculates for payment under the 

IPPS, using updated Core Based Statistical Areas (CBSAs) issued by OMB in June 2003. 

In other words, the wage index for an ASC is the pre-floor and pre-reclassified hospital 

wage index under the IPPS of the CBSA that maps to the CBSA where the ASC is 

located. 

 The reclassification provision in section 1886(d)(10) of the Act is specific to 

hospitals. We believe that using the most recently available raw pre-floor and prereclassified hospital wage indexes results in the most appropriate adjustment to the labor 

portion of ASC costs. In addition, use of the unadjusted hospital wage data avoids 

further reductions in certain rural statewide wage index values that result from 

reclassification. We continue to believe that the unadjusted hospital wage indexes, which 

are updated yearly and are used by many other Medicare payment systems, appropriately 

account for geographic variation in labor costs for ASCs. 

 On February 28, 2013, OMB issued OMB Bulletin No. 13-01, which provides the 

delineations of all Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan 

Statistical Areas, Combined Statistical Areas, and New England City and Town Areas in 

the United States and Puerto Rico based on the standards published on June 28, 2010 in 

the Federal Register (75 FR 37246 through 37252) and 2010 Census Bureau data. (A 

copy of this bulletin may be obtained at: 

http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf.) The 
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pre-floor and pre-reclassified hospital wage indexes for FY 2014 do not reflect OMB’s 

new area delineations and, because the ASC wage indexes are the pre-floor and prereclassified hospital wage indexes, the CY 2014 ASC wage indexes do not reflect the 

OMB changes. As discussed in the FY 2015 IPPS/LTCH PPS proposed rule 

(79 FR 28054 through 28068), we are proposing to use the new CBSAs delineations 

issued by OMB in OMB Bulletin 13-01 for the IPPS hospital wage index. Therefore, 

because the ASC wage indexes are the pre-floor and pre-reclassified hospital wage 

indexes, the proposed CY 2015 ASC wage indexes reflect the new OMB delineations. 

As discussed in section XII.G.2.b. of this proposed rule, we are proposing a transition to 

these new OMB delineations in certain situations for CY 2015. 

 We note that in certain instances there might be urban or rural areas for which 

there is no IPPS hospital whose wage index data would be used to set the wage index for 

that area. For these areas, our policy has been to use the average of the wage indexes for 

CBSAs (or metropolitan divisions as applicable) that are contiguous to the area that has 

no wage index (where “contiguous” is defined as sharing a border). For example, for 

CY 2014, we applied a proxy wage index based on this methodology to ASCs located in 

CBSA 25980 (Hinesville-Fort Stewart, GA) and CBSA 08 (Rural Delaware). 

 When all of the areas contiguous to the urban CBSA of interest are rural and there 

is no IPPS hospital that has wage index data that could be used to set the wage index for 

that area, we determine the ASC wage index by calculating the average of all wage 

indexes for urban areas in the State (75 FR 72058 through 72059). In other situations, 

where there are no IPPS hospitals located in a relevant labor market area, we will 
CMS-1613-P 462 

continue our current policy of calculating an urban or rural area’s wage index by 

calculating the average of the wage indexes for CBSAs (or metropolitan divisions where 

applicable) that are contiguous to the area with no wage index. 

2. Proposed Calculation of the ASC Payment Rates 

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

 We update the ASC relative payment weights each year using the national OPPS 

relative payment weights (and MPFS nonfacility PE RVU-based amounts, as applicable) 

for that same calendar year and uniformly scale the ASC relative payment weights for 

each update year to make them budget neutral (72 FR 42533). Consistent with our 

established policy, we are proposing to scale the CY 2015 relative payment weights for 

ASCs according to the following method. Holding ASC utilization and the mix of 

services constant from CY 2013, we are proposing to compare the total payment using 

the CY 2014 ASC relative payment weights with the total payment using the CY 2015 

relative payment weights to take into account the changes in the OPPS relative payment 

weights between CY 2014 and CY 2015. We are proposing to use the ratio of CY 2014 

to CY 2015 total payment (the weight scaler) to scale the ASC relative payment weights 

for CY 2015. The proposed CY 2015 ASC scaler is 0.9142 and scaling would apply to 

the ASC relative payment weights of the covered surgical procedures and covered 

ancillary radiology services for which the ASC payment rates are based on OPPS relative 

payment weights. 

 Scaling would not apply in the case of ASC payment for separately payable 

covered ancillary services that have a predetermined national payment amount (that is, 
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their national ASC payment amounts are not based on OPPS relative payment weights), 

such as drugs and biologicals that are separately paid or services that are 

contractor-priced or paid at reasonable cost in ASCs. Any service with a predetermined 

national payment amount would be included in the ASC budget neutrality comparison, 

but scaling of the ASC relative payment weights would not apply to those services. The 

ASC payment weights for those services without predetermined national payment 

amounts (that is, those services with national payment amounts that would be based on 

OPPS relative payment weights) would be scaled to eliminate any difference in the total 

payment between the current year and the update year. 

 For any given year’s ratesetting, we typically use the most recent full calendar 

year of claims data to model budget neutrality adjustments. At the time of this proposed 

rule, we have available 98 percent of CY 2013 ASC claims data. 

 To create an analytic file to support calculation of the weight scaler and budget 

neutrality adjustment for the wage index (discussed below), we summarized available 

CY 2013 ASC claims by ASC and by HCPCS code. We used the National Provider 

Identifier for the purpose of identifying unique ASCs within the CY 2013 claims data. 

We used the supplier zip code reported on the claim to associate State, county, and CBSA 

with each ASC. This file, available to the public as a supporting data file for this 

proposed rule, is posted on the CMS Web site at: http://www.cms.gov/ResearchStatistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ASCPaymentSystem.html. 
CMS-1613-P 464 

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

 As discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28054 

through 28055), we are proposing to use the new CBSA delineations issued by OMB in 

OMB Bulletin 13-01 dated February 28, 2013 for the IPPS hospital wage index. 

Therefore, because the ASC wage indexes are the pre-floor and pre-reclassified hospital 

wage indexes, the proposed CY 2015 ASC wage indexes reflect the new OMB 

delineations. While we believe that instituting the latest OMB labor market area 

delineations would create a more accurate and up-to-date wage index system, we also 

recognize that implementing the new OMB delineations may cause some short-term 

instability in ASC payments; therefore, we are proposing a transition to the new OMB 

delineations similar to what has been proposed for the IPPS for FY 2015 (79 FR 28062) 

and the OPPS as described in section II.C of this proposed rule. Specifically for ASCs, 

we are proposing a 1-year blended wage index for all ASCs that would experience any 

decrease in their actual wage index exclusively due to the implementation of the new 

OMB delineations. For ASCs where the CY 2015 ASC wage index with the CY 2015 

CBSAs would be lower than with the CY 2014 CBSAs, we are proposing that the 

CY 2015 ASC wage index would be 50 percent of the ASC wage index based on the 

CY 2014 CBSA and 50 percent of the ASC wage index based on the new CY 2015 

CBSA. We believe a 1-year 50/50 blended wage index would mitigate the short-term 

instability and negative payment impacts due to the proposed implementation of the new 

OMB delineations, providing ASCs that would be negatively impacted by the new OMB 

delineations with a transition period during which they may adjust to their new 
CMS-1613-P 465 

geographic CBSA. We believe that a longer transition period would reduce the accuracy 

of the overall labor market area wage index system. 

c. Updating the ASC Conversion Factor 

 Under the OPPS, we typically apply a budget neutrality adjustment for provider 

level changes, most notably a change in the wage index values for the upcoming year, to 

the conversion factor. Consistent with our final ASC payment policy, for the CY 2015 

ASC payment system, we are proposing to calculate and apply a budget neutrality 

adjustment to the ASC conversion factor for supplier level changes in wage index values 

for the upcoming year, just as the OPPS wage index budget neutrality adjustment is 

calculated and applied to the OPPS conversion factor. For CY 2015, we calculated this 

proposed adjustment for the ASC payment system by using the most recent CY 2013 

claims data available and estimating the difference in total payment that would be created 

by introducing the proposed CY 2015 ASC wage indexes. Specifically, holding CY 2013 

ASC utilization and service-mix and the proposed CY 2015 national payment rates after 

application of the weight scaler constant, we calculated the total adjusted payment using 

the CY 2014 ASC wage indexes and the total adjusted payment using the proposed 

CY 2015 ASC wage indexes (which reflect the new OMB delineations and would include 

any applicable transition period). We used the 50-percent labor-related share for both 

total adjusted payment calculations. We then compared the total adjusted payment 

calculated with the CY 2014 ASC wage indexes to the total adjusted payment calculated 

with the proposed CY 2015 ASC wage indexes and applied the resulting ratio of 0.9983 
CMS-1613-P 466 

(the proposed CY 2015 ASC wage index budget neutrality adjustment) to the CY 2014 

ASC conversion factor to calculate the proposed CY 2015 ASC conversion factor. 

 Section 1833(i)(2)(C)(i) of the Act requires that, “if the Secretary has not updated 

amounts established” under the revised ASC payment system in a calendar year, the 

payment amounts “shall be increased by the percentage increase in the Consumer Price 

Index for all urban consumers (U.S. city average) as estimated by the Secretary for the 

12-month period ending with the midpoint of the year involved.” The statute, therefore, 

does not mandate the adoption of any particular update mechanism, but it requires the 

payment amounts to be increased by the CPI-U in the absence of any update. Because 

the Secretary updates the ASC payment amounts annually, we adopted a policy, which 

we codified at 42 CFR 416.171(a)(2)(ii), to update the ASC conversion factor using the 

CPI-U for CY 2010 and subsequent calendar years. Therefore, the annual update to the 

ASC payment system is the CPI-U (referred to as the CPI-U update factor). 

 Section 3401(k) of the Affordable Care Act amended section 1833(i)(2)(D) of the 

Act by adding a new clause (v) which requires that “any annual update under [the ASC 

payment] system for the year, after application of clause (iv), shall be reduced by the 

productivity adjustment described in section 1886(b)(3)(B)(xi)(II)” of the Act effective 

with the calendar year beginning January 1, 2011. The statute defines the productivity 

adjustment to be equal to the 10-year moving average of changes in annual 

economy-wide private nonfarm business multifactor productivity (MFP) (as projected by 

the Secretary for the 10-year period ending with the applicable fiscal year, year, cost 

reporting period, or other annual period) (the “MFP adjustment”). Clause (iv) of section 
CMS-1613-P 467 

1833(i)(2)(D) of the Act authorizes the Secretary to provide for a reduction in any annual 

update for failure to report on quality measures. Clause (v) of section 1833(i)(2)(D) of 

the Act states that application of the MFP adjustment to the ASC payment system may 

result in the update to the ASC payment system being less than zero for a year and may 

result in payment rates under the ASC payment system for a year being less than such 

payment rates for the preceding year. 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74516), we 

finalized a policy that ASCs begin submitting data on quality measures for services 

beginning on October 1, 2012 for the CY 2014 payment determination under the ASCQR 

Program. In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 

through 68500), we finalized a methodology to calculate reduced national unadjusted 

payment rates using the ASCQR Program reduced update conversion factor that would 

apply to ASCs that fail to meet their quality reporting requirements for the CY 2014 

payment determination and subsequent years. The application of the 2.0 percentage point 

reduction to the annual update factor, which currently is the CPI-U, may result in the 

update to the ASC payment system being less than zero for a year for ASCs that fail to 

meet the ASCQR Program requirements. We amended §§ 416.160(a)(1) and 416.171 to 

reflect these policies. 

 In accordance with section 1833(i)(2)(C)(i) of the Act, before applying the MFP 

adjustment, the Secretary first determines the “percentage increase” in the CPI-U, which 

we interpret cannot be a negative percentage. Thus, in the instance where the percentage 

change in the CPI-U for a year is negative, we would hold the CPI-U update factor for the 
CMS-1613-P 468 

ASC payment system to zero. For the CY 2014 payment determination and subsequent 

years, under section 1833(i)(2)(D)(iv) of the Act, we would reduce the annual update by 

2.0 percentage points for an ASC that fails to submit quality information under the rules 

established by the Secretary in accordance with section 1833(i)(7) of the Act. 

Section 1833(i)(2)(D)(v) of the Act, as added by section 3401(k) of the Affordable Care 

Act, requires that the Secretary reduce the annual update factor, after application of any 

quality reporting reduction, by the MFP adjustment, and states that application of the 

MFP adjustment to the annual update factor after application of any quality reporting 

reduction may result in the update being less than zero for a year. If the application of 

the MFP adjustment to the annual update factor after application of any quality reporting 

reduction would result in an MFP-adjusted update factor that is less than zero, the 

resulting update to the ASC payment rates would be negative and payments would 

decrease relative to the prior year. We refer readers to the CY 2011 OPPS/ASC final rule 

with comment period (75 FR 72062 through 72064) for illustrative examples of how the 

MFP adjustment is applied to the ASC payment system. 

 For this proposed rule, based on IHS Global Insight’s (IGI’s) 2014 first quarter 

forecast with historical data through 2013 fourth quarter, for the 12-month period ending 

with the midpoint of CY 2015, the CPI-U update is projected to be 1.7 percent. Also, 

based on IGI’s 2014 first quarter forecast, the MFP adjustment for the period ending with 

the midpoint of CY 2015 is projected to be 0.5 percent. IGI is a nationally recognized 

economic and financial forecasting firm that contracts with CMS to forecast the 

components of CMS’ market baskets as well as the CPI-U and MFP. We finalized the 
CMS-1613-P 469 

methodology for calculating the MFP adjustment in the CY 2011 MPFS final rule with 

comment period (75 FR 73394 through 73396) as revised in the CY 2012 MPFS final 

rule with comment period (76 FR 73300 through 73301). The ASCQR Program affected 

payment rates beginning in CY 2014 and, under this program, there is a 2.0 percentage 

point reduction to the CPI-U for ASCs that fail to meet the ASCQR Program 

requirements. 

 We are proposing to reduce the CPI-U update of 1.7 percent by the MFP 

adjustment of 0.5 percentage point, resulting in an MFP-adjusted CPI-U update factor of 

1.2 percent for ASCs meeting the quality reporting requirements. Therefore, we are 

proposing to apply a 1.2 percent MFP-adjusted CPI-U update factor to the CY 2014 ASC 

conversion factor for ASCs meeting the quality reporting requirements. We are 

proposing to reduce the CPI-U update of 1.7 percent by 2.0 percentage points for ASCs 

that do not meet the quality reporting requirements and then apply the 0.5 percentage 

point MFP reduction. Therefore, we are proposing to apply a -0.8 percent quality 

reporting/MFP-adjusted CPI-U update factor to the CY 2014 ASC conversion factor for 

ASCs not meeting the quality reporting requirements. We also are proposing that if more 

recent data are subsequently available (for example, a more recent estimate of the 

CY 2015 CPI-U update and MFP adjustment), we would use such data, if appropriate, to 

determine the CY 2015 ASC update for the final rule with comment period. 

 For CY 2015, we also are proposing to adjust the CY 2014 ASC conversion factor 

($43.471) by the proposed wage index budget neutrality factor of 0.9983 in addition to 

the MFP-adjusted update factor of 1.2 percent discussed above, which results in a 
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proposed CY 2015 ASC conversion factor of $43.918 for ASCs meeting the quality 

reporting requirements. For ASCs not meeting the quality reporting requirements, we are 

proposing to adjust the CY 2014 ASC conversion factor ($43.471) by the proposed wage 

index budget neutrality factor of 0.9983 in addition to the quality reporting/MFP-adjusted 

update factor of -0.8 percent discussed above, which results in a proposed CY 2015 ASC 

conversion factor of $43.050. 

 We invite public comment on these proposals. 

3. Display of Proposed CY 2015 ASC Payment Rates 

 Addenda AA and BB to this proposed rule (which are available via the Internet on 

the CMS Web site) display the proposed updated ASC payment rates for CY 2015 for 

covered surgical procedures and covered ancillary services, respectively. The payment 

rates included in these addenda reflect the full ASC payment update and not the reduced 

payment update used to calculate payment rates for ASCs not meeting the quality 

reporting requirements under the ASCQR Program. These addenda contain several types 

of information related to the proposed CY 2015 payment rates. Specifically, in 

Addendum AA, a “Y” in the column titled “Proposed to be Subject to Multiple Procedure 

Discounting” indicates that the surgical procedure would be subject to the multiple 

procedure payment reduction policy. As discussed in the CY 2008 OPPS/ASC final rule 

with comment period (72 FR 66829 through 66830), most covered surgical procedures 

are subject to a 50-percent reduction in the ASC payment for the lower-paying procedure 

when more than one procedure is performed in a single operative session. Display of the 

comment indicator “CH” in the column titled “Comment Indicator” indicates a change in 
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payment policy for the item or service, including identifying discontinued HCPCS codes, 

designating items or services newly payable under the ASC payment system, and 

identifying items or services with changes in the ASC payment indicator for CY 2015. 

Display of the comment indicator “NI” in the column titled “Comment Indicator” 

indicates that the code is new (or substantially revised) and that the payment indicator 

assignment is an interim assignment that is open to comment in the final rule with 

comment period. 

 The values displayed in the column titled “Proposed CY 2015 Payment Weight” 

are the proposed relative payment weights for each of the listed services for CY 2015. 

The proposed payment weights for all covered surgical procedures and covered ancillary 

services whose ASC payment rates are based on OPPS relative payment weights were 

scaled for budget neutrality. Therefore, scaling was not applied to the device portion of 

the device-intensive procedures, services that are paid at the MPFS nonfacility 

PE RVU-based amount, separately payable covered ancillary services that have a 

predetermined national payment amount, such as drugs and biologicals and 

brachytherapy sources that are separately paid under the OPPS, or services that are 

contractor-priced or paid at reasonable cost in ASCs. 

 To derive the proposed CY 2015 payment rate displayed in the “Proposed 

CY 2015 Payment Rate” column, each ASC payment weight in the “Proposed CY 2015 

Payment Weight” column was multiplied by the proposed CY 2015 conversion factor of 

$43.918. The conversion factor includes a budget neutrality adjustment for changes in 
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the wage index values and the annual update factor as reduced by the productivity 

adjustment (as discussed in section XII.H.2.b. of this proposed rule). 

 In Addendum BB, there are no relative payment weights displayed in the 

“Proposed CY 2015 Payment Weight” column for items and services with predetermined 

national payment amounts, such as separately payable drugs and biologicals. The 

“Proposed CY 2015 Payment” column displays the proposed CY 2015 national 

unadjusted ASC payment rates for all items and services. The proposed CY 2015 ASC 

payment rates listed in Addendum BB for separately payable drugs and biologicals are 

based on ASP data used for payment in physicians’ offices in April 2014. 

 Addendum E provides the HCPCS codes and short descriptors for surgical 

procedures that are proposed to be excluded from payment in ASCs for FY 2015. 

III. Hospital Outpatient Quality Reporting Program Updates 

A. Background 

1. Overview 

CMS seeks to promote higher quality and more efficient health care for Medicare 

beneficiaries. In pursuit of these goals, CMS has implemented quality reporting 

programs for multiple care settings including the quality reporting program for hospital 

outpatient care, known as the Hospital Outpatient Quality Reporting (OQR) Program, 

formerly known as the Hospital Outpatient Quality Data Reporting Program 

(HOP QDRP). The Hospital OQR Program has generally been modeled after the quality 

reporting program for hospital inpatient services known as the Hospital Inpatient Quality 
CMS-1613-P 473 

Reporting (IQR) Program (formerly known as the Reporting Hospital Quality Data for 

Annual Payment Update (RHQDAPU) Program).

 In addition to the Hospital IQR and Hospital OQR Programs, CMS has 

implemented quality reporting programs for other care settings that provide financial 

incentives for the reporting of quality data to CMS. These additional programs include 

reporting for care furnished by: 

● Physicians and other eligible professionals, under the Physician Quality 

Reporting System (PQRS, formerly referred to as the Physician Quality Reporting 

Program Initiative (PQRI)); 

● Inpatient rehabilitation facilities, under the Inpatient Rehabilitation Facility 

Quality Reporting Program (IRF QRP); 

● Long-term care hospitals, under the Long-Term Care Hospital Quality 

Reporting (LTCHQR) Program; 

● PPS-exempt cancer hospitals, under the PPS-Exempt Cancer Hospital Quality 

Reporting (PCHQR) Program; 

● Ambulatory surgical centers, under the Ambulatory Surgical Center Quality 

Reporting (ASCQR) Program; 

● Inpatient psychiatric facilities, under the Inpatient Psychiatric Facility Quality 

Reporting (IPFQR) Program; 

● Home health agencies, under the Home Health Quality Reporting Program 

(HH QRP); and 

● Hospices, under the Hospice Quality Reporting Program. 
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 In addition, CMS has implemented two value-based purchasing programs, the 

Hospital Value-Based Purchasing (Hospital VBP) Program and the End-Stage Renal 

Disease (ESRD) Quality Incentive Program (QIP), that link payment to performance. 

 In implementing the Hospital OQR Program and other quality reporting 

programs, we have focused on measures that have high impact and support national 

priorities for improved quality and efficiency of care for Medicare beneficiaries as 

reflected in the National Quality Strategy (NQS) and CMS Quality Strategy, as well as 

conditions for which wide cost and treatment variations have been reported, despite 

established clinical guidelines. To the extent possible under various authorizing statutes, 

our ultimate goal is to align the clinical quality measure requirements of our various 

quality reporting programs. As appropriate, we will consider the adoption of measures 

with electronic specifications to enable the collection of this information as part of care 

delivery. 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68467 through 68469) for a discussion on the principles underlying consideration 

for future measures that we intend to use in implementing this and other quality reporting 

programs. 

2. Statutory History of the Hospital OQR Program 

 We refer readers to the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72064 through 72065) for a detailed discussion of the statutory history of the 

Hospital OQR Program. 
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3. Measure Updates and Data Publication 

a. Maintenance of Technical Specifications for Quality Measures 

 CMS maintains technical specifications for previously adopted Hospital OQR 

Program measures. These specifications are updated as we continue to develop the 

Hospital OQR Program. The manuals that contain specifications for the previously 

adopted measures can be found on the QualityNet Web site at: 

https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1196289981244. 

 Many of the quality measures used in Medicare and Medicaid reporting programs 

are endorsed by the National Quality Forum (NQF). We note that not all of the measures 

adopted by the Hospital OQR Program are NQF-endorsed, nor is NQF endorsement a 

program requirement (section 1833(t)(17)(C)(i) of the Act). As part of its regular 

maintenance process for endorsed performance measures, the NQF requires measure 

stewards (owners/developers) to submit annual measure maintenance updates and 

undergo maintenance of endorsement review every 3 years. In the measure maintenance 

process, the measure steward is responsible for updating and maintaining the currency 

and relevance of the measure and will confirm existing or minor specification changes 

with the NQF on an annual basis. The NQF solicits information from measure stewards 

for annual reviews, and it reviews measures for continued endorsement in a specific 

3-year cycle. 

 We note that the NQF’s annual or triennial maintenance processes for endorsed 

measures may result in the NQF requiring updates to measures in order to maintain 
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endorsement status. Other non-NQF measures may undergo maintenance changes as 

well. We believe that it is important to have in place a subregulatory process to 

incorporate nonsubstantive updates into the measure specifications for measures that we 

have adopted for the Hospital OQR Program so that these measure specifications remain 

current. We also recognize that some changes to measures are substantive in nature and 

might not be appropriate for adoption using a subregulatory process. 

 Therefore, in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68469 through 68470) we finalized our proposal to follow the same process for 

updating Hospital OQR Program measures that we adopted for the Hospital IQR Program 

measures, including the subregulatory process for making updates to the adopted 

measures (77 FR 53504 through 53505). This process expanded upon the subregulatory 

process for updating measures that we finalized in the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68766 through 68767). 

b. Public Display of Quality Measures 

 We refer readers to the CY 2014 OPPS/ASC proposed rule (78 FR 43645) for a 

discussion of our policy for the publication of Hospital OQR Program data on the 

Hospital Compare Web site and noninteractive CMS Web sites. 

 We are not proposing any changes to our policies on the public display of quality 

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

Payment Determinations 

 In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68471), we 

finalized a policy that once a quality measure is adopted for the Hospital OQR Program, 

it is retained for use in subsequent years unless otherwise specified. 

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

previously adopted. 

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

1. Considerations in Removing Quality Measures from the Hospital OQR Program 

 In the FY 2010 IPPS/LTCH PPS final rule, we finalized a process for immediate 

retirement, which we later termed “removal” (74 FR 43863), of Hospital IQR Program 

measures based on evidence that the continued use of the measure as specified raised 

patient safety concerns. We adopted the same immediate measure retirement policy for 

the Hospital OQR Program in the CY 2010 OPPS/ASC final rule with comment period 

(74 FR 60634 through 60635). We refer readers to the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68472 through 68473) for a discussion of our reasons for 

changing the term “retirement” to “removal” in the Hospital OQR Program. 

 In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50185), we finalized a set of 

criteria for determining whether to remove measures from the Hospital IQR Program. 

These criteria are: (1) measure performance among hospitals is so high and unvarying 

that meaningful distinctions and improvements in performance can no longer be made 

(“topped-out” measures); (2) performance or improvement on a measure does not result 
CMS-1613-P 478 

in better patient outcomes; (3) a measure does not align with current clinical guidelines or 

practice; (4) the availability of a more broadly applicable (across settings, populations, or 

conditions) measure for the topic; (5) the availability of a measure that is more proximal 

in time to desired patient outcomes for the particular topic; (6) the availability of a 

measure that is more strongly associated with desired patient outcomes for the particular 

topic; and (7) collection or public reporting of a measure leads to negative unintended 

consequences such as patient harm. These criteria were suggested through public 

comment on proposals for the Hospital IQR Program, and we determined that these 

criteria are also applicable in evaluating the Hospital OQR Program quality measures for 

removal. 

 In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68472 through 

68473), we finalized our proposal to apply these measure removal criteria in the Hospital 

OQR Program as well. In addition to the Hospital IQR Program’s criteria, we consider 

eliminating measure redundancy and incorporating the views of the Measures 

Application Partnership (MAP) when evaluating measures for removal. 

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

 In this proposed rule, we are proposing to refine the criteria for determining when 

a measure is “topped-out.” We had previously finalized that a measure is “topped-out” 

when measure performance among hospitals is so high and unvarying that meaningful 

distinctions and improvements in performance can no longer be made (“topped-out” 

measures) (77 FR 68472). We do not believe that measuring hospital performance on 

“topped-out” measures provides meaningful information on the quality of care provided 
CMS-1613-P 479 

by hospitals. We further believe that quality measures, once “topped-out,” represent care 

standards that have been widely adopted by hospitals. We believe such measures should 

be considered for removal from the Hospital OQR Program because their associated 

reporting burden may outweigh the value of the quality information they provide. 

 In order to determine “topped-out” status, we are proposing to apply the following 

two criteria, the first of which was previously adopted by the Hospital VBP Program in 

the Hospital Inpatient VBP Program final rule (76 FR 26496 through 26497). The 

second criterion is a modified version of what was previously adopted by the Hospital 

VBP Program in the above mentioned final rule, with the change from the “less than” 

operator (<) to the “less than or equal to” operator (≤). Specifically, we are proposing 

that a measure under the Hospital OQR Program is “topped-out” when it meets both of 

the following criteria: 

● Statistically indistinguishable performance at the 75th and 90th percentiles; and 

● A truncated coefficient of variation less than or equal to 0.10. 

 To identify if a measure has statistically indistinguishable performance at the 75th 

and 90th percentiles, we would determine whether the difference between the 75th and 

90th percentiles for a measure is within two times the standard error of the full dataset. 

The coefficient of variation (CV) is a descriptive statistic that expresses the standard 

deviation as a percentage of the sample mean; this provides a statistic that is independent 

of the units of observation. Applied to this analysis, a large CV would indicate a broad 

distribution of individual hospital scores, with large and presumably meaningful 

differences between hospitals in relative performance. A small CV would indicate that 
CMS-1613-P 480 

the distribution of individual hospital scores is clustered tightly around the mean value, 

suggesting that it is not useful to draw distinctions among individual hospitals’ measure 

performance. The truncated CV excludes observations whose rates are below the 5th

percentile and above the 95th percentile. We have proposed these same criteria for when 

we would consider a measure to be “topped-out” for the Hospital VBP Program 

(79 FR 28119) and the Hospital IQR Program (79 FR 28219), and we are also proposing 

them for the ASCQR Program in section XIV.B.3. of this proposed rule. 

 We invite public comment on this proposal. 

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

Payment Determination and Subsequent Years 

 We are proposing to remove three measures for the CY 2017 payment 

determination and subsequent years: OP-4, OP-6, and OP-7. Based on our analysis of 

Hospital OQR Program chart-abstracted measure data for January 1, 2013 – June 

30, 2013 (Q1-Q2) encounters, the following measures meet both: (1) the previously 

finalized criteria for being “topped-out,” that is, measure performance among hospitals is 

so high and unvarying that meaningful distinctions and improvements in performance can 

no longer be made (77 FR 68472), and (2) the two criteria we are proposing in 

section XIII.C.2. of this proposed rule for determining “topped-out” status. These 

measures are: 

● OP-4: Aspirin at Arrival (NQF # 0286); 

● OP-6: Timing of Antibiotic Prophylaxis; and 

● OP-7: Prophylactic Antibiotic Selection for Surgical Patients (NQF # 0528). 
CMS-1613-P 481 

 Therefore, we are proposing to remove these three measures from the Hospital 

OQR Program beginning with the CY 2017 payment determination. 

 We believe that removal is appropriate as there is little room for improvement for 

these measures, all of which address standard clinical care. In addition, by removing 

these measures, we would alleviate the maintenance costs and administrative burden to 

hospitals associated with retaining them. Should we determine that hospital adherence to 

these practices has unacceptably declined, we would repropose these measures in future 

rulemaking. In addition, we would comply with any requirements imposed by the 

Paperwork Reduction Act before reinstituting these measures. We have also proposed to 

remove three measures under the Hospital IQR Program that are similar to these 

measures. We note that the similar measures are called AMI-1, SCIP-Inf-1, and 

SCIP-Inf-2, respectively, in the Hospital IQR Program and that we proposed to retain 

SCIP-Inf-1 and SCIP-Inf-2 as voluntarily reported electronic clinical quality measures 

(79 FR 28219 through 28220 and 79 FR 29242). 

 We invite public comment on these proposals. 

Hospital OQR Program Measures Proposed for Removal for the CY 2017 Payment 

Determination and Subsequent Years 

NQF # 

Measure 

0286 OP-4: Aspirin at Arrival 

N/A OP-6: Timing of Prophylactic Antibiotics 

0528 OP-7: Prophylactic Antibiotic Selection for Surgical Patients 
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D. Quality Measures Previously Adopted for the CY 2016 Payment Determination and 

Subsequent Years 

 As previously discussed, in the CY 2013 OPPS/ASC final rule with comment 

period (77 FR 68471), we finalized a policy that, beginning CY 2013, when we adopt 

measures for the Hospital OQR Program, these measures are automatically adopted for 

all subsequent years’ payment determinations, unless we propose to remove, suspend, or 

replace the measures. The table below lists 27 measures that we adopted for the CY 2016 

payment determination and subsequent years under the Hospital OQR Program. 

Hospital OQR Program Measure Set Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

NQF# Measure Name 

N/A OP-1: Median Time to Fibrinolysis 

0288 OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival  

0290 OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention 

0286 OP-4: Aspirin at Arrival**  

0289 OP-5: Median Time to ECG 

N/A OP-6: Timing of Prophylactic Antibiotics ** 

 0528 OP-7: Prophylactic Antibiotic Selection for Surgical Patients** 

0514 OP-8: MRI Lumbar Spine for Low Back Pain 

N/A OP-9: Mammography Follow-up Rates 

N/A OP-10: Abdomen CT – Use of Contrast Material 

0513 OP-11: Thorax CT – Use of Contrast Material 

N/A OP-12: The Ability for Providers with HIT to Receive Laboratory Data 

Electronically Directly into their ONC-Certified EHR System as Discrete 

Searchable Data 

0669 OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac 

Low Risk Surgery 

N/A 

OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT) 

N/A OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache 
CMS-1613-P 483 

Hospital OQR Program Measure Set Previously Adopted for the CY 2016 Payment 

Determination and Subsequent Years 

NQF# Measure Name 

N/A OP-17: Tracking Clinical Results between Visits 

0496 OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients 

N/A OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional 

0662 OP-21: Median Time to Pain Management for Long Bone Fracture 

N/A OP-22: ED- Left Without Being Seen**** 

0661 OP-23: ED- Head CT or MRI Scan Results for Acute Ischemic Stroke or 

Hemorrhagic Stroke who Received Head CT or MRI Scan Interpretation 

Within 45 minutes of Arrival 

N/A OP-25: Safe Surgery Checklist Use 

N/A OP-26: Hospital Outpatient Volume on Selected Outpatient Surgical 

Procedures* 

0431 OP-27: Influenza Vaccination Coverage among Healthcare Personnel 

0658 OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients 

0659 OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with 

a History of Adenomatous Polyps – Avoidance of Inappropriate Use 

1536 OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery*** 

* OP-26: Procedure categories and corresponding HCPCS codes are located at: 

http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobhe

ader=multipart%2Foctet-stream&blobheadername1=ContentDisposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata

&blobtable=MungoBlobs. 

** Measures we are proposing for removal beginning with the CY 2017 payment determination in 

section XIII.C.3. of this proposed rule. 

*** Measure we are proposing for voluntary data collection in section XIII.D.3.b. of this proposed rule. 

  Name has been updated to correspond with NQF-endorsed name. 

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

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

Determination and Subsequent Years 

 The Influenza Vaccination Coverage among Healthcare Personnel (HCP) 

(NQF # 0431) was finalized for the Hospital OQR Program in the CY 2014 OPPS/ASC 
CMS-1613-P 484 

final rule with comment period (78 FR 75097 through 75100). We refer readers to the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75116 through 75117) for a 

discussion of the previously finalized data submission requirements for this measure. 

This measure was previously finalized for the Hospital IQR Program in the FY 2012 

IPPS/LTCH PPS final rule (76 FR 51636). In this proposed rule, we are making two 

clarifications: (1) correcting the previously stated submission deadline; and (2) clarifying 

that hospitals should report the Influenza Vaccination Coverage among HCP 

(NQF # 0431) measure by CMS Certification Number (CCN) rather than separately 

reporting for both the inpatient and outpatient setting. 

a. Clarification of Submission Deadline and Data Submitted 

 We note that there was a typographical error in our discussion in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 75116 through 75117); and we are 

proposing to remedy that error through this proposed rule. Specifically, we finalized that 

the first deadline for hospitals to submit NHSN HAI measure data would be 

“May 15, 2015 with respect to the October 1, 2015 through March 31, 2015 encounter 

period” (78 FR 75117). We are clarifying here that the beginning of the encounter period 

should be “October 1, 2014” instead of “October 1, 2015.” In addition, we are clarifying 

here that the data to be submitted are more specifically referred to as “health care 

personnel influenza vaccination summary reporting data” instead of “HAI measure data.” 

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

 We received public comment about the burden of separately collecting HCP 

influenza vaccination status for both the hospital inpatient and outpatient settings. We 
CMS-1613-P 485 

believe that reporting a single vaccination count for each health care facility enrolled in 

NHSN will be less burdensome to facilities. Therefore, in response to these concerns, we 

collaborated with CDC to clarify in an Operational Guidance document, that beginning 

with the 2014-2015 influenza season (CY 2014 reporting period and CY 2016 payment 

determination), facilities should collect and report a single vaccination count for each 

health care facility by CNN, instead of separately reporting by inpatient or outpatient 

setting. We are clarifying here that facilities will report data to NHSN by enrolled 

facility. CDC will then submit the data on behalf of the facilities by CNN. The CDC 

also has produced an Operational Guidance document regarding reporting for this 

measure, which can be found at: http://www.cdc.gov/nhsn/PDFs/HCP/OperationalGuidance-ACH-HCP-Flu.pdf. 

 Reporting data in this way will allow health care facilities with multiple care 

settings to simplify data collection and submit a single count applicable across the 

inpatient and outpatient settings. We will then publicly report the percentage of HCP 

who received an influenza vaccination per CCN. This single count per CCN will inform 

the public of the percentage of vaccinated HCP at a particular healthcare facility, which 

would still provide meaningful data and help to improve the quality of care. Specific 

details on data submission for this measure can be found at: 

http://www.cdc.gov/nhsn/acute-care-hospital/hcp-vaccination/ and at: 

http://www.cdc.gov/nhsn/acute-care-hospital/index.html. 

 This clarification regarding the reporting of a single count applicable across the 

inpatient and outpatient settings was also noted in the FY 2015 IPPS/LTCH PPS 
CMS-1613-P 486 

proposed rule for the Hospital IQR Program (79 FR 28221). We note that, in that rule, 

we refer to reporting specifically by CNN rather than by “enrolled facility”. 

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

 In the CY 2014 OPPS/ASC final rule with comment period, we adopted OP-29: 

Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for Normal Colonoscopy 

in Average Risk Patients (NQF # 0558) (78 FR 75102) and OP-30: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps – 

Avoidance of Inappropriate Use (NQF # 0659) (78 FR 75102), both chart-abstracted 

measures, and proposed that aggregate data would be collected via an online Web-based 

tool (the QualityNet Web site) beginning with the CY 2016 payment determination. We 

finalized that, for the CY 2016 payment determination, hospitals would be required to 

submit aggregate-level encounter data between July 1, 2015 and November 1, 2015 for 

data collected during January 1, 2014 – December 31, 2014 (78 FR 75114 through 

75115). 

 On December 31, 2013, we issued guidance stating that we would delay the 

implementation of OP-29 and OP-30 for 3 months for the CY 2016 payment 

determination, changing the encounter period from January 1, 2014 – December 31, 2014 

to April 1, 2014 – December 31, 2014 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1228721506778). The data submission window for data collected 

from April 1, 2014 – December 31, 2014 is still July 1, 2015 – November 1, 2015. The 

data submission windows and the encounter periods for subsequent years remains as 
CMS-1613-P 487 

previously finalized (78 FR 75114); hospitals are to submit Web-based data between July 

1 and November 1 of the year prior to a payment determination with respect to the 

encounter period of January 1 to December 31 of 2 years prior to a payment 

determination year. 

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

Following Cataract Surgery 

 In the CY 2014 OPPS/ASC final rule with comment period, we adopted OP-31 

Cataracts – Improvement in Patient’s Visual Function within 90 Days Following Cataract 

Surgery (NQF # 1536) for the CY 2016 payment determination and subsequent years 

(78 FR 75103). This measure assesses the rate of patients 18 years and older (with a 

diagnosis of uncomplicated cataract) in a sample who had improvement in visual function 

achieved within 90 days following cataract surgery based on completing both a 

pre-operative and post-operative visual function survey. 

 In this proposed rule, we are: (1) correcting our response to public comments, 

(2) noting our decision to delay data collection for the CY 2016 payment determination, 

and, (3) proposing voluntary data collection for the CY 2017 payment determination and 

subsequent years for OP-31: Cataracts: Improvement in Patient’s Visual Function within 

90 Days Following Cataract Surgery (NQF # 1536). 

a. Correction of Response to Public Comments 

In the CY 2014 OPPS/ASC final rule with comment period, we stated in response 

to commenters concerned that the proposed chart-abstracted measures had not been 

field-tested, that, “all three measures that we are finalizing . . . were field-tested in the 
CMS-1613-P 488 

HOPD facility setting by the measure stewards. These three measures are: 

(1) Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 

Colonoscopy in Average Risk Patients (NQF # 0658); (2) Endoscopy/Polyp Surveillance: 

Colonoscopy Interval for Patients with a History of Adenomatous Polyps – Avoidance of 

Inappropriate Use (NQF # 0659); and (3) [OP-31] Cataracts: Improvement in Patient’s 

Visual Function within 90 Days Following Cataract Surgery (NQF # 1536)” 

(78 FR 75099 through 75100). 

 We inadvertently misstated that the OP-31: Cataracts: Improvement in Patient’s 

Visual Function within 90 Days Following Cataract Surgery (NQF # 1536) had been 

field-tested in the HOPD setting, and we are clarifying here that this measure has not 

been field-tested in that setting. We note that in considering and selecting this measure, 

however, we took into account other principles or factors, including: NQS goals, type of 

measure, HHS Strategic Plan and Initiatives, NQF endorsement, MAP support, 

stakeholder input, alignment with quality goals and settings, relevance, utility and 

burden. More information about these principles can be found in the CY 2014 

OPPS/ASC final rule with comment period (78 FR 43643 through 43644 and 75090 

through 75091). 

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

Payment Determination Measure Set 

 Since our adoption of this measure, we have come to believe that it may be 

operationally difficult for hospitals to collect and report this measure. Specifically, we 

are concerned that the results of the survey used to assess the pre-operative and post-
CMS-1613-P 489 

operative visual function of the patient may not be shared across clinicians, making it 

difficult for hospitals to have knowledge of the visual function of the patient before and 

after surgery. 

 We are also concerned about the use of inconsistent surveys to assess visual 

function; the measure specifications allow for the use of any validated survey and results 

may be inconsistent should clinicians use different surveys. Therefore, on 

December 31, 2013, we issued guidance stating that we would delay the implementation 

of OP-31 by 3 months from January 1, 2014 to April 1, 2014 for the CY 2016 payment 

determination 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1228721506778). Because of continuing concerns, on 

April 2, 2014, we issued additional guidance stating that we would further delay the 

implementation of the measure from April 1, 2014 to January 1, 2015 for the CY 2016 

payment determination 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1228721506778). Therefore, we are proposing to exclude OP-31 

Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract 

Surgery (NQF # 1536) from the CY 2016 payment determination measure set. We will 

not subject hospitals to a payment reduction with respect to this measure for the CY 2016 

payment determination. 

 We invite comment on this proposal. 
CMS-1613-P 490 

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

Determination and Subsequent Years 

 We continue to believe that this measure addresses an area of care that is not 

adequately addressed in our current measure set and that the measure serves to drive 

coordination of care (78 FR 75103). Further, we believe that HOPDs should be a partner 

in care with physicians and other clinicians using their facility, and this measure provides 

an opportunity to do so. Therefore, we are continuing to include this measure in the 

Hospital OQR Program measure set, but we are proposing that hospitals have the option 

to voluntarily collect and submit OP-31 data for the CY 2015 encounter period/CY 2017 

payment determination and subsequent years. Further, we will not subject hospitals to a 

payment reduction with respect to this measure during the period of voluntary reporting. 

For hospitals that choose to voluntarily submit data, we would request that they submit 

such data using the means and timelines finalized in the CY 2014 OPPS/ASC final rule 

with comment period (78 FR 75112 through 75113). Data submitted voluntarily will be 

publicly reported as discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 43645)

and final rule (78 FR 75092). 

 We invite public comment on this proposal. 

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

Subsequent Years 

 We are proposing to adopt one new claims-based measure into the Hospital OQR 

Program for the CY 2017 payment determination and subsequent years: OP-32: Facility 

7-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy. 
CMS-1613-P 491 

Colonoscopy is one of the most frequently performed procedures in the outpatient setting 

in the United States.1

 The most recent data available indicate that, in 2002 alone, 

physicians performed an estimated 14 million colonoscopies in the United States.2

 

Colonoscopies are associated with a range of well-described and potentially preventable 

adverse events that can lead to hospital visits, repeat procedures, or surgical intervention 

for treatment, including colonic perforation, gastrointestinal (GI) bleeding, and 

cardiopulmonary events such as hypoxia, aspiration pneumonia, and cardiac arrhythmias. 

While hospital visits are generally unexpected after outpatient colonoscopy, the literature 

suggests that the majority of these visits occur within the first 7 days.3,4,5 Reported 

hospital visit rates after outpatient colonoscopy range from 0.8 to 1.0 percent at 7 to 14 

days post procedure, and from 2.4 to 3.8 percent at 30 days post procedure.6,7,8 Some 

adverse events such as bleeding occur after the 7th day, but based on input from clinical 

experts, public comment, and empirical analyses, we concluded that unplanned hospital 

visits within 7 days is the optimal outcome to ensure capture of procedure-related adverse 

 

1

 Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based Ambulatory Surgery, 2007: Statistical Brief 

#86. Healthcare Cost and Utilization Project (HCUP) Statistical Briefs. Rockville (MD)2006. 2

 Seeff LC, Richards TB, Shapiro JA, et al. How many endoscopies are performed for colorectal cancer 

screening? Results from CDC's survey of endoscopic capacity. Gastroenterology. Dec 

2004;127(6):1670-1677. 

3

 Rathgaber SW, Wick TM. Colonoscopy completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 2006; 64:556-62. 4

 Rabeneck L, Saskin R, Paszat LF. Onset and clinical course of bleeding and perforation after outpatient 

colonoscopy: a population-based study. Gastrointest Endosc. 2011; 73:520-3. 5

 Ko CW, Riffle S, Michael L, et al. Serious complications within 30 days of screening and surveillance 

colonoscopy are uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73. 6

 Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor complications and time lost from normal 

activities after screening or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;65(4):648-656. 7

 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 8

 Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A, Brooks R. Is there a relationship 

between physician and facility volumes of ambulatory procedures and patient outcomes? J Ambul Care 

Manage. Oct-Dec 2008;31(4):354-369. 
CMS-1613-P 492 

events and to minimize capture of hospital visits unrelated to the procedure. This 

measure provides the opportunity for providers to improve quality of care and to lower 

the rates of adverse events leading to hospital visits after outpatient colonoscopy; this will 

encourage providers to achieve the outcome rates of the best performers. 

 We believe it is important to reduce adverse patient outcomes associated with 

preparation for colonoscopy, the procedure itself, and follow-up care. Therefore, we are 

proposing to include OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy, which is based on Medicare FFS claims, in the Hospital OQR 

Program for the CY 2017 payment determination and subsequent years. We expect the 

measure would promote improvement in patient care over time because transparency in 

publicly reporting measure scores will make patient unplanned hospital visits (emergency 

department visits, observation stays, and inpatient admissions) following colonoscopies 

more visible to providers and patients and encourage providers to incorporate quality 

improvement activities in order to reduce these visits. Providers are often unaware of 

complications following colonoscopy for which patients visit the hospital.9

 This riskstandardized quality measure will address this information gap and promote quality 

improvement by providing feedback to facilities and physicians, as well as transparency 

for patients on the rates and variation across facilities in unplanned hospital visits after 

colonoscopy. 

 The outcome measured in the OP-32 measure is all-cause, unplanned hospital 

visits (admissions, observation stays, and emergency department visits) within 7 days of 

 

9

 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 
CMS-1613-P 493 

an outpatient colonoscopy procedure. The measure score, also referred to as the facilitylevel risk-standardized hospital visit rate, is derived from the calculation of the ratio of 

the numerator to the denominator multiplied by the crude rate. The numerator is the 

number of predicted (meaning adjusted actual) hospital visits, which is the number of 

unplanned hospital visits within seven days of colonoscopy that the facility is predicted to 

have based on its case-mix. The denominator is the number of expected hospital visits,

which is the number of unplanned hospital visits the facility is expected to have based on 

the nation’s performance with the facility’s case-mix. The crude rate is the national 

unadjusted number of patients who had a hospital visit post-colonoscopy among all 

patients who had a colonoscopy. 

 Based on discussions with clinical and technical panel experts, the measure 

excludes colonoscopies for patients undergoing concomitant high-risk upper GI 

endoscopy because these patients are at a higher risk for hospital visits than patients 

undergoing a typical colonoscopy, and patients with a history of inflammatory bowel 

disease (IBD) or diverticulitis in the year preceding the colonoscopy because we likely 

could not fully characterize and adjust for their pre-procedure risk of needing a postprocedure hospital visit or identify whether these admissions are planned or unplanned. 

The measure also excludes procedures for patients who lack continuous enrollment in 

Medicare FFS Parts A and B in the 1 month after the procedure to ensure all patients have 

complete data available for outcome assessment. The statistical risk adjustment model 

includes 15 clinically relevant risk-adjustment variables that are strongly associated with 

risk of hospital visits within 7 days following colonoscopy. Additional methodology 
CMS-1613-P 494 

details and information obtained from public comments for measure development are 

available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/HospitalQualityInits/Measure-Methodology.html under “Hospital Outpatient 

Colonoscopy.” 

 Section 1890A(a)(2) of the Act outlines the pre-rulemaking process established 

under section 1890A of the Act, which requires the Secretary to make available to the 

public by December 1 of each year a list of quality and efficiency measures that the 

Secretary is considering. This measure was included on a publicly available document 

titled “MAP Pre-Rulemaking Report: 2014 Recommendations on Measures for More 

than 20 Federal Programs” on the NQF Web site at: 

http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Feder

al_Programs.aspx (formerly referred to as the “List of Measures Under Consideration”) 

in compliance with section 1890A(a)(2) of the Act. (We note that at the time the measure 

was listed on the “MAP Pre-Rulemaking Report: 2014 Recommendations on Measures 

for More than 20 Federal Programs,” it was named “High-Acuity Care Visits after 

Outpatient Colonoscopy Procedure”). 

 The MAP, which represents stakeholder groups, conditionally supported the 

measure, “noting the need to provide outcome information to inform consumer decisions 

and drive quality improvement.” The MAP further stated that “[t]his measure addresses 

an important quality and safety issue with incidence of these events ranging from 10 to 

22 per 1,000 after risk adjustment.” The MAP, however, also “recognized the need for 
CMS-1613-P 495 

the measure to be further developed and gain NQF endorsement. [The] MAP expects the 

endorsement process to resolve questions of the reliability and validity of the measure as 

well as with the accuracy of the algorithm for attributing claims data in light of possible 

effects of the Medicare 3-day payment window policy.” As required under 

section 1890A(a)(4) of the Act, we considered the input and recommendations provided 

by the MAP in selecting measures to propose for the Hospital OQR Program.

 We believe we have addressed the concerns raised by the MAP to the extent 

possible. The measure is well defined and precisely specified for consistent 

implementation within and between organizations that will allow for comparability. 

Reliability testing demonstrated the measure data elements produced were repeatable; 

that is, the same results were produced a high proportion of the time when assessed in the 

same population in the same time period. Validity testing demonstrated that the measure 

data elements produce measure scores that correctly reflect the quality of care provided 

and that adequately identify differences in quality. In order to ensure the accuracy of the 

algorithm for attributing claims data and the comprehensive capture of HOPD 

colonoscopies potentially affected by the policy, we identified physician claims for 

colonoscopy in the HOPD setting from the Medicare Part B Standard Analytical Files 

(SAF) with an inpatient admission within three days and lacking a corresponding HOPD 

facility claim. We then attribute the colonoscopies identified as affected by this policy to 

the appropriate HOPD facility using the facility provider ID from the inpatient claim. 

 Section 1833(t)(17)(C)(i) of the Act states that, “The Secretary shall develop 

measures . . . that reflect consensus among affected parties and, to the extent feasible and 
CMS-1613-P 496 

practicable, shall include measures set forth by one or more national consensus building 

entities.” We believe that this proposed measure reflects consensus among the affected 

parties, because the MAP, which represents stakeholder groups, reviewed, conditionally 

supported the measure, and stated that it “would provide valuable outcome information to 

inform consumer decision and drive quality improvement.” Further, the measure was 

subject to public comment during the MAP and measure development processes, with 

some public commenters agreeing with the MAP’s conclusions on the measure (p. 184, 

MAP Report, January 2014; 

http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal

_Programs.aspx). We also note that the measure was submitted to NQF for endorsement 

on February 21, 2014. 

 Currently, there are no publicly available quality of care reports for providers or 

facilities that conduct outpatient colonoscopies. Thus, adoption of this measure provides 

an opportunity to enhance the information available to patients choosing among providers 

who offer this elective procedure. We believe this measure would reduce adverse patient 

outcomes associated with preparation for colonoscopy, the procedure itself, and 

follow-up care by capturing and making more visible to providers and patients all 

unplanned hospital visits following the procedure. Further, providing outcome rates to 

providers will make visible to clinicians meaningful quality differences and encourage 

improvement. Although this measure is not NQF-endorsed, it is currently undergoing the 

endorsement process, as noted above. Thus, we believe the statutory requirement for 
CMS-1613-P 497 

included measures to have, to the extent feasible and practicable, been set forth by a 

national consensus-building entity has been met by the measure being proposed for 

adoption. 

 We invite public comment on the proposal to include the following measure in the 

Hospital OQR Program for the CY 2017 payment determination and subsequent years. 

NQF # Proposed Measure for the CY 2017 Payment Determination and 

Subsequent Years 

Pending OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy 

 The proposed and previously finalized measures are listed below.

Proposed Hospital OQR Program Measure Set for the CY 2017 Payment 

Determination and Subsequent Years 

NQF # Measure Name 

N/A OP-1: Median Time to Fibrinolysis 

0288 OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival** ** 

0290 OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention 

0289 OP-5: Median Time to ECG 

0514 OP-8: MRI Lumbar Spine for Low Back Pain 

N/A OP-9: Mammography Follow-up Rates 

N/A OP-10: Abdomen CT – Use of Contrast Material 

0513 OP-11: Thorax CT – Use of Contrast Material 

N/A OP-12: The Ability for Providers with HIT to Receive Laboratory Data 

Electronically Directly into their ONC-Certified EHR System as Discrete 

Searchable Data 

0669 OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non Cardiac 

Low Risk Surgery 

N/A 

OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT) 

N/A OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache 
CMS-1613-P 498 

Proposed Hospital OQR Program Measure Set for the CY 2017 Payment 

Determination and Subsequent Years 

NQF # Measure Name 

N/A OP-17: Tracking Clinical Results between Visits 

0496 OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients 

N/A OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional 

0662 OP-21: Median Time to Pain Management for Long Bone Fracture 

N/A OP-22: ED- Left Without Being Seen**** 

0661 OP-23: ED- Head CT or MRI Scan Results for Acute Ischemic Stroke or 

Hemorrhagic Stroke who Received Head CT or MRI Scan Interpretation 

Within 45 minutes of Arrival 

N/A OP-25: Safe Surgery Checklist Use 

N/A OP-26: Hospital Outpatient Volume on Selected Outpatient Surgical 

Procedures* 

0431 OP-27: Influenza Vaccination Coverage among Healthcare Personnel 

0658 OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients 

0659 OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients 

with a History of Adenomatous Polyps – Avoidance of Inappropriate Use 

1536 OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 

Days Following Cataract Surgery** 

N/A OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy*** 

* OP-26: Procedure categories and corresponding HCPCS codes are located at: 

http://qualitynet.org/dcs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1228889963089&blobhe

ader=multipart%2Foctet-stream&blobheadername1=ContentDisposition&blobheadervalue1=attachment%3Bfilename%3D1r_OP26MIF_v+6+0b.pdf&blobcol=urldata

&blobtable=MungoBlobs.

** Measure we are proposing for voluntary data collection in section XIII.D.3.b. of this proposed rule. 

*** New measure proposed for the CY 2017 payment determination and subsequent years. 

**** Name has been updated to correspond with NQF-endorsed name. 

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

 The current measure set for the Hospital OQR Program includes measures that 

assess process of care, imaging efficiency patterns, care transitions, ED throughput 

efficiency, the use of health information technology (health IT), care coordination, patient 

safety, and volume. For future payment determinations, we are considering expanding 
CMS-1613-P 499 

these measure areas and creating measures in new areas. Specifically, we are exploring 

(1) electronic clinical quality measures; (2) partial hospitalization measures; 

(3) behavioral health measures; and (4) other measures that align with the National 

Quality Strategy and the CMS Quality Strategy domains. 

1. Electronic Clinical Quality Measures 

 HHS believes all patients, their families, and their healthcare providers should 

have consistent and timely access to their health information in a standardized format that 

can be securely exchanged between the patient, providers, and others involved in the 

patient’s care. (HHS August 2013 Statement, “Principles and Strategies for Accelerating 

Health Information Exchange.” 

(http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf)) The 

Department is committed to accelerating health information exchange (HIE) through the 

use of electronic health records (EHRs) and other types of health information technology 

(health IT) across the broader care continuum through a number of initiatives 

including: (1) alignment of incentives and payment adjustments to encourage provider 

adoption and optimization of health IT and HIE services through Medicare and Medicaid 

payment policies; (2) adoption of common standards and certification requirements for 

interoperable health IT; (3) support for privacy and security of patient information across 

all HIE-focused initiatives; and (4) governance of health information networks. 

 More information on the governance of health information networks and its role 

in facilitating interoperability of health information systems can be found at: 

http://www.healthit.gov/sites/default/files/ONC10yearInteroperabilityConceptPaper.pdf. 
CMS-1613-P 500 

 These initiatives are designed to encourage HIE among health care providers, 

including professionals and hospitals eligible for the Medicare and Medicaid EHR 

Incentive Programs as well as those who are not eligible for those programs, and are 

designed to improve care delivery and coordination across the entire care continuum. For 

example, the Transition of Care Measure #2 in Stage 2 of the Medicare and Medicaid 

EHR Incentive Programs requires HIE to share summary records for more than 

10 percent of care transitions. In addition, to increase flexibility in the Office of the 

National Coordinator for Health Information Technology’s (ONC’s) health IT 

Certification Program and expand health IT certification, ONC has issued a proposed rule 

concerning a voluntary 2015 Edition of EHR certification criteria, which would more 

easily accommodate the certification of health IT used in health care settings where 

health care providers are not typically eligible for incentive payments under the EHR 

Incentive Programs, to facilitate greater HIE across the entire care continuum. 

 We believe that HIE and the use of certified EHRs can effectively and efficiently 

help providers improve internal care delivery practices, support management of patient 

care across the continuum, and support the reporting of electronically specified clinical 

quality measures (eCQMs). More information on the Voluntary 2015 Edition EHR 

Certification Criteria proposed rule can be found at: http://healthit.gov/policyresearchers-implementers/standards-and-certification-regulations. 

 We anticipate that as electronic health records (EHR) technology evolves and 

more infrastructure is operational, we will begin to accept electronic reporting of many 

measures from EHR technology certified under the ONC health IT Certification Program. 
CMS-1613-P 501 

We are working diligently toward this goal. We believe that this progress would 

significantly reduce the administrative burden on hospitals under the Hospital OQR 

Program to report chart-abstracted measures. We recognize that considerable work needs 

to be done by measure owners and health IT developers and implementers to make this 

possible with respect to the clinical quality measures targeted for electronic specifications 

(e-specifications). This work includes completing e-specifications for measures, pilot 

testing, reliability and validity testing, and implementing such specifications in certified 

EHR technology to capture and calculate the results. 

2. Partial Hospitalization Program Measures 

 We seek to develop a comprehensive set of quality measures to be available for 

widespread use for informed decision-making and quality improvement in the hospital 

outpatient setting. Therefore, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75106), we stated that, through future rulemaking, we intend to propose new 

measures that help us further our goal of achieving better health care and improved health 

for Medicare beneficiaries who receive health care in hospital outpatient settings, such as 

partial hospitalization programs (PHPs) that are part of HOPDs. 

 Partial hospitalization is an intensive outpatient program of psychiatric services 

provided to patients as an alternative to inpatient psychiatric care for individuals who 

have acute mental illness. The PHP was designed to assist individuals with acute 

psychiatric illness in managing debilitating symptoms and prevent the need for 

hospitalization or re-hospitalization. Behavioral health treatments and services have 

improved and evolved through medication advances, recovery-based therapy, and 
CMS-1613-P 502 

evidenced-based interventions, including peer supports. PHP services have had the 

opportunity to evolve to provide individuals with a unique setting that can contribute to 

maintaining social and community connectivity while focusing on sustained recovery to 

prevent initial hospitalization during a given episode and subsequent re-hospitalization. 

Currently, the Hospital OQR Program has not adopted measures applicable to PHPs. 

 Although we believe that the PHP is an important program offering an alternative 

to inpatient stays, we note that PHP utilization has been declining.10 Therefore, as we 

consider implementing PHP measures in future years, we invite public comment 

regarding the utility of including measures for this care setting in the Hospital OQR 

Program. 

 We specifically request public comment on three PHP measures we submitted to 

the MAP for consideration as part of the “MAP Pre-Rulemaking Report: 2014 

Recommendations on Measures for More than 20 Federal Programs” 

(http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partn

ership.aspx (formerly referred to as the “List of Measures Under Consideration”)): 

● 30-Day Readmission; 

● Group Therapy; and 

● No Individual Therapy. 

 These measures are included in the Program for Evaluating Payment Patterns 

Electronic Reports (PEPPERs) developed under the Comprehensive Error Rate Testing 

(CERT) Program. Further information on these claims-based measures that provide 

 

10 http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/Reports/downloads/Leung_PHP_PPS_2010.pdf. 
CMS-1613-P 503 

indicators of quality of care can be found at 

http://www.pepperresources.org/LinkClick.aspx?fileticket=stK9uUmQWlM%3d&tabid=

148.

 We also request public input on other possible quality measures for partial 

hospitalization services for inclusion in the Hospital OQR Program in future years. 

3. Behavioral Health Measures 

 In addition to PHP measures, we are considering other measures specific to 

behavioral health in the outpatient setting, including measures addressing depression and 

alcohol abuse. Major depression is a leading cause of disability in the United States, 

complicates the treatment of other serious illnesses, and is associated with an increased 

risk of suicide. Major depression is a common mental health condition, affecting 6 to 9 

percent of those over 55 years of age.11 Along with other serious mental health 

conditions, it has a higher Medicare inpatient readmission rate than all other conditions 

with the exception of heart failure.12 Alcohol use disorders are the most prevalent type of 

addictive disorder in individuals ages 65 and over.13 Roughly 6 percent of the elderly are 

considered to be heavy users of alcohol.14 Alcohol abuse is often associated with 

depression and contributes to the etiology of serious medical conditions, including liver 

disease and coronary heart disease. Because of the prevalence of depression and alcohol 

 

11 O’Connor E, Whitlock E, Beil T, et al. Screening for depression in adult patients in primary care 

settings: a systematic evidence review. Annals of Internal Medicine 2009 December 1:151(11):793-803. 12 Stephen F. Jencks, M.D., M.P.H., Mark V. Williams, M.D.,and Eric A. Coleman, M.D., M.P.H. 

Rehospitalizations among Patients in the Medicare Fee-for-Service Program. N Engl J Med 

2009;360:1418-28. 

13 Stephen Ross. Alcohol Use Disorders in the Elderly. Psychiatry Weekly (no date) Available at: 

http://www.psychweekly.com/aspx/article/ArticleDetail.aspx?articleid=19. 14 AL Mirand and JW Welte. Alcohol consumption among the elderly in a general population, Erie 

County, New York. Am J Public Health. 1996 July; 86(7): 978–984. 
CMS-1613-P 504 

abuse and their impact on the Medicare population, we believe that we should consider 

measures in these and other behavioral health areas for use in future Hospital OQR 

Program payment determination years. Therefore, we invite public comment on 

measures applicable to these areas that would be suitable for the Hospital OQR Program. 

4. National Quality Strategy and CMS Quality Strategy Measure Domains 

 In considering future Hospital OQR Program measures, we are focusing on the 

following National Quality Strategy and CMS Quality Strategy measure domains: 

making care safer, strengthen person and family engagement, promote effective 

communication and coordination of care, promote effective prevention and treatment, 

work with communities to promote best practices of healthy living, and make care 

affordable. We believe measures in these areas will promote better care and align 

measures across multiple CMS quality programs, in particular, the Hospital OQR, 

Hospital IQR, and ASCQR Programs. 

 We invite public comment on these possible measures. 

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

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

1. Background 

 Section 1833(t)(17) of the Act, which applies to subsection (d) hospitals (as 

defined under section 1886(d)(1)(B) of the Act), states that hospitals that fail to report 

data required to be submitted on the measures selected by the Secretary, in the form and 

manner, and at a time, required by the Secretary will incur a 2.0 percentage point 

reduction to their Outpatient Department (OPD) fee schedule increase factor; that is, the 
CMS-1613-P 505 

annual payment update factor. Section 1833(t)(17)(A)(ii) of the Act specifies that any 

reduction applies only to the payment year involved and will not be taken into account in 

computing the applicable OPD fee schedule increase factor for a subsequent payment 

year. 

 The application of a reduced OPD fee schedule increase factor results in reduced 

national unadjusted payment rates that apply to certain outpatient items and services 

provided by hospitals that are required to report outpatient quality data in order to receive 

the full payment update factor and that fail to meet the Hospital OQR Program 

requirements. Hospitals that meet the reporting requirements receive the full OPPS 

payment update without the reduction. For a more detailed discussion of how this 

payment reduction was initially implemented, we refer readers to the CY 2009 

OPPS/ASC final rule with comment period (73 FR 68769 through 68772). 

 The national unadjusted payment rates for many services paid under the OPPS 

equal the product of the OPPS conversion factor and the scaled relative payment weight 

for the APC to which the service is assigned. The OPPS conversion factor, which is 

updated annually by the OPD fee schedule increase factor, is used to calculate the OPPS 

payment rate for services with the following status indicators (listed in Addendum B to 

this proposed rule, which is available via the Internet on the CMS Web site): “P,” “Q1,” 

“Q2,” “Q3,” “R,” “S,” “T,” “V,” or “U.” We note that we are proposing to delete status 

indicator “X”’ as described in sections II.A.3. and X. of this proposed rule. We also note 

that we are proposing to develop status indicator “J1” as part of our comprehensive APC 

policy, effective for CY 2015, discussed in section II.A.2.e. of the CY 2014 OPPS/ASC 
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final rule with comment period (78 FR 74861 through 74910) and section II.A.2.e. of this 

proposed rule. Payment for all services assigned to these status indicators will be subject 

to the reduction of the national unadjusted payment rates for hospitals that fail to meet 

Hospital OQR Program requirements, with the exception of services assigned to New 

Technology APCs with assigned status indicator “S” or “T.” We refer readers to the 

CY 2009 OPPS/ASC final rule with comment period (73 FR 68770 through 68771) for a 

discussion of this policy. 

 The OPD fee schedule increase factor is an input into the OPPS conversion factor, 

which is used to calculate OPPS payment rates. To reduce the OPD fee schedule increase 

factor for hospitals that fail to meet reporting requirements, we calculate two conversion 

factors--a full market basket conversion factor (that is, the full conversion factor), and a 

reduced market basket conversion factor (that is, the reduced conversion factor). We 

then calculate a reduction ratio by dividing the reduced conversion factor by the full 

conversion factor. We refer to this reduction ratio as the “reporting ratio” to indicate that 

it applies to payment for hospitals that fail to meet their reporting requirements. 

Applying this reporting ratio to the OPPS payment amounts results in reduced national 

unadjusted payment rates that are mathematically equivalent to the reduced national 

unadjusted payment rates that would result if we multiplied the scaled OPPS relative 

payment weights by the reduced conversion factor. For example, to determine the 

reduced national unadjusted payment rates that applied to hospitals that failed to meet 

their quality reporting requirements for the CY 2010 OPPS, we multiplied the final full 

national unadjusted payment rate found in Addendum B of the CY 2010 OPPS/ASC final 
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rule with comment period by the CY 2010 OPPS final reporting ratio of 0.980 

(74 FR 60642). 

 In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68771 through 

68772), we established a policy that the Medicare beneficiary’s minimum unadjusted 

copayment and national unadjusted copayment for a service to which a reduced national 

unadjusted payment rate applies would each equal the product of the reporting ratio and 

the national unadjusted copayment or the minimum unadjusted copayment, as applicable, 

for the service. Under this policy, we apply the reporting ratio to both the minimum 

unadjusted copayment and national unadjusted copayment for services provided by 

hospitals that receive the payment reduction for failure to meet the Hospital OQR 

Program reporting requirements. This application of the reporting ratio to the national 

unadjusted and minimum unadjusted copayments is calculated according to § 419.41 of 

our regulations, prior to any adjustment for a hospital’s failure to meet the quality 

reporting standards according to § 419.43(h). Beneficiaries and secondary payers thereby 

share in the reduction of payments to these hospitals. 

 In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68772), we 

established the policy that all other applicable adjustments to the OPPS national 

unadjusted payment rates apply when the OPD fee schedule increase factor is reduced for 

hospitals that fail to meet the requirements of the Hospital OQR Program. For example, 

the following standard adjustments apply to the reduced national unadjusted payment 

rates: the wage index adjustment; the multiple procedure adjustment; the interrupted 

procedure adjustment; the rural sole community hospital adjustment; and the adjustment 
CMS-1613-P 508 

for devices furnished with full or partial credit or without cost. Similarly, OPPS outlier 

payments made for high cost and complex procedures will continue to be made when 

outlier criteria are met. For hospitals that fail to meet the quality data reporting 

requirements, the hospitals' costs are compared to the reduced payments for purposes of 

outlier eligibility and payment calculation. We established this policy in the OPPS 

beginning in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60642). 

For a complete discussion of the OPPS outlier calculation and eligibility criteria, we refer 

readers to section II.G. of this proposed rule. 

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

 We are proposing to continue our established policy of applying the reduction of 

the OPD fee schedule increase factor through the use of a reporting ratio for those 

hospitals that fail to meet the Hospital OQR Program requirements for the full CY 2015 

annual payment update factor. For the CY 2015 OPPS, the proposed reporting ratio is 

0.980, calculated by dividing the proposed reduced conversion factor of $72.692 by the 

proposed full conversion factor of $74.176. We are proposing to continue to apply the 

reporting ratio to all services calculated using the OPPS conversion factor. For the 

CY 2015 OPPS, we are proposing to apply the reporting ratio, when applicable, to all 

HCPCS codes to which we have assigned status indicators “P,” “Q1,” “Q2,” “Q3,” “R,” 

“S,” “T,” “V,” and “U” (other than new technology APCs to which we have assigned 

status indicators “S” and “T”). We note that we are proposing to delete status indicator 

“X” as described in sections II.A.3. and X. of this proposed rule. We note that we are 

proposing to develop status indicator “J1” as part of our CY 2015 comprehensive APC 
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policy, discussed in section II.A.2.e. of this proposed rule and to apply the reporting ratio 

to the comprehensive APCs. We are proposing to continue to exclude services paid 

under New Technology APCs. We are proposing to continue to apply the reporting ratio 

to the national unadjusted payment rates and the minimum unadjusted and national 

unadjusted copayment rates of all applicable services for those hospitals that fail to meet 

the Hospital OQR Program reporting requirements. We also are proposing to continue to 

apply all other applicable standard adjustments to the OPPS national unadjusted payment 

rates for hospitals that fail to meet the requirements of the Hospital OQR Program. 

Similarly, we are proposing to continue to calculate OPPS outlier eligibility and outlier 

payment based on the reduced payment rates for those hospitals that fail to meet the 

reporting requirements. 

 We invite public comment on these proposals. 

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

Payment Determination and Subsequent Years 

1. Administrative Requirements for the CY 2017 Payment Determination and 

Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75108 through 75109) for a discussion of the Hospital OQR Program procedural 

requirements for the CY 2015 payment determination and subsequent years. In that final 

rule with comment period, we codified these procedural requirements at 

42 CFR 419.46(a). 
CMS-1613-P 510 

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

a. General Procedural Requirements 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75110 through 75111) for a discussion of Hospital OQR Program general 

procedural requirements. In that final rule with comment period, we finalized our 

proposal to codify these general procedural requirements at 42 CFR § 419.46(c). 

 We are proposing to correct a typographical error in 42 CFR 419.46(c). This 

section states, “Except as provided in paragraph (d) of this section, hospitals that 

participate in the Hospital OQR Program must submit to CMS data on measures selected 

under section 1833(17)(C) of the Act . . .” We are proposing to correct the erroneous 

reference of “section 1833(17)(C)” to “section 1833(t)(17)(C).” We invite public 

comment on this proposal. 

b. Requirements for Chart-Abstracted Measures Where Data is Submitted Directly to 

CMS for the CY 2017 Payment Determination and Subsequent Years 

 The following chart-abstracted measures in the Hospital OQR Program require 

data to be submitted for the CY 2017 payment determination and subsequent years: 

● OP-1: Median Time to Fibrinolysis; 

● OP-2: Fibrinolytic Therapy Received Within 30 Minutes of ED Arrival 

(NQF # 0288); 

● OP-3: Median Time to Transfer to Another Facility for Acute Coronary 

Intervention (NQF # 0290); 

● OP-5: Median Time to ECG (NQF # 0289); 
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● OP-18: Median Time from ED Arrival to ED Departure for Discharged ED 

Patients (NQF # 0496); 

● OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional; 

● OP-21: ED – Median Time to Pain Management for Long Bone Fracture 

(NQF # 0662); 

● OP-22: ED – Left Without Being Seen; 

● OP-23: ED – Head CT Scan Results for Acute Ischemic Stroke or Hemorrhagic 

Stroke who Received Head CT Scan Interpretation Within 45 Minutes of Arrival 

(NQF # 0661); 

● OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-up Interval for 

Normal Colonoscopy in Average Risk Patients (NQF # 0658); and 

● OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with 

a History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF # 1536). 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68481 through 68484) for a discussion of the form and manner for data 

submission of these measures. 

 We are neither proposing new chart-abstracted measures where patient-level data 

is submitted directly to CMS nor proposing new requirements for data submission for 

chart-abstracted measures. 
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c. Claims-Based Measure Data Requirements for the CY 2017 Payment Determination 

and Subsequent Years 

 As discussed in section XIII.E. of the preamble of this proposed rule, we are 

proposing one additional claims-based measure for the CY 2017 payment determination 

and subsequent years, OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after 

Outpatient Colonoscopy. If this proposal is finalized, there will be a total of eight claimsbased measures for the CY 2017 payment determination and subsequent years: 

● OP-8: MRI Lumbar Spine for Low Back Pain (NQF # 0514); 

● OP-9: Mammography Follow-Up Rates; 

● OP-10: Abdomen CT – Use of Contrast Material; 

● OP-11: Thorax CT – Use of Contrast Material; 

● OP-13: Cardiac Imaging for Preoperative Risk Assessment for Non-Cardiac 

Low Risk Surgery (NQF # 0669); 

● OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus 

Computed Tomography (CT); 

● OP-15: Use of Brain Computed Tomography (CT) in the Emergency 

Department for Atraumatic Headache; and 

● OP-32: Facility 7-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy. 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75111 through 75112) for a discussion of the claims-based measure data 

submission requirements for the CY 2015 payment determination and subsequent years. 
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 In the CY 2012 OPPS/ASC final rule with comment period, we deferred the 

public reporting of OP-15 (76 FR 74456). We extended the postponement of public 

reporting for this measure in the CY 2013 and CY 2014 OPPS/ASC final rules with 

comment period (77 FR 68481, 78 FR 75111). We are not proposing any changes to this 

policy. Public reporting for OP-15 continues to be deferred, and this deferral has no 

effect on any payment determinations; however, hospitals are still required to submit data 

as previously finalized (76 FR 74456). 

d. Data Submission Requirements for Measure Data Submitted via the CMS Web-Based 

Tool for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75112 through 75115) for a discussion of the requirements for measure data 

submitted via the Web-based tool on a CMS Web site (the QualityNet Web site) for the 

CY 2016 payment determination and subsequent years. 

 We are not proposing any changes to the data submission requirements for data 

submitted via the CMS Web-based tool. 

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

and Subsequent Years 

 We refer readers to the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72100 through 72103) and the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74482 through 74483) for discussions of our policy that hospitals may 

voluntarily submit aggregate population and sample size counts for Medicare and non-
CMS-1613-P 514 

Medicare encounters for the measure populations for which chart-abstracted data must be 

submitted. We are not proposing any changes to this policy. 

f. Proposed Review and Corrections Period for Chart-Abstracted Measures 

 Under the Hospital OQR Program, hospitals submit chart-abstracted data to CMS 

on a quarterly basis. This data is typically due 4 months after the quarter has ended, 

unless we grant an extension or exception, as further described in section XIII.J. of this 

proposed rule. We refer readers to the CY 2014 OPPS/ASC final rule with comment 

period for a discussion of our previously finalized policies regarding submissions 

deadlines for chart-abstracted measures (78 FR 68482). Hospitals can begin submitting 

data on the first discharge day of any reporting quarter and can modify this data up until 

the close of the submission period (or 4 months after the quarter has ended). For 

example, if a hospital enters data on January 2, it could continue to review, correct, and 

change this data until August 1, the first quarter submission deadline. We generally 

provide rates for the measures that have been submitted for chart-abstracted, patient-level 

data 24-48 hours following submission. Hospitals are encouraged to submit data early in 

the submission schedule so that they can identify errors and resubmit data before the 

quarterly submission deadline. 

 We are proposing to formalize this 4-month period as the review and corrections 

period for chart-abstracted data for the Hospital OQR Program. During this review and 

corrections period, hospitals can enter, review, and correct data submitted directly to 

CMS. After the submission deadline, however, hospitals would not be allowed to change 
CMS-1613-P 515 

these data. We believe that 4 months is sufficient time for hospitals to perform these 

activities. We invite public comment on this proposal. 

3. Hospital OQR Program Validation Requirements for Chart-Abstracted Measure Data 

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

Years 

a. Background 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68484 through 68487) for a discussion of finalized policies regarding our 

validation requirements. We codified these policies at 42 CFR 419.46(e). We are 

proposing three changes to our validation procedures: (1) we are proposing to change the 

eligibility requirements for hospitals selected for validation so that a hospital would be 

eligible if it submits at least one case to the Hospital OQR Program Clinical Data 

Warehouse during the quarter containing the most recently available data; (2) we are 

proposing give hospitals the option to either submit paper copies of patient charts or 

securely transmit electronic versions of medical information for validation; and (3) we 

are proposing that a hospital must identify the medical record staff responsible for 

submission of records under the Hospital OQR Program to the designated CMS 

contractor. 

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

the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2012 and CY 2013 OPPS/ASC final rules with 

comment period (76 FR 74484 through 74485 and 77 FR 68484 through 68485) for a 
CMS-1613-P 516 

discussion of finalized policies regarding our sampling methodology, including sample 

size, eligibility for validation selection, and encounter minimums for patient-level data 

for measures where data is obtained from chart abstraction and submitted directly to 

CMS from selected hospitals. 

 We are proposing one change to this process. Previously, to be eligible for 

random selection for validation, a hospital must have been coded as “open” in the 

CASPER system at the time of selection and must have submitted at least 10 encounters 

to the OPPS Clinical Warehouse during the data collection period for the applicable 

payment determination (76 FR 74484). We are proposing that, beginning with the 

CY 2015 encounter period for the CY 2017 payment determination and subsequent years, 

a hospital will be eligible for validation if it submits at least one case to the Hospital 

OQR Program Clinical Data Warehouse during the quarter containing the most recently 

available data. The quarter containing the most recently available data will be defined 

based on when the random sample is drawn. For example, if we draw a sample in 

December 2014, the most recent data available would be that from the second quarter of 

2014, which ends June 2014, because the submission deadline for second quarter data 

would be November 1, 2014 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1205442125082; 78 FR 68482). As another example, if a sample is 

drawn in October 2014, the most recent available data would be from quarter one, which 

ended in March 2014, because data must be submitted by August 1, 2014. We believe 

this change is necessary because it increases the probability that selected hospitals have 
CMS-1613-P 517 

current data in the Warehouse to be validated. Previously, hospitals that did not have 

data from the current year available could still be selected for validation. We invite 

public comment on this proposal. 

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

Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68485 through 68486) for a discussion of our targeting criteria. We are not 

proposing any changes to these policies. 

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

Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68486) for a discussion of our methodology for encounter selection. We are not 

proposing any changes to this policy. 

e. Proposed Medical Record Documentation Requests for Validation and Validation 

Score Calculation for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68486 through 68487) for a discussion of our previously finalized procedures for 

requesting medical record documentation for validation and validation score calculation. 

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75118), we codified 

these procedures at 42 CFR 419.46(e)(1) and (e)(2). We are proposing two changes to 

these policies for the CY 2017 payment determination and subsequent years: (1) we are 

proposing to give hospitals the option to either submit paper copies of patient charts or 
CMS-1613-P 518 

securely transmit electronic versions of medical information for validation; and (2) we 

are proposing that a hospital must identify the medical record staff responsible for 

submission of records under the Hospital OQR Program to the designated CMS 

contractor. 

 For records stored electronically, hospitals expend additional resources printing 

records onto paper that may be more efficiently transmitted electronically. In addition, 

the length of paper charts has been increasing, and the paper used to submit these records 

has an environmental impact. Therefore, we are proposing to give hospitals the option to 

either submit copies of paper patient charts or securely transmit electronic versions of 

medical information, which has the potential to significantly reduce administrative 

burden, cost, and environmental impact. We have already finalized a similar policy for 

the Hospital IQR Program in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50834 

through 50836) that allows hospitals for the Hospital IQR Program to submit electronic 

records through the mail on a CD, DVD, or flash drive. In addition, in the FY 2015 

IPPS/LTCH PPS proposed rule for the Hospital IQR Program (79 FR 28251), we have 

proposed to also allow hospitals to submit patient charts using a Secure File Transfer 

Portal on the QualityNet Web site. 

 The current Hospital OQR Program regulation at § 419.46(e)(1) states: ‘‘Upon 

written request by CMS or its contractor, a hospital must submit to CMS supporting 

medical record documentation that the hospital used for purposes of data submission 

under the program. . . .” We are proposing that this requirement may be met by 

employing either of the following options for the CY 2017 payment determination and 
CMS-1613-P 519 

subsequent years: (1) a hospital may submit paper medical records, the form in which we 

have historically requested them; or (2) a hospital may securely transmit electronic 

versions of medical information. 

 For the CY 2017 payment determination and subsequent years, we are proposing 

that hospitals that chose to securely transmit electronic versions of medical information 

should either: (1) download or copy the digital image of the patient chart onto CD, DVD, 

or flash drive and ship the electronic media following instructions specified on the 

QualityNet Web site; or (2) securely submit digital images (PDFs) of patient charts using 

a Secure File Transfer Portal on the QualityNet Web site. The Secure File Transfer 

Portal would allow hospitals to transfer files through either a Web-based portal or 

directly from a client application using a secure file transfer protocol. The system 

provides a mechanism for securely exchanging documents containing sensitive 

information such as Protected Health Information (PHI) or Personally Identifiable 

Information (PII). Detailed instructions on how to use this system are available in the 

Secure File Transfer 1.0 User Manual available on QualityNet at: 

http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetBasic&cid=1228773343598. 

 In addition, in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68486 through 68487), we stated that our validation contractor would request 

medical documentation from each hospital selected for validation via certified mail or 

other trackable method. This request would be sent to “the hospital’s medical record 

staff identified by the hospital for the submission of records under the Hospital IQR 
CMS-1613-P 520 

Program (that is, the hospital’s medical records staff identified by the hospital to the State 

QIO)” (77 FR 68487). Quality Improvement Organizations (QIOs) are CMS contractors 

required by the Act (section 1152 through 1154) tasked with, among other 

responsibilities, assisting hospitals with quality improvement activities. Due to the 

evolution of the structure of the QIO program, beginning with CY 2015 for the CY 2017 

payment determination and subsequent years, we are proposing that a hospital must 

identify the medical record staff responsible for submission of records under the Hospital 

OQR Program to the designated CMS contractor; this CMS contractor may be a 

contractor other than the State QIO. 

 Finally, we note that a typographical error exists in our validation language in 

§ 419.46(e). This section states, “CMS may validate one or more measures selected 

under section 1833(17)(C) of the Act . . . .” “[S]ection 1833(17)(C)” should instead state 

“section 1833(t)(17)(C).” We are proposing to make this change in the regulation text. 

 We invite public comment on these proposals. 

I. Hospital OQR Program Reconsideration and Appeals Procedures for the CY 2017 

Payment Determination and Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68487 through 68489) and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75118 through 75119) for a discussion of our reconsideration and appeals 

procedures. We codified this process by which participating hospitals may submit 

requests for reconsideration at 42 CFR 419.46(f). We also codified language at 

§ 419.46(f)(3) stating that a hospital that is dissatisfied with a decision made by CMS on 
CMS-1613-P 521 

its reconsideration request may file an appeal with the Provider Reimbursement Review 

Board. 

 We are not proposing any changes to the reconsideration and appeals procedures.

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

Subsequent Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 75119 

through 75120), and 42 CFR 419.46(d) for a complete discussion of our extraordinary 

circumstances extension or waiver process under the Hospital OQR Program. We are not 

proposing any substantive changes to these policies or the processes. 

 However, in the future, we will refer to the process as the Extraordinary 

Circumstances Extensions or Exemptions process, instead of the Extraordinary 

Circumstances Extensions or Waiver process. We are in the process of revising the 

Extraordinary Circumstances/Disaster Extension or Waiver Request form (CMS-10432), 

approved under OMB control number 0938-1171. We are updating the forms and 

instructions so that a hospital or facility may apply for an extension for all applicable 

quality reporting programs at one time. 

 In addition, we are proposing to make a conforming change from the phrase 

“extension or waiver” to the phrase “extension or exemption” in 42 CFR 419.46(d). 

Section 419.46(d) currently states, 

 “Exception. CMS may grant an extension or waiver of one or more data 

submission deadlines and requirements in the event of extraordinary circumstances 
CMS-1613-P 522 

beyond the control of the hospital, such as when an act of nature affects an entire region 

or locale or a systemic problem with one of CMS’ data collection systems directly or 

indirectly affects data submission. CMS may grant an extension or waiver as follows: 

 (1) Upon request by the hospital. Specific requirements for submission of a 

request for an extension or waiver are available on the QualityNet Web site. 

 (2) At the discretion of CMS. CMS may grant waivers or extensions to hospitals 

that have not requested them when CMS determines that an extraordinary circumstance 

has occurred.’ 

 We are proposing to revise this language to state, 

 “Exception. CMS may grant an extension or exception of one or more data 

submission deadlines and requirements in the event of extraordinary circumstances 

beyond the control of the hospital, such as when an act of nature affects an entire region 

or locale or a systemic problem with one of CMS’ data collection systems directly or 

indirectly affects data submission. CMS may grant an extension or exception as follows: 

 (1) Upon request by the hospital. Specific requirements for submission of a 

request for an extension or exception are available on the QualityNet Web site. 
CMS-1613-P 523 

 (2) At the discretion of CMS. CMS may grant exceptions or extensions to 

hospitals that have not requested them when CMS determines that an extraordinary 

circumstance has occurred.” 

XIV. Requirements for the Ambulatory Surgical Center Quality Reporting 

(ASCQR) Program 

A. Background 

1. Overview 

 We refer readers to section XIII.A.1. of this proposed rule for a general overview 

of our quality reporting programs. 

2. Statutory History of the Ambulatory Surgical Center Quality Reporting (ASCQR) 

Program 

 We refer readers to section XIV.K.1. of the CY 2012 OPPS/ASC final rule with 

comment period (76 FR 74492 through 74493) for a detailed discussion of the statutory 

history of the ASCQR Program. 

3. Regulatory History of the ASCQR Program 

 We refer readers to section XV.A.3. of the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75122) for an overview of the regulatory history of the ASCQR 

Program. 
CMS-1613-P 524 

B. ASCQR Program Quality Measures 

1. Considerations in the Selection of ASCQR Program Quality Measures 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68493 through 68494) for a detailed discussion of priorities we consider for 

ASCQR Program quality measure selection. 

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

 We previously adopted a policy to retain measures from the previous year’s 

ASCQR Program measure set for subsequent years’ measure sets except when they are 

removed, suspended or replaced as indicated (76 FR 74504; 77 FR 68494 through 68495; 

78 FR 75122). In this proposed rule, we are proposing a process for removing adopted 

measures. 

 In the FY 2010 IPPS/LTCH PPS final rule (74 FR 43863 through 43865), we 

finalized a process for immediate retirement (a term we later changed to “removal”) of 

RHQDAPU Program (now referred to as the Hospital IQR Program) measures based on 

evidence that the continued use of the measure as specified raised patient safety concerns. 

We stated that we believe immediate retirement of quality measures should occur when 

the clinical evidence suggests that continued collection of the data may result in harm to 

patients. For example, we removed the AMI-6-Beta Blocker at Arrival measure from the 

Hospital IQR Program because it encouraged care that raised potential safety concerns 

according to newly published research suggesting that beta-blockers could increase 

mortality risks for certain patient populations (74 FR 43863). Under such circumstances, 

we may not be able to wait until the annual rulemaking cycle or until we have had the 
CMS-1613-P 525 

opportunity to obtain input from the public to retire the measure because of the need to 

discourage potentially harmful practices which may result from continued collection of 

the measure. 

 In these situations, we would promptly retire the measure and notify hospitals and 

the public of the retirement of the measure and the reasons for its retirement through the 

usual communication channels. Further, we would confirm the retirement of the measure 

that was the subject of immediate retirement in the next program rulemaking. Finally, we 

stated that, in other circumstances where we do not believe that continued use of a 

measure raises specific safety concerns, we intend to use the rulemaking process to retire 

a measure. For the same reasons stated for the Hospital IQR Program, we believe that 

this process also would be appropriate for the ASCQR Program. Therefore, we are 

proposing to adopt this same removal process for the ASCQR Program. Under this 

process, we would immediately remove an ASCQR Program measure based on evidence 

that the continued use of the measure as specified raised patient safety concerns. In these 

situations, we would promptly remove the measure and notify ASCs and the public of the 

removal of the measure and the reasons for its removal through the ASCQR Program 

ListServ and the ASCQR Program QualityNet Web site at 

http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1228772879650. Further, we would confirm the removal of the 

measure that was the subject of immediate removal in the next OPPS/ASC rulemaking. 

 For situations where we do not believe that continued use of a measure raises 

specific safety concerns, we are proposing to use the regular rulemaking process to 
CMS-1613-P 526 

remove a measure to allow for public comment. In the FY 2013 IPPS/LTCH PPS final 

rule (77 FR 53505 through 53506), we listed the criteria we have used to determine 

whether to remove measures from the Hospital IQR Program. These criteria are: 

(1) measure performance among hospitals is so high and unvarying that meaningful 

distinctions and improvements in performance can no longer be made (“topped out” 

measures); (2) availability of alternative measures with a stronger relationship to patient 

outcomes; (3) a measure does not align with current clinical guidelines or practice; (4) the 

availability of a more broadly applicable (across settings, populations, or conditions) 

measure for the topic; (5) the availability of a measure that is more proximal in time to 

desired patient outcomes for the particular topic; (6) the availability of a measure that is 

more strongly associated with desired patient outcomes for the particular topic; and (7) 

collection or public reporting of a measure leads to negative unintended consequences 

other than patient harm. These criteria were suggested through public comment on 

proposals for the Hospital IQR Program and, we agreed that these criteria should be 

considered in evaluating the Hospital IQR Program quality measures for removal 

(75 FR 53506). We believe that these criteria also are applicable in evaluating ASCQR 

Program quality measures for removal, because we have found them useful for evaluating 

measures in the Hospital IQR Program and our other quality reporting programs, which 

share similar goals to the ASCQR Program. Accordingly, we are proposing to adopt 

these measure removal criteria for the ASCQR Program. 

 We invite public comment on these proposals. 
CMS-1613-P 527 

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

 We are proposing to define criteria for when we would consider a measure to be 

“topped-out.” A measure is “topped-out” when measure performance among ASCs is so 

high and unvarying that meaningful distinctions and improvements in performance can 

no longer be made (“topped-out” measures). We do not believe that measuring ASC 

performance on “topped-out” measures provides meaningful information on the quality 

of care provided by ASCs. We further believe that quality measures, once “topped-out,” 

represent care standards that have been widely adopted by ASCs. We believe such 

measures should be considered for removal from the ASCQR Program because their 

associated reporting burden may outweigh the value of the quality information they 

provide. 

 Specifically, we are proposing that a measure under the ASCQR Program is 

“topped-out” when it meets both of the following criteria: 

● Statistically indistinguishable performance at the 75th and 90th percentiles; and 

● A truncated coefficient of variation less than or equal to 0.10 

 To identify if a measure has statistically indistinguishable performance at the 75th

and 90th percentiles, we would determine whether the difference between the 75th and 90th

percentiles for an ASC’s measure is within two times the standard error of the full 

dataset. The coefficient of variation (CV) is a descriptive statistic that expresses the 

standard deviation as a percentage of the sample mean; this provides a statistic that is 

independent of the units of observation. Applied to this analysis, a large CV would 

indicate a broad distribution of individual ASC scores, with large and presumably 
CMS-1613-P 528 

meaningful differences between ASCs in relative performance. A small CV would 

indicate that the distribution of individual hospital scores is clustered tightly around the 

mean value, suggesting that it is not useful to draw distinctions among individual ASCs’ 

measure performance. The truncated CV excludes observations whose rates are below 

the 5th percentile and above the 95th percentile. This was done to avoid undue effects of 

the highest and lowest outlier ASCs, which if included, would tend to greatly widen the 

dispersion of the distribution and make the measure appear to be more reliable or 

discerning. These same criteria for when we would consider a measure to be “toppedout” have been proposed for adoption in the Hospital VBP Program (79 FR 28119) and 

the Hospital IQR Program (79 FR 28219). 

 We invite public comment on this proposal. 

4. ASCQR Program Quality Measures Adopted in Previous Rulemaking 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74492 through 

74517), we finalized our proposal to implement the ASCQR Program beginning with the 

CY 2014 payment determination. In the CY 2012 OPPS/ASC final rule with comment 

period, we adopted five claims-based measures for the CY 2014 payment determination 

and subsequent years, two measures with data submission via an online Web page for the 

CY 2015 payment determination and subsequent years, and one process of care measure 

for the CY 2016 payment determination and subsequent years (74 FR 74496 to 74511). 

In the CY 2014 OPPS/ASC final rule with comment period, we adopted three chartabstracted measures for the CY 2016 payment determination and subsequent years (78 

FR 75124 to 75130). 
CMS-1613-P 529 

 The quality measures that we have previously adopted are listed below. 

ASC Program Measure Set Previously Adopted for the CY 2016 Payment Determination 

and Subsequent Years 

ASC # NQF # Measure Name 

ASC-1 0263 Patient Burn 

ASC-2 0266 Patient Fall 

ASC-3 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong 

Implant 

ASC-4 0265 Hospital Transfer/Admission 

ASC-5 0264 Prophylactic Intravenous (IV) Antibiotic Timing 

ASC-6 N/A Safe Surgery Checklist Use 

ASC-7 N/A ASC Facility Volume Data on Selected ASC Surgical Procedures 

Procedure categories and corresponding HCPCS codes are located at: 

http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%

2FPage%2FQnetTier2&cid=1228772475754 

ASC-8 0431 Influenza Vaccination Coverage among Healthcare Personnel 

ASC-9 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for 

Normal Colonoscopy in Average Risk Patients 

ASC-10 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps-Avoidance of Inappropriate Use 

ASC-11 1536 Cataracts: Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery* 

* We are proposing voluntary data collection starting in CY 2017 for this previously adopted measure in 

section XIV.E.3.c. of this proposed rule. 

5. Proposed New ASCQR Program Quality Measure for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75124) for a detailed discussion of our approach to ASCQR measure selection. In 

this proposed rule, we are proposing to adopt one new claims-based measure into the 

ASCQR Program for the CY 2017 payment determination and subsequent years: 
CMS-1613-P 530 

ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy. 

 Colonoscopy is the most commonly performed ambulatory surgery in the United 

States.15 The most recent data available indicate that, in 2002 alone, physicians 

performed an estimated 14 million colonoscopies in the United States.16 Colonoscopies 

are associated with a range of well-described and potentially preventable adverse events 

that can lead to hospital visits, repeat procedures, or surgical intervention for treatment, 

including colonic perforation, gastrointestinal (GI) bleeding, and cardiopulmonary events 

such as hypoxia, aspiration pneumonia, and cardiac arrhythmias. While hospital visits 

are generally unexpected after outpatient colonoscopy, the literature suggests that the 

majority of these visits occur within the first 7 days.17,18,19 Reported hospital visit rates 

after outpatient colonoscopy range from 0.8 to 1.0 percent at 7 to 14 days post procedure, 

and from 2.4 to 3.8 percent at 30 days post procedure.20,21,22 Some adverse events such as 

 

15 Russo A, Elixhauser A, Steiner C, Wier L. Hospital-Based Ambulatory Surgery, 2007: Statistical Brief 

#86. Healthcare Cost and Utilization Project (HCUP) Statistical Briefs. Rockville (MD)2006. 16 Seeff LC, Richards TB, Shapiro JA, et al. How many endoscopies are performed for colorectal cancer 

screening? Results from CDC's survey of endoscopic capacity. Gastroenterology. 

Dec 2004;127(6):1670-1677. 

17 Rathgaber SW, Wick TM. Colonoscopy completion and complication rates in a community 

gastroenterology practice. Gastrointest Endosc. 2006; 64:556-62. 18 Rabeneck L, Saskin R, Paszat LF. Onset and clinical course of bleeding and perforation after outpatient 

colonoscopy: a population-based study. Gastrointest Endosc. 2011; 73:520-3. 19 Ko CW, Riffle S, Michael L, et al. Serious complications within 30 days of screening and surveillance 

colonoscopy are uncommon. Clin Gastroenterol Hepatol. 2010; 8:166-73. 20 Ko CW, Riffle S, Shapiro JA, et al. Incidence of minor complications and time lost from normal 

activities after screening or surveillance colonoscopy. Gastrointest Endosc. Apr 2007;65(4):648-656. 21 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757. 22 Chukmaitov AS, Menachemi N, Brown SL, Saunders C, Tang A, Brooks R. Is there a relationship 

between physician and facility volumes of ambulatory procedures and patient outcomes? J Ambul Care 

Manage. Oct-Dec 2008;31(4):354-369. 
CMS-1613-P 531 

bleeding occur after day 7, but based on input from clinical experts, public comment, and 

empirical analyses, we concluded that unplanned hospital visits within 7 days is the 

optimal outcome to ensure capture of procedure-related adverse events and to minimize 

capture of hospital visits unrelated to the procedure. This measure provides the 

opportunity for ASCs to improve quality of care and to lower the rates of adverse events 

leading to hospital visits after outpatient colonoscopy; this would encourage ASCs to 

achieve the outcome rates of the best performers. 

 We believe it is important to reduce adverse patient outcomes associated with 

preparation for colonoscopy, the procedure itself, and follow-up care. Therefore, we are 

proposing to include the ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit 

Rate after Outpatient Colonoscopy measure, which is based on Medicare FFS claims, in 

the ASCQR Program for the CY 2017 payment determination and subsequent years. We 

expect the measure would promote improvement in patient care over time because 

transparency in publicly reporting measure scores would make patient unplanned hospital 

visits (emergency department visits, observation stays and inpatient admissions) 

following colonoscopies more visible to ASCs and patients and incentivize ASCs to 

incorporate quality improvement activities in order to reduce these visits. ASCs are often 

unaware of complications following colonoscopy for which patients visit the hospital.23 

This risk-standardized quality measure would address this information gap and promote 

quality improvement by providing feedback to facilities and physicians, as well as 

 

23 Leffler DA, Kheraj R, Garud S, et al. The incidence and cost of unexpected hospital use after scheduled 

outpatient endoscopy. Arch Intern Med. Oct 25 2010;170(19):1752-1757.
CMS-1613-P 532 

transparency for patients on the rates and variation across facilities in unplanned hospital 

visits after colonoscopy. 

 The outcome measured in the ASC-12 measure is all-cause, unplanned hospital 

visits (admissions, observation stays, and emergency department visits) within 7 days of 

an outpatient colonoscopy procedure. The measure score, also referred to as the 

facility-level risk-standardized hospital visit rate, is derived from the calculation of the 

ratio of the numerator to the denominator multiplied by the crude rate. The numerator is 

the number of predicted (meaning adjusted actual) hospital visits, which is the number of 

unplanned hospital visits within seven days of colonoscopy that the facility is predicted to 

have based on its case-mix. The denominator is the number of expected hospital visits, 

which is the number of unplanned hospital visits the facility is expected to have based on 

the nation’s performance with the facility’s case-mix. The crude rate is the national 

unadjusted number of patients who had a hospital visit post-colonoscopy among all 

patients who had a colonoscopy. 

 Based on discussions with clinical and technical panel experts, the measure 

excludes colonoscopies for patients undergoing concomitant high-risk upper GI 

endoscopy because these patients are at a higher risk for hospital visits than patients 

undergoing a typical colonoscopy, and patients with a history of inflammatory bowel 

disease (IBD) or diverticulitis in the year preceding the colonoscopy because we likely 

could not fully characterize and adjust for their pre-procedure risk of needing a postprocedure hospital visit or identify whether these admissions are planned or unplanned. 

The measure also excludes procedures for patients who lack continuous enrollment in 
CMS-1613-P 533 

Medicare FFS Parts A and B in the first month after the procedure to ensure all patients 

have complete data available for outcome assessment. The statistical risk adjustment 

model includes 15 clinically relevant risk-adjustment variables that are strongly 

associated with risk of hospital visits within seven days following a colonoscopy. 

Additional methodology details, and information obtained from public comment for 

measure development are available at: http://www.cms.gov/Medicare/Quality-InitiativesPatient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. 

 Section 1890A of the Act requires the Secretary to establish a pre-rulemaking 

process with respect to the selection of certain categories of quality and efficiency 

measures. Under section 1890A(a)(2) of the Act, the Secretary must make available to 

the public by December 1st of each year a list of quality and efficiency measures that the 

Secretary is considering for the Medicare program. The measure that we are proposing 

was reviewed by the MAP and was included on a publicly available document entitled 

“MAP Pre-Rulemaking Report: 2014 Recommendations on Measures for More than 20 

Federal Programs” (formerly referred to as the “List of Measures Under Consideration”) 

on the NQF Web site at: http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report__2014_Recommendations_on_Measures_for_More_than_20_Feder

al_Programs.aspx (“MAP Report”). (We note that at the time the measure was listed on 

the “MAP Pre-Rulemaking Report: 2014 Recommendations on Measures for More than 

20 Federal Programs” it was named, “High-Acuity Care Visits after Outpatient 

Colonoscopy Procedure.”) The MAP conditionally supported this measure for the 

ASCQR Program. 
CMS-1613-P 534 

 The MAP Report stated that the measure “[s]hould be submitted for and receive 

NQF endorsement; Measure is promising but needs further development,” (p. 187, MAP 

Report). Further, the MAP Report stated that the measure “would provide valuable 

outcome information to inform consumer decision and drive quality improvement” and 

that the “NQF endorsement process would resolve questions about the reliability and 

validity of the measure.” The MAP also stated that NQF endorsement would resolve 

questions about “the feasibility of the algorithm for attributing claims data in light of 

possible effects of the Medicare three-day payment window” (p. 187, MAP Report). 

However, this concern with Part A hospital payments relates to the Hospital OQR 

Program and not the ASCQR Program. As required under section 1890A(a)(4) of the 

Act, we considered the input and recommendations provided by the MAP in selecting 

measures to propose for the ASCQR Program. 

 We believe we have addressed the concerns raised by the MAP to the extent 

possible. The measure was submitted to NQF for endorsement on February 21, 2014. 

The measure is well-defined and precisely specified for consistent implementation within 

and between organizations that will allow for comparability. Reliability testing 

demonstrated the measure data elements produced were repeatable; that is, the same 

results were produced a high proportion of the time when assessed in the same population 

in the same time. Validity testing demonstrated that the measure data elements produce 

measure scores that correctly reflect the quality of care provided and that adequately 

identify differences in quality. 
CMS-1613-P 535 

Currently, there are no publicly available quality of care reports for ASCs that 

conduct outpatient colonoscopies. Thus, adoption of this measure provides an 

opportunity to enhance the information available to patients choosing among ASCs who 

offer this elective procedure. We believe this measure would reduce adverse patient 

outcomes associated with preparation for colonoscopy, the procedure itself, and 

follow-up care by capturing and making more visible to ASCs and patients all unplanned 

hospital visits following the procedure. In addition, providing outcome rates to ASCs 

would make visible to clinicians meaningful quality differences and incentivize 

improvement. 

 Sections 1833(i)(7)(B) and 1833(t)(17)(C)(i) of the Act, when read together, 

require the Secretary, except as the Secretary may otherwise provide, to develop 

measures appropriate for the measurement of the quality of care furnished by ASCs, that 

reflect consensus among affected parties and, to the extent feasible and practicable, that 

include measures set forth by one or more national consensus building entities. As stated 

in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74465 and 74505), we 

believe that consensus among affected parties can be reflected through means other than 

NQF endorsement, including consensus achieved during the measure development 

process, consensus shown through broad acceptance and use of measures, and consensus 

through public comment. We believe this proposed measure meets these statutory 

requirements. We believe that this measure is appropriate for the measurement of quality 

of care furnished by ASCs because this procedure is commonly performed in ASCs and, 

as discussed above, can signify important issues in the care being provided in ASCs. We 
CMS-1613-P 536 

also believe this measure reflects consensus among affected parties, because the MAP, 

which represents stakeholder groups, reviewed and conditionally supported the measure, 

and stated that it “would provide valuable outcome information to inform consumer 

decision and drive quality improvement.” Further, the measure was subject to public 

comment during the MAP and measure development processes, with some public 

commenters agreeing with the MAP’s conclusions on the measure (p. 187, MAP Report, 

January 2014; http://www.qualityforum.org/Publications/2014/01/MAP_PreRulemaking_Report_2014_Recommendations_on_Measures_for_More_than_20_Federal

_Programs.aspx). 

 As discussed above, the statute also requires the Secretary, except as the Secretary 

may otherwise provide, to include measures set forth by one or more national consensus 

building entities to the extent feasible and practicable. This measure is not 

NQF-endorsed; however, as noted above, this measure is currently undergoing the NQF 

endorsement process. We note that section 1833(t)(17) of the Act does not require that 

each measure we adopt for the ASCQR Program be endorsed by a national consensus 

building entity, or by the NQF specifically. Further, under section 1833(i)(7)(B) of the 

Act, section 1833(t)(17)(C)(i) of the Act, which contains this requirement, applies to the 

ASCQR Program, except as the Secretary may otherwise provide. Under this provision, 

the Secretary has further authority to adopt non-endorsed measures. 

 In summary, we are proposing to adopt one new measure for the ASCQR 

Program for the CY 2017 payment determination and subsequent years. 
CMS-1613-P 537 

ASC # NQF# Proposed ASCQR Measure for the CY 2017 Payment 

Determination and Subsequent Years 

ASC-12 Pending Facility Seven-Day Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy 

 If this proposal is finalized, the measure set for the ASCQR Program CY 2017 

payment determination and subsequent years would be as listed below. 

Proposed ASC Program Measure Set for the CY 2017 Payment Determination 

and Subsequent Years 

ASC # NQF # Measure Name 

ASC-1 0263 Patient Burn 

ASC-2 0266 Patient Fall 

ASC-3 0267 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, 

Wrong Implant 

ASC-4 0265 Hospital Transfer/Admission 

ASC-5 0264 Prophylactic Intravenous (IV) Antibiotic Timing 

ASC-6 N/A Safe Surgery Checklist Use 

ASC-7 N/A ASC Facility Volume Data on Selected ASC Surgical 

Procedures 

Procedure categories and corresponding HCPCS codes are 

located at: 

http://qualitynet.org/dcs/ContentServer?c=Page&pagename=

QnetPublic%2FPage%2FQnetTier2&cid=1228772475754

ASC-8 0431 Influenza Vaccination Coverage among Healthcare Personnel 

ASC-9 0658 Endoscopy/Polyp Surveillance: Appropriate Follow-Up 

Interval for Normal Colonoscopy in Average Risk Patients 

ASC-10 0659 Endoscopy/Polyp Surveillance: Colonoscopy Interval for 

Patients with a History of Adenomatous Polyps-Avoidance of 

Inappropriate Use 

ASC-11 1536 Cataracts: Improvement in Patient’s Visual Function within 

90 Days Following Cataract Surgery* 

ASC-12 Pending Facility Seven-Day Risk-Standardized Hospital Visit Rate 

after Outpatient Colonoscopy** 

* We are proposing voluntary data collection for this previously adopted measure in section XIV.E.3.c. of 

this proposed rule. 

** New measure proposed for CY 2017 payment determination and subsequent years. 
CMS-1613-P 538 

 We invite public comment on our proposal to include ASC-12: Facility 

Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy in the 

ASCQR Program beginning with the CY 2017 payment determination. 

6. ASCQR Program Measures for Future Consideration 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68493 through 68494), where we finalized our approach to future measure 

selection for the ASCQR Program. We seek to develop a comprehensive set of quality 

measures to be available for widespread use for informed “patient decision-making and 

quality improvement in the ASC setting” (77 FR 68496). We also seek to align these 

quality measures with the National Quality Strategy (NQS), the CMS Strategic Plan 

(which includes the CMS Quality Strategy), and our other quality reporting and valuebased purchasing programs, as appropriate. Accordingly, in considering future ASCQR 

Program measures, we are focusing on the following NQS and CMS Quality Strategy 

measure domains: make care safer; strengthen person and family engagement; promote 

effective communication and coordination of care; promote effective prevention and 

treatment; work with communities to promote best practices of healthy living; and make 

care affordable. 

7. Maintenance of Technical Specifications for Quality Measures 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74513 through 74514), where we finalized our proposal to follow the same 

process for updating the ASCQR Program measures that we adopted for the Hospital 

OQR Program measures, including the subregulatory process for making updates to the 
CMS-1613-P 539 

adopted measures. In the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68496 through 68497) and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75131), we provided additional clarification regarding the ASCQR 

Program policy in the context of the previously finalized Hospital OQR Program policy, 

including the processes for addressing nonsubstantive and substantive changes to adopted 

measures. 

 We maintain technical specifications for previously adopted ASCQR Program 

measures. These specifications are updated as we continue to develop the ASCQR 

Program. The manuals that contain specifications for the previously adopted measures 

can be found on the QualityNet Web site at: 

https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier2&cid=1228772475754. 

 Many of the quality measures used in Medicare and Medicaid reporting programs 

are NQF-endorsed. We note that two of the measures previously adopted for the ASCQR 

Program are not NQF-endorsed, and NQF endorsement is not a program requirement. 

However, for those measures that are NQF-endorsed, the NQF requires measure stewards 

to submit annual measure maintenance updates and undergo maintenance of endorsement 

review every 3 years as part of its regular maintenance process for NQF-endorsed 

performance measures. In the measure maintenance process, the measure steward 

(owner/developer) is responsible for updating and maintaining the currency and relevance 

of the measure and will confirm existing or minor specification changes with the NQF on 
CMS-1613-P 540 

an annual basis. The NQF solicits information from measure stewards for annual 

reviews, and it reviews measures for continued endorsement in a specific 3-year cycle. 

 We note that the NQF’s annual or triennial maintenance processes for endorsed 

measures may result in the NQF requiring updates to measures in order to maintain 

endorsement status. Other non-NQF measures may undergo maintenance changes as 

well. We believe that it is important to have in place the subregulatory process that we 

have adopted for the ASCQR Program to incorporate nonsubstantive updates into the 

measure specifications for measures so that the measure specifications remain current. 

We also recognize that some changes to measures are substantive in nature and might not 

be appropriate for adoption using a subregulatory process. 

 We are not proposing any changes to this policy. 

8. Public Reporting of ASCQR Program Data 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74514 through 

74515), we finalized a policy to make data that an ASC submitted for the ASCQR 

Program publicly available on a CMS Web site after providing an ASC an opportunity to 

review the data to be made public. These data will be displayed at the CCN level. We 

are not proposing any changes to this policy. 

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

1. Statutory Background 

 We refer readers to section XV.C.1. of the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75131 through 75132) for a detailed discussion of the statutory 
CMS-1613-P 541 

background regarding payment reductions for ASCs that fail to meet the ASCQR 

Program requirements. 

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

Program Requirements for a Payment Determination Year 

 The national unadjusted payment rates for many services paid under the ASC 

payment system equal the product of the ASC conversion factor and the scaled relative 

payment weight for the APC to which the service is assigned. Currently, the ASC 

conversion factor is equal to the conversion factor calculated for the previous year 

updated by the MFP-adjusted CPI-U update factor, which is the adjustment set forth in 

section 1833(i)(2)(D)(v) of the Act. The MFP-adjusted CPI-U update factor is the 

Consumer Price Index for all urban consumers (CPI-U), which currently is the annual 

update for the ASC payment system, minus the MFP adjustment. As discussed in the 

CY 2011 MPFS final rule with comment period (75 FR 73397), if the CPI-U is a negative 

number, the CPI-U would be held to zero. Under the ASCQR Program, any annual 

update would be reduced by 2.0 percentage points for ASCs that fail to meet the reporting 

requirements of the ASCQR Program. This reduction would apply beginning with the 

CY 2014 payment rates. For a complete discussion of the calculation of the ASC 

conversion factor, we refer readers to section XII.G. of this proposed rule. 

 In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68499 through 

68500), in order to implement the requirement to reduce the annual update for ASCs that 

fail to meet the ASCQR Program requirements, we finalized our proposal that we would 

calculate two conversion factors: a full update conversion factor and an ASCQR 
CMS-1613-P 542 

Program reduced update conversion factor. We finalized our proposal to calculate the 

reduced national unadjusted payment rates using the ASCQR Program reduced update 

conversion factor that would apply to ASCs that fail to meet their quality reporting 

requirements for that calendar year payment determination. We finalized our proposal 

that application of the 2.0 percentage point reduction to the annual update may result in 

the update to the ASC payment system being less than zero prior to the application of the 

MFP adjustment. 

 The ASC conversion factor is used to calculate the ASC payment rate for services 

with the following payment indicators (listed in Addenda AA and BB to this proposed 

rule, which are available via the Internet on the CMS Web site): “A2,” “G2,” “P2,” 

“R2,” “Z2,” as well as the service portion of device-intensive procedures identified by 

“J8.” We finalized our proposal that payment for all services assigned the payment 

indicators listed above would be subject to the reduction of the national unadjusted 

payment rates for applicable ASCs using the ASCQR Program reduced update 

conversion factor. 

 The conversion factor is not used to calculate the ASC payment rates for 

separately payable services that are assigned status indicators other than payment 

indicators “A2,” “G2,” “J8,” “P2,” “R2,” and “Z2.” These services include separately 

payable drugs and biologicals, pass-through devices that are contractor-priced, 

brachytherapy sources that are paid based on the OPPS payment rates, and certain 

office-based procedures and radiology services where payment is based on the MPFS PE 

RVU amount and a few other specific services that receive cost-based payment. As a 
CMS-1613-P 543 

result, we also finalized our proposal that the ASC payment rates for these services would 

not be reduced for failure to meet the ASCQR Program requirements because the 

payment rates for these services are not calculated using the ASC conversion factor and, 

therefore, not affected by reductions to the annual update. 

 Office-based surgical procedures (performed more than 50 percent of the time in 

physicians’ offices) and separately paid radiology services (excluding covered ancillary 

radiology services involving certain nuclear medicine procedures or involving the use of 

contrast agents, as discussed in section XII.C.1.b. of this proposed rule) are paid at the 

lesser of the MPFS nonfacility PE RVU-based amounts and the standard ASC ratesetting 

methodology. We finalized our proposal that the standard ASC ratesetting methodology 

for this comparison would use the ASC conversion factor that has been calculated using 

the full ASC update adjusted for productivity. This is necessary so that the resulting ASC 

payment indicator, based on the comparison, assigned to an office-based or radiology 

procedure is consistent for each HCPCS code regardless of whether payment is based on 

the full update conversion factor or the reduced update conversion factor. 

 For ASCs that receive the reduced ASC payment for failure to meet the ASCQR 

Program requirements, we believe that it is both equitable and appropriate that a 

reduction in the payment for a service should result in proportionately reduced 

copayment liability for beneficiaries. Therefore, in the CY 2013 OPPS/ASC final rule 

with comment period (77 FR 68500), we finalized our proposal that the Medicare 

beneficiary’s national unadjusted copayment for a service to which a reduced national 
CMS-1613-P 544 

unadjusted payment rate applies would be based on the reduced national unadjusted 

payment rate. 

 In that final rule with comment period, we finalized our proposal that all other 

applicable adjustments to the ASC national unadjusted payment rates would apply in 

those cases when the annual update is reduced for ASCs that fail to meet the 

requirements of the ASCQR Program (77 FR 68500). For example, the following 

standard adjustments would apply to the reduced national unadjusted payment rates: the 

wage index adjustment, the multiple procedure adjustment, the interrupted procedure 

adjustment, and the adjustment for devices furnished with full or partial credit or without 

cost. We believe that these adjustments continue to be equally applicable to payment for 

ASCs that do not meet the ASCQR Program requirements. 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75132), we 

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

policies. 

D. Administrative Requirements 

1. Requirements Regarding QualityNet Account and Security Administrator 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75132 through 75133) for a detailed discussion of the QualityNet security 

administrator requirements, including setting up a QualityNet account, and the associated 

timelines, for the CY 2014 payment determination and subsequent years. We are not 

proposing any changes to these policies. 
CMS-1613-P 545 

2. Requirements Regarding Participation Status 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75133 through 78 FR 75135) for a complete discussion of the participation status 

requirements for the CY 2014 payment determination and subsequent years. We are not 

proposing any changes to these policies. 

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

1. Requirements Regarding Data Processing and Collection Periods for Claims-Based 

Measures Using Quality Data Codes (QDCs) 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75135) for a complete summary of the data processing and collection periods for 

the claims-based measures using QDCs for the CY 2014 payment determination and 

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

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

Claims-Based Measures Using QDCs 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75135 through 75137) for a complete discussion of the minimum thresholds, 

minimum case volume, and data completeness for successful reporting for the CY 2014 

payment determination and subsequent years. We are not proposing any changes to these 

policies. 
CMS-1613-P 546 

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

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

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74509) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75137 through 75138) for a complete discussion of the requirements for data 

collection and submission for the ASC-6: Safe Surgery Checklist Use and ASC-7: ASC 

Facility Volume Data on Selected ASC Surgical Procedures measures for the CY 2015 

payment determination and subsequent years. We are not proposing any changes to these 

policies. 

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

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 through 

75130), we adopted ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-up 

Interval for Normal Colonoscopy in Average Risk Patients (NQF #0658) and ASC-10: 

Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of 

Adenomatous Polyps – Avoidance of Inappropriate Use (NQF #0659), two additional 

chart-abstracted measures, and we finalized a policy that aggregate data (numerators, 

denominators, and exclusions) on all ASC patients would be collected via an online 

Web-based tool that would be made available to ASCs via the QualityNet Web site. 

 We finalized that the data collection time period would be the calendar year 

(January 1 to December 31) 2 years prior to the affected payment determination year, and 

the data collected would be submitted during the time period of January 1 to August 15 in 

the year prior to the affected payment determination year. Thus, for the CY 2016 
CMS-1613-P 547 

payment determination, ASCs would be required to submit aggregate-level encounter 

data from January 1, 2014 to December 31, 2014 using our Web-based tool during the 

data submission window of January 1, 2015 to August 15, 2015 (78 FR 75138 through 

75139). 

 On December 31, 2013, we issued guidance stating that we would delay the 

implementation of ASC-9 and ASC-10 for 3 months for the CY 2016 payment 

determination, with a resulting encounter period of April 1, 2014 to December 31, 2014 

instead of January 1, 2014 to December 31, 2014 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier3&cid=1228772879036). The data submission timeframe and the 

encounter period for subsequent years remain as previously finalized (78 FR 75139). 

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

Payment Determination and Proposed Voluntary Data Collection for ASC-11 for CY 

2017 and Subsequent Payment Determination Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period, 

where we adopted ASC-11: Cataracts – Improvement in Patient’s Visual Function within 

90 Days Following Cataract Surgery (NQF #1536) beginning with the CY 2016 payment 

determination (78 FR 75129), and finalized the data collection and data submission 

timelines (78 FR 75138 to 75139). This measure assesses the rate of patients 18 years 

and older (with a diagnosis of uncomplicated cataract) in a sample who had improvement 

in visual function achieved within 90 days following cataract surgery based on 

completing both a pre-operative and post-operative visual function survey. 
CMS-1613-P 548 

 Since our adoption of this measure, we have come to believe that it may be 

operationally difficult at this time for ASCs to collect and report this measure. 

Specifically, we are concerned that the results of the survey used to assess the preoperative and post-operative visual function of the patient may not be shared across 

clinicians and facilities, making it difficult for ASCs to have knowledge of the visual 

function of the patient before and after surgery. We are also concerned about the surveys 

used to assess visual function; the measure allows for the use of any validated survey and 

results may be inconsistent should clinicians use different surveys. 

 Therefore, on December 31, 2013, we issued guidance stating that we would 

delay data collection for ASC-11 for 3 months (data collection would commence with 

April 1, 2014 encounters) for the CY 2016 payment determination 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier3&cid=1228772879036). We issued additional guidance on April 2, 2014, 

stating that we would further delay the implementation of ASC-11 for an additional 

9 months, until January 1, 2015 for the CY 2016 payment determination, due to 

continued concerns 

(https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage

%2FQnetTier3&cid=1228773811586). Therefore, we are proposing to exclude ASC-11 

Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract 

Surgery (NQF #1536) from the CY 2016 payment determination measure set. We would 

not subject ASCs to a payment reduction with respect to this measure for the CY 2016 

payment determination. 
CMS-1613-P 549 

 We continue to believe that this measure addresses an area of care that is not 

adequately addressed in our current measure set and the measure serves to drive 

coordination of care (78 FR 75129). Further, we believe ASCs should be a partner in 

care with physicians and other clinicians using their facility and that this measure 

provides an opportunity to do so. Therefore, we are continuing to include this measure in 

the ASCQR Program measure set for the CY 2017 payment determination and 

subsequent years. However, we understand the concerns and, therefore, are proposing 

that data collection and submission be voluntary for this measure for the CY 2017 

payment determination and subsequent years. ASCs would not be subject to a payment 

reduction for failing to report this measure during the period of voluntary reporting. For 

ASCs that choose to submit data, we continue to request that they submit such data using 

the means and timelines finalized in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75138 to 75139). Data submitted voluntarily will be publicly reported as 

discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 75138 to 75139). 

 We invite public comment on this proposal. 

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

CY 2017 Payment Determination and Subsequent Years 

 We are proposing to adopt the ASC-12: Facility Seven-Day Risk-Standardized 

Hospital Visit Rate after Outpatient Colonoscopy measure, which is a claims-based 

measure that does not require any additional data submission apart from standard 

Medicare FFS claims. We are proposing that, for this measure, which uses ASC 

Medicare claims data as specified in the ASCQR Specifications Manual and does not 
CMS-1613-P 550 

require any additional data submission such as QDCs, we would use paid Medicare FFS 

claims from a 12-month period from July 1 of the year 3 years before the payment 

determination year to June 30 of the following year. Thus, for the CY 2017 payment 

determination for this measure, claims from July 1, 2014 to June 30, 2015 would be used. 

We note that we are proposing to adopt this measure under the Hospital OQR Program, 

as described in section XIII.H.2.c. of this proposed rule. This ASCQR Program time 

period provides for the timeliest data possible while aligning the proposed data 

submission requirements with our Hospital OQR Program proposal, which would use the 

claims-based measure data submission requirements for the CY 2015 payment 

determination and subsequent years that we adopted in the CY 2014 OPPS/ASC final 

rule with comment period (78 FR 75111 through 75112). 

 We invite public comment on this proposal. 

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

Healthcare Personnel) Reported via the National Healthcare Safety Network (NHSN) for 

the CY 2016 Payment Determination and Subsequent Years 

a. Previously Adopted Requirements for the CY 2016 Payment Determination 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74510) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75139 through 75140) for a complete discussion of the ASC-8 measure (Influenza 

Vaccination Coverage among Healthcare Personnel) (NQF #0431), including the data 

collection timeframe and the data reporting standard procedures for the CY 2016 

payment determination. 
CMS-1613-P 551 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75139 through 

75140), we finalized our proposal to use the data submission and reporting standard 

procedures that have been set forth by the CDC for NHSN participation in general and 

for submission of this measure to NHSN. We refer readers to the CDC’s NHSN Web site 

for detailed procedures for enrollment (http://www.cdc.gov/nhsn/ambulatorysurgery/enroll.html), set-up (http://www.cdc.gov/nhsn/ambulatory-surgery/setup.html), 

and reporting (https://sams.cdc.gov) (user authorization through Secure Access 

Management Services (SAMS) is required for access to NHSN). We note that the 

reporting link has been updated in this proposed rule. 

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

Subsequent Years and Proposed Submission Deadlines for the CY 2016 Payment 

Determination and Subsequent Years 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74510), we 

finalized that data collection for the CY 2016 payment determination would be from 

October 1, 2014 through March 31, 2015 (the 2014-2015 influenza season data). We are 

proposing that for the CY 2017 payment determination and subsequent years, ASCs 

would collect data from October 1 of the year 2 years prior to the payment determination 

year to March 31 of the year prior to the payment determination year. For example, the 

CY 2017 payment determination would require data collection from October 1, 2015 to 

March 31, 2016. 

 In the CY 2014 OPPS/ASC proposed rule, we proposed that ASCs would have 

until August 15, 2015 to submit their 2014-2015 influenza season data (October 1, 2014 
CMS-1613-P 552 

through March 31, 2015) to NHSN. We stated that this date is the latest date possible for 

data entry that would provide sufficient time for CMS to make the CY 2016 payment 

determinations and is aligned with the data entry deadline for the measures entered via 

the CMS online tool (78 FR 43670). While some commenters supported this proposal, 

others expressed disagreement with this proposal because it differed from the May 15 

deadline proposed for the Hospital IQR Program (78 FR 27700, 50822) and the Hospital 

OQR Program (78 FR 43656, 75116 through 75117) and they believed this difference in 

deadlines could cause confusion, thereby disadvantaging ASCs (78 FR 75140). Other 

commenters believed that providing ASCs with a later deadline would provide an unfair 

advantage because ASCs would have longer to submit their data. Due to these concerns, 

we did not finalize the August 15, 2015 deadline. We stated that we intended to propose 

a submission deadline for this measure for the CY 2016 payment determination in this 

proposed rule. 

 In this proposed rule, we are proposing that May 15 of the year in which the 

influenza season ends be the submission deadline for each payment determination year, 

similar to the Hospital IQR and OQR Programs. For example, for the CY 2016 payment 

determination, ASCs would be required to submit their 2014-2015 influenza season data 

(October 1, 2014 through March 31, 2015) by May 15, 2015. Similarly, for the CY 2017 

payment determination, ASCs would be required to submit their 2015-2016 influenza 

season data (October 1, 2015 through March 31, 2016) by May 15, 2016. We believe a 

May 15 reporting deadline would enable ASCs to use data summarizing the results of 

their previous influenza vaccination campaign to set targets and make plans for their 
CMS-1613-P 553 

influenza vaccination campaigns prior to the next influenza season. This deadline also 

would enable us to post and the public to review the summary data before the start of the 

next influenza season. Finally, this date aligns to the May 15 deadline used in the 

Hospital IQR and OQR Programs for this measure. 

 We invite public comment on this proposal. 

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

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53641 

through 53642) for a complete discussion of our policy not to require validation of 

claims-based measures (beyond the usual claims validation activities conducted by our 

administrative contractors) or Web-based measures for the ASCQR Program, which is in 

alignment with our requirements for the Hospital IQR and OQR Programs. We are not 

proposing any changes to this policy. 

7. Extraordinary Circumstances Extensions or Exemptions for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53642 

through 53643) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75140 through 75141) for a complete discussion of our extraordinary 

circumstances extension or waiver process under the ASCQR Program. We are not 

proposing any substantive changes to these policies or the processes. However, in the 

future, we will refer to the process as the “Extraordinary Circumstances Extensions or 

Exemptions” process rather than the “Extraordinary Circumstances Extensions or 

Waivers” process. 
CMS-1613-P 554 

 We also are in the process of revising the Extraordinary Circumstances/Disaster 

Extension or Waiver Request form (CMS-10432), approved under OMB control number 

0938-1171. We are updating the instructions and the form so that a hospital or facility 

may apply for an extension for all applicable quality reporting programs at the same time. 

In addition, the instructions for the form will be updated. 

8. ASCQR Program Reconsideration Procedures for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53643 

through 53644) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75141) for a complete discussion of our informal reconsideration process for the 

ASCQR Program for the CY 2014 payment determination and subsequent years. We are 

not proposing any changes to the informal reconsideration process. 

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

to the Physician Self-Referral Law: Expansion Exception Process

A. Background 

1. Statutory Basis 

 Section 1877 of the Act, also known as the “physician self-referral law” prohibits: 

(1) a physician from making referrals for certain designated health services payable by 

Medicare to an entity with which the physician (or an immediate family member) has a 

financial relationship (ownership or compensation), unless an exception applies; and 

(2) the entity from submitting claims to Medicare (or to another individual, entity, or 
CMS-1613-P 555 

third party payer) for those designated health services furnished as a result of a prohibited 

referral. The Act establishes a number of specific exceptions to the physician 

self-referral law and grants the Secretary the authority to create regulatory exceptions that 

pose no risk of program or patient abuse. Since the original enactment of the statute in 

1989, we have published a series of final rules interpreting the statute and promulgating 

numerous exceptions. 

 Section 1877(d) of the Act sets forth exceptions related to ownership and 

investment interests held by a physician (or an immediate family member of a physician) 

in an entity that furnishes designated health services. Section 1877(d)(2) of the Act 

provides an exception for ownership and investment interests in rural providers. Under 

the provision of section 1877(d)(2) of the Act, in order for an ownership or investment 

interest to qualify for the exception, the designated health services must be furnished in a 

rural area (as defined in section 1886(d)(2) of the Act), and substantially all of the 

designated health services furnished by the entity must be furnished to individuals 

residing in a rural area. Section 1877(d)(3) of the Act provides the hospital ownership 

exception, often referred to as the “whole hospital exception,” for ownership and 

investment interests in a hospital located outside of Puerto Rico, provided that the 

referring physician is authorized to perform services at the hospital and the ownership or 

investment interest is in the hospital itself (and not merely in a subdivision of the 

hospital). 

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

Exceptions to the Physician Self-Referral Law 
CMS-1613-P 556 

 Section 6001(a) of the Affordable Care Act amended the rural provider and whole 

hospital exceptions to the physician self-referral law to impose additional restrictions on 

physician ownership and investment in rural providers and hospitals. Section 6001(a) 

defines a “physician owner or investor” as a physician, or immediate family member of a 

physician, who has a direct or indirect ownership or investment interest in a hospital. We 

refer to hospitals with direct or indirect physician owners or investors as 

“physician-owned hospitals.” 

 Section 6001(a)(3) of the Affordable Care Act established new section 1877(i) of 

the Act, which imposes additional requirements for physician-owned hospitals to qualify 

for the rural provider or whole hospital exception. In addition to other requirements, 

section 1877(i)(1) of the Act prohibits a physician-owned hospital from expanding its 

facility capacity beyond the number of operating rooms, procedure rooms, and beds for 

which the hospital was licensed as of March 23, 2010, unless an exception is granted by 

the Secretary. 

 Section 1877(i)(3) of the Act requires the Secretary to establish and implement an 

exception process to the prohibition on expansion of facility capacity. We refer to this 

process as the “expansion exception process.” Section 1877(i)(3)(A)(i) of the Act 

provides that a hospital qualifying as an “applicable hospital” or a “high Medicaid 

facility” may apply for an expansion exception. Section 1877(i)(3)(E) of the Act sets 

forth the eligibility criteria for applicable hospitals, which include criteria concerning 

inpatient Medicaid admissions, bed capacity, and bed occupancy. Section 1877(i)(3)(F) 
CMS-1613-P 557 

of the Act sets forth the eligibility criteria for high Medicaid facilities, which include a 

criterion concerning inpatient Medicaid admissions. 

 In the CY 2011 OPPS/ASC final rule with comment period (75 FR 72240), we 

addressed many of the additional requirements that were established by section 6001(a) 

of the Affordable Care Act for the rural provider and whole hospital exceptions, 

including the prohibition on expansion of facility capacity. In that final rule with 

comment period, we finalized regulations at 42 CFR 411.362(b)(2) that prohibit a 

physician-owned hospital from increasing the number of operating rooms, procedure 

rooms, and beds beyond that for which the hospital was licensed on March 23, 2010 (or, 

in the case of a physician-owned hospital that did not have a provider agreement in effect 

as of that date, but did have a provider agreement in effect on December 31, 2010, the 

effective date of such agreement), if the hospital seeks to avail itself of the rural provider 

or whole hospital exception. 

 In the CY 2012 OPPS/ASC final rule with comment period (76 FR 74517), we 

promulgated regulations under 42 CFR 411.362(c) that govern the expansion exception 

process. Section 411.362(c)(2) sets forth the criteria for a physician-owned hospital to 

qualify for an expansion exception as an applicable hospital. Specifically, 

§ 411.362(c)(2) states that: (1) the hospital’s annual percent of total inpatient admissions 

under Medicaid must be equal to or greater than the average percent with respect to such 

admissions for all hospitals located in the county in which the hospital is located during 

the most recent fiscal year for which data are available as of the date that the hospital 

submits its exception request; (2) the hospital must be located in a State in which the 
CMS-1613-P 558 

average bed capacity in the State is less than the national average bed capacity during the 

most recent fiscal year for which data are available as of the date that the hospital submits 

its request; and (3) the hospital must have an average bed occupancy rate that is greater 

than the average bed occupancy rate in the State in which the hospital is located during 

the most recent fiscal year for which data are available as of the date that the hospital 

submits its request. 

 Section 411.362(c)(3) specifies the criteria for a physician-owned hospital seeking 

an exception under the expansion exception process on the basis that it is a high Medicaid 

facility, including the requirement that, with respect to each of the 3 most recent fiscal 

years for which data are available as of the date that the hospital submits its exception 

request, the hospital must have an annual percent of total inpatient admissions under 

Medicaid that is estimated to be greater than such percent with respect to such admissions 

for any other hospital located in the county in which the hospital is located. 

 In the CY 2012 OPPS/ASC proposed rule (76 FR 42350 through 42352), we 

proposed that data from the CMS Healthcare Cost Report Information System (HCRIS) 

be used to determine whether a hospital satisfies the inpatient Medicaid admissions, bed 

capacity, and bed occupancy criteria for applicable hospitals and the inpatient Medicaid 

admissions criterion for high Medicaid facilities. We requested public comments 

concerning alternative data sources that could result in more accurate determinations as to 

whether a hospital satisfies the relevant criteria (76 FR 42350). The public comments 

that we received provided no persuasive support for a data source more accurate than the 

filed hospital cost report data reported to HCRIS and, therefore, we finalized the 
CMS-1613-P 559 

requirement to use filed hospital cost report data for purposes of facility capacity 

expansion exception requests in the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74518). We refer to the filed hospital cost report data that are required under our 

existing regulations as “HCRIS data” in this proposal. 

 As required by section 1877(i)(3)(A) of the Act, the regulations addressing the 

expansion exception process in the CY 2012 OPPS/ASC final rule with comment period 

were issued by January 1, 2012, and the process was implemented on February 1, 2012. 

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

 Following the implementation of the expansion exception process, industry 

stakeholders informed us of what they believed to be certain limitations regarding the 

required use of HCRIS data, which we describe in the following two sections. 
CMS-1613-P 560 

1. Medicaid Managed Care Data 

 Existing § 411.362(c)(2)(ii) provides that an applicable hospital must use filed 

cost report discharge data to estimate its annual percent of total inpatient admissions 

under Medicaid for the most recent fiscal year for which data are available. Existing 

§ 411.362(c)(3)(ii) similarly provides that a high Medicaid facility must use filed cost 

report discharge data to estimate its annual percent of total inpatient admissions under 

Medicaid and such percent for every other hospital located in its county for each of the 

3 most recent fiscal years for which data are available. 

 Since the issuance and implementation of this rule, several industry stakeholders 

have informed us that a correctly completed hospital cost report does not include 

Medicaid managed care admissions or discharges and, therefore, Medicaid managed care 

admissions and discharges are not available in HCRIS. The industry stakeholders 

claimed that, because HCRIS data does not include Medicaid managed care admissions 

or discharges, they are unable to satisfy §§ 411.362(c)(2)(ii) and (c)(3)(ii) and, thus, 

cannot qualify for an exception under the existing expansion exception process, despite 

claiming to have served a significant number of total Medicaid patients. 

 After being notified of this issue, we confirmed that hospitals cannot report 

Medicaid managed care admissions or discharges through their hospital cost reports and 

that this information is not available in HCRIS. In addition, we have concluded that the 

information collected currently through HCRIS cannot be used to estimate Medicaid 

managed care admissions or discharges for purposes of estimating inpatient Medicaid 

admissions under §§ 411.362(c)(2)(ii) and (c)(3)(ii). 
CMS-1613-P 561 

 We believe that some physician-owned hospitals that serve a significant number 

of Medicaid managed care patients and are interested in the expansion exception process 

may fail to qualify for an exception based on the exclusion of Medicaid managed care 

data. Accordingly, as detailed in section XV.C. of this proposed rule, we are proposing 

to revise the expansion exception process to permit physician-owned hospitals to use 

filed hospital cost report data, data from internal data sources, or data from external data 

sources to estimate the required percentages of inpatient admissions under Medicaid. 

(We refer in this proposal to the non-HCRIS internal data sources and external data 

sources that we are proposing to permit for purposes of the expansion exception process 

as “supplemental data sources.”) We believe that our proposal to permit the use of 

supplemental data sources is necessary to effectuate section 6001(a) of the Affordable 

Care Act for those physician-owned hospitals that are unable to satisfy the criteria for an 

expansion exception using only HCRIS data. 

2. Hospitals That Lack Filed Cost Reports for the Relevant Fiscal Years 

 As stated above, existing § 411.362(c)(3)(ii) provides that a high Medicaid 

facility must use filed cost report discharge data to estimate its annual percent of total 

inpatient admissions under Medicaid and such percent for every other hospital located in 

its county for each of the 3 most recent fiscal years for which data are available. One 

industry stakeholder, seeking to avail itself of the whole hospital exception, stated that it 

would like to expand its facility capacity by qualifying as a high Medicaid facility. The 

stakeholder claimed that, although it treated Medicaid patients during the relevant 3-year 

period, it does not have filed cost report discharge data available for each of the relevant 
CMS-1613-P 562 

fiscal years because it was not a Medicare participating provider during the entire period. 

The industry stakeholder further claimed that it is unable to request an exception as a 

high Medicaid facility until it has 3 years of the required filed cost report data. 

 The stakeholder is correct that a hospital that has not participated as a provider in 

the Medicare program for all of the 3 most recent fiscal years for which data are available 

would be precluded from seeking a facility expansion exception. It would be similarly 

prohibitive if the hospitals in the county in which the requesting hospital is located were 

not Medicare participating providers or were not participating in the Medicare program 

for the entire period for which comparisons are required under the statute and our 

regulations. We find this to be another persuasive reason to permit the use of 

supplemental data sources and, as such, we are proposing to permit the use of other data 

sources, as further detailed in section XV.C. of this proposed rule, for physician-owned 

hospitals to estimate the percentages of inpatient admissions under Medicaid for 

§ 411.362(c)(3)(ii). We believe that our proposal will enable physician-owned hospitals 

to perform the comparison set forth in § 411.362(c)(3)(ii), even if the requesting hospital 

and/or another hospital located in its county lacks filed hospital cost report data for some 

or all of the relevant fiscal years. We note that the proposal would apply regardless of the 

reason that the requesting hospital and/or another hospital in its county lacks filed 

hospital cost report data. 

 The industry stakeholder that informed us of this issue would like to qualify as a 

high Medicaid facility; therefore, the stakeholder’s comments addressed only the 

inpatient Medicaid admissions criterion for high Medicaid facilities. However, as stated 
CMS-1613-P 563 

above, hospitals seeking to qualify as an applicable hospital also use filed hospital cost 

report data for the inpatient Medicaid admissions, bed capacity, and bed occupancy 

criteria set forth in § 411.362(c)(2). We recognize that these hospitals may also lack filed 

hospital cost report data or may be subject to comparisons against other hospitals that 

lack filed cost report data for the relevant fiscal year. Therefore, as further detailed in 

section XV.C. of this proposed rule, we are proposing to permit the use of supplemental 

data sources for the inpatient Medicaid admissions, bed capacity, and bed occupancy 

criteria for applicable hospitals. 

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

Process 

 Given the limitations regarding the required use of HCRIS data described in 

sections XV.B.1. and XV.B.2. of this proposed rule, we are proposing to revise our 

regulations at §§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and (c)(3)(ii) to permit 

physician-owned hospitals to use data from certain internal data sources or external data 

sources, in addition to HCRIS data, in order to estimate the percentages of inpatient 

Medicaid admissions, and to determine the bed capacities and the bed occupancy rates 

referenced in those sections. We are not prescribing that hospitals use a specific 

individual data source or combination of data sources. 

 We are proposing that, for purposes of the expansion exception process, internal 

data sources are sources generated, maintained, or under the control of the Department. 

The following list provides examples of internal data sources that we are proposing 

physician-owned hospitals may use in the expansion exception process: 
CMS-1613-P 564 

● Healthcare Cost and Utilization Project (HCUP) – HCUP is a family of health 

care databases and related software tools and products developed through a 

Federal-State-industry partnership and sponsored by the Agency for Healthcare Research 

and Quality (AHRQ). HCUP databases bring together the data collection efforts of State 

data organizations, hospital associations, private data organizations, and the Federal 

government to create a national information resource of encounter-level health care data 

(HCUP Partners). 

● Medicaid Statistical Information System (MSIS) - States report Medicaid data 

through MSIS. Through this system, States submit raw eligibility and claims data to 

CMS, which CMS uses to produce Medicaid program characteristics and utilization 

information. 

● Medicaid Analytic Extract (MAX) - MAX data are person-level data files on 

Medicaid eligibility, service utilization, and payment information for all individuals, 

whether or not they used any Medicaid services in a given calendar year. The purpose of 

MAX is to produce data to support research and policy analysis on Medicaid populations. 

 We also are seeking public comments that recommend other possible internal data 

sources. 

 We are proposing that, for purposes of the expansion exception process, external 

data sources are data sources generated, maintained, or under the control of a State 

Medicaid agency. We are seeking public comments that recommend other possible 

external data sources, including those of other State agencies or departments. 
CMS-1613-P 565 

 We are proposing to define the terms “internal data source” and “external data 

source” in § 411.351. We recognize the need for an accurate and consistent expansion 

exception process. Accordingly, we are proposing to define “internal data source” to 

include only non-HCRIS data sources that are reliable and transparent, and that maintain 

or generate data that are accurate, complete, and objectively verifiable for purposes of the 

expansion exception process. In addition, we are proposing to define “external data 

source” to include only data sources that are reliable and transparent, and that maintain or 

generate data that are accurate, complete, and objectively verifiable for purposes of the 

expansion exception process. Finally, we are proposing in § 411.351 that internal data 

sources and external data sources must maintain data that are readily available and 

accessible to the requesting hospital, comparison hospitals, and to CMS for purposes of 

the expansion exception process. We note that the expansion exception process includes 

both the physician-owned hospital’s completion of its request and CMS’ consideration of 

the physician-owned hospital’s request. 

 We believe that the supplemental data sources should-- 

● Be transparent regarding what comprises the data, where the data originated, 

and the manner and method by which the data source received the data; 

● Be maintained on a secure database that prevents distortion or corruption of 

data and that ensures the accuracy of the data; 

● Contain sufficient information to enable accurate estimates of the percentages 

of inpatient Medicaid admissions, and accurate determinations of bed capacities and bed 

occupancy rates; 
CMS-1613-P 566 

● Contain sufficient information to enable the comparisons required by 

§§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and (c)(3)(ii) for the fiscal year(s) at issue; and 

● Contain sufficiently clear and detailed data that will enable multiple users to 

produce consistent results and outcomes when using the same data set. 

 Under the existing expansion exception process, CMS uses HCRIS data to 

provide the average percent of total inpatient Medicaid admissions per county, the 

average bed capacity per State, the national average bed capacity, and the average bed 

occupancy rate per State on the CMS Web site at: http://www.cms.gov/Medicare/Fraudand-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. If we finalize our 

proposal to permit the use of supplemental data sources, we plan to continue to provide 

HCRIS-based information and issue guidance on the potential use of supplemental data 

sources on the CMS Web site. 

 We recognize that if a physician-owned hospital uses data from a supplemental 

data source, the hospitals may ultimately need to make estimates or determinations in 

addition to those referenced in our existing regulations. Accordingly, we are proposing 

to revise our regulations to allow for the additional estimates or determinations that may 

be necessary under our revised process. Specifically, we are proposing to permit a 

requesting hospital to use data from a supplemental data source to: 

● Estimate its own annual percentage of inpatient Medicaid admissions 

(§ 411.362(c)(2)(ii)). 

● Estimate the average percentage with respect to such admissions for all 

hospitals located in the county in which the hospital is located (§ 411.362(c)(2)(ii)). 
CMS-1613-P 567 

● Determine the average bed capacity in the State in which the hospital is located 

(§ 411.362(c)(2)(iv)). 

● Determine the national average bed capacity (§ 411.362(c)(2)(iv)). 

● Determine its own average bed occupancy rate (§ 411.362(c)(2)(v)). 

● Determine the average bed occupancy rate for the State in which the hospital is 

located (§ 411.362(c)(2)(v)). 

● Estimate its annual percentage of total inpatient admissions under Medicaid for 

each of the 3 most recent fiscal years for which data are available (§ 411.362(c)(3)(ii)). 

● Estimate the annual percentages of total inpatient admissions under Medicaid 

for every other hospital located in the county in which the hospital is located for each of 

the 3 most recent fiscal years for which data are available (§ 411.362(c)(3)(ii)). 

 We note that section 1877(i)(3)(F) of the Act requires that a high Medicaid 

facility use data from the 3 most recent fiscal years for which data are available. In the 

CY 2012 OPPS/ASC final rule with comment period (76 FR 74518), we stated that we 

consider the most recent fiscal year for which data are available to be the most recent 

year for which HCRIS contains data from at least 6,100 hospitals. We currently apply 

this standard to expansion exception requests for both applicable hospitals and high 

Medicaid facilities. We are proposing to revise our standard so that the most recent fiscal 

year for which data are available would be the year for which the data source(s) used in 

an expansion exception request contain sufficient data to perform the comparisons 

required under §§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), and (c)(3)(ii). Specifically, we 

are proposing that data sources, either alone or in combination with other data sources, 
CMS-1613-P 568 

would be considered to contain “sufficient data” if they contain all data from the 

requesting hospital and each hospital to which the requesting hospital must compare itself 

that are necessary to perform the estimates required in the expansion exception process. 

In addition, with respect to a hospital seeking an expansion exception as an applicable 

hospital, we are proposing that, in order to be considered to contain “sufficient data,” the 

data sources, either alone or in combination with other data sources, must contain the data 

necessary to determine the State and national average bed capacity and the average bed 

occupancy rate in the State in which the requesting hospital is located for purposes of the 

expansion exception process. 

 Modifying our current interpretation of “the most recent fiscal year for which data 

are available” would allow physician-owned hospitals in counties or States where all data 

necessary to perform the required estimates and determinations have been filed or 

otherwise included in the permissible data source(s) to proceed with an expansion 

exception request, even if hospitals unrelated to the request have not filed or otherwise 

submitted data to the source(s) being used in the hospital’s request. We also are 

proposing to require that data from the same fiscal year be used for the applicable 

hospital eligibility criteria at §§ 411.362(c)(2)(ii), (c)(2)(iv), (c)(2)(v), even if the hospital 

uses multiple data sources for those criteria. We believe that requiring the use of data 

from the same fiscal year will ensure consistency and equitability in the expansion 

exception process. We are seeking public comments on our proposal to revise the 

standard that determines the most recent fiscal year(s) for which data are available, as 
CMS-1613-P 569 

well as other ways to define “sufficient data” for purposes of the expansion exception 

process. 

 In addition, we are proposing to require that the requesting hospital provide actual 

notification directly to hospitals whose data are part of the comparisons set forth under 

§§ 411.362(c)(2)(ii) and (c)(3)(ii) of the regulations. Under proposed § 411.362(c)(5), 

the notification must be in writing, in either electronic or hard copy form, and must be 

provided at the same time that the hospital discloses on any public Web site for the 

hospital that it is requesting an exception. This additional safeguard would ensure that 

comparison hospitals are aware of the opportunity to confirm or dispute the accuracy or 

reliability of the data in the physician-owned hospital’s request. 

 Finally, our existing regulations at § 411.362(c)(5) set forth the process for 

community input and the timing of a complete expansion exception request. These 

regulations provide for a 30-day comment period following publication in the Federal 

Register of notice of the physician-owned hospital’s expansion exception request and a 

30-day rebuttal period for the requesting hospital to respond, if it chooses, to any written 

comments that CMS receives from the community. Currently, an expansion exception 

request is considered complete at the end of the 30-day comment period if CMS does not 

receive written comments from the community. If CMS receives written comments from 

the community, the request is considered complete at the end of the 30-day rebuttal 

period, regardless of whether the requesting hospital submits a rebuttal statement. We 

believe that permitting the use of data from an internal data source or an external data 

source would likely require additional time for our review of an expansion exception 
CMS-1613-P 570 

request, including any comments submitted with respect to the request. For example, 

CMS may need to obtain the data from the original source, confirm that the data 

presented in the request are an accurate representation of the original source data, and 

objectively verify the estimates and determinations presented in the request. Therefore, 

we are proposing to revise our regulations at § 411.362(c)(5) to extend the date by which 

certain expansion exception requests will be deemed complete. Specifically, we are 

proposing to revise § 411.362(c)(5) to provide that, where the request, any written 

comments, and any rebuttal statement include only HCRIS data, an expansion exception 

request will be deemed complete no later than: (1) the end of the 30-day comment period 

if no written comments from the community are received; and (2) the end of the 30-day 

rebuttal period if written comments from the community are received, regardless of 

whether the physician-owned hospital submitting the request submits a rebuttal 

statement. We also are proposing that, where the request, any written comments, or a 

rebuttal statement includes data from a supplemental data source, an expansion exception 

request will be deemed complete no later than: (1) 180 days after the end of the 30-day 

comment period if no written comments from the community are received; and (2) 180 

days after the end of the 30-day rebuttal period if written comments from the community 

are received, regardless of whether the physician-owned hospital submitting the request 

submits a rebuttal statement. 

 We note that additional revisions may be necessary to conform our regulations at 

§ 411.362(c) if we finalize our proposal to permit the use of supplemental data sources. 
CMS-1613-P 571 

D. Additional Considerations 

 As stated above, we recognize the need for an accurate and consistent expansion 

exception process. We are aware that data sources have unique characteristics due to 

their inputs, collection methods, compilation, and other factors, and will take this into 

consideration if we finalize our proposal to permit the use of supplemental data sources. 

In an effort to implement an accurate and consistent expansion exception process, we are 

seeking public comments on the utility, appropriateness, and limitations of our proposal 

to permit the use of supplemental data sources. Specifically, we are seeking public 

comments that: 

● Address whether permitting the use of supplemental internal or external data 

sources would significantly affect the outcomes for any of the estimates or determinations 

required in our regulations. 

● Address whether permitting the use of supplemental data sources would 

materially affect a physician-owned hospital’s ability to request an exception or CMS’ 

determination on an exception request. 

● Describe the length of time that would be necessary to obtain or generate the 

required data from a specific data source. 

● Address whether and when the data will be available and accessible per fiscal 

year. 

● Address whether the data will be available and accessible in a format that 

enables the requesting hospital to perform the necessary comparisons. 
CMS-1613-P 572 

● Describe how supplemental data sources could or should be prioritized, 

including, but not limited to, rankings related to accuracy or reliability. 

● Describe how data from a particular data source could be used in the expansion 

exception process. We encourage commenters to specify whether a particular data source 

already maintains the percentages or rates required, or whether calculations will be 

necessary to generate the required percentages or rates. If calculations will be necessary, 

we are requesting that commenters describe the calculations. 

● Describe the cost to industry stakeholders, State governments, and the Federal 

government for obtaining or generating data from any potential data sources. We 

consider cost to include both resources (for example, human capital and information 

technology) and actual financial burden (for example, fees to use or purchase the data). 

We also seek public comments on whether any additional burdens would affect the 

quality of care for beneficiaries as a result of additional costs borne by a requesting 

hospital. 

XVI. Proposed Revision of the Requirements for Physician Certification of Hospital 

Inpatient Services Other Than Psychiatric Inpatient Services 

 In the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27644 through 27650), we 

discussed the statutory requirement for certification of hospital inpatient services for 

payment under Medicare Part A. The certification requirement for inpatient services 

other than psychiatric inpatient services is found in section 1814(a)(3) of the Act, which 

provides that Medicare Part A payment will only be made for such services “which are 
CMS-1613-P 573 

furnished over a period of time, [if] a physician certifies that such services are required to 

be given on an inpatient basis.” 

 In commenting on our FY 2014 proposal, some commenters argued that the 

statutory reference to services furnished “over a period of time” and the then-existing 

regulation’s lack of any specific deadline for physician certifications in nonoutlier cases 

indicate that no certification is required for short-stay cases. In support of their argument, 

the commenters cited the legislative history of section 1814(a)(3) of the Act, which these 

commenters interpreted as indicating that the certification requirements should apply only 

to certain long-term stays. 

 As we indicated in our response to these public comments in the FY 2014 

IPPS/LTCH PPS final rule (78 FR 50939), we do not agree with the assertion that the 

only possible interpretation of the statute is that the requirement for physician 

certification only applies to long-stay cases. The statute does not define “over a period of 

time,” and further provides that “such certification shall be furnished only in such cases, 

and with such frequency, and accompanied by such supporting material . . . as may be 

provided by regulations.” By this language, Congress explicitly delegated authority to 

the agency to elucidate this provision of the statute by regulation. 

 In our current regulations, we have interpreted the statute’s requirement of a 

physician certification for inpatient hospital services furnished “over a period of time” to 

apply to all inpatient admissions. While this is not the only possible interpretation of the 

statute, we believe that it is a permissible interpretation. 

 We continue to believe that the requirement of an order from a physician or other 
CMS-1613-P 574 

qualified practitioner in order to trigger an inpatient hospital admission as specified in 

42 CFR 412.3 is necessary for all inpatient admissions. As described more fully in the 

FY 2014 IPPS/LTCH PPS final rule (78 FR 50938 through 50954), the requirement for a 

physician order for a hospital inpatient admission has long been clear in the Medicare 

hospital conditions of participation (CoPs), and we promulgated § 412.3 to make more 

explicit that admission pursuant to this order is the means whereby a beneficiary becomes 

a hospital inpatient and, therefore, is required for payment of hospital inpatient services 

under Medicare Part A. A beneficiary becomes a hospital inpatient when admitted as 

such after a physician (or other qualified practitioner as provided in the regulations) 

orders inpatient admission in accordance with the CoPs, and Medicare pays under Part A 

for such an admission if the order is documented in the medical record. The order must 

be supported by objective medical information for purposes of the Part A payment 

determinations. Thus, the physician order must be present in the medical record and be 

supported by the physician admission and progress notes in order for the hospital to be 

paid for hospital inpatient services. 

 As further noted in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50938 through 

50954), we believe the additional certification requirements now specified under 42 CFR 

424.13(a)(2), (a)(3), and (a)(4) (that is, the reason for hospitalization, the estimated time 

the patient will need to remain in the hospital, and the plan of posthospital care, if 

applicable) generally can be satisfied by elements routinely found in a patient’s medical 

record, such as progress notes. 

 However, as we look to achieve our policy goals with the minimum 
CMS-1613-P 575 

administrative requirements necessary, and after considering previous public comments 

and our experience with our existing regulations, we believe that, in the majority of cases, 

the additional benefits (for example, as a program safeguard) of formally requiring a 

physician certification may not outweigh the associated administrative requirements 

placed on hospitals. Therefore, while we continue to believe that the inpatient admission 

order is necessary for all inpatient admissions, we are proposing to require such orders as 

a condition of payment based upon our general rulemaking authority under section 1871 

of the Act rather than as an element of the physician certification under section 

1814(a)(3) of the Act. Section 1871 of the Act authorizes the Secretary “to prescribe 

such regulations as may be necessary to carry out the administration of the insurance 

programs under [Title XVIII].” A clear regulatory definition of when and how a 

beneficiary becomes an inpatient is necessary to carry out the administration of Medicare 

Part A. Section 1861(b) of the Act defines “inpatient hospital services” as certain items 

and services furnished to “an inpatient of a hospital,” but does not define “an inpatient of 

a hospital.” Accordingly, 42 CFR 412.3 provides the necessary definition for purposes of 

Medicare Part A payment by clarifying when “an individual is considered an inpatient of 

a hospital, including a critical access hospital.” We are proposing to remove paragraph 

(c) from § 412.3. As we are proposing to rely on a different statutory authority for such 

regulation, an admission order would no longer be a required component of physician 

certification of medical necessity. 

 As to the physician certification requirement, we maintain that our existing 

longstanding policy is based upon a permissible interpretation of section 1814(a)(3) of 
CMS-1613-P 576 

the Act pursuant to that provision’s express delegation of authority to the agency to 

determine the circumstances under which such certification should be required. 

Nonetheless, after consideration of public feedback, our experience under the existing 

regulations, and our policy goals, we are proposing to change our interpretation of section 

1814(a)(3) of the Act to require a physician certification only for long-stay cases and 

outlier cases. 

 As noted above, we believe that, in most cases, the admission order, medical 

record, and progress notes will contain sufficient information to support the medical 

necessity of an inpatient admission without a separate requirement of an additional, 

formal, physician certification. However, we believe that evidence of additional review 

and documentation by a treating physician beyond the admission order is necessary to 

substantiate the continued medical necessity of long or costly inpatient stays. While 

granting the Secretary broad discretion to determine the circumstances under which a 

physician certification should be required, the statute specifies that the certification by a 

physician with respect to inpatient hospital services (other than inpatient psychiatric 

hospital services) “shall be furnished no later than the 20th day” of the stay. Because the 

statute specifically requires that certification must occur no later than the 20th day, we 

believe that, at a minimum, Congress intended that physicians should conduct a more 

thorough review of such cases to help ensure that all requirements of medical necessity 

continue to be met. We also note the current regulations at § 424.13(f)(2) specify our 

longstanding requirement that the physician certification for cost outlier cases occur no 

later than 20 days into the hospital stay, and we are not proposing to change the 
CMS-1613-P 577 

requirements for these cases. Therefore, we believe that, for nonoutlier cases, 20 days is 

also an appropriate minimum threshold for the physician certification, and we are 

proposing to define long-stay cases as cases with stays of 20 days or longer. 

 Specifically, in this proposed rule, we are proposing to revise paragraph (a) of 

§ 424.13 to specify that “Medicare Part A pays for inpatient hospital services (other than 

inpatient psychiatric facility services) for cases that are 20 inpatient days or more, or are 

outlier cases under subpart F of Part 412 of this chapter, only if a physician certifies or 

recertifies the following: 

 (1) The reasons for either— 

 (i) Continued hospitalization of the patient for medical treatment or medically 

required diagnostic study; or 

 (ii) Special or unusual services for cost outlier cases (under the prospective 

payment system set forth in subpart F of part 412 of this chapter). 

 (2) The estimated time the patient will need to remain in the hospital. 

 (3) The plans for posthospital care, if appropriate.” 

 We also are proposing to revise paragraph (b) of § 424.13 to specify that 

certifications for long-stay cases must be furnished no later than 20 days into the hospital 

stay. 

 Because the care furnished in inpatient psychiatric facilities is often purely 

custodial and therefore not covered under Medicare and because the primary purpose of 

the certification of these cases is to help ensure that Medicare pays only for services of 

the type appropriate for Medicare coverage, we are not proposing changes to the 
CMS-1613-P 578 

certification requirements for inpatient psychiatric hospital services. 

 As discussed more fully in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50942 

through 50943), there also are inherent differences in the operation of and beneficiary 

admission to IRFs. Therefore, we also are not proposing any changes to the admission 

requirements for IRFs. 

 We are inviting public comment on these proposals. 

XVII. CMS-Identified Overpayments Associated with Payment Data Submitted by 

Medicare Advantage (MA) Organizations and Medicare Part D Sponsors (Proposed 

§§ 422.330 and 423.352) 

A. Background 

Medicare Part C and Part D payments to Medicare Advantage (MA) organizations 

and Part D sponsors are determined, in part, using data submitted to CMS by the MA 

organizations and Part D sponsors. These “payment data” include diagnosis data that are 

used by CMS to risk adjust Part C and Part D payments, Prescription Dug Event (PDE) 

data that are used by CMS to cost reconcile various Part D subsidies, as well as other 

types of data discussed below. Through our review and oversight of payment data 

submitted by MA organizations and Part D sponsors, CMS identifies situations where 

MA organizations and/or Part D sponsors have submitted payment data to CMS that 

should not have been submitted--either because the data submitted are inaccurate or 

because the data are inconsistent with Part C and Part D requirements. (Throughout this 

section, we refer to these data submissions as “erroneous payment data.”) If an MA 

organization or Part D sponsor submits erroneous payment data to CMS, the MA 
CMS-1613-P 579 

organization or Part D sponsor can address errors by submitting corrected data to the 

CMS payment systems, and our approach thus far to these kinds of situations has been to 

request that MA organizations and Part D sponsors make these kinds of data corrections 

voluntarily. 

 However, in instances in which the MA organization or Part D sponsor fails to 

make the requested data correction, the payment amount calculated for the plan may also 

be incorrect. As a result, we have concluded that CMS needs to establish a formal 

process that allows us to recoup overpayments that result from the submission of 

erroneous payment data by an MA organization or Part D sponsor in the limited 

circumstances when the organization fails to correct those data. We emphasize that, in 

our experience, the circumstance where an MA organization or Part D sponsor fails to 

correct identified erroneous payment data arises very infrequently. 

 This proposed new process is not intended to replace established recovery and 

appeals processes such as the Risk Adjustment Data Validation (RADV) audit dispute 

and appeal process described at 42 CFR 422.311 or the Part D payment appeals process 

described at 42 CFR 423.350. This proposed process would not constitute a change to 

the existing Part C or Part D payment methodologies. Rather, we are merely proposing 

to adopt a procedural mechanism for recouping overpayments that CMS will use in those 

limited circumstances when an MA organization or Part D sponsor fails to correct 

erroneous payment data. The established recovery and appeals processes do not support 

this scenario. Section 1856(b) of the Act establishes authority for us to add standards for 

Part C and MA organizations. Section 1853 of the Act for Part C and sections 1860D-14 
CMS-1613-P 580 

and 1860D-15 of the Act for Part D establish the methodology for computing payments 

to MA organizations and Part D sponsors, respectively. We believe that inherent in the 

methodology under which payments to MA organizations and Part D sponsors are 

calculated is the authority for CMS to establish a process for identifying and recouping 

overpayments, in order to ensure that payments are made consistent with the payment 

framework established in the statute. Therefore, we are proposing to implement such a 

process through changes to our regulations. 

1. Medicare Part C Payment Background 

 For Medicare Part C, CMS makes prospective monthly payments to MA 

organizations for each enrollee in the plan. CMS’ monthly Part C payment for each MA 

plan enrollee consists of two components: the capitated payment for each enrollee 

(calculated as the plan-specific county payment rate multiplied by the enrollee risk 

score), plus the plan rebate amount (if any). The plan-specific county rates and the plan 

rebate amount are based on the bid approved by CMS and are set in advance for a 

payment year. In addition, payment rates may be adjusted for enrollees with end-stage 

renal disease, enrollees in Medical Savings Account MA plans, and enrollees in religious 

fraternal benefit society MA plans under § 422.304. Prospective payments are made 

during the year, subject to a reconciliation after the end of the year. 

 CMS adjusts the plan-specific county payment rate for each enrollee based on an 

enrollee risk score. Enrollee risk scores are determined using the CMS-Hierarchical 

Condition Category (CMS-HCC) risk adjustment model in effect for the payment year, 

plan-submitted diagnoses for the data collection year, and other data that CMS 
CMS-1613-P 581 

determines to be appropriate to perform risk adjustment. The CMS-HCC model is 

prospective in that it uses diagnosis information from a base year (data collection year) to 

adjust payments for the next year (payment year or coverage year). For example, the risk 

adjustment model uses diagnosis data from 2013 to adjust payments to MA organizations 

for coverage in 2014. 

 To determine the appropriate risk score for each beneficiary, CMS uses 

demographic characteristics of beneficiaries and diagnostic information gathered in the 

administration of Original Medicare and submitted by MA organizations. MA 

organizations are required to submit an occurrence of an HCC model-relevant diagnosis 

only once during the data collection year, even though a beneficiary may have several 

service dates in a data collection year associated with a given diagnosis. The minimum 

data elements currently collected from MA organizations under § 422.310 are: Health 

Insurance Claim (HIC) Number; provider type (hospital inpatient, hospital outpatient, or 

physician); service from date; service through date; and ICD-9 codes at the level of 

specificity used by the HCC model. In addition, effective January 2012, CMS collects 

more detailed Part C utilization and cost data from MA organizations (often referred to as 

encounter data), that are used in setting the risk score. 

 CMS allows 13 months after the end of a data collection year for MA 

organizations to update the risk adjustment data submitted under § 422.310; this period 

provides MA organizations an opportunity to identify and correct errors in data they have 

submitted for that data collection year (that is, by deleting diagnoses from CMS’ systems) 

and to identify and submit additional diagnoses not submitted during the data collection 
CMS-1613-P 582 

year. During this 13-month period, CMS uses the diagnosis data that MA organizations 

have submitted up to that point to calculate interim beneficiary risk scores for adjusting 

prospective payments made during the payment year. The end of this 13-month period is 

called the final risk adjustment data submission deadline (§ 422.310(g)(2)(ii)). 

 For each payment year, we apply three sets of risk scores to adjust payments: 

initial and midyear risk scores during the payment year (both sets are based on 

incomplete diagnosis data from the data collection year), and final risk scores after the 

payment year using data MA organizations submitted as of the final deadline for risk 

adjustment data (which reflect complete data for the data collection year). During the 

year, CMS makes monthly prospective payments to the MA organization based on 

enrollment information and using interim risk scores calculated based on the data 

available before the final risk adjustment data submission deadline. CMS calculates the 

preliminary risk scores before the first payment is made (that is, for January of the 

payment year) and again in the middle of the payment year; an interim reconciliation is 

made so that the prospective payments to MA organizations are based on the most recent 

risk score available for each enrollee. 

 After the final risk adjustment data submission deadline, CMS conducts a 

reconciliation, in which the prospective Part C payments made during the coverage year 

based on interim risk scores are compared to Part C payments recalculated using final 

risk scores and the latest enrollment data. While changes in enrollment data are updated 

every month by CMS’ systems during the payment year (for example, disenrollments 

from MA organizations and dates of death from the Social Security Administration 
CMS-1613-P 583 

(SSA)), risk adjustment data are not finalized until the final risk adjustment data 

submission deadline. 

 We note that after the final risk adjustment data submission deadline, MA 

organizations are allowed to submit corrected diagnosis data to correct overpayments 

they received from CMS. However, after this deadline, MA organizations are not 

allowed to submit diagnosis codes for additional payment, as specified in 

§ 422.310(g)(2)(ii); this provision was recently adopted in the final rule entitled 

“Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare 

Advantage and the Medicare Prescription Drug Benefit Programs” (79 FR 29843). When 

such corrections are submitted, CMS conducts another reconciliation to correct the 

payments made to the MA organization using the established payment adjustment 

process. In addition, under § 422.311, CMS conducts RADV audits of the risk 

adjustment data submitted by MA organizations pursuant to § 422.310. Such RADV 

audits are conducted at the MA organization contract level and are designed to calculate a 

contract–level error rate and payment adjustment amount for a specific payment year 

under audit. 

2. Medicare Part D Payment Background 

 For Medicare Part D, the Medicare Prescription Drug Benefit, Improvement, and 

Modernization Act (MMA), which amended the Act by adding Part D under Title 18, 

provides four payment mechanisms: direct subsidy (codified at § 423.329(a)); 

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

§§ 423.780 and 423.782); and risk sharing (codified at § 423.336(b)). As a condition of 
CMS-1613-P 584 

payment, section 1860D-15(d)(2)(A) of the Act requires that Part D sponsors submit data 

and information necessary for CMS to carry out those payment provisions. Part D 

sponsors submit PDE data, direct and indirect remuneration (DIR) data, and risk 

adjustment data to CMS for payment purposes. 

 Throughout the coverage year, CMS makes prospective payments to Part D 

sponsors that cover three subsidies: the direct subsidy; the low income cost-sharing 

subsidy; and the reinsurance subsidy. The payment amounts are based on information in 

the approved basic bid and on data received by CMS that are used to update payments 

throughout the year. Following the end of the coverage year, the prospective payments 

are reconciled against the actual costs of the Part D sponsor. Reconciliation of the low 

income cost-sharing subsidy and reinsurance and the calculation of risk sharing are based 

on PDE and DIR data submitted by the Part D sponsor, as well as data captured from 

other CMS systems. CMS instructs Part D sponsors that they should continually monitor 

their submitted data throughout the year in order to ensure that the reconciliation and 

final payment determinations are accurate. 

 The final payment determination may be reopened and revised at CMS discretion 

under § 423.346. In our final rule, “Medicare Program; Medicare Prescription Drug 

Benefit” published in the Federal Register on January 28, 2005 (70 FR 4194), we stated 

that including the Medicare Part D reopening provision at § 423.346 would “ensure that 

the discovery of any overpayment or underpayments could be rectified” (70 FR 4316). 

However, this is only possible to the extent that the data submitted by Part D sponsors are 

accurate. Accordingly, prior to making a payment determination for a coverage year, 
CMS-1613-P 585 

either through a reconciliation described at § 423.343 or a reopening described at 

§ 423.346, CMS periodically makes requests that Part D sponsors correct payment data 

that do not comply with program requirements (that is, what we have defined as 

“erroneous payment data”). These may be general requests to all Part D sponsors to look 

for a type of payment issue (for example, the Health Plan Management System (HPMS) 

memorandum, “Correcting Missing, Invalid, and Inactive Prescriber Identifiers on 2012 

Prescription Drug Event (PDE) Records,” dated February 4, 2013) or targeted requests to 

specific Part D sponsors known to have particular payment issues (as was done in the 

“Prescriber NPI Project” announced in the HPMS memorandum, “Announcement of 

Prescriber NPI Project and Website Release,” dated December 4, 2012). If a Part D 

sponsor fails to correct its payment data, the erroneous payment data remain in the 

payment system, rendering the reopening provision ineffective for rectifying 

overpayments as it was intended. 

B. Provisions of our Proposals 

 In this proposed rule, we are proposing to establish regulations at 

42 CFR 422.330, relating to MA organizations, and at 42 CFR 423.352, relating to Part D 

sponsors, that would specify the procedural mechanism used by CMS to recoup 

overpayments associated with errors identified by CMS in payment data submitted by 

MA organizations and Part D sponsors. We also are proposing to create a process 

whereby an MA organization or Part D sponsor can appeal the finding that payment data 

are erroneous. 
CMS-1613-P 586 

 We note that our proposal is intended to establish a process to address errors and 

payment adjustments that are not addressed by existing processes such as the RADV 

audit and appeal process or overpayments identified by the MA organization or Part D 

sponsor, which are subject to separate procedures. If an MA organization or a Part D 

sponsor self-identifies an overpayment, that overpayment must be reported and returned 

to CMS in accordance with section 1128J(d) of the Act, which was added by section 

6402 of the Affordable Care Act. Regulations implementing section 1128J(d) have 

recently been adopted at §§ 422.326 and 423.360 in the final rule entitled “Medicare 

Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage 

and the Medicare Prescription Drug Benefit Programs” (79 FR 29843). 

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

 We are proposing to define “payment data” to mean data controlled and submitted 

to CMS by an MA organization or a Part D sponsor that is used for payment purposes 

(proposed §§ 422.330(a) and 423.352(a)). The MA organization or Part D sponsor is 

responsible for the accuracy of such data. MA organizations and Part D sponsors are 

currently required to attest to the accuracy, completeness, and truthfulness of such data 

under § 422.504(l) and § 423.505(k), respectively. For Medicare Part C, the data 

submitted by the MA organization to CMS include, for example, enrollment data and risk 

adjustment data specified at § 422.310. For Medicare Part D, data submitted by the Part 

D sponsor to CMS include enrollment data and data submitted under § 423.329(b)(3) 

(risk adjustment data), § 423.336(c)(1) (cost data), § 423.343 (data for retroactive 

adjustments and reconciliations), and data provided for purposes of supporting allowable 
CMS-1613-P 587 

reinsurance costs and allowable risk corridor costs as defined in § 423.308, which include 

data submitted to CMS regarding direct or indirect remuneration (DIR). 

 There are additional payment-related data that CMS uses to calculate Part C and 

Part D payments that are submitted directly to CMS by other entities, such as the Social 

Security Administration (SSA). These entities are the authoritative source for data that 

they submit to CMS, and MA organizations and Part D sponsors are not the official 

source for data submitted by these other entities. For example, the SSA is the 

authoritative source for date of death of Medicare beneficiaries. An MA organization or 

a Part D sponsor generally does not submit a beneficiary’s date of death directly to CMS’ 

systems; such data come from the SSA data feed. When the SSA submits corrected data 

regarding a beneficiary’s date of death to CMS, CMS’ systems recalculate the payments 

made to the plan for that beneficiary and correct any incorrect payment through a routine 

retroactive payment adjustment process. Therefore, the proposed definition of “payment 

data” refers only to data that the MA organization or Part D sponsor controls and submits 

to CMS for payment purposes. 

 For MA organizations under Part C, we are proposing that the “applicable 

reconciliation date” occurs on the date of the annual final risk adjustment data submission 

deadline set under § 422.310(g)(2)(ii). While changes in enrollment data are updated 

every month by CMS’ systems during the payment year (for example, disenrollments 

from MA organizations and dates of death from the SSA), risk adjustment data are not 

finalized until the final risk adjustment data submission deadline. Prior to that deadline, 

CMS allows the MA organization to continue submitting corrected and new diagnosis 
CMS-1613-P 588 

data. However, once the final risk adjustment data submission deadline has passed, CMS 

uses this final diagnosis data to calculate the final risk scores for the payment year. CMS 

then uses those final risk scores for payment reconciliation. By proposing that the 

applicable reconciliation date occurs on the risk adjustment data submission deadline, we 

intend to signal that the normal payment process for the year has been concluded. 

 For Part D sponsors, we are proposing that the “applicable reconciliation date” is 

the later of either: the annual deadline for submitting PDE data for the annual Part D 

payment reconciliations referenced in § 423.343(c) and (d); or the annual deadline for 

submitting DIR data. The annual deadline for submitting PDE data is the last Federal 

business day prior to June 30 of the year following the coverage year being reconciled. 

The annual deadline for submitting DIR data is announced annually through 

subregulatory guidance and generally occurs around the last business day in June of the 

year following the coverage year being reconciled. We selected these events to define 

the Part D applicable reconciliation date because data must be submitted by these 

deadlines in order to be used for the purposes of the final Part D payment reconciliation. 

 We note that the proposed definitions of “applicable reconciliation date” are 

nearly identical to the definitions of “applicable reconciliation” at existing §§ 422.326 

and 423.360. Similarly, the proposed definitions of “payment data” are nearly identical 

to the definitions of “funds” at existing §§ 422.326 and 423.360. Although proposed 

§§ 422.330 and 423.352 address overpayments to MA organizations and Part D sponsors 

that have been identified by CMS, whereas §§ 422.326 and 423.360 address 

overpayments that are identified by the MA organization or Part D sponsor, we do not 
CMS-1613-P 589 

believe that the issue of which entity (CMS or the plan) identified the overpayment is 

relevant to the question of when the overpayment occurred or what information is at 

issue. Both the current policy regarding overpayments identified by MA organizations 

and Part D sponsors and the proposed policy regarding CMS-identified overpayments are 

intended to address circumstances in which an overpayment has been identified; 

therefore, we believe it would be appropriate and avoid unnecessary confusion to use 

similar definitions. 

2. Request for Corrections of Payment Data 

 We are proposing that if CMS identifies an error in payment data submitted by an 

MA organization or Part D sponsor that would result in an overpayment, CMS may 

request that the organization make corrections to the applicable payment data (proposed 

§§ 422.330(b) and 423.352(b)). We are proposing that CMS would make the request 

through a data correction notice that would contain or make reference to the specific 

payment data identified by CMS as erroneous, the reason why CMS believes that the 

payment data are erroneous, and the timeframe in which the MA organization or Part D 

sponsor must make corrections to the data. CMS may identify payment data that need to 

be corrected through a variety of different mechanisms, including, but not limited to, 

CMS analyses of payment data, CMS audits, or communications with the MA 

organization or Part D sponsor. 

 We understand that, at some point, it would no longer be practical for MA 

organizations and Part D sponsors to correct payment data for coverage years that have 

long since been reconciled. Therefore, consistent with the look-back period for 
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overpayments that are identified by the MA organization or Part D sponsor found at 

existing §§ 422.326 and 423.360, we are proposing that CMS would request corrections 

to erroneous payment data only if the erroneous data affects payments for one or more of 

the 6 most recently completed payment years. That would mean, for example, that after 

the initial reconciliation takes place for Part D payments under § 423.343 (that is, the 

determination of the final amount of direct subsidy described in § 423.329(a)(1), final 

reinsurance payments described in § 423.329(c), the final amount of the low income 

subsidy described in § 423.329(d), or final risk corridor payments as described in 

§ 423.336) for contract year 2015 (which would take place in 2016), CMS may request 

corrections to erroneous payment data for contract years 2010 through 2015. We are 

proposing to use the same 6-year look-back period as applies to plan-identified 

overpayments under existing §§ 422.326 and 423.360 because both overpayment policies 

are intended to address circumstances in which an overpayment has been identified, and 

we do not believe that the issue of which entity (CMS or the plan) identified the 

overpayment is relevant to the length of the look-back period. 

 The timeframes for correcting payment data would be the same as under our 

current practice for correcting payment data described in existing procedural rules and 

subregulatory guidance and would be explained in additional procedural rules and 

subregulatory guidance, as necessary. For example, current Part D guidance states that 

corrections to PDE data must be completed within 90 days from discovery of the issue. 

We refer readers to the Health Plan Management System (HPMS) memorandum entitled 
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“Revision to Previous Guidance Titled ‘Timely Submission of Prescription Drug Event 

(PDE) Records and Resolution of Rejected PDEs,’” dated October 6, 2011. 

3. Proposed Payment Offset 

 If the MA organization or Part D sponsor submits corrected payment data in 

response to CMS’s request pursuant to proposed § 422.330(b) and § 423.352(b), CMS 

will perform a reconciliation in the payment system using the established payment 

adjustment process. CMS’ systems will conduct a payment reconciliation and determine 

the associated payment adjustment based on the corrected data using established payment 

procedures. However, if the MA organization of Part D sponsor fails to correct the 

erroneous payment data, we are proposing that CMS would conduct a payment offset 

from plan payments (proposed §§ 422.330(c) and 423.352(c)). 

a. Offset Amount 

 Because the data would not have been corrected in the routine payment process, 

we are proposing, to be codified at §§ 422.330(c) and 423.352(c), that CMS determine 

the overpayment offset amount by applying a payment calculation algorithm to simulate 

the payment calculations currently applied by CMS to produce the routine Part C and Part 

D payments. The payment calculation algorithm would apply the Part C or Part D 

payment rules for the applicable year to calculate what the correct payment should have 

been using corrected payment data. CMS currently simulates payment error amounts for 

a variety of different purposes including for the annual Part C and Part D error rate 

reporting (required by the Improper Payment Elimination and Recovery Act (IPERA) and 

subject to the annual agency’s Chief Financial Officer’s (CFO) audit and reported in the 
CMS-1613-P 592 

annual Agency Financial Report (AFR)), RADV payment error estimation (subject to 

public comment), and the Part C and Part D monthly payment validation required by 

CFO auditors. These payment error calculations are all conducted outside of the suite of 

payment systems that CMS uses to make routine payments to MA organizations and Part 

D sponsors. We believe that these calculations are reliable and an accurate reflection of 

what the routine payment systems would calculate using the corrected data if the MA 

organization or Part D sponsor had submitted corrected payment data. 

 The actual process for calculating the overpayment will be different for Part C 

and Part D due to the different payment rules for the two programs. The Part C and Part 

D programs are both subject to risk adjustment payment error resulting from invalid 

diagnoses and to payment error due to inaccurate enrollment data. The Part D program is 

further subject to payment reconciliation error resulting from errors in PDE data and/or 

DIR data. The two programs also are subject to different schedules with regard to the 

applicable reconciliation date and subsequent payment reconciliation processes. 

 When new payment-related data are submitted to CMS payment systems, there is 

generally a change to the correct amount of payment once CMS conducts a payment 

reconciliation using the established payment adjustment process. However, it is not 

sufficient for the plan to just submit the new corrected risk adjustment, PDE, or DIR data 

to CMS systems because data submission does not automatically trigger a system 

reconciliation and payment adjustment. A change in payment will only occur if a 

payment reconciliation is conducted. If the applicable reconciliation has already been 
CMS-1613-P 593 

performed, CMS, at its discretion, may conduct risk adjustment reruns or Part D 

reopenings to ensure that payments also are corrected to reflect the newly corrected data. 

 We are proposing that, under the payment calculation algorithm, CMS would 

calculate the payment to the MA organization or Part D sponsor with and then without 

the corrected data as of a certain specified date. The difference in the two amounts would 

be the payment recovery or offset amount. The following are examples of how the offset 

amount would be calculated for Part C and Part D relative to two different types of 

payment data errors. 

● Part C Offset Calculation. The example for Part C relates to incorrect 

diagnosis data identified by CMS in the process of calculating the national payment error 

estimate. A beneficiary’s final risk score and annual payment will be recalculated outside 

of the routine payment system without the invalid diagnoses but using all the other data 

used in the routine payment system. The year-appropriate CMS-HCC risk adjustment 

software will be used to produce the revised risk scores. The difference in payment for 

the beneficiary pre- and post- change in the invalid diagnosis will be the offset amount. 

This offset amount--generated using the same process for each beneficiary for whom 

erroneous payment data are identified by CMS--will be summed across all beneficiaries. 

● Part D Offset Calculation. The example for Part D relates to the situation in 

which a Part D plan sponsor has submitted PDE records for a beneficiary that include 

invalid National Drug Codes (NDCs). For payment purposes, PDEs are required to 

reference valid NDCs. In order to calculate the Part D payment offset amount, all of the 

beneficiary’s entire post-reconciliation PDE data will be pulled, and the incorrect PDEs 
CMS-1613-P 594 

will be deleted or adjusted. The programmed calculation logic will keep track of a 

variety of payment-related information; for example, a beneficiary’s benefit phase, gross 

covered drug cost, true out-of-pocket (TrOOP) costs, low income cost-sharing subsidies 

(if any), and plan payment as the beneficiary progresses through the Part D coverage 

benefit. The calculation algorithm will tap into a variety of different data sets, such as 

health plan benefit parameters, beneficiary low income subsidy status, and standard low 

income cost-sharing subsidy parameters. Reports will then be produced on Gross 

Covered Drug Cost (GCDC) and low income cost-sharing subsidy payment differentials. 

These payment differential amounts will be incorporated into final reinsurance, low 

income cost-sharing subsidy, and risk sharing summary totals for a contract. DIR 

adjustments will be factored into these calculations to arrive at the related payment offset 

amount to be applied at the contract level. The difference in reinsurance, low income 

cost-sharing subsidy, and risk sharing dollars with and without the correction to the PDEs 

will constitute the payment offset related to the beneficiaries with the incorrect PDEs. 

 If the erroneous payment data in question is subsequently corrected through the 

CMS payment system, the offset amount will be reversed, and the payment to the MA 

organization or Part D sponsor will be updated through the routine payment process. 

However, if the data in the CMS system are not corrected and CMS conducts a 

reconciliation or reopening for the applicable payment year after the offset has been 

determined, the data will not be properly synchronized, and it is possible that the 

resulting payment adjustments could be incorrect. In order to resolve this problem, CMS 

may reverse the original offset and recalculate the offset using the more recent data used 
CMS-1613-P 595 

in the most recent payment reconciliation or reopening. The new offset amount will 

replace the previous offset amount, and CMS would need to evaluate and act on the 

resulting overpayment or underpayment. 

b. Payment Offset Notification 

 We are proposing that CMS would provide a payment offset notice to the MA 

organization or Part D sponsor (proposed §§ 422.330(d)(1) through (d)(3) and 

423.352(d)(1) through (d)(3)). The notice would provide the dollar amount to be offset 

against a plan’s monthly prospective payments and an explanation of how the erroneous 

data were identified and of the calculation of the payment offset amount. Under our 

proposal, the payment offset notice would also explain that, in the event that the MA 

organization or Part D sponsor disagrees with the payment offset, it may request an 

appeal within 30 days of the issuance of the payment offset notice. 

4. Proposed Appeals Process for MA Organizations and Part D Sponsors 

 We are proposing an appeals process for MA organizations and Part D sponsors 

with three levels of review, including reconsideration (described at proposed 

§§ 422.330(e)(1) and 423.352(e)(1)), an informal hearing (described at proposed 

§§ 422.330(e)(2) and 423.352(e)(2)), and an Administrator review (described at proposed 

§§ 422.330(e)(3) and 423.352(e)(3)). 

a. Reconsideration 

 We are proposing that an MA organization or Part D sponsor must file its request 

for reconsideration within 30 days from the date that CMS issued the payment offset 

notice to the MA organization or the Part D sponsor (proposed §§ 422.330(e)(1)(i) and 
CMS-1613-P 596 

423.352(e)(1)(i)). At proposed §§ 422.330(e)(1)(ii) and 423.352(e)(1)(ii), we address the 

information that must be included in the MA organization’s or Part D sponsor’s request 

for reconsideration. The request must contain the findings or issues with which the MA 

organization or Part D sponsor disagrees, the reasons for its disagreement, and any 

additional documentary evidence that the MA organization or Part D sponsor wishes to 

submit in support of its position. This additional evidence must be submitted with the 

request for reconsideration. Any information submitted after this time will be rejected as 

untimely. In conducting the reconsideration, the CMS reconsideration official reviews 

the underlying data that were used to determine the amount of the payment offset and any 

additional documentary evidence that the MA organization or Part D sponsor timely 

submitted with its reconsideration request (§§ 422.330(e)(1)(iii) and 423.352(e)(1)(iii)). 

We are proposing at proposed §§ 422.330(e)(1)(iv) and 423.352(e)(1)(iv) that CMS 

would inform the MA organization or Part D sponsor of its decision. We are proposing 

at §§ 422.330(e)(1)(v) and 423.352(e)(1)(v) that a reconsideration decision would be 

final and binding unless a timely request for an informal hearing is filed by the MA 

organization or Part D sponsor. 

b. Informal Hearing 

 Under our proposal, if the MA organization or Part D sponsor is dissatisfied with 

CMS’ reconsideration decision, it would be entitled to request an informal hearing 

(proposed §§ 422.330(e)(2) and 423.352(e)(2)). As proposed at §§ 422.330(e)(2)(i) and 

423.352(e)(2)(i), a request for an informal hearing must be made in writing and filed 

within 30 days of the date of CMS’ reconsideration decision. The request must include a 
CMS-1613-P 597 

copy of CMS’ reconsideration decision and must specify the findings or issues in the 

decision with which the MA organization or Part D sponsor disagrees and the reasons for 

its disagreement (proposed §§ 422.330(e)(2)(ii) and 423.352(e)(2)(ii)). 

 We set forth the proposed procedures for conducting the informal hearing at 

proposed §§ 422.330(e)(2)(iii) and 423.352(e)(2)(iii). Under these procedures, CMS 

would provide written notice of the time and place of the informal hearing at least 10 

days before the scheduled date of the hearing (proposed § 422.330(e)(2)(iii)(A) and 

§ 423.352(e)(2)(iii)(A)); the informal hearing would be conducted by a CMS hearing 

officer. The hearing officer would be limited to reviewing the record that was before 

CMS when CMS made its reconsideration determination (proposed 

§ 422.330(e)(2)(iii)(B) and § 423.352(e)(2)(iii)(B)). Under our proposal, no new or 

additional documentation or evidence may be submitted at this hearing. At proposed 

§ 422.330(e)(2)(iii)(C) and § 423.352(e)(2)(iii)(C), we are proposing that the CMS 

hearing officer would review the record of the proceeding before the CMS 

reconsideration official using the clearly erroneous standard of review. CMS’ 

reconsideration decision would not be reversed unless the MA organization or Part D 

sponsor establishes that the decision was clearly erroneous in light of the evidence in the 

record before the CMS reconsideration official. 

 At proposed §§ 422.330(e)(2)(iv) and 423.352(e)(2)(iv), we are proposing that the 

CMS hearing officer would send a written decision of the informal hearing to the MA 

organization or Part D sponsor explaining the basis for the decision. The CMS hearing 
CMS-1613-P 598 

officer’s decision would be final and binding, unless the decision is reversed or modified 

by the Administrator (proposed §§ 422.330(e)(2)(v) and 423.352(e)(2)(v)). 

c. Review by Administrator 

 We are proposing that the MA organization or Part D sponsor may request review 

of the hearing officer’s decision by the Administrator within 30 days of issuance of the 

hearing officer’s decision (proposed §§ 422.330(e)(3)(i) and 423.352(e)(3)(i)). The MA 

organization or Part D sponsor may provide written arguments to the Administrator for 

review. Under proposed §§ 422.330(e)(3)(ii) and 423.352(e)(3)(ii), after receiving the 

request to review, the Administrator would have the discretion to elect to review the 

hearing determination or decline to review it. At proposed §§ 422.330(e)(3)(iii) and 

423.352(e)(3)(iii), if the Administrator declines to review the hearing officer’s decision, 

the hearing officer’s decision would be final and binding. At proposed 

§§ 422.330(e)(3)(iv) and 423.352(e)(3)(iv), we are proposing that if the Administrator 

elects to review the hearing officer’s decision, the Administrator would review the 

hearing officer’s decision, as well as any other information included in the record of the 

hearing officer's decision and any written arguments submitted by the MA organization 

or Part D sponsor. The Administrator may determine whether to uphold, reverse, or 

modify the hearing officer’s decision. The Administrator’s determination would be final 

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

5. Matters Subject to Appeal and Burden of Proof 

 At proposed §§ 422.330(f)(1) and (2) and 423.352(f)(1) and (2), we are proposing 

to limit the subject-matter that an MA organization or Part D sponsor may appeal under 
CMS-1613-P 599 

this provision and establish the burden of proof that the MA organization or Part D 

sponsor must meet in its appeal. Under this provision, an MA organization or Part D 

sponsor would be able to appeal the notice of payment offset solely on the grounds that 

CMS’ finding that the MA organization’s or Part D sponsor’s payment data were 

erroneous was incorrect or otherwise inconsistent with applicable program requirements. 

The MA organization or Part D sponsor would bear the burden of proof by a 

preponderance of the evidence in demonstrating that CMS’ finding was incorrect or 

inconsistent with applicable program requirements. 

 At proposed §§ 422.330(g) and 423.352(g), we are proposing that the appeals 

process under paragraph (e) of these sections would apply only to payment offsets 

described at proposed §§ 422.330(c) and 423.352(c). It would not apply to any other 

CMS payment offset process. 

6. Effective Date of Proposed Appeals Process Provisions 

 We are proposing that this new procedural mechanism for a payment offset at 

proposed § 422.330 and § 423.352 would apply after the effective date of any final rule 

implementing the new payment offset and appeals process, but that requests to correct 

payment data under proposed §§ 422.330(b) and 423.352(b) and the payment offsets 

under proposed §§ 422.330(c) and 423.352(c) may apply to any payment year, subject to 

the 6-year limitation under §§ 422.330(b) and 423.352(b). 

 We are inviting public comment on these proposals. 
CMS-1613-P 600 

XVIII. Files Available to the Public via the Internet 

 Addendum J to this proposed rule is a new addendum that we are proposing for 

CY 2015, in response to requests by public commenters on the CY 2014 OPPS/ASC final 

rule with comment period for additional data regarding ratesetting for the new 

comprehensive APCs established in that final rule with comment period, which are 

discussed in section II.A.2.e. of this proposed rule. Addendum J lists the HCPCS code 

pairs for which we are proposing complexity adjustments for CY 2015, by clinical 

family; the HCPCS codes proposed for exclusion from the comprehensive APC payment 

bundle; and the relevant cost statistics. 

 The Addenda to the OPPS/ASC proposed rules and the final rules with comment 

period are published and available only via the Internet on the CMS Web site. To view 

the Addenda of this proposed rule pertaining to CY 2015 payments under the OPPS, we 

refer readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-andNotices.html; select “1613-P” from the list of regulations. All OPPS Addenda for this

proposed rule are contained in the zipped folder entitled “2015 OPPS 1613-P Addenda” 

at the bottom of the page. To view the Addenda of this proposed rule pertaining to the 

proposed CY 2015 payments under the ASC payment system, we refer readers to the 

CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ASCPayment/ASC-Regulations-and-Notices.html; select “1613-P” from the list 

of regulations. All ASC Addenda for this proposed rule are contained in the zipped 
CMS-1613-P 601 

folders entitled “Addendum AA, BB, DD1 and DD2,” and “Addendum EE” at the bottom 

of the page. 

XIX. Collection of Information Requirements 

A. Legislative Requirements for Solicitation of Comments 

 Under the Paperwork Reduction Act of 1995, we are required to provide 60-day 

notice in the Federal Register and to solicit public comment before a collection of 

information requirement is submitted to the Office of Management and Budget (OMB) 

for review and approval. In order to fairly evaluate whether an information collection 

should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 

1995 requires that we solicit comment on the following issues: 

● The need for the information collection and its usefulness in carrying out the 

proper functions of our agency. 

● The accuracy of our estimate of the information collection burden. 

● The quality, utility, and clarity of the information to be collected. 

● Recommendations to minimize the information collection burden on the 

affected public, including automated collection techniques. 

 In this proposed rule, we are soliciting public comments on each of the issues 

outlined above for the information collection requirements discussed below. 
CMS-1613-P 602 

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

Hospital Ownership Exceptions to the Physician Self-Referral Law: Expansion 

Exception Process (§ 411.362) 

 Section XV.C. of the preamble of this proposed rule discusses our proposal to 

revise the expansion exception process for physician-owned hospitals under the rural 

provider and hospital ownership exceptions to the physician self-referral law. 

Specifically, we are proposing to revise 42 CFR 411.362(c) to permit physician-owned 

hospitals to use data from HCRIS, internal data sources, or external data sources to 

estimate the percentages of inpatient Medicaid admissions and to determine the bed 

capacities and the bed occupancy rates referenced in that section for the hospitals to 

demonstrate eligibility for an expansion exception. 

 We believe the burden associated with this revision is exempt from the PRA 

under 5 CFR 1320.3(c), which defines the agency collection of information subject to the 

requirements of the PRA as information collection imposed on 10 or more persons within 

any 12-month period. We do not believe this information collection impacts 10 or more 

entities in a 12-month period. We have received four requests since the expansion 

exception process was implemented on February 1, 2012; only one of the four requests 

was complete and eligible to proceed in the process. In CYs 2012, 2013, and 2014, we 

received zero, two, and two requests, respectively. 
CMS-1613-P 603 

C. Associated Information Collections Not Specified in Regulatory Text 

 In this proposed rule, we make reference to proposed associated information 

collection requirements that were not discussed in the regulation text contained in this 

proposed rule. The following is a discussion of those requirements. 

1. Hospital OQR Program 

 As we stated in section XIV. of the CY 2012 OPPS/ASC final rule with comment 

period, the Hospital OQR Program has been generally modeled after the quality data 

reporting program for the Hospital IQR Program (76 FR 74451). We refer readers to the 

CY 2011 OPPS/ASC final rule with comment period (75 FR 72111 through 72114), the 

CY 2012 OPPS/ASC final rule with comment period (76 FR 74549 through 74554), the 

CY 2013 OPPS/ASC final rule with comment period (77 FR 68527 through 68532) and 

the CY 2014 OPPS/ASC final rule with comment period (78 FR 75170 through 75172) 

for detailed discussions of the Hospital OQR Program information collection 

requirements we have previously finalized. 

a. Revisions to the CY 2016 Payment Determination Estimates 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75103), we 

finalized the adoption of four new measures for the CY 2016 payment determination and 

subsequent years: (1) OP-27: Influenza Vaccination Coverage among Healthcare 

Personnel (NQF # 0431); (2) OP-29: Endoscopy/Polyp Surveillance: Appropriate 

Follow-up Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658); 

(3) OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF # 0659); and 
CMS-1613-P 604 

(4) OP-31: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery (NQF # 1536). In the CY 2014 OPPS/ASC final rule with 

comment period (78 FR 75171), we estimated measures OP-29, OP-30 and OP-31 would 

require 40 hours of reporting per quarter (96 cases x 0.417 hours). We also estimated that 

reporting these measures via our Web-based tool would take 10 minutes (or 0.167 hours) 

per measure per year (or 2.5 minutes for each quarter’s worth of data, which is submitted 

on an annual basis) (78 FR 75171 through 75172). 

 As stated in section XIII.D.2. of this proposed rule, we delayed reporting for 

OP-29 and OP-30 by one quarter. Therefore, we estimate a reduction in burden of 

40 hours for each of these measures (40 hours per quarter for reporting + 2.5 minutes of 

reporting via the Web-based tool) per hospital for the CY 2016 payment determination. 

In addition, in section XIII.D.3. of this proposed rule, we are proposing to exclude this 

measure from the CY 2016 payment determination measure set. Therefore, we estimate 

that there will be no burden for reporting OP-31 for the CY 2016 payment determination, 

and an overall reduction in burden of 160 hours ((40 hours per quarter for reporting x 4 

quarters) + 0.167 hours per year for reporting via the Web-based tool) per hospital for the 

CY 2016 payment determination because of this proposal. 

 Combining the estimated reductions in burden for all three of these measures, we 

estimate a total reduction in burden of 240 hours (40 hours + 40 hours + 160 hours) per 

hospital for the CY 2016 payment determination due to delayed data collection and the 

proposed measure exclusion. We estimate that approximately 3,300 hospitals will 

participate in the Hospital OQR Program for the CY 2016 payment determination. 
CMS-1613-P 605 

Therefore, we estimate a total reduction in burden of 792,000 hours (240 hours x 3,300 

hospital) for all hospitals participating in the Hospital OQR Program for the CY 2016 

payment determination based on the data collection delays for OP-29, OP-30, and OP-31. 

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75171), we estimated 

that these measures would result in a financial burden of $30 per hour. Therefore, we 

estimate that the delay of these three measures will result in a reduction of $23.8 million 

($30/hour x 792,000 hours). 

b. Hospital OQR Program Requirements for the CY 2017 Payment Determination and 

Subsequent Years 

 As we stated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75171), we believe there is a burden associated with successful participation in 

the Hospital OQR Program, where successful participation results in a full annual 

payment update (APU) for the particular payment determination. For the reasons stated 

in that rule, we believe that the burden associated with these requirements is 42 hours per 

hospital or 138,600 hours for all hospitals. We estimate a financial burden for these 

requirements of $4.2 million ($30/hour x 138,600) for all hospitals. 

(1) Claims-Based Measures for the CY 2017 Payment Determination and Subsequent 

Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68530) for detailed discussions of the information collection requirements for the 

previously finalized claims-based measures (OP-8, OP-9, OP-10, OP-11, OP-13, OP-14, 

and OP-15). In section XIII.E. of this proposed rule, we are proposing to adopt one 
CMS-1613-P 606 

additional claims-based measure for the CY 2017 payment determination and subsequent 

years: OP-32: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy. As we note in the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68530), we calculate the claims-based measures using Medicare FFS claims data 

that do not require additional hospital data submissions. 

(2) Chart-Abstracted Measures for the CY 2017 Payment Determination and Subsequent 

Years 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68530 through 68531) and the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75171) for detailed discussions of the information collection requirements 

for the previously finalized chart-abstracted measures (OP-1, OP-2, OP-3, OP-4, OP-5, 

OP-6, OP-7, OP-18, OP-20, OP-21, OP-22, OP-23, OP-29, OP-30, and OP-31). 

 In section XIII. of this proposed rule, we are proposing to remove three chartabstracted measures from the Hospital OQR Program for the CY 2017 payment 

determination and subsequent years: OP-4: Aspirin at Arrival (NQF # 0286); OP-6: 

Timing of Prophylactic Antibiotics; and OP-7: Perioperative Care: Prophylactic 

Antibiotic Selection for Surgical Patients (NQF # 0528). We previously estimated that 

each participating hospital will spend 35 minutes (or 0.583 hours) per case to collect and 

submit the data required for the chart-abstracted measures finalized for the CY 2015 

payment determination and subsequent years (OP-1, OP-2, OP-3, OP-4, OP-5, OP-6, 

OP-7, OP-18, OP-20, OP-21, OP-22, OP-23) for each case (78 FR 75171). Since we are 

proposing to remove three of these measures, we believe that the time to chart-abstract 
CMS-1613-P 607 

these measures will be reduced by 25 percent (3 of 12 measures). Therefore, we estimate 

that hospitals will spend approximately 26 minutes (0.433 hours) per case to collect and 

submit these data. 

 Data submitted for the CY 2014 payment determination indicate that a hospital 

will submit approximately 1,266 cases per year for these measures. Therefore, we 

estimate that the time it will take a hospital to abstract data for all of the chart-abstracted 

measures will be 549 hours per year (1,266 cases x 0.433 hours). We estimate that there 

will be approximately 3,300 hospitals that participate in the Hospital OQR Program for 

the CY 2017 payment determination and subsequent years. Therefore, we estimate that 

the chart-abstracted measures for the CY 2017 payment determination and subsequent 

years will result in a burden of 1.8 million hours (549 hours x 3,300 hospitals) for all 

participating hospitals, for a total financial burden of approximately $54 million (1.8 

million hours x $30/hour). 

 In addition, in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75171), we estimated that OP-29 and OP-30 would require 25 minutes 

(0.417 hours) per case per measure to chart-abstract. We also estimated that hospitals 

would abstract 384 cases per year for each of these measures. Our estimate for the 

CY 2017 payment determination and subsequent years has not changed from last year’s 

estimate (although, as noted above, we have changed our estimate for the CY 2016 

payment determination based on the delay of OP-29 and OP-30). Therefore, for the 

CY 2017 payment determination and subsequent years, we estimate a burden of 

1.1 million hours (3,300 hospitals x 0.417 hours/case x 384 case/measure x 2 measures) 
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for all participating hospitals for OP-29 and OP-30 for a total financial burden of 

approximately $33 million ($30/hour x 1.1 million hours). 

 In section XIII.D.3. of this proposed rule, we are proposing to exclude OP-31 

from the CY 2016 payment determination measure set and, for the CY 2017 payment 

determination and subsequent years, to change this measure from required to voluntary. 

Hospitals would not be subject to a payment reduction with respect to this measure for 

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

continue to believe this measure addresses an important area of care, and anticipate that 

many facilities will report this measure on a voluntary basis. In the CY 2014 ASC/OPPS 

final rule with comment period (78 FR 75171), we estimated that OP-31 would require 

25 minutes (0.417 hours) per case to chart-abstract. We also estimated that hospitals 

would abstract 384 cases per year for this measure. We estimate that approximately 

20 percent of hospitals (660 hospitals (3,300 hospitals x 0.2)) will elect to report this 

measure on a voluntary basis. Therefore, we are revising the estimated burden for this 

measure to 105,685 hours (660 hospitals x 0.417 hours/case x 384 cases) for participating 

hospitals for the CY 2017 payment determination and subsequent years, for a total 

financial burden of approximately $3.2 million ($30/hour x 105,685 hours). 

 Therefore, for the chart-abstracted measures, we estimate a total burden for all 

participating hospitals of 3 million hours (1.8 million hours + 105,685 hours + 1.1 million 

hours) and $90 million (3 million hours x $30/hour) for the CY 2017 payment 

determination and subsequent years. 
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(3) Web-Based Measures Submitted Directly to CMS for the CY 2017 Payment 

Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75171) for detailed discussions of the information collection requirements for the 

previously finalized measures submitted via the Web-based tool. For the reasons stated 

in that final rule with comment period, we estimate that each participating hospital would 

spend 10 minutes per measure per year to collect and submit the data for the six measures 

(OP-12, OP-17, OP-25, OP-26, OP-29, and OP-30) submitted via the Web-based tool. 

Therefore, the estimated annual estimate burden associated with these measures for all 

participating hospitals is 3,307 hours (3,300 hospitals x 0.167 hours/measure x 

6 measures/hospital) for the CY 2017 payment determination and subsequent years. 

 As stated above, in section XIII.D.3. of this proposed rule, we are proposing to 

require voluntary reporting for OP-31, meaning that failing to report this measure would 

not affect a hospital’s CY 2017 and subsequent years’ payment determinations. We 

estimate that approximately 20 percent of hospitals (660 hospitals (3,300 hospitals x 0.2)) 

will elect to report this measure on a voluntary basis. Therefore, we are revising the 

estimated burden for this measure for all participating hospitals to 111 hours (660 

hospitals x 0.167 hours) for the CY 2017 payment determination and subsequent years. 

 Therefore, we estimate that the financial burden incurred for the Web-based 

submission of these measures for all participating hospitals will be $119,070 ($30/hour x 

(3,858 hours + 111 hours)) for the CY 2017 payment determination and subsequent 

years. 
CMS-1613-P 610 

(4) NHSN HAI Measure for the CY 2017 Payment Determination and Subsequent Years 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75172) for detailed discussions of the information collection requirements for 

OP-27: Influenza Vaccination Coverage among Healthcare Personnel. In section 

XIII.D.1. of this proposed rule, we are proposing to correct a submission deadline for this 

measure. We do not believe there will be a change in burden due to this proposal since it 

was a typographical error and our previous estimates were based on the corrected 

submission timeframe. We also noted that hospitals may report this measure for both the 

Hospital IQR Program and the Hospital OQR Program by CCN. Although we believe an 

overall reduction in burden will occur from this guidance because hospitals will only be 

required to submit this information once for each program, submitting this information is 

still a requirement of the Hospital OQR Program. Therefore, we do not believe this 

guidance will result in a reduction in burden attributable to the Hospital OQR Program. 

Therefore, for the reasons discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75172), we estimate a total burden for all participating hospitals of 

106,940 hours and a total financial burden of $3,208,203 associated with this measure. 

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

Determination and Subsequent Years 

 In section XIII.H.2.f. of this proposed rule, we are proposing to formalize that the 

time during which hospitals submit chart-abstracted data is the review and corrections 

period for that data. Because this proposal does not require hospitals to submit additional 

data, we do not believe it will increase burden for these hospitals. 
CMS-1613-P 611 

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

Determination and Subsequent Years 

 In section XIII.H.3.d. of this proposed rule, we are proposing three changes to our 

validation procedures: (1) we are proposing to change the eligibility requirements for 

hospitals selected for validation so that a hospital would be eligible if it submits at least 

one case to the Hospital OQR Program Clinical Data Warehouse during the quarter 

containing the most recently available data; (2) we are proposing to give hospitals the 

option to either submit paper copies of patient charts or securely transmit electronic 

versions of medical information for validation; and (3) we are proposing that a hospital 

must identify the medical record staff responsible for submission of records under the 

Hospital OQR Program to the designated CMS contractor. We do not believe that 

changing the eligibility requirements will result in additional burden since the same 

number of hospitals will be selected for validation, as discussed below. In addition, we 

do not believe that changing to whom a hospital must identify the medical staff 

responsible for submission of records will result in additional burden since hospitals must 

already submit this data; that is, only the contractor to whom the data is submitted may 

change. We do believe, however, that the second requirement may result in a change in 

burden. 

 We are proposing that the requirement to submit patient charts for validation of 

Hospital OQR Program data may be met by employing either of the following options: 

(1) a hospital may submit paper medical records, the form in which we have historically 

requested them; or (2) a hospital may securely transmit electronic versions of medical 
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information beginning in the CY 2017 payment determination. We are proposing that 

hospitals that chose to securely transmit electronic versions of medical information 

should either: (1) download or copy the digital image of the patient chart onto CD, DVD, 

or flash drive and ship the electronic media following instructions specified on the 

QualityNet Web site; or (2) securely submit digital images (PDFs) of patient charts using 

a Secure File Transfer Portal on the QualityNet Web site. In the FY 2014 IPPS/LTCH 

PPS final rule, the Hospital IQR Program previously finalized a similar policy that also 

allows hospitals to submit electronic versions of records for validation using the first 

method (78 FR 50834 through 78 FR 50835). The Hospital IQR Program has proposed 

the second method, secure submission of digital images via a Secure File Transfer Portal, 

in the FY 2015 IPPS/LTCH proposed rule (79 FR 28251). For the same reasons outlined 

in the Hospital IQR Program (78 FR 50956), we are proposing a reimbursement rate of 

$3.00 per patient chart submitted electronically (using either of the proposed methods for 

electronic submission) for validation for the CY 2017 payment determination and 

subsequent years. We will continue to reimburse hospitals at a rate of 12 cents per page, 

plus shipping, for records provided on paper (76 FR 74577). 

 The burden associated with validation is the time and effort necessary to submit 

validation data to the CMS contractor. For some hospitals, we believe that submitting 

this data electronically may result in a reduction in burden; for others we believe that 

submitting paper copies will be the least burdensome option. We sample 500 hospitals 

for validation, and we estimate that it will take each hospital 12 hours to comply with the 

data submission requirements. Therefore, we estimate a total burden of approximately 
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6,000 hours (500 hospitals x 12 hours/hospital) and a total financial impact of $180,000 

($30/hour x 6,000 hours) for the CY 2017 payment determination and subsequent years. 

e. Extraordinary Circumstances Extensions or Exemptions Process 

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68489), the CY 2014 OPPS/ASC final rule with comment period (78 FR 75119 

through 75120), and 42 CFR 419.46(d) for a complete discussion of our extraordinary 

circumstances extension or waiver process under the Hospital OQR Program. In this 

proposed rule, we are proposing to make a change from the phrase “extension or waiver” 

to the phrase “extension or exemption” throughout the regulation. We do not anticipate 

that this proposed minor change will affect the collection of information burden estimates 

for this process. 

f. Reconsideration and Appeals 

 While there is burden associated with filing a reconsideration request, 

5 CFR 1320.4 of the Paperwork Reduction Act of 1995 regulations excludes collection 

activities during the conduct of administrative actions such as redeterminations, 

reconsiderations, or appeals or all of these actions. 

 We invite public comment on the burden associated with these information 

collection requirements. 

2. ASCQR Program Requirements 

a. Background 

 We refer readers to the CY 2012 OPPS/ASC final rule with comment period 

(76 FR 74554), the FY 2013 IPPS/LTCH final rule (77 FR 53672), the CY 2013 
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OPPS/ASC final rule with comment period (77 FR 68532 through 68533), and the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 through 75174) for 

detailed discussions of the ASCQR Program information collection requirements we have 

previously finalized. 

b. Revisions to the CY 2016 Payment Determination Estimates 

 In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75124 through 

75130), we finalized the adoption of three new measures for the CY 2016 payment 

determination and subsequent years: ASC-9: Endoscopy/Polyp Surveillance: Appropriate 

Follow-up Interval for Normal Colonoscopy in Average Risk Patients (NQF # 0658), 

ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a 

History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF # 0659), and 

ASC-11: Cataracts – Improvement in Patient’s Visual Function within 90 Days 

Following Cataract Surgery (NQF # 1536). In that rule, we estimated that each 

participating ASC would spend 35 minutes per case to collect and submit the data for 

these measures, making a total estimated burden for ASCs with a single case per ASC of 

3,067 hours (5,260 ASCs × 0.583 hours per case per ASC). We also stated that we 

expected ASCs would vary greatly as to the number of cases per ASC due to ASC 

specialization (78 FR 75173). As stated in section XIV.E.3. of this proposed rule, we 

have delayed reporting for ASC-9 and ASC-10 by one quarter. Therefore, we estimate a 

25-percent reduction in cases and burden for these measures for the CY 2016 payment 

determination. As stated in section XIV.E.3.c. of this proposed rule, we delayed 

reporting of ASC-11 by one year and are proposing to exclude ASC-11 from the CY 
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2016 payment determination measure set . As a result, we do not believe there would be 

any burden associated with this measure for the CY 2016 payment determination. 

c. Claims-Based Measures for the CY 2017 Payment Determination and Subsequent 

Years 

 We refer readers to the CY 2013 OPPS /ASC final rule with comment period 

(77 FR 68532) and CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 

through 75174) for detailed discussions of the information collection requirements for the 

five previously-adopted claims-based ASCQR Program measures (four outcome 

measures and one process measure). The five previously adopted measures are: 

ASC-1: Patient Burn (NQF # 0263); ASC-2: Patient Fall (NQF # 0266); ASC-3: Wrong 

Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant (NQF # 0267); 

ASC-4: Hospital Transfer/Admission (NQF # 0265); and ASC-5: Prophylactic 

Intravenous (IV) Antibiotic Timing (NQF # 0264). For the reasons we discussed in the 

CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 through 75173), we 

estimate that the reporting burden to report Quality Data Codes (QDCs) for these five 

claims-based outcome measures would be nominal for the CY 2017 payment 

determination and for subsequent years. 

 In section XIV.B.5. of this proposed rule, we are proposing to add one additional 

claims-based measure to the ASCQR Program. The additional measure, 

ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient 

Colonoscopy, would be computed by CMS based on Medicare FFS claims, and would 

not require ASCs to input QDCs. Therefore, we do not anticipate that this proposed 
CMS-1613-P 616 

measure would add additional burden to ASCs for the CY 2017 payment determination 

and for subsequent years. 

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

 We refer readers to the CY 2013 OPPS/ASC final rule with comment period 

(77 FR 68532) and CY 2014 OPPS/ASC final rule with comment period (78 FR 75172 

through 75174) for detailed discussions of the information collection requirements for the 

five previously-adopted Web-based measures, excluding ASC-11, which we are 

proposing for voluntary inclusion in the ASCQR Program for CY 2017. The five 

previously adopted measures are: ASC-6: Safe Surgery Checklist Use; ASC-7: ASC 

Facility Volume Data on Selected ASC Surgical Procedures; ASC-8: Influenza 

Vaccination Coverage Among Healthcare Personnel (NQF # 0431); 

ASC-9: Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal 

Colonoscopy in Average Risk Patients (NQF # 0658); and ASC-10: Endoscopy/Polyp 

Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous PolypsAvoidance of Inappropriate Use (NQF # 0659). 

 For the reasons we discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75173 through 75174), we estimate that the reporting burden for the 

ASC-6: Safe Surgery Checklist Use and the ASC-7: ASC Facility Volume measures 

would be 1,756 hours (5,260 ASCs x 2 measures x 0.167 hours per ASC) and $52,680 

(1,756 hours x $30.00 per hour) annually for the CY 2017 payment determination and for 

subsequent years. 
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 For the reasons discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75173 through 75174), we estimate that the reporting burden for the 

ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel (NQF #0431) 

measure would be 18,005 hours and $540,150 (18,005 hours x $30.00 per hour) annually 

for the CY 2017 payment determination and for subsequent years. 

 For the reasons discussed in the CY 2014 OPPS/ASC final rule with comment 

period (78 FR 75173 through 75174), we estimate that the reporting burden for ASCs 

with a single case per ASC for the chart-abstracted ASC-9: Endoscopy/Polyp 

Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk 

Patients (NQF # 0658) and ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy 

Interval for Patients with a History of Adenomatous Polyps-Avoidance of Inappropriate 

Use (NQF # 0659) measures would be 3,067 hours and $92,010 (3,067 hours x $30.00 

per hour) annually for the CY 2017 payment determination and for subsequent years. 

 In section XIV.E.3.c. of this proposed rule, we are proposing that data collection 

and submission be voluntary for ASC-11: Cataracts: Improvement in Patient’s Visual 

Function within 90 Days Following Cataract Surgery (NQF # 1536), meaning we would 

not subject ASCs to payment reduction with respect to this measure during the period of 

voluntary reporting. We continue to believe this measure addresses an important area of 

care, and anticipate that many facilities will report this measure on a voluntary basis. In 

the CY 2014 ASC/OPPS final rule with comment period (78 FR 75173), we estimated 

that each participating ASC would spend 35 minutes per case to collect and submit the 

data for this measure, making the total estimated burden for ASCs with a single case per 
CMS-1613-P 618 

ASC of 3,067 hours (5,260 ASCs x 0.583 hours per case per ASC) annually. We expect 

that ASCs would vary greatly as to the number of cases per ASC due to ASC 

specialization. We estimate that approximately 20 percent of ASCs would elect to report 

this measure on a voluntary basis; therefore, we estimate the total estimated burden for 

ASCs with a single case per ASC to be 613 hours (1,052 ASCs x 0.583 hours per case per 

ASC) and $18,390 (613 hours x $30.00 per hour) annually for the CY 2017 payment 

determination and subsequent years. 

e. Extraordinary Circumstances Extension or Exemptions Process 

 We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53642 

through 53643) and the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75140) for a complete discussion of our extraordinary circumstances extension or 

waiver process under the ASCQR Program. We are not proposing to make any 

substantive changes to this process. However, in the future, we will refer to the process 

as the extraordinary circumstances extensions or exemptions process. In 

section XIV.E.7. of this proposed rule, we note that we are proposing to make certain 

changes to the form to ensure that the form is consistent across CMS quality reporting 

programs. We do not anticipate that these proposed minor changes will affect the burden 

estimates for this process. 

f. Reconsideration and Appeals 

 While there is burden associated with filing a reconsideration request, 

5 CFR 1320.4 of the Paperwork Reduction Act of 1995 regulations excludes collection 
CMS-1613-P 619 

activities during the conduct of administrative actions such as redeterminations, 

reconsiderations, or appeals or all of these actions. 

 We invite public comment on the burden associated with these information 

collection requirements. 

XX. Response to Comments 

 Because of the large number of public comments we normally receive on Federal 

Register documents, we are not able to acknowledge or respond to them individually. 

We will consider all comments we receive by the date and time specified in the DATES

section of this proposed rule, and, when we proceed with a subsequent document(s), we 

will respond to those comments in the preamble to that document. 

XXI. Economic Analyses 

A. Regulatory Impact Analysis 

1. Introduction 

 We have examined the impacts of this proposed rule as required by Executive 

Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the 

Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) 

of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 

(UMRA) (March 22, 1995, Pub. L. 104-4), Executive Order 13132 on Federalism 

(August 4, 1999), and the Contract with America Advancement Act of 1996 

(Pub. L. 104-121) (5 U.S.C. 804(2)). This section of the proposed rule contains the 

impact and other economic analyses for the provisions that we are proposing. 
CMS-1613-P 620 

 Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits 

of available regulatory alternatives and, if regulation is necessary, to select regulatory 

approaches that maximize net benefits (including potential economic, environmental, 

public health and safety effects, distributive impacts, and equity). Executive Order 13563 

emphasizes the importance of quantifying both costs and benefits, of reducing costs, of 

harmonizing rules, and of promoting flexibility. This proposed rule has been designated 

as an economically significant rule under section 3(f)(1) of Executive Order 12866 and a 

major rule under the Contract with America Advancement Act of 1996 

(Pub. L. 104-121). Accordingly, this proposed rule has been reviewed by the Office of 

Management and Budget. We have prepared a regulatory impact analysis that, to the best 

of our ability, presents the costs and benefits of this proposed rule. We are soliciting 

public comments on the regulatory impact analysis provided. 

2. Statement of Need 

 This proposed rule is necessary to update the Medicare hospital OPPS rates. It is 

necessary to make changes to the payment policies and rates for outpatient services 

furnished by hospitals and CMHCs in CY 2015. We are required under section 

1833(t)(3)(C)(ii) of the Act to update annually the OPPS conversion factor used to 

determine the payment rates for APCs. We also are required under section 1833(t)(9)(A) 

of the Act to review, not less often than annually, and revise the groups, the relative 

payment weights, and the wage and other adjustments described in section 1833(t)(2) of 

the Act. We must review the clinical integrity of payment groups and relative payment 

weights at least annually. We are proposing to revise the APC relative payment weights 
CMS-1613-P 621 

using claims data for services furnished on and after January 1, 2013, through and 

including December 31, 2013, and updated cost report information. 

 This proposed rule also is necessary to update the ASC payment rates for 

CY 2015, enabling CMS to make changes to payment policies and payment rates for 

covered surgical procedures and covered ancillary services that are performed in an ASC 

in CY 2015. Because ASC payment rates are based on the OPPS relative payment 

weights for the majority of the procedures performed in ASCs, the ASC payment rates 

are updated annually to reflect annual changes to the OPPS relative payment weights. In 

addition, we are required under section 1833(i)(1) of the Act to review and update the list 

of surgical procedures that can be performed in an ASC not less frequently than every 

2 years. 

3. Overall Impacts for the Proposed OPPS and ASC Payment Provisions 

 We estimate that the total increase in Federal government expenditures under the 

OPPS for CY 2015 compared to CY 2014 due to the changes in this proposed rule would 

be approximately $800 million. Taking into account our estimated changes in 

enrollment, utilization, and case-mix, we estimate that the proposed OPPS expenditures 

for CY 2015 would be approximately $5.224 billion higher relative to expenditures in 

CY 2014. Because this proposed rule is economically significant as measured by the 

threshold of an additional $100 million in expenditures in one year, we have prepared this 

regulatory impact analysis that, to the best of our ability, presents its costs and benefits. 

Table 52 displays the redistributional impact of the proposed CY 2015 changes in OPPS 

payment to various groups of hospitals and for CMHCs. 
CMS-1613-P 622 

 We estimate that the proposed update to the conversion factor and other 

adjustments (not including the effects of outlier payments, the pass-through estimates, 

and the application of the proposed frontier State wage adjustment for CY 2015) would 

increase total OPPS payments by 2.1 percent in CY 2015. The proposed changes to the 

APC weights, the proposed changes to the wage indexes, the proposed continuation of a 

payment adjustment for rural SCHs, including EACHs, and the proposed payment 

adjustment for cancer hospitals would not increase OPPS payments because these 

proposed changes to the OPPS are budget neutral. However, these proposed updates 

would change the distribution of payments within the budget neutral system. We 

estimate that the total change in payments between CY 2014 and CY 2015, considering 

all proposed payments, including proposed changes in estimated total outlier payments, 

pass-through payments, and the application of the frontier State wage adjustment outside 

of budget neutrality, in addition to the application of the proposed OPD fee schedule 

increase factor after all adjustments required by sections 1833(t)(3)(F), 1833(t)(3)(G), 

and 1833(t)(17) of the Act, would increase total estimated OPPS payments by 2.2 

percent. 

 We estimate the total increase (from proposed changes to the ASC provisions in 

this proposed rule as well as from enrollment, utilization, and case-mix changes) in 

expenditures under the ASC payment system for CY 2015 compared to CY 2014 to be 

approximately $243 million. Because the provisions for the ASC payment system are 

part of a proposed rule that is economically significant as measured by the $100 million 

threshold, we have prepared a regulatory impact analysis of the proposed changes to the 
CMS-1613-P 623 

ASC payment system that, to the best of our ability, presents the costs and benefits of this 

portion of the proposed rule. Tables 53 and Table 54 of this proposed rule display the 

redistributional impact of the proposed CY 2015 changes on ASC payment, grouped by 

specialty area and then grouped by procedures with the greatest ASC expenditures, 

respectively. 

4. Detailed Economic Analyses 

a. Estimated Effects of Proposed OPPS Changes in this Proposed Rule 

(1) Limitations of Our Analysis 

 The distributional impacts presented here are the projected effects of the proposed 

CY 2015 policy changes on various hospital groups. We post on the CMS Web site our 

proposed hospital-specific estimated payments for CY 2015 with the other supporting 

documentation for this proposed rule. To view the hospital-specific estimates, we refer 

readers to the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/HospitalOutpatientPPS/index.html. At the Web site, select “regulations 

and notices” from the left side of the page and then select “CMS-1613-P” from the list of 

regulations and notices. The hospital-specific file layout and the hospital-specific file are 

listed with the other supporting documentation for this proposed rule. We show 

hospital-specific data only for hospitals whose claims were used for modeling the impacts 

shown in Table 52 below. We do not show hospital-specific impacts for hospitals whose 

claims we were unable to use. We refer readers to section II.A. of this proposed rule for 

a discussion of the hospitals whose claims we do not use for ratesetting and impact 

purposes. 
CMS-1613-P 624 

 We estimate the effects of the proposed individual policy changes by estimating 

payments per service, while holding all other payment policies constant. We use the best 

data available, but do not attempt to predict behavioral responses to our proposed policy 

changes. In addition, we do not make adjustments for future changes in variables such as 

service volume, service-mix, or number of encounters. In this proposed rule, we are 

soliciting public comment and information about the anticipated effects of our proposed 

changes on providers and our methodology for estimating them. Any public comments 

that we receive will be addressed in the applicable sections of the final rule with 

comment period. 

(2) Estimated Effects of Proposed OPPS Changes on Hospitals 

 Table 52 below shows the estimated impact of this proposed rule on hospitals. 

Historically, the first line of the impact table, which estimates the proposed change in 

payments to all facilities, has always included cancer and children’s hospitals, which are 

held harmless to their pre-BBA amount. We also include CMHCs in the first line that 

includes all providers. We now include a second line for all hospitals, excluding 

permanently held harmless hospitals and CMHCs. 

 We present separate impacts for CMHCs in Table 52, and we discuss them 

separately below, because CMHCs are paid only for partial hospitalization services under 

the OPPS and are a different provider type from hospitals. In CY 2015, we are 

continuing to pay CMHCs under APC 0172 (Level I Partial Hospitalization (3 services) 

for CMHCs) and APC 0173 (Level II Partial Hospitalization (4 or more services) for 

CMHCs), and we are paying hospitals for partial hospitalization services under APC 
CMS-1613-P 625 

0175 (Level I Partial Hospitalization (3 services) for hospital-based PHPs) and APC 0176 

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

 The estimated increase in the total payments made under the OPPS is determined 

largely by the increase to the conversion factor under the statutory methodology. The 

distributional impacts presented do not include assumptions about changes in volume and 

service-mix. The conversion factor is updated annually by the OPD fee schedule increase 

factor as discussed in detail in section II.B. of this proposed rule. 

Section 1833(t)(3)(C)(iv) of the Act provides that the OPD fee schedule increase factor is 

equal to the market basket percentage increase applicable under section 1886(b)(3)(B)(iii) 

of the Act, which we refer to as the IPPS market basket percentage increase. The 

proposed IPPS market basket percentage increase for FY 2015 is 2.7 percent 

(79 FR 28087). Section 1833(t)(3)(F)(i) of the Act reduces that 2.7 percent by the 

multifactor productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act, 

which is proposed to be 0.4 percentage points for FY 2015 (which is also the proposed 

MFP adjustment for FY 2015 in the FY 2015 IPPS/LTCH PPS proposed rule 

(79 FR 28087); and sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(iv) of the Act further 

reduce the market basket percentage increase by 0.2 percentage points, resulting in the 

proposed OPD fee schedule increase factor of 2.1 percent. We are proposing to use the 

proposed OPD fee schedule increase factor of 2.1 percent in the calculation of the 

CY 2015 proposed OPPS conversion factor. Section 10324 of the Affordable Care Act, 

as amended by HCERA, further authorized additional expenditures outside budget 

neutrality for hospitals in certain frontier States that have a wage index less than 1.00. 
CMS-1613-P 626 

The amounts attributable to this frontier State wage index adjustment are incorporated in 

the CY 2015 estimates in Table 52. 

 To illustrate the impact of the proposed CY 2015 changes, our analysis begins 

with a baseline simulation model that uses the CY 2014 relative payment weights, the 

FY 2014 final IPPS wage indexes that include reclassifications, and the final CY 2014 

conversion factor. Table 52 shows the estimated redistribution of the proposed increase 

in payments for CY 2015 over CY 2014 payments to hospitals and CMHCs as a result of 

the following factors: the impact of the APC reconfiguration and recalibration changes 

between CY 2014 and CY 2015 (Column 2); the proposed wage indexes and the provider 

adjustments (Column 3); the combined impact of all the proposed changes described in 

the preceding columns plus the proposed 2.1 percent OPD fee schedule increase factor 

update to the conversion factor (Column 4); the combined impact shown in Column 4 

plus the proposed CY 2015 frontier State wage index adjustment (Column 5); and the 

estimated impact taking into account all proposed payments for CY 2015 relative to all 

payments for CY 2014, including the impact of proposed changes in estimated outlier 

payments and proposed changes to the pass-through payment estimate (Column 6). 

 We did not model an explicit budget neutrality adjustment for the rural adjustment 

for SCHs because we are proposing to maintain the current adjustment percentage for 

CY 2015. Because the updates to the conversion factor (including the update of the OPD 

fee schedule increase factor), the estimated cost of the rural adjustment, and the estimated 

cost of projected pass-through payment for CY 2015 are applied uniformly across 

services, observed redistributions of payments in the impact table for hospitals largely 
CMS-1613-P 627 

depend on the mix of services furnished by a hospital (for example, how the APCs for the 

hospital’s most frequently furnished services would change), and the impact of the wage 

index changes on the hospital. However, total payments made under this system and the 

extent to which this proposed rule would redistribute money during implementation also 

would depend on changes in volume, practice patterns, and the mix of services billed 

between CY 2014 and CY 2015 by various groups of hospitals, which CMS cannot 

forecast. 

 Overall, we estimate that the proposed rates for CY 2015 would increase 

Medicare OPPS payments by an estimated 2.2 percent. Removing payments to cancer 

and children’s hospitals because their payments are held harmless to the pre-OPPS ratio 

between payment and cost and removing payments to CMHCs results in an estimated 

2.2 percent increase in Medicare payments to all other hospitals. These estimated 

payments would not significantly impact other providers. 

Column 1: Total Number of Hospitals 

 The first line in Column 1 in Table 52 shows the total number of facilities (3,947), 

including designated cancer and children’s hospitals and CMHCs, for which we were 

able to use CY 2013 hospital outpatient and CMHC claims data to model CY 2014 and 

CY 2015 payments, by classes of hospitals, for CMHCs and for dedicated cancer 

hospitals. We excluded all hospitals and CMHCs for which we could not plausibly 

estimate CY 2014 or CY 2015 payment and entities that are not paid under the OPPS. 

The latter entities include CAHs, all-inclusive hospitals, and hospitals located in Guam, 

the U.S. Virgin Islands, Northern Mariana Islands, American Samoa, and the State of 
CMS-1613-P 628 

Maryland. This process is discussed in greater detail in section II.A. of this proposed 

rule. At this time, we are unable to calculate a disproportionate share (DSH) variable for 

hospitals not participating in the IPPS. Hospitals for which we do not have a DSH 

variable are grouped separately and generally include freestanding psychiatric hospitals, 

rehabilitation hospitals, and long-term care hospitals. We show the total number of 

OPPS hospitals (3,814), excluding the hold-harmless cancer and children’s hospitals and 

CMHCs, on the second line of the table. We excluded cancer and children’s hospitals 

because section 1833(t)(7)(D) of the Act permanently holds harmless cancer hospitals 

and children’s hospitals to their “pre-BBA amount” as specified under the terms of the 

statute, and therefore, we removed them from our impact analyses. We show the isolated 

impact on 72 CMHCs at the bottom of the impact table and discuss that impact separately 

below. 

Column 2: APC Recalibration – All Proposed Changes 

 Column 2 shows the estimated effect of APC recalibration. Column 2 also 

reflects any changes in multiple procedure discount patterns or conditional packaging that 

occur as a result of the changes in the relative magnitude of payment weights. As a result 

of APC recalibration, we estimate that urban hospitals would experience a decrease 

of -0.1 percent, with the impact ranging from an increase of 0.1 percent to a decrease 

of -0.3 percent, depending on the number of beds. Rural hospitals would experience an 

increase of 0.5 percent, with the impact ranging from an increase of 1.2 percent to a 

decrease of -0.6 percent, depending on the number of beds. Major teaching hospitals 

would experience an increase of 0.6 percent overall. 
CMS-1613-P 629 

Column 3: New Wage Indexes and the Effect of the Provider Adjustments 

 Column 3 demonstrates the combined budget neutral impact of the proposed APC 

recalibration; the proposed updates for the wage indexes with the proposed fiscal year 

(FY) 2015 IPPS post-reclassification wage indexes; and the proposed rural adjustment. 

We modeled the independent effect of the proposed budget neutrality adjustments and the 

proposed OPD fee schedule increase factor by using the relative payment weights and 

wage indexes for each year, and using a CY 2014 conversion factor that included the 

OPD fee schedule increase and a budget neutrality adjustment for differences in wage 

indexes. 

 Column 3 reflects the independent effects of the proposed updated wage indexes, 

including the application of budget neutrality for the rural floor policy on a nationwide 

basis. This column excludes the effects of the proposed frontier State wage index 

adjustment, which is not budget neutral and is included in Column 5. We did not model a 

budget neutrality adjustment for the rural adjustment for SCHs because we are proposing 

to continue the rural payment adjustment of 7.1 percent to rural SCHs for CY 2015, as 

described in section II.E. of this proposed rule. 

 We modeled the independent effect of updating the wage indexes by varying only 

the wage indexes, holding APC relative payment weights, service-mix, and the rural 

adjustment constant and using the proposed CY 2015 scaled weights and a CY 2014 

conversion factor that included a budget neutrality adjustment for the effect of changing 

the wage indexes between CY 2014 and CY 2015. The proposed FY 2015 wage policy 

results in modest redistributions. 
CMS-1613-P 630 

 There is no difference in impact between the CY 2014 cancer hospital payment 

adjustment and the proposed CY 2015 cancer hospital payment adjustment because we 

are proposing the same payment-to-cost ratio target in CY 2015 as in CY 2014. 

Column 4: All Proposed Budget Neutrality Changes Combined with the Proposed 

Market Basket Update 

 Column 4 demonstrates the combined impact of all the proposed changes 

previously described and the proposed update to the conversion factor of 2.1 percent. 

Overall, these changes would increase payments to urban hospitals by 2.1 percent and to 

rural hospitals by 2.4 percent. Most classes of hospitals would receive an increase in line 

with the proposed 2.1 percent overall increase after the update is applied to the budget 

neutrality adjustments. 

Column 5: All Proposed Adjustments with the Proposed Frontier State Wage Index 

Adjustment 

 This column shows the impact of all proposed budget neutrality adjustments, 

application of the proposed 2.1 percent OPD fee schedule increase factor, and the 

nonbudget-neutral impact of applying the proposed CY 2015 frontier State wage 

adjustment. Rural hospitals in West North Central and Mountain States would experience 

estimated increases in payment of 3.8 and 4.3 percent, respectively, as a result of the 

proposed frontier State wage index adjustment, while urban hospitals in those States 

would experience estimated increases of 3.2 and 2.5 percent, respectively. 

Column 6: All Proposed Changes for CY 2015 
CMS-1613-P 631 

 Column 6 depicts the full impact of the proposed CY 2015 policies on each 

hospital group by including the effect of all of the proposed changes for CY 2015 and 

comparing them to all estimated payments in CY 2014. Column 6 shows the combined 

budget neutral effects of Column 2 and 3; the proposed OPD fee schedule increase; the 

impact of the proposed frontier State wage index adjustment; the impact of estimated 

OPPS outlier payments as discussed in section II.G. of this proposed rule; the proposed 

change in the Hospital OQR Program payment reduction for the small number of 

hospitals in our impact model that failed to meet the reporting requirements (discussed in 

section XIII. of this proposed rule); and the difference in total OPPS payments dedicated 

to transitional pass-through payments. 

 Of those hospitals that failed to meet the Hospital OQR Program reporting 

requirements for the full CY 2014 update (and assumed, for modeling purposes, to be the 

same number for CY 2015), we included 35 hospitals in our model because they had both 

CY 2013 claims data and recent cost report data. We estimate that the cumulative effect 

of all proposed changes for CY 2015 would increase payments to all providers by 

2.2 percent for CY 2015. We modeled the independent effect of all proposed changes in 

Column 6 using the final relative payment weights for CY 2014 and the proposed relative 

payment weights for CY 2015. We used the final conversion factor for CY 2014 of 

$72.672 and the proposed CY 2015 conversion factor of $74.176 discussed in section 

II.B. of this proposed rule. 

 Column 6 contains simulated outlier payments for each year. We used the 1-year 

proposed charge inflation factor used in the FY 2015 IPPS/LTCH PPS proposed rule 
CMS-1613-P 632 

(79 FR 28321) of 5.57 percent (1.0557) to increase individual costs on the CY 2013 

claims, and we used the most recent overall CCR in the April 2014 Outpatient 

Provider-Specific File (OPSF) to estimate outlier payments for CY 2014. Using the 

CY 2013 claims and a 5.57 percent charge inflation factor, we currently estimate that 

outlier payments for CY 2014, using a multiple threshold of 1.75 and a proposed 

fixed-dollar threshold of $2,900 would be approximately 0.9 percent of total payments. 

The estimated current outlier payments of 0.9 percent are incorporated in the comparison 

in Column 6. We used the same set of claims and a proposed charge inflation factor of 

11.46 percent (1.1146) and the CCRs in the April 2014 OPSF, with an adjustment of 

0.9813, to reflect relative changes in cost and charge inflation between CY 2013 and 

CY 2015, to model the CY 2015 proposed outliers at 1.0 percent of estimated total 

payments using a multiple threshold of 1.75 and a proposed fixed-dollar threshold of 

$3,100. The charge inflation and CCR inflation factors are discussed in detail in the 

FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28321). 

 We estimate that the anticipated change in payment between CY 2014 and 

CY 2015 for the hospitals failing to meet the Hospital OQR Program requirements would 

be negligible. Overall, we estimate that facilities would experience an increase of 

2.2 percent under this proposed rule in CY 2015 relative to total spending in CY 2014. 

This projected increase (shown in Column 6) of Table 52 reflects the proposed 

2.1 percent OPD fee schedule increase factor, less 0.01 percent for the proposed change 

in the pass-through estimate between CY 2014 and CY 2015, plus 0.1 percent for the 

difference in estimated outlier payments between CY 2014 (0.9 percent) and CY 2015 
CMS-1613-P 633 

(1.0 percent), less 0.1 percent due to the frontier adjustment in CY 2014, plus 0.1 percent 

due to the proposed frontier State wage index adjustment in CY 2015. We estimate that 

the combined effect of all proposed changes for CY 2015 would increase payments to 

urban hospitals by 2.2 percent. 

 Overall, we estimate that rural hospitals would experience a 2.5 percent increase 

as a result of the combined effects of all proposed changes for CY 2015. We estimate 

that rural hospitals that bill less than 5,000 lines of OPPS services would experience a 

decrease of -3.1 percent and rural hospitals that bill 11,000 or more lines of OPPS 

services would experience increases ranging from 1.5 to 3.0 percent. 

 Among hospitals by teaching status, we estimate that the impacts resulting from 

the combined effects of all proposed changes would include an increase of 2.9 percent for 

major teaching hospitals and 2.1 percent for nonteaching hospitals. Minor teaching 

hospitals would experience an estimated increase of 1.8 percent. 

 In our analysis, we also have categorized hospitals by type of ownership. Based 

on this analysis, we estimate that voluntary hospitals would experience an increase of 

2.4 percent, proprietary hospitals would experience an increase of 1.7 percent, and 

governmental hospitals would experience an increase of 2.2 percent. 
CMS-1613-P 634 

TABLE 52.—ESTIMATED IMPACT OF THE PROPOSED CY 2015 CHANGES 

FOR THE HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM 

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

 

Number 

of 

Hospitals

APC 

Recalibration 

(all proposed 

changes) 

Proposed 

New Wage 

Index and 

Provider 

Adjustments

All Budget 

Neutral 

Changes 

(combined 

cols 2,3) 

with 

Proposed 

Market 

Basket 

Update 

All 

Proposed 

Budget 

Neutral 

Changes 

and 

Proposed 

Update 

(Column 4) 

with 

Proposed 

Frontier 

Wage 

Index 

Adjustment

All 

Proposed 

Changes 

 

ALL FACILITIES * 3,947 0.0 0.0 2.1 2.2 2.2

ALL HOSPITALS 3,814 0.0 0.0 2.1 2.2 2.2

(excludes hospitals permanently 

held harmless and CMHCs) 

 

URBAN HOSPITALS 2,953 -0.1 0.0 2.1 2.2 2.2

 LARGE URBAN 1,616 -0.1 0.1 2.2 2.2 2.3

 (GT 1 MILL.) 

 OTHER URBAN 1,337 -0.1 -0.1 1.9 2.2 2.1

 (LE 1 MILL.) 

 

RURAL HOSPITALS 861 0.5 -0.2 2.4 2.7 2.5

 SOLE COMMUNITY 377 0.7 -0.1 2.6 3.0 2.7

 OTHER RURAL 484 0.3 -0.3 2.2 2.3 2.2

BEDS (URBAN) 

 0 - 99 BEDS 1,008 0.1 0.1 2.4 2.6 2.5

 100-199 BEDS 856 0.2 0.0 2.3 2.4 2.4

 200-299 BEDS 462 -0.2 0.1 2.0 2.2 2.2

 300-499 BEDS 412 -0.3 0.0 1.8 2.0 2.0

 500 + BEDS 215 0.1 0.0 2.1 2.1 2.3

 

BEDS (RURAL) 

 0 - 49 BEDS 338 0.9 0.0 3.0 3.2 3.0

 50- 100 BEDS 319 1.2 -0.2 3.0 3.3 3.1

 101- 149 BEDS 117 0.3 -0.1 2.3 2.6 2.4

 150- 199 BEDS 47 0.0 -0.5 1.6 2.3 1.7

 200 + BEDS 40 -0.6 -0.2 1.3 1.3 1.4

 

VOLUME (URBAN) 

 LT 5,000 Lines 500 -2.6 -0.2 -0.8 -0.6 -0.7
CMS-1613-P 635 

 5,000 - 10,999 Lines 138 -2.7 -0.1 -0.7 -0.1 -0.5

 11,000 - 20,999 Lines 120 -2.4 0.0 -0.3 -0.1 -0.1

 21,000 - 42,999 Lines 237 -0.4 0.1 1.8 1.8 1.9

 42,999 - 89,999 Lines 540 -0.2 0.0 1.9 1.9 2.0

 GT 89,999 Lines 1,418 0.0 0.0 2.1 2.2 2.3

 

VOLUME (RURAL) 

 LT 5,000 Lines 35 -5.1 -0.1 -3.1 -0.3 -3.1

 5,000 - 10,999 Lines 27 -4.1 0.1 -1.9 -0.7 -1.9

 11,000 - 20,999 Lines 50 -0.2 -0.4 1.5 1.7 1.5

 21,000 - 42,999 Lines 162 1.0 -0.1 3.0 3.5 3.0

 GT 42,999 Lines 587 0.5 -0.2 2.4 2.6 2.5

 

REGION (URBAN) 

 NEW ENGLAND 151 1.3 -0.1 3.3 3.3 3.4

 MIDDLE ATLANTIC 357 0.5 0.5 3.1 3.1 3.2

 SOUTH ATLANTIC 468 -0.2 -0.2 1.6 1.6 1.8

 EAST NORTH CENT. 465 0.1 -0.3 1.9 1.9 2.1

 EAST SOUTH CENT. 175 -1.0 -0.5 0.6 0.6 0.8

 WEST NORTH CENT. 192 -0.1 0.0 2.0 3.2 2.1

 WEST SOUTH CENT. 509 -1.1 -0.2 0.8 0.8 1.0

 MOUNTAIN 199 0.0 0.0 2.1 2.5 2.3

 PACIFIC 390 -0.1 1.0 3.1 3.1 3.2

 PUERTO RICO 47 1.0 0.5 3.6 3.6 3.6

 

REGION (RURAL) 

 NEW ENGLAND 23 2.0 -0.1 4.0 4.0 4.1

 MIDDLE ATLANTIC 58 1.4 0.4 3.9 3.9 4.0

 SOUTH ATLANTIC 130 -0.3 -0.5 1.3 1.3 1.4

 EAST NORTH CENT. 120 0.7 0.0 2.8 2.8 2.9

 EAST SOUTH CENT. 165 -0.2 -0.4 1.5 1.5 1.6

 WEST NORTH CENT. 99 0.7 -0.2 2.6 3.8 2.6

 WEST SOUTH CENT. 181 0.1 -0.6 1.6 1.6 1.7

 MOUNTAIN 61 0.9 -0.5 2.6 4.3 2.8

 PACIFIC 24 1.4 0.9 4.4 4.4 4.4

 

TEACHING STATUS 

 NON-TEACHING 2,793 -0.1 0.0 2.0 2.1 2.1

 MINOR 699 -0.3 -0.1 1.7 1.9 1.8

 MAJOR 322 0.6 0.1 2.8 2.8 2.9

 

DSH PATIENT PERCENT 

 0 15 0.2 0.5 2.8 3.2 2.8

 GT 0 - 0.10 334 0.3 0.2 2.6 2.8 2.7

 0.10 - 0.16 317 0.3 -0.1 2.4 2.5 2.4

 0.16 - 0.23 681 0.2 -0.1 2.3 2.4 2.4

 0.23 - 0.35 1,095 0.0 0.0 2.1 2.3 2.2

 GE 0.35 811 -0.2 0.0 1.9 1.9 2.1

 DSH NOT AVAILABLE ** 561 -6.6 0.1 -4.4 -4.4 -4.5

 

URBAN TEACHING/DSH 
CMS-1613-P 636 

Column (1) shows total hospitals and/or CMHCs. 

Column (2) includes all proposed CY 2015 OPPS policies and compares those to the CY 2014 OPPS. 

Column (3) shows the budget neutral impact of updating the wage index by applying the proposed FY 2015 hospital 

inpatient wage index, including all proposed hold harmless policies and transitional wages. The proposed rural adjustment 

continues our current policy of 7.1 percent so the budget neutrality factor is 1. The budget neutrality adjustment for the 

proposed cancer hospital adjustment is 1.000 because the payment-to-cost ratio target remains the same as in CY 2014. 

Column (4) shows the impact of all budget neutrality adjustments and the addition of the proposed 2.1 percent OPD fee 

schedule update factor (2.7 percent reduced by 0.4 percentage points for the final productivity adjustment and further 

reduced by 0.2 percentage point in order to satisfy statutory requirements set forth in the Affordable Care Act). 

Column (5) shows the non-budget neutral impact of applying the frontier State wage adjustment in CY 2015. 

Column (6) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, 

adding estimated outlier payments, and applying payment wage indexes. 

*These 3,947 providers include children and cancer hospitals, which are held harmless to pre-BBA amounts, and CMHCs. 

** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, 

and long-term care hospitals. 

 TEACHING & DSH 928 0.1 0.0 2.2 2.3 2.3

 NO TEACHING/DSH 1,482 -0.2 0.1 2.0 2.1 2.1

 NO TEACHING/NO DSH 13 0.2 0.5 2.9 2.9 2.9

 DSH NOT AVAILABLE** 530 -6.1 0.2 -3.8 -3.8 -3.9

 

TYPE OF OWNERSHIP 

 VOLUNTARY 2,007 0.1 0.0 2.2 2.4 2.4

 PROPRIETARY 1,255 -0.5 0.0 1.6 1.7 1.7

 GOVERNMENT 552 0.0 -0.1 2.1 2.1 2.2

 

CMHCs 72 -4.0 -0.1 -2.0 -2.0 -1.6
CMS-1613-P 637 

(3) Estimated Effects of Proposed OPPS Changes on CMHCs 

 The last line of Table 52 demonstrates the isolated impact on CMHCs, which 

furnish only partial hospitalization services under the OPPS. In CY 2014, CMHCs are 

paid under two APCs for these services: APC 0172 (Level I Partial Hospitalization 

(3 services) for CMHCs) and APC 0173 (Level II Partial Hospitalization (4 or more 

services) for CMHCs). Hospitals are paid for partial hospitalization services under APC 

0175 (Level I Partial Hospitalization (3 services) for hospital-based PHPs) and APC 0176 

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

our standard ratesetting methodology to derive the payment rates for each APC based on 

the cost data derived from claims and cost reports for the provider-type-specific APC. 

For CY 2015, we are proposing to continue the provider-type-specific APC structure that 

we adopted in CY 2011. We modeled the impact of this proposed APC policy assuming 

that CMHCs would continue to provide the same number of days of PHP care, with each 

day having either 3 services or 4 or more services, as seen in the CY 2013 claims data 

used for this proposed rule. We excluded days with 1 or 2 services because our policy 

only pays a per diem rate for partial hospitalization when 3 or more qualifying services 

are provided to the beneficiary. We estimate that CMHCs would experience an 

overall -1.6 percent decrease in payments from CY 2014 (shown in Column 6). 

 Column 3 shows that the estimated impact of adopting the proposed FY 2015 

wage index values would result in a small decrease of -0.1 percent to CMHCs. We note 

that all providers paid under the OPPS, including CMHCs, would receive a 2.1 percent 

OPD fee schedule increase factor. Column 4 shows that combining this proposed OPD 
CMS-1613-P 638 

fee schedule increase factor, along with proposed changes in APC policy for CY 2015 

and the proposed FY 2015 wage index updates, would result in an estimated decrease of -

2.0 percent. Column 5 shows that adding the proposed frontier State wage index 

adjustment would result in no change to the cumulative -2.0 percent decrease. Column 6 

shows that adding the proposed changes in outlier and pass-though payments would 

result in an additional 0.4 percent increase in payment for CMHCs, for a total decrease of 

-1.6 percent. This reflects all proposed changes to CMHCs for CY 2015. 

(4) Estimated Effect of Proposed OPPS Changes on Beneficiaries 

 For services for which the beneficiary pays a copayment of 20 percent of the 

payment rate, the beneficiary share of payment would increase for services for which the 

OPPS payments would rise and would decrease for services for which the OPPS 

payments would fall. For further discussion on the calculation of the national unadjusted 

copayments and minimum unadjusted copayments, we refer readers to section II.I. of this 

proposed rule. In all cases, the statute limits beneficiary liability for copayment for a 

procedure to the hospital inpatient deductible for the applicable year. 

 We estimate that the aggregate beneficiary coinsurance percentage would be 20.1 

percent for all services paid under the OPPS in CY 2015. The estimated aggregate 

beneficiary coinsurance reflects general system adjustments, including proposed 

recalibration of the APC relative payment weights, proposed change in the portion of 

OPPS payments dedicated to pass-through payments, and the CY 2015 comprehensive 

APC policy discussed in section II.A.2.e. of this proposed rule. 
CMS-1613-P 639 

(5) Estimated Effects of Proposed OPPS Changes on Other Providers 

 The relative payment weights and payment amounts established under the OPPS 

affect the payments made to ASCs as discussed in section XII. of this proposed rule. No 

types of providers or suppliers other than hospitals, CMHCs and ASCs would be affected 

by the proposed changes in this proposed rule. 

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

Programs 

 The effect on the Medicare program is expected to be $800 million in additional 

program payments for OPPS services furnished in CY 2015. The effect on the Medicaid 

program is expected to be limited to increased copayments that Medicaid may make on 

behalf of Medicaid recipients who are also Medicare beneficiaries. We refer readers to 

our discussion of the impact on beneficiaries in section XXI.A. of this proposed rule. 

(7) Alternative OPPS Policies Considered 

 Alternatives to the OPPS changes we are proposing to make and the reasons for 

our selected alternatives are discussed throughout this proposed rule. 

● Alternatives Considered for the Establishment of Comprehensive APCs 

 We refer readers to the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 74861 through 74910 and 75184 through 75185) for a discussion of our policy to 

establish comprehensive APCs for CY 2015 and the alternatives we considered. We note 

that we published tables in that final rule with comment period to demonstrate how this 

policy would have been implemented in CY 2014, and stated that we would be 
CMS-1613-P 640 

considering any additional public comments we receive when we update the policy for 

CY 2015 to account for changes that may occur in the CY 2013 claims data. 

b. Estimated Effects of CY 2015 ASC Payment System Proposed Policies 

 Most ASC payment rates are calculated by multiplying the ASC conversion factor 

by the ASC relative payment weight. As discussed fully in section XII. of this proposed 

rule, we are proposing to set the CY 2015 ASC relative payment weights by scaling the 

proposed CY 2015 OPPS relative payment weights by the proposed ASC scaler of 

0.9142. The estimated effects of the proposed updated relative payment weights on 

payment rates are varied and are reflected in the estimated payments displayed in 

Tables 53 and 54 below. 

 Beginning in CY 2011, section 3401 of the Affordable Care Act requires that the 

annual update to the ASC payment system (which currently is the CPI-U) after 

application of any quality reporting reduction be reduced by a productivity adjustment. 

The Affordable Care Act defines the productivity adjustment to be equal to the 10-year 

moving average of changes in annual economy-wide private nonfarm business 

multifactor productivity (MFP) (as projected by the Secretary for the 10-year period 

ending with the applicable fiscal year, year, cost reporting period, or other annual period). 

For ASCs that fail to meet their quality reporting requirements, the CY 2015 payment 

determinations will be based on the application of a 2.0 percentage point reduction to the 

annual update factor, which currently is the CPI-U. We calculated the proposed CY 2015 

ASC conversion factor by adjusting the CY 2014 ASC conversion factor by 0.9983 to 

account for changes in the pre-floor and pre-reclassified hospital wage indexes between 
CMS-1613-P 641 

CY 2014 and CY 2015 and by applying the proposed CY 2015 MFP-adjusted CPI-U 

update factor of 1.2 percent (projected CPI-U update of 1.7 percent minus a projected 

productivity adjustment of 0.5 percent). The proposed CY 2015 ASC conversion factor 

is $43.918. 

(1) Limitations of Our Analysis 

 Presented here are the projected effects of the proposed changes for CY 2015 on 

Medicare payment to ASCs. A key limitation of our analysis is our inability to predict 

changes in ASC service-mix between CY 2013 and CY 2015 with precision. We believe 

that the net effect on Medicare expenditures resulting from the proposed CY 2015 

changes would be small in the aggregate for all ASCs. However, such changes may have 

differential effects across surgical specialty groups as ASCs continue to adjust to the 

payment rates based on the policies of the revised ASC payment system. We are unable 

to accurately project such changes at a disaggregated level. Clearly, individual ASCs 

would experience changes in payment that differ from the aggregated estimated impacts 

presented below. 

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

 Some ASCs are multispecialty facilities that perform the gamut of surgical 

procedures from excision of lesions to hernia repair to cataract extraction; others focus on 

a single specialty and perform only a limited range of surgical procedures, such as eye, 

digestive system, or orthopedic procedures. The combined effect on an individual ASC 

of the proposed update to the CY 2015 payments would depend on a number of factors, 

including, but not limited to, the mix of services the ASC provides, the volume of 
CMS-1613-P 642 

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 2015 updates to the ASC payment system on Medicare payments to ASCs, 

assuming the same mix of services as reflected in our CY 2013 claims data. Table 53 

depicts the estimated aggregate percent change in payment by surgical specialty or 

ancillary items and services group by comparing estimated CY 2014 payments to 

estimated CY 2015 payments and Table 54 shows a comparison of estimated CY 2014 

payments to estimated CY 2015 payments for procedures that we estimate would receive 

the most Medicare payment in CY 2014. 

 Table 53 shows the estimated effects on aggregate Medicare payments under the 

ASC payment system by surgical specialty or ancillary items and services group. We 

have aggregated the surgical HCPCS codes by specialty group, grouped all HCPCS codes 

for covered ancillary items and services into a single group, and then estimated the effect 

on aggregated payment for surgical specialty and ancillary items and services groups. 

The groups are sorted for display in descending order by estimated Medicare program 

payment to ASCs. The following is an explanation of the information presented in 

Table 53. 

● Column 1—Surgical Specialty or Ancillary Items and Services Group indicates 

the surgical specialty into which ASC procedures are grouped and the ancillary items and 

services group which includes all HCPCS codes for covered ancillary items and services. 

To group surgical procedures by surgical specialty, we used the CPT code range 
CMS-1613-P 643 

definitions and Level II HCPCS codes and Category III CPT codes as appropriate, to 

account for all surgical procedures to which the Medicare program payments are 

attributed. 

● Column 2—Estimated CY 2014 ASC Payments were calculated using 

CY 2013 ASC utilization (the most recent full year of ASC utilization) and CY 2014 

ASC payment rates. The surgical specialty and ancillary items and services groups are 

displayed in descending order based on estimated CY 2014 ASC payments. 

● Column 3—Estimated CY 2015 Percent Change is the aggregate percentage 

increase or decrease in Medicare program payment to ASCs for each surgical specialty or 

ancillary items and services group that are attributable to proposed updates to 

ASC payment rates for CY 2015 compared to CY 2014. 

 As seen in Table 53, for the six specialty groups that account for the most ASC 

utilization and spending, we estimate that the proposed update to ASC rates for CY 2015 

would result in a 2-percent decrease in aggregate payment amounts for eye and ocular 

adnexa procedures, a 6-percent increase in aggregate payment amounts for digestive 

system procedures, a 1-percent increase in aggregate payment amounts for nervous 

system procedures, a 2-percent increase in aggregate payment amounts for 

musculoskeletal system procedures, and a 3-percent increase in aggregate payment 

amounts for genitourinary system procedures and integumentary system procedures. 

 An estimated increase in aggregate payment for the specialty group does not mean 

that all procedures in the group would experience increased payment rates. For example, 

the estimated increase for CY 2015 for digestive system procedures is likely due to an 
CMS-1613-P 644 

increase in the ASC payment weight for some of the high volume procedures, such as 

CPT code 43239 (Upper GI endoscopy biopsy) where estimated payment would increase 

by 9 percent for CY 2015. 

 Also displayed in Table 53 is a separate estimate of Medicare ASC payments for 

the group of separately payable covered ancillary items and services. The payment 

estimates for the covered surgical procedures include the costs of packaged ancillary 

items and services. We estimate that aggregate payments for these items and services 

would not change for CY 2015. 

 
CMS-1613-P 645 

TABLE 53.—ESTIMATED IMPACT OF THE PROPOSED CY 2015 UPDATE TO 

THE ASC PAYMENT SYSTEM ON AGGREGATE CY 2015 MEDICARE 

PROGRAM PAYMENTS BY SURGICAL SPECIALTY OR ANCILLARY ITEMS 

AND SERVICES GROUP 

Surgical Specialty Group 

(1) 

Estimated 

CY 2014 

ASC 

Payments 

(in Millions) 

(2) 

Estimated 

CY 2015 

Percent 

Change 

(3) 

Total $3,819 1% 

Eye and ocular adnexa $1,556 -2% 

Digestive system $780 6% 

Nervous system $572 1% 

Musculoskeletal system $474 2% 

Genitourinary system $167 3% 

Integumentary system $137 3% 

Respiratory system $54 1% 

Cardiovascular system $35 -3% 

Ancillary items and services $24 0% 

Auditory system $14 0% 

Hematologic & lymphatic systems $6 12% 

 Table 54 below shows the estimated impact of the proposed updates to the revised 

ASC payment system on aggregate ASC payments for selected surgical procedures 

during CY 2015. The table displays 30 of the procedures receiving the greatest estimated 

CY 2014 aggregate Medicare payments to ASCs. The HCPCS codes are sorted in 

descending order by estimated CY 2014 program payment. 

● Column 1–CPT/HCPCS code. 

● Column 2–Short Descriptor of the HCPCS code. 
CMS-1613-P 646 

● Column 3–Estimated CY 2014 ASC Payments were calculated using CY 2013 

ASC utilization (the most recent full year of ASC utilization) and the CY 2014 ASC 

payment rates. The estimated CY 2014 payments are expressed in millions of dollars. 

● Column 4–Estimated CY 2015 Percent Change reflects the percent differences 

between the estimated ASC payment for CY 2014 and the estimated payment for 

CY 2015 based on the proposed update. 

TABLE 54.--ESTIMATED IMPACT OF THE PROPOSED CY 2015 UPDATE TO 

THE ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR 

SELECTED PROCEDURES 

CPT/HCPCS 

Code* 

(1) 

Short Descriptor 

(2) 

Estimated 

CY 2014 

ASC 

Payments 

(in millions) 

(3) 

Estimated 

CY 2015 

Percent 

Change 

(4) 

66984 Cataract surg w/iol, 1 stage $1,132 -2%

43239 Upper GI endoscopy, biopsy $170 9%

45380 Colonoscopy and biopsy $168 6%

45385 Lesion removal colonoscopy $107 6%

66982 Cataract surgery, complex $93 -2%

64483 Inj foramen epidural l/s $90 0%

62311 Inject spine l/s (cd) $79 0%

45378 Diagnostic colonoscopy $72 6%

66821 After cataract laser surgery $63 2%

64493 Inj paravert f jnt l/s 1 lev $47 0%

64635 Destroy lumb/sac facet jnt $45 -3%

G0105 Colorectal scrn; hi risk ind $45 0%

63650 Implant neuroelectrodes $41 5%

G0121 Colon ca scrn not hi rsk ind $41 0%

64590 Insrt/redo pn/gastr stimul $39 -4%

15823 Revision of upper eyelid $35 1%

63685 Insrt/redo spine n generator $35 27%

29827 Arthroscop rotator cuff repr $34 1%

64721 Carpal tunnel surgery $32 -1%
CMS-1613-P 647 

CPT/HCPCS 

Code* 

(1) 

Short Descriptor 

(2) 

Estimated 

CY 2014 

ASC 

Payments 

(in millions) 

(3) 

Estimated 

CY 2015 

Percent 

Change 

(4) 

29881 Knee arthroscopy/surgery $30 -1%

29824 Shoulder arthroscopy/surgery $28 1%

29880 Knee arthroscopy/surgery $25 -1%

43235 Uppr gi endoscopy diagnosis $23 9%

62310 Inject spine c/t $23 0%

29823 Shoulder arthroscopy/surgery $22 1%

52000 Cystoscopy $22 1%

G0260 Inj for sacroiliac jt anesth $21 0%

45384 Lesion remove colonoscopy $21 6%

67042 Vit for macular hole $21 -1%

26055 Incise finger tendon sheath $20 -1%

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

 We estimate that the proposed CY 2015 update to the ASC payment system 

would be generally positive for beneficiaries with respect to the new procedures that we 

are adding to the ASC list of covered surgical procedures and for those that we are 

proposing to designate as office-based for CY 2015. First, other than certain preventive 

services where coinsurance and the Part B deductible is waived to comply with sections 

1833(a)(1) and (b) of the Act, the ASC coinsurance rate for all procedures is 20 percent. 

This contrasts with procedures performed in HOPDs under the OPPS, where the 

beneficiary is responsible for copayments that range from 20 percent to 40 percent of the 

procedure payment (other than for certain preventive services). Second, in almost all 

cases, the ASC payment rates under the ASC payment system are lower than payment 

rates for the same procedures under the OPPS. Therefore, the beneficiary coinsurance 
CMS-1613-P 648 

amount under the ASC payment system will almost always be less than the OPPS 

copayment amount for the same services. (The only exceptions would be if the ASC 

coinsurance amount exceeds the inpatient deductible. The statute requires that 

copayment amounts under the OPPS not exceed the inpatient deductible.) Beneficiary 

coinsurance for services migrating from physicians’ offices to ASCs may decrease or 

increase under the revised ASC payment system, depending on the particular service and 

the relative payment amounts under the MPFS compared to the ASC. However, for those 

additional procedures that we are proposing to designate as office-based in CY 2015, the 

beneficiary coinsurance amount under the ASC payment system generally would be no 

greater than the beneficiary coinsurance under the MPFS because the coinsurance under 

both payment systems generally is 20 percent (except for certain preventive services 

where the coinsurance is waived under both payment systems). 

(4) Alternative ASC Payment Policies Considered 

 Alternatives to the minor changes that we are proposing to make to the ASC 

payment system and the reasons that we have chosen specific options are discussed 

throughout this proposed rule. There are no proposed major changes to ASC policies for 

CY 2015. 
CMS-1613-P 649 

c.. Accounting Statements and Tables 

 As required by OMB Circular A-4 (available on the Office of Management and 

Budget Web Site at: 

http://www.whitehouse.gov/sites/default/files/omb/assets/regulatory_matters_pdf/a4.pdf), we have prepared two accounting statements to illustrate the impacts of this 

proposed rule. The first accounting statement, Table 55 (below), illustrates the 

classification of expenditures for the CY 2015 estimated hospital OPPS incurred benefit 

impacts associated with the proposed CY 2015 OPD fee schedule increase, based on the 

2014 Trustee’s Report. The second accounting statement, Table 56 (below), illustrates 

the classification of expenditures associated with the 1.2 percent proposed CY 2015 

update to the ASC payment system, based on the provisions of this proposed rule and the 

baseline spending estimates for ASCs in the 2014 Trustee’s Report. Lastly, the tables 

classify most estimated impacts as transfers. 

TABLE 55.--ACCOUNTING STATEMENT: CY 2015 ESTIMATED HOSPITAL 

OPPS TRANSFERS FROM CY 2014 TO CY 2015 ASSOCIATED WITH THE 

PROPOSED CY 2015 HOSPITAL OUTPATIENT OPD FEE SCHEDULE 

INCREASE 

Category Transfers 

Annualized Monetized Transfers $800 million 

From Whom to Whom Federal Government to outpatient hospitals and 

other providers who receive payment under the 

hospital OPPS 

Total $800 million 

 
CMS-1613-P 650 

TABLE 56.--ACCOUNTING STATEMENT: CLASSIFICATION OF 

ESTIMATED TRANSFERS FROM CY 2014 TO CY 2015 AS A RESULT OF THE 

PROPOSED CY 2015 UPDATE TO THE ASC PAYMENT SYSTEM 

Category Transfers 

Annualized Monetized Transfers $36 million 

From Whom to Whom 

Federal Government to Medicare Providers 

and Suppliers 

Total $36 million 

d. Effects of Proposed Requirements for the Hospital OQR Program 

 In section XIII. of this proposed rule, we are proposing to adopt policies affecting 

the Hospital OQR Program. 

 Of 3,325 hospitals that met eligibility requirements for the CY 2014 payment 

determination, we determined that 88 hospitals did not meet the requirements to receive 

the full OPD fee schedule increase factor. Most of these hospitals (70 of the 88) chose 

not to participate in the Hospital OQR Program for the CY 2014 payment determination. 

We estimate that approximately 90 hospitals will not receive the full OPD fee schedule 

increase factor for the CY 2017 payment determination and subsequent years. 

 In sections XIII.E. and XIII.C.3.of this proposed rule, for the CY 2017 payment 

determination and subsequent years, we are proposing to add one claims-based quality 

measure and to remove three measures from the Hospital OQR Program. In 

sections XIII.D.3.b. and c. of this proposed rule we are proposing to remove one measure 

from the CY 2016 payment determination measure set and to change that measure from 

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

Hospitals would not be subject to a payment reduction with respect to this measure for 

the CY 2016 payment determination or during the period of voluntary reporting. 
CMS-1613-P 651 

 Because the measure we are proposing to add for the CY 2017 payment 

determination and subsequent years is claims-based, it will not require additional burden 

from data reporting or other action on the part of the hospitals. Therefore, we do not 

anticipate that this measure will cause any additional facilities to fail the Hospital OQR 

Program requirements. We anticipate a reduction in burden of approximately 862,077 

hours or $25.9 million across participating hospitals from the three measures we are 

proposing to remove and the one measure we are proposing to make voluntary as further 

detailed in sections XIII.C.3. and XIII.D.3.c. of this proposed rule, respectively, adnd the 

information collection requirements in section XIX.C.1. of this proposed rule. 

 The validation requirements for the CY 2017 payment determination and 

subsequent years would result in medical record documentation of approximately 6,000 

cases per quarter (up to 12 cases per quarter for 500 hospitals) submitted to the 

designated CMS contractor. In section XIII.H.3.e. of this proposed rule, we are 

proposing to allow hospitals to submit medical record documentation for validation using 

either of two methods: (1) through paper medical records; or (2) by securely transmitting 

electronic versions of medical information by either (a) downloading or copying the 

digital image of the patient chart onto CD, DVD, or flash drive and shipping the 

electronic media following instructions specified on the QualityNet Web site; or 

(b) securely submitting digital images (PDFs) of patient charts using a Secure File 

Transfer Portal on the QualityNet Web site. 

 As stated previously (76 FR 74577), we would pay for the cost of sending paper 

medical record documentation to the designated CMS contractor at the rate of 12 cents 
CMS-1613-P 652 

per page for copying and approximately $1.00 per case for postage. For both new 

proposed electronic methods, we are proposing in the information collection 

requirements section of this proposed rule to reimburse hospitals for sending medical 

records electronically at a rate of $3.00 per patient chart. 

 As we stated in the CY 2014 OPPS/ASC final rule with comment period 

(78 FR 75192), we have found that an outpatient medical chart is generally up to 

10 pages. However, because we do not yet know how many hospitals will choose to 

submit data electronically or through paper, we cannot estimate the total cost of 

expenditures and are unable to estimate the number of hospitals that would fail the 

validation documentation submission requirement for the CY 2017 payment 

determination. Because we would pay for the data collection effort though, we believe 

that a requirement for medical record documentation for up to 12 cases per quarter for up 

to 500 hospitals for CY 2015 represents a minimal burden to Hospital OQR Program 

participating hospitals. 

e. Effects of CY 2015 Proposed Policies for the ASCQR Program 

 In section XIV. of this proposed rule, we are proposing to adopt policies affecting 

the ASCQR Program. Of 5,300 ASCs that met eligibility requirements, we determined 

that 116 ASCs did not meet the requirements to receive the full annual payment update 

for CY 2014. 

 In section XIV.B.5. of this proposed rule, for the CY 2017 payment determination 

and subsequent years, we are proposing to add one claims-based quality measure. The 

measure we are proposing for CY 2017 and subsequent years is claims-based and would 
CMS-1613-P 653 

not require additional data reporting or other action by ASCs. Therefore, we do not 

anticipate that this measure would cause any additional ASCs to fail to meet the ASCQR 

Program requirements. We present the time and burdens associated with our policies and 

proposals in section XIX.C.2. of this proposed rule. 

 In section XIV.E.3.b. of this proposed rule, we note a 3-month delay in data 

collection for two measures for the CY 2016 payment determination. We do not believe 

that this 3-month delay in data collection would significantly affect the number of ASCs 

that meet the ASCQR Program requirements. 

 In section XIV.E.3.c. of this proposed rule, we are proposing that one measure 

which was to be first included in the CY 2016 payment determination, would not be 

included in the CY 2016 measure set and that the measure would be voluntary for the 

CY 2017 payment determination and subsequent years. ASCs would not be subject to a 

payment reduction for the CY 2016 payment determination, nor would ASCs be subject 

to a payment reduction for the CY 2017 payment determination and subsequent years for 

failing to report this measure. Because this measure was not included in the CY 2014 

payment determination and has not yet affected any payment determination, we do not 

believe that there will be an impact on the number of ASCs that meet the ASCQR 

Program requirements from our proposals not to include this measure in the measure set 

for the CY 2016 payment determination and to make this measure voluntary for the 

CY 2017 payment determination and subsequent years. 

 We do not believe that the other measures we previously adopted would cause 

any additional ASCs to fail to meet the ASCQR Program requirements. (We refer 
CMS-1613-P 654 

readers to the CY 2014 OPPS/ASC final rule with comment period for a list of these 

measures (78 FR 75130). 

 Further, we do not believe that any of the proposals in this proposed rule would 

significantly affect the number of ASCs that do not receive a full annual payment update 

for the CY 2017 payment determination. We are unable to estimate the number of ASCs 

that would not receive the full annual payment update based on the CY 2015 and 

CY 2016 payment determinations (78 FR 75192). For this reason, using the CY 2014 

payment determination numbers as a baseline, we estimate that approximately 116 ASCs 

would not receive the full annual payment update in CY 2017 due to failure to meet the 

ASCQR Program requirements. 
CMS-1613-P 655 

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

to the Physician Self-Referral Law 

 Section 6001(a) of the Affordable Care Act amended the rural provider and 

hospital ownership exceptions to the physician self-referral law (sections 1877(d)(2) and 

(d)(3) of the Act, respectively) to impose additional restrictions on physician ownership 

or investment in hospitals. The amended rural provider and hospital ownership 

exceptions provide that a hospital may not increase the number of operating rooms, 

procedure rooms, and beds beyond that for which the hospital was licensed on 

March 23, 2010 (or, in the case of a hospital that did not have a provider agreement in 

effect as of this date, but did have a provider agreement in effect on December 31, 2010, 

the date of effect of such agreement). We issued regulations addressing the prohibition 

against facility expansion in the CY 2011 OPPS/ASC final rule with comment period 

(75 FR 72240). 

 Section 6001(a)(3) of the Affordable Care Act added section 1877(i)(3)(A)(i) of 

the Act to set forth that the Secretary shall establish and implement an exception process 

to the prohibition on expansion of facility capacity. We issued regulations that govern 

the expansion exception process in the CY 2012 OPPS/ASC final rule with comment 

period (76 FR 74517) at 42 CFR 411.362(c). The regulations addressing the expansion 

exception process were issued by January 1, 2012, and the process was implemented on 

February 1, 2012. 

 As required by the statute, the expansion exception process provides that hospitals 

that qualify as an “applicable hospital” or a “high Medicaid facility” may request an 
CMS-1613-P 656 

exception to the prohibition on facility expansion. The existing expansion exception 

process requires the use of filed Medicare cost report data from the Healthcare Cost 

Report Information System (HCRIS) for hospitals to demonstrate that they satisfy the 

relevant eligibility criteria set forth in § 411.362(c)(2) for applicable hospitals and 

§ 411.362(c)(3) for high Medicaid facilities (76 FR 42350 through 42352). In section 

XV. of this proposed rule, we discuss our proposal to permit hospitals also to use internal 

or external data sources, as defined in the proposal, to demonstrate satisfaction of the 

eligibility criteria. Under our proposal, we would continue to require each hospital 

seeking to qualify for an expansion exception to access and utilize data for its estimations 

or determinations to demonstrate that the hospital meets the relevant criteria and to 

provide a detailed explanation regarding whether and how it satisfies each of the relevant 

criteria. We believe the impact of our proposed modification on affected hospitals would 

be minimal, given that the use of data from an internal or external source is voluntary. 

 Our proposal would require each requesting hospital also to provide actual 

notification that it is requesting an expansion exception directly to hospitals whose data 

are part of the comparisons set forth in §§ 411.362(c)(2)(ii) and (c)(3)(ii) of the 

regulations, in addition to performing the other methods of notification specified in our 

existing regulations. We believe the impact of this proposed additional requirement on 

physician-owned hospitals would be minimal. 

 We believe that our proposals would affect a relatively small number of 

physician-owned hospitals. We estimate that there are approximately 265 

physician-owned hospitals in the country. Since the process was implemented in 
CMS-1613-P 657 

February 2012, we have received only four requests, only one of which has been 

considered sufficiently complete to continue with publication in the Federal Register, 

under the current regulations. We anticipate receiving a similar number of requests each 

year. We do not believe that we can use the four requests to estimate accurately the 

potential increase in operating rooms, procedure rooms, and beds pursuant to approved 

expansion exception requests, and we are not aware of any data that may indicate such an 

increase. At this time, we also have no data or projections that may help estimate the 

number of physicians that would be affected by these proposals as a result of their 

ownership interests in hospitals. 

 We believe that beneficiaries may be positively impacted by our proposals. 

Specifically, an increase in operating rooms, procedure rooms, and beds may augment the 

volume or nature of services offered by physician-owned hospitals. An expansion in the 

number of hospital beds may also permit additional inpatient admissions and overnight 

stays. Increased operating rooms, procedure rooms, and beds may result in improved 

access to health care facilities and services. We believe that our proposals are necessary 

to conform our regulations to the amendments to section 1877 of the Act. 

 We are soliciting public comments on each of the issues outlined above that 

contain estimates of the costs and benefits of the proposed rule. We are specifically 

soliciting comments on the potential impact on State governments, given that we are 

proposing to define external data sources as data sources generated, maintained, or under 

the control of a State Medicaid agency. 
CMS-1613-P 658 

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

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

Part D Sponsors 

 In section XVII. of this proposed rule, we discuss our proposals to set forth in 

regulations a formal process, including appeals processes, that allows us to recoup 

overpayments in the limited set of circumstances where CMS makes a determination that 

an overpayment to an MA organization or Part D sponsor occurred because the 

organization or sponsor submitted erroneous data to CMS. It is difficult to predict how 

many times CMS would annually determine an overpayment due to erroneous data 

submitted to CMS by the MA organization or Part D sponsor and that, therefore, would 

be subject to the proposed offset and appeals regulations. However, we predict that it 

would be highly unlikely to exceed 10 cases a year and would probably be fewer. 

Further, electing to appeal a CMS overpayment determination under the proposed 

regulations is completely at the discretion of the MA organization or Part D sponsor. The 

MA organization or Part D sponsor may agree that the data require correction and 

resubmit the data; MA organizations and Part D sponsors that receive notification of an 

overpayment are under no obligation to initiate the appeal process. If the MA 

organization or Part D sponsor chooses not to appeal, there are no costs or burden 

associated with the appeal. If the MA organization or Part D sponsor chooses to appeal 

the overpayment determination, there would be costs associated with preparing the appeal 

request. 
CMS-1613-P 659 

 We are proposing three levels of appeal review (reconsideration, informal 

hearing, and Administrator review), each of which the MA organization or Part D 

sponsor would have to request. Once the appeal has been filed, however; there will be 

little or no cost experienced by the MA organization or Part D sponsor because the appeal 

process is on the record and would not involve oral testimony. The extent to which there 

would be costs associated with preparing the appeal request is subject to preference and 

choice. We estimate that it would take a plan 5 hours to prepare and file a 

reconsideration request. In terms of cost, it has been our experience that most appeals 

have been prepared by high-level officials of the plan or lawyers. According to the most 

recent wage data provided by the Bureau of Labor Statistics (BLS) for May 2012, the 

mean hourly wage for the category of “Lawyers”—which we believe, considering the 

variety of officials who have submitted appeals, is the most appropriate category—is 

$62.93. Multiplying this figure by 50 hours (10 submissions x 5 hours) results in a 

projected annual cost burden of $3,147. We estimate the preparation and filing of a 

request for a hearing, or for Administrator’s review would take 2 hours, at most, because 

the MA organization or Part D sponsor cannot submit new evidence. The hearing officer 

or Administrator is limited to a review of the record. Multiplying this figure by 40 hours 

(10 submissions x 4 hours) results in a projected annual cost burden of $2,517. It is 

estimated that if the costs of benefits and overhead are included, the total annual costs for 

requests at the three levels would be approximately $11,000. 
CMS-1613-P 660 

B. Regulatory Flexibility Act (RFA) Analysis 

 The RFA requires agencies to analyze options for regulatory relief of small 

entities, if a rule has a significant impact on a substantial number of small entities. For 

purposes of the RFA, we estimate that most hospitals, ASCs and CMHCs are small 

entities as that term is used in the RFA. For purposes of the RFA, most hospitals are 

considered small businesses according to the Small Business Administration’s size 

standards with total revenues of $35.5 million or less in any single year. Most ASCs and 

most CMHCs are considered small businesses with total revenues of $14 million or less 

in any single year. We estimate that this proposed rule may have a significant impact on 

approximately 2,007 hospitals with voluntary ownership. For details, see the Small 

Business Administration’s “Table of Small Business Size Standards” at 

http://www.sba.gov/content/table-small-business-size-standards. 

 In addition, section 1102(b) of the Act requires us to prepare a regulatory impact 

analysis if a rule may have a significant impact on the operations of a substantial number 

of small rural hospitals. This analysis must conform to the provisions of section 603 of 

the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as 

a hospital that is located outside of a metropolitan statistical area and has 100 or fewer 

beds. We estimate that this proposed rule may have a significant impact on 

approximately 709 small rural hospitals. 

 The analysis above, together with the remainder of this preamble, provides a 

regulatory flexibility analysis and a regulatory impact analysis. 

C. Unfunded Mandates Reform Act Analysis 
CMS-1613-P 661 

 Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 

requires that agencies assess anticipated costs and benefits before issuing any rule whose 

mandates require spending in any 1 year of $100 million in 1995 dollars, updated 

annually for inflation. That threshold level is currently approximately $141 million. This 

proposed rule does not mandate any requirements for State, local, or tribal governments, 

or for the private sector. 

D. Conclusion 

 The changes we are proposing to make in this proposed rule would affect all 

classes of hospitals paid under the OPPS and would affect both CMHCs and ASCs. We 

estimate that most classes of hospitals paid under the OPPS would experience a modest 

increase or a minimal decrease in payment for services furnished under the OPPS in 

CY 2015. Table 52 demonstrates the estimated distributional impact of the OPPS budget 

neutrality requirements that would result in a 2.2 percent increase in payments for all 

services paid under the OPPS in CY 2015, after considering all of the proposed changes 

to APC reconfiguration and recalibration, as well as the proposed OPD fee schedule 

increase factor, proposed wage index changes, including the proposed frontier State wage 

index adjustment, estimated payment for outliers, and proposed changes to the 

pass-through payment estimate. However, some classes of providers that are paid under 

the OPPS would experience more significant gains and others would experience modest 

losses in OPPS payments in CY 2015. 

 The proposed updates to the ASC payment system for CY 2015 would affect each 

of the approximately 5,300 ASCs currently approved for participation in the Medicare 
CMS-1613-P 662 

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 53 demonstrates the estimated distributional impact among ASC 

surgical specialties of the MFP-adjusted CPI-U update factor of 1.2 percent for CY 2015. 

XXII. Federalism Analysis 

Executive Order 13132 establishes certain requirements that an agency must meet 

when it promulgates a proposed rule (and subsequent final rule) that imposes substantial 

direct costs on State and local governments, preempts State law, or otherwise has 

Federalism implications. We have examined the OPPS and ASC provisions included in 

this proposed rule in accordance with Executive Order 13132, Federalism, and have 

determined that they would not have a substantial direct effect on State, local or tribal 

governments, preempt State law, or otherwise have a Federalism implication. As 

reflected in Table 52 of this proposed rule, we estimate that OPPS payments to 

governmental hospitals (including State and local governmental hospitals) would increase 

by 2.2 percent under this proposed rule. While we do not know the number of ASCs or 

CMHCs with government ownership, we anticipate that it is small. The analyses we have 

provided in this section of this proposed rule, in conjunction with the remainder of this 

document, demonstrate that this proposed rule is consistent with the regulatory 

philosophy and principles identified in Executive Order 12866, the RFA, and section 

1102(b) of the Act. 
CMS-1613-P 663 

 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. 
CMS-1613-P 664 

List of Subjects 

42 CFR Part 411 

 Kidney diseases, Medicare, Physician referral, Reporting and recordkeeping 

requirements. 

42 CFR Part 412 

 Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, 

Reporting and recordkeeping requirements. 

42 CFR Part 416 

 Health facilities, Health professions, Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 419

 Hospitals, Medicare, Reporting and recordkeeping requirements. 

42 CFR Part 422 

 Administrative practice and procedure, Health facilities, Health maintenance, 

organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping 

requirements. 

42 CFR Part 423 

 Administrative practice and procedure, Emergency medical services, Health 

facilities, Health maintenance organizations (HMO), Health professionals, Medicare, 

Penalties, Privacy, Reporting and recordkeeping requirements. 

42 CFR Part 424

 Emergency medical services, Health professions, Medicare 
CMS-1613-P 665 

For reasons stated in the preamble of this document, the Centers for Medicare & 

Medicaid Services is proposing to amend 42 CFR Chapter IV as set forth below:

Part 411—EXCLUSIONS FROM MEDICARE AND LIMITATION ON 

MEDICARE PAYMENT 

 1. The authority citation for part 411 continues to read as follows: 

Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877 of the 

Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh, and 

1395nn). 

 2. Section 411.351 is amended by adding the definitions “External data source” 

and “Internal data source” in alphabetical order to read as follows: 

§ 411.351 Definitions

* * * * * 

 External data source means a data source that— 

 (1) Is generated, maintained, or under the control of a State Medicaid agency; 

 (2) Is reliable and transparent; 

 (3) Maintains data that, for purposes of the process described in § 411.362(c), are 

readily available and accessible to the requesting hospital, comparison hospitals, and 

CMS; and 

 (4) Maintains or generates data that, for purposes of the process described in 

§ 411.362(c), are accurate, complete, and objectively verifiable. 

* * * * * 
CMS-1613-P 666 

 Internal data source means a data source other than the Healthcare Cost Report 

Information System that— 

 (1) Is generated, maintained, or under the control of the Department; 

 (2) Is reliable and transparent; 

 (3) Maintains data that, for purposes of the process described in § 411.362(c), are 

readily available and accessible to the requesting hospital, comparison hospitals, and 

CMS; and 

 (4) Maintains or generates data that, for purposes of the process described in 

§ 411.362(c), are accurate, complete, and objectively verifiable. 

* * * * * 

 3. Section 411.362 is amended by revising paragraphs (c)(2)(ii), (c)(2)(iv), 

(c)(2)(v), (c)(3)(ii), and (c)(5) to read as follows: 

§ 411.362 Additional requirements concerning physician ownership and investment 

in hospitals. 

* * * * * 

 (c) * * * 

 (2) * * * 

 (ii) Medicaid inpatient admissions. Has an annual percent of total inpatient 

admissions under Medicaid that is equal to or greater than the average percent with 

respect to such admissions for all hospitals located in the county in which the hospital is 

located during the most recent fiscal year for which data are available as of the date that 

the hospital submits its request. A hospital must use only filed Medicare hospital cost 
CMS-1613-P 667 

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

an external data source (as defined at § 411.351) to estimate its annual percent of total 

inpatient admissions under Medicaid and the average percent with respect to such 

admissions for all hospitals located in the county in which the hospital is located: 

* * * * * 

 (iv) Average bed capacity. Is located in a State in which the average bed 

capacity in the State is less than the national average bed capacity during the most recent 

fiscal year for which data are available as of the date that the hospital submits its request. 

A hospital must use only filed Medicare hospital cost report data, data from an internal 

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

defined at § 411.351) to determine the average bed capacity in the State in which the 

hospital is located and the national average bed capacity. 

 (v) Average bed occupancy. Has an average bed occupancy rate that is greater 

than the average bed occupancy rate in the State in which the hospital is located during 

the most recent fiscal year for which data are available as of the date that the hospital 

submits its request. A hospital must use only filed Medicare hospital cost report data, 

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

data source (as defined at § 411.351) to determine its average bed occupancy rate and the 

average bed occupancy rate for the State in which the hospital is located. 

 (3) * * * 

 (ii) Medicaid inpatient admissions. With respect to each of the 3 most recent 

fiscal years for which data are available as of the date the hospital submits its request, has 
CMS-1613-P 668 

an annual percent of total inpatient admissions under Medicaid that is estimated to be 

greater than such percent with respect to such admissions for any other hospital located in 

the county in which the hospital is located. A hospital must use only filed Medicare 

hospital cost report data, data from an internal data source (as defined at § 411.351), 

and/or data from an external data source (as defined at § 411.351) to estimate its annual 

percentage of total inpatient admissions under Medicaid and the annual percentages of 

total inpatient admissions under Medicaid for every other hospital located in the county 

in which the hospital is located. 

* * * * * 

 (5) Community input and timing of complete request. Upon submitting a request 

for an exception and until the hospital receives a CMS decision, the hospital must 

disclose on any public Web site for the hospital that it is requesting an exception and 

must also provide actual notification that it is requesting an exception, in either electronic 

or hard copy form, directly to hospitals whose data are part of the comparisons in 

paragraphs (c)(2)(ii) and (c)(3)(ii) of this section. Individuals and entities in the 

hospital’s community may provide input with respect to the hospital’s request no later 

than 30 days after CMS publishes notice of the hospital’s request in the Federal 

Register. Such input must take the form of written comments. The written comments 

must be either mailed or submitted electronically to CMS. If CMS receives written 

comments from the community, the hospital has 30 days after CMS notifies the hospital 

of the written comments to submit a rebuttal statement. 
CMS-1613-P 669 

 (i) If only filed Medicare hospital cost report data are used in the hospital’s 

request, the written comments, and the hospital’s rebuttal statement— 

 (A) A request will be deemed complete at the end of the 30-day comment period 

if CMS does not receive written comments from the community. 

 (B) A request will be deemed complete at the end of the 30-day rebuttal period, 

regardless of whether the hospital submits a rebuttal statement, if CMS receives written 

comments from the community. 

 (ii) If data from an internal data source or external data source are used in the 

hospital’s request, the written comments, or the hospital’s rebuttal statement— 

 (A) A request will be deemed complete no later than 180 days after the end of the 

30-day comment period if CMS does not receive written comments from the community. 

 (B) A request will be deemed complete no later than 180 days after the end of the 

30-day rebuttal period, regardless of whether the hospital submits a rebuttal statement, if 

CMS receives written comments from the community. 

* * * * * 

PART 412—PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT 

HOSPITAL SERVICES 

 4. The authority citation for part 412 continues to read as follows: 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh), and sec. 124 of Public Law 106-113 (113 Stat.1501A-332). 

§ 412.3 [Amended] 

 5. Section 412.3 is amended by— 
CMS-1613-P 670 

 a. Removing paragraph (c). 

 b. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d), respectively. 

 c. In newly redesignated paragraph (d)(1), removing the cross-reference 

“paragraph (e)(2)” and adding in its place the cross-reference “paragraph (d)(2)”. 

PART 416—AMBULATORY SURGICAL SERVICES 

 6. The authority citation for Part 416 continues to read as follows: 

 Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

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

as follows:

§ 416.164 Scope of ASC services. 

 (a) * * * 
CMS-1613-P 671 

 (11) Radiology services for which separate payment is not allowed under the 

OPPS and other diagnostic tests or interpretive services that are integral to a surgical 

procedure, except certain diagnostic tests for which separate payment is allowed under 

the OPPS; 

* * * * * 

 (b) * * * 

 (5) Certain radiology services and certain diagnostic tests for which separate 

payment is allowed under the OPPS. 

* * * * * 

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

follows:

§ 416.171 Determination of payment rates for ASC services. 

* * * * * 

 (b) * * * 

 (1) Covered ancillary services specified in § 416.164(b), with the exception of 

radiology services and certain diagnostic tests as provided in § 416.164(b)(5); 

 (2) The device portion of device-intensive procedures, which are procedures 

assigned to an APC with a device cost greater than 40 percent of the APC costs when 

calculated according to the standard OPPS APC ratesetting methodology. 

* * * * * 

PART 419—PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL 

OUTPATIENT DEPARTMENT SERVICES 
CMS-1613-P 672 

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

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

1302, 1395l(t), and 1395hh).

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

follows: 

§ 419.2 Basis of payment. 

* * * * * 

 (b) * * * 

 (7) Ancillary services; 

* * * * * 

 (16) Drugs and biologicals that function as supplies when used in a surgical 

procedure (including, but not limited to, skin substitutes and similar products that aid 

wound healing and implantable biologicals); 

* * * * * 

 11. Section 419.22 is amended by revising paragraph (j) to read as follows: 

§ 419.22 Hospital services excluded from payment under the hospital outpatient 

prospective payment system. 

* * * * * 

 (j) Except as provided in § 419.2(b)(11), prosthetic devices and orthotic devices. 

* * * * * 

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

§ 419.32 Calculation of prospective payment rates for hospital outpatient services. 
CMS-1613-P 673 

* * * * * 

 (b) * * * 

 (1) * * * 

 (iv) * * * 

 (B) * * * 

 (6) For calendar year 2015, a multifactor productivity adjustment (as determined 

by CMS) and 0.2 percentage point. 

* * * * * 

§ 419.46 [Amended]

 13. Section 419.46 is amended by— 

 a. In paragraph (c)(1), removing the phrase “section 1833(17)(C)” and adding in 

its place the phrase “section 1833(t)(17)(C)”. 

 b. In paragraph (d) introductory text and paragraph (d)(1), removing the term 

“waiver” and adding in its place the term “exception” each time it apppears. 

 c. In paragraph (d)(2), removing the term “waivers” and adding in its place the 

term “exceptions”. 

 d. In paragraph (e) introductory text, removing the phrase “section 1833(17)(C)” 

and adding in its place the phrase “section 1833(t)(17)(C)”. 

 14. Section 419.64 is amended by revising paragraph (a)(4)(iv) to read as 

follows: 

§ 419.64 Transitional pass-through payments: Drugs and biologicals. 

* * * * * 
CMS-1613-P 674 

 (a) * * * 

 (4) * * * 

 (iv) A biological that is not a skin substitute or similar product that aids wound 

healing, unless pass-through payment for a skin substitute as a biological is made on or 

before January 1, 2015. 

* * * * * 

 15. Section 419.66 is amended by revising paragraph (b)(3) and removing 

paragraph (b)(4)(iii). 

The revision reads as follows: 

§ 419.66 Transitional pass-through payments: Medical devices. 

* * * * * 

 (b) * * * 

 (3) The device is an integral part of the service furnished, is used for one patient 

only, comes in contact with human tissue, and is surgically implanted or inserted (either 

permanently or temporarily) or applied in or on a wound or other skin lesion. 

* * * * * 

PART 422—MEDICARE ADVANTAGE PROGRAM 

 16. The authority citation for part 422 continues to read as follows: 

 Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 
CMS-1613-P 675 

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

§ 422.330 CMS-identified overpayments associated with payment data submitted 

by MA organizations. 

 (a) Definitions. For purposes of this section— 

 Payment data means data controlled and submitted by an MA organization to 

CMS and used for payment purposes, including enrollment data and data submitted under 

§ 422.310. 

 Applicable reconciliation date occurs on the date of the annual final deadline for 

risk adjustment data submission described at § 422.310(g)(2)(ii). 

 (b) Request to correct payment data. If CMS identifies an error in payment data 

other than an error identified through the process described in § 422.311, and the 

payment error identified affects payments for any of the 6 most recently completed 

payment years, CMS may send a data correction notice to the MA organization 

requesting that the MA organization correct the payment data. The notice will include or 

make reference to the specific payment data that need to be corrected, the reason why 

CMS believes that the payment data are erroneous, and the timeframe for correcting the 

payment data. 

 (c) Payment offset. If the MA organization fails to submit the corrected payment 

data within the timeframe as requested in accordance with paragraph (b) of this section, 

CMS will conduct a payment offset against payments made to the MA organization. 

CMS will calculate the payment offset amount using a payment algorithm that applies the 

payment rules for the applicable year. 
CMS-1613-P 676 

 (d) Payment offset notification. CMS will issue a payment offset notice to the 

MA organization that includes the following: 

 (1) The dollar amount of the offset from plan payments. 

 (2) An explanation of how the erroneous data were identified and used to 

calculate the payment offset amount. 

 (3) An explanation that, if the MA organization disagrees with the payment 

offset, it may request an appeal within 30 days of issuance of the payment offset 

notification. 

 (e) Appeals process. If an MA organization does not agree with the payment 

offset described in paragraph (c) of this section, it may appeal under the following 

three-level appeal process: 

 (1) Reconsideration. An MA organization may request reconsideration of the 

payment offset described in paragraph (c) of this section, according to the following 

process: 

 (i) Manner and timing of request. A written request for reconsideration must be 

filed within 30 days from the date that CMS issued the payment offset notice to the MA 

organization. 

 (ii) Content of request. The written request for reconsideration must specify the 

findings or issues with which the MA organization disagrees and the reasons for its 

disagreement. As part of its request for reconsideration, the MA organization may 

include any additional documentary evidence in support of its position. Any additional 
CMS-1613-P 677 

evidence must be submitted with the request for reconsideration. Additional information 

submitted after this time will be rejected as untimely. 

 (iii) Conduct of reconsideration. In conducting the reconsideration, the CMS 

reconsideration official reviews the underlying data that were used to determine the 

amount of the payment offset and any additional documentary evidence timely submitted 

by the MA organization. 

 (iv) Reconsideration decision. The CMS reconsideration official informs the MA 

organization of its decision on the reconsideration request. 

 (v) Effect of reconsideration decision. The decision of the CMS reconsideration 

official is final and binding unless a timely request for an informal hearing is filed in 

accordance with paragraph (e)(2) of this section. 

 (2) Informal hearing. An MA organization dissatisfied with CMS’ 

reconsideration decision made under paragraph (e)(1) of this section is entitled to an 

informal hearing as provided for under paragraphs (e)(2)(i) through (v) of this section. 

 (i) Manner and timing for request. A request for an informal hearing must be 

made in writing and filed with CMS within 30 days of the date of CMS’ reconsideration 

decision. 

 (ii) Content of request. The request for an informal hearing must include a copy 

of the reconsideration decision and must specify the findings or issues in the decision 

with which the MA organization disagrees and the reasons for its disagreement. 

 (iii) Informal hearing procedures. The informal hearing will be conducted in 

accordance with the following: 
CMS-1613-P 678 

 (A) CMS provides written notice of the time and place of the informal hearing at 

least 10 days before the scheduled date. 

 (B) The informal hearing is conducted by a CMS hearing officer who neither 

receives testimony nor accepts any new evidence that was not timely presented with the 

reconsideration request. The CMS hearing officer is limited to the review of the record 

that was before the CMS reconsideration official when CMS made its reconsideration 

determination. 

 (C) The CMS hearing officer will review the proceeding before the CMS 

reconsideration official on the record made before the CMS reconsideration official using 

the clearly erroneous standard of review. 

 (iv) Decision of the CMS hearing officer. The CMS hearing officer decides the 

case and sends a written decision to the MA organization explaining the basis for the 

decision. 

 (v) Effect of hearing officer’s decision. The hearing officer’s decision is final 

and binding, unless the decision is reversed or modified by the Administrator in 

accordance with paragraph (e)(3) of this section. 

 (3) Review by the Administrator. The Administrator review will be conducted in 

the following manner: 

 (i) An MA organization that has received a hearing officer’s decision may 

request review by the Administrator within 30 days of the date of issuance of the hearing 

officer’s decision under paragraph (e)(2)(iv) of this section. The MA organization may 

submit written arguments to the Administrator for review. 
CMS-1613-P 679 

 (ii) After receiving a request for review, the Administrator has the discretion to 

elect to review the hearing officer’s determination in accordance with paragraph 

(e)(3)(iii) of this section or to decline to review the hearing officer’s decision. 

 (iii) If the Administrator declines to review the hearing officer’s decision, the 

hearing officer’s decision is final and binding. 

 (iv) If the Administrator elects to review the hearing officer’s decision, the 

Administrator will review the hearing officer’s decision, as well as any information 

included in the record of the hearing officer’s decision and any written argument 

submitted by the MA organization, and determine whether to uphold, reverse, or modify 

the hearing officer’s decision. 

 (v) The Administrator’s determination is final and binding. 

 (f) Matters subject to appeal and burden of proof. 

 (1) The MA organization’s appeal is limited to CMS’ finding that the payment 

data submitted by the MA organization are erroneous. 

 (2) The MA organization bears the burden of proof by a preponderance of the 

evidence in demonstrating that CMS’ finding that the payment data were erroneous was 

incorrect or otherwise inconsistent with applicable program requirements. 

 (g) Applicability of appeals process. The appeals process under paragraph (e) of 

this section applies only to payment offsets under paragraph (c) of this section. 

PART 423—VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT 

 18. The authority citation for part 423 continues to read as follows: 
CMS-1613-P 680 

 Authority: Secs. 1102, 1106, 1860D–1 through 1860D–42, and 1871 of the 

Social Security Act (42 U.S.C. 1302, 1306, 1395w–101 through 1395w–152, and 

1395hh. 

 19. Section 423.352 is added to read as follows: 

§ 423.352 CMS-identified overpayments associated with payment data submitted 

by Part D sponsors. 

 (a) Definitions. For purposes of this section-- 

 Applicable reconciliation date occurs on the later of either the annual deadline for 

submitting— 

 (1) Prescription drug event (PDE) data for the annual Part D payment 

reconciliations referred to in § 423.343(c) and (d); or 

 (2) Direct and indirect remuneration data. 

 Payment data means data controlled and submitted by a Part D sponsor to CMS 

and used for payment purposes, including enrollment data and data submitted under 

§§ 423.329(b)(3), 423.336(c)(1), and 423.343, and data provided for purposes of 

supporting allowable reinsurance costs and allowable risk corridor costs as defined in 

§ 423.308, including data submitted to CMS regarding direct and indirect remuneration. 

 (b) Request to correct payment data. If CMS identifies an error in payment data 

submitted by a Part D sponsor, and the payment error identified affects payments for any 

of the 6 most recently completed payment years, CMS may send a data correction notice 

to the Part D sponsor requesting that the Part D sponsor correct the payment data. The 

notice will include or make reference to the specific payment data that need to be 
CMS-1613-P 681 

corrected, the reason why CMS believes that the payment data are erroneous, and the 

timeframe for correcting the payment data. 

 (c) Payment offset. If the Part D sponsor fails to submit the corrected payment 

data within the timeframe as requested in accordance with paragraph (b) of this section, 

CMS will conduct a payment offset against payments made to the Part D sponsor. CMS 

will calculate the payment offset amount using a payment algorithm that applies the 

payment rules for the applicable year. 

 (d) Payment offset notification. CMS will issue a payment offset notice to the 

Part D sponsor that includes the following: 

 (1) The dollar amount of the offset from plan payments. 

 (2) An explanation of how the erroneous data were identified and used to 

calculate the payment offset amount. 

 (3) An explanation that, if the Part D sponsor disagrees with the payment offset, 

it may request an appeal within 30 days of issuance of the payment offset notification. 

 (e) Appeals process. If a Part D sponsor does not agree with the payment offset 

described in paragraph (c) of this section, it may appeal under the following three-level 

appeal process: 

 (1) Reconsideration. A Part D sponsor may request reconsideration of the 

payment offset described in paragraph (c) of this section, according to the following 

process: 
CMS-1613-P 682 

 (i) Manner and timing of request. A written request for reconsideration must be 

filed within 30 days from the date that CMS issued the payment offset notice to the Part 

D sponsor. 

 (ii) Content of request. The written request for reconsideration must specify the 

findings or issues with which the Part D sponsor disagrees and the reasons for its 

disagreement. As part of its request for reconsideration, the Part D sponsor may include 

any additional documentary evidence in support of its position. Any additional evidence 

must be submitted with the request for reconsideration. Additional information submitted 

after this time will be rejected as untimely. 

 (iii) Conduct of reconsideration. In conducting the reconsideration, the CMS 

reconsideration official reviews the underlying data that were used to determine the 

amount of the payment offset and any additional documentary evidence timely submitted 

by the Part D sponsor. 

 (iv) Reconsideration decision. The CMS reconsideration official informs the Part 

D sponsor of its decision on the reconsideration request. 

 (v) Effect of reconsideration decision. The decision of the CMS reconsideration 

official is final and binding unless a timely request for an informal hearing is filed in 

accordance with paragraph (e)(2) of this section. 

 (2) Informal hearing. A Part D sponsor dissatisfied with CMS’ reconsideration 

decision made under paragraph (e)(1) of this section is entitled to an informal hearing as 

provided for under paragraphs (e)(2)(i) through (v) of this section. 
CMS-1613-P 683 

 (i) Manner and timing for request. A request for an informal hearing must be 

made in writing and filed with CMS within 30 days of the date of CMS’ reconsideration 

decision. 

 (ii) Content of request. The request for an informal hearing must include a copy 

of the reconsideration decision and must specify the findings or issues in the decision 

with which the Part D sponsor disagrees and the reasons for its disagreement. 

 (iii) Informal hearing procedures. The informal hearing will be conducted in 

accordance with the following: 

 (A) CMS provides written notice of the time and place of the informal hearing at 

least 10 days before the scheduled date. 

 (B) The informal hearing is conducted by a CMS hearing officer who neither 

receives testimony nor accepts any new evidence that was not timely presented with the 

reconsideration request. The CMS hearing officer is limited to the review of the record 

that was before the CMS reconsideration official when CMS made its reconsideration 

determination. 

 (C) The CMS hearing officer will review the proceeding before the CMS 

reconsideration official on the record made before the CMS reconsideration official using 

the clearly erroneous standard of review. 

 (iv) Decision of the CMS hearing officer. The CMS hearing officer decides the 

case and sends a written decision to the Part D sponsor explaining the basis for the 

decision. 
CMS-1613-P 684 

 (v) Effect of hearing officer’s decision. The hearing officer’s decision is final 

and binding, unless the decision is reversed or modified by the Administrator in 

accordance with paragraph (e)(3) of this section. 

 (3) Review by the Administrator. The Administrator review will be conducted in 

the following manner: 

 (i) A Part D sponsor that has received a hearing officer’s decision may request 

review by the Administrator within 30 days of the date of issuance of the hearing 

officer’s decision under paragraph (e)(2)(iv) of this section. The Part D sponsor may 

submit written arguments to the Administrator for review. 

 (ii) After receiving a request for review, the Administrator has the discretion to 

elect to review the hearing officer’s determination in accordance with paragraph 

(e)(3)(iii) of this section or to decline to review the hearing officer’s decision. 

 (iii) If the Administrator declines to review the hearing officer’s decision, the 

hearing officer’s decision is final and binding. 

 (iv) If the Administrator elects to review the hearing officer’s decision, the 

Administrator will review the hearing officer’s decision, as well as any information 

included in the record of the hearing officer’s decision and any written argument 

submitted by the Part D sponsor, and determine whether to uphold, reverse, or modify the 

hearing officer’s decision. 

 (v) The Administrator’s determination is final and binding. 
CMS-1613-P 685 

 (f) Matters subject to appeal and burden of proof. (1) The Part D sponsor’s 

appeal is limited to CMS’ finding that the payment data submitted by the Part D sponsor 

are erroneous. 

 (2) The Part D sponsor bears the burden of proof by a preponderance of the 

evidence in demonstrating that CMS’ finding that the payment data were erroneous was 

incorrect or otherwise inconsistent with applicable program requirements. 

 (g) Applicability of appeals process. The appeals process under paragraph (e) of 

this section applies only to payment offsets under paragraph (c) of this section. 

PART 424--CONDITIONS FOR PAYMENT 

 20. The authority citation for part 424 continues to read as follows: 

Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 

1395hh). 

 21. Section 424.13 is amended by— 

 a. Revising paragraph (a) introductory text. 

 b. Removing paragraph (a)(1). 

 c. Redesignating paragraphs (a)(2), (3), and (4) as paragraphs (a)(1), (2), and (3), 

respectively. 

 d. Revising newly redesignated paragraph (a)(1)(i). 

 e. Revising paragraph (b). 

 The revisions read as follows: 

§ 424.13 Requirements for inpatient services of hospitals other than inpatient 

psychiatric facilities. 
CMS-1613-P 686 

(a) Content of certification and recertification. Medicare Part A pays for 

inpatient hospital services (other than inpatient psychiatric facility services) for cases that 

are 20 inpatient days or more, or are outlier cases under subpart F of part 412 of this 

chapter, only if a physician certifies or recertifies the following: 

* * * * * 

 (1) * * * 

 (i) Hospitalization of the patient for medical treatment or medically required 

diagnostic study; or 

* * * * * 

 (b) Timing of certification. For outlier cases under subpart F of part 412 of this 

chapter, the certification must be signed and documented in the medical record and as 

specified in paragraphs (e) through (h) of this section. For all other cases, the 

certification must be signed and documented no later than 20 days into the hospital stay. 

* * * * * 
CMS-1613-P 

Dated: __June 24, 2014_____________ 

 ______________________________ 

 Marilyn Tavenner, 

 Administrator, 

 Centers for Medicare & Medicaid 

 Services. 

Dated: _June 27, 2014______________ 

 ___________________________ 

 Sylvia M. Burwell, 

 Secretary. 

BILLING CODE 4120-01-P

[FR Doc. 2014-15939 Filed 07/03/2014 at 4:15 pm; Publication Date: 07/14/2014]